<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
AMB FINANCIAL CORP.
- --------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LETTERHEAD]
September 12, 1996
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of AMB Financial Corp.
(the "Company"), we cordially invite you to attend a Special Meeting of
Stockholders of the Company. The meeting will be held at 10:00 a.m., Munster,
Indiana time, on October 23, 1996 at the main office of the Company located at
8230 Hohman Avenue, Munster, Indiana.
An important aspect of the meeting process is the stockholder vote on
corporate business items. We urge you to exercise your rights as a stockholder
to vote and participate in this process. Stockholders are being asked to
consider and vote upon the proposals to ratify the adoption of the 1996 Stock
Option and Incentive Plan and the Recognition and Retention Plan. The Board of
Directors has carefully considered both of these proposals and believes that
their approval will enhance the ability of the Company to recruit and retain
quality directors and management. Accordingly, your Board of Directors
unanimously recommends that you vote "FOR" both of the proposals.
We encourage you to attend the meeting in person. WHETHER OR NOT YOU PLAN
TO ATTEND, PLEASE READ THE ENCLOSED PROXY STATEMENT AND THEN COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE PREPAID
RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. This will save the Company additional
expense in soliciting proxies and will ensure that your shares are represented
at the meeting.
Sincerely,
Clement B. Knapp, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
AMB FINANCIAL CORP.
8230 Hohman Avenue
Munster, Indiana 46321-1578
(219) 836-5870
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be Held on October 23, 1996
Notice is hereby given that a Special Meeting of Stockholders (the
"Meeting") of AMB Financial Corp. (the "Company") will be held at the main
office of the Company located at 8230 Hohman Avenue, Munster, Indiana, at 10:00
a.m., Munster, Indiana time, on October 23, 1996.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The ratification of the adoption of the Company's 1996 Stock
Option and Incentive Plan;
2. The ratification of the adoption of the Company's Recognition and
Retention Plan;
and such other matters as may properly come before the Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on August 30, 1996
are the stockholders entitled to vote at the Meeting and any adjournments
thereof. A complete list of stockholders entitled to vote at the Meeting will
be available for inspection by stockholders at the office of the Company, 8230
Hohman Avenue, Munster, Indiana, during the ten days prior to the Meeting,
during the hours of 9:00 a.m. to 3:00 p.m., Monday through Friday, as well as at
the Meeting.
You are requested to complete and sign the enclosed form of proxy, which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend and vote at the
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
Clement B. Knapp, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Munster, Indiana
September 12, 1996
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
AMB FINANCIAL CORP.
8230 Hohman Avenue
Munster, Indiana 46321-1578
(219) 836-5870
SPECIAL MEETING OF STOCKHOLDERS
October 23, 1996
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of AMB Financial Corp. (the "Company"), the
parent company of American Savings, FSB ("American Savings" or the
"Association"), of proxies to be used at the Special Meeting of Stockholders of
the Company (the "Meeting") which will be held at the main office of the Company
located at 8230 Hohman Avenue, Munster, Indiana, on October 23, 1996, at 10:00
a.m., Munster, Indiana time, and all adjournments of the Meeting. The
accompanying Notice of Special Meeting and this Proxy Statement are first being
mailed to stockholders on or about September 12, 1996.
At the Meeting, stockholders of the Company are being asked to consider and
vote upon the proposals to ratify the adoption of the AMB Financial Corp. 1996
Stock Option and Incentive Plan (the "Stock Option Plan") and the AMB Financial
Corp. Recognition and Retention Plan (the "RRP").
VOTE REQUIRED AND PROXY INFORMATION
All shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the proposals set forth
in this Proxy Statement. The Company does not know of any matters, other than
those described in the Notice of Special Meeting, that are to come before the
Meeting. If any other matters are properly presented at the Meeting for action,
the persons named in the enclosed form of proxy and acting thereunder will have
the discretion to vote on such matters in accordance with their best judgment.
Proposals to ratify the adoption of the Stock Option Plan and the RRP
require the affirmative vote of a majority of shares entitled to vote at the
Meeting. Proxies marked to abstain with respect to any proposal have the same
effect as votes against the proposal. Broker non-votes have no effect on the
vote. One-third of the shares of the Common Stock, present in person or
represented by proxy, shall constitute a quorum for purposes of the Meeting.
Abstentions and broker non-votes are counted for purposes of determining a
quorum.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary
of the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Denise L.
Knapp, Secretary, AMB Financial Corp., 8230 Hohman Avenue, Munster, Indiana
46321-1578.
VOTING SECURITIES AND CERTAIN HOLDERS THEREOF
Stockholders of record as of the close of business on August 30, 1996 will
be entitled to one vote for each share of Common Stock then held. As of that
date, the Company had 1,124,125 shares of Common Stock issued and outstanding.
The following table sets forth information regarding share ownership of (i)
those persons or entities known by management to beneficially own more than five
percent of the Common Stock ("Five Percent Beneficial Owners"), (ii) each member
of the Company's board of directors, (iii) each officer of the Company and the
Bank
<PAGE>
who made in excess of $100,000 (salary and bonus) (the "Named Officers") during
the fiscal year ended December 31, 1995 ("fiscal 1995"); and (iv) all directors,
directors emeritus and executive officers of the Company and the Bank as a
group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED AT PERCENT
BENEFICIAL OWNER AUGUST 30, 1996 OF CLASS
---------------- --------------- --------
<S> <C> <C>
FIVE PERCENT BENEFICIAL OWNERS:
AMB Financial Corp. Employee Stock Ownership Plan 89,930(1) 8.00%
8230 Hohman Avenue
Munster, Indiana
Jerome H. Davis and Susan B. Davis 112,000(2) 9.96
11 Baldwin Farms North
Greenwich, Connecticut
DIRECTORS AND NAMED OFFICERS:
Clement B. Knapp, Jr., Chairman of the Board 14,949 1.33
President and Chief Executive Officer
Ronald W. Borto, Director 20,000 1.78
Donald L. Harle, Director 9,000 .80
John C. McLaughlin, Director 100 (3)
John G. Pastrick, Director 2,200 .20
Robert E. Tolley, Director 10,200 .91
Directors, director emeritus and executive officers 76,659(4) 6.82
of the Company and the Bank, as a group (12 persons)
</TABLE>
- --------------------
(1) The amount reported represents shares held by the Employee Stock Ownership
Plan ("ESOP"), none of which have been allocated to accounts of
participants. 1st Bankers Trust, the trustee of the ESOP, may be deemed to
beneficially own the shares held by the ESOP which have not been allocated
to accounts of participants. Participants in the ESOP are entitled to
instruct the trustee as to the voting of shares allocated to their accounts
under the ESOP. Unallocated shares held in the ESOP's suspense account or
allocated shares for which no voting instructions are received are voted by
the trustee in the same proportion as allocated shares voted by
participants.
(2) As reported by Mr. and Mrs. Davis in a statement dated April 1, 1996 on
Schedule 13D under the Securities Exchange Act of 1934. Mr. and Mrs. Davis
reported shared voting and investment power as to 87,000 shares. Mr. Davis
reported sole voting and investment power as to the remaining 15,000
shares.
(3) Less than .01%.
(4) Includes shares held directly, shares held jointly with family members,
shares held in retirement accounts, shares held in a fiduciary capacity or
by certain family members, with respect to which shares the group members
may be deemed to have sole voting and/or investment power. The amount
reported excludes shares proposed to be awarded to such individuals
pursuant to the Stock Option Plan and the RRP, subject to the ratification
of such plans by stockholders at the Meeting.
2
<PAGE>
DIRECTOR COMPENSATION
The Board of Directors of the Company are paid a fee of $100 for each Board
meeting attended.
Effective February 1, 1996, each director of the Bank received a fee of
$750 per month. Directors do not receive any additional compensation for
committee meeting attendance.
EXECUTIVE COMPENSATION
The Company has not paid any compensation to its executive officers since
its formation. The Company does not presently anticipate paying any
compensation to such persons until it becomes actively involved in the operation
or acquisition of businesses other than the Bank.
The following table sets forth information concerning the compensation paid
or granted to the Named Officers in fiscal 1995. No other executive officer had
compensation in excess of $100,000 in fiscal 1995.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------------------
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
- -------------------------------------------------------------------------------------------------------------
RESTRICTED ALL OTHER
BONUS STOCK OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) ($) AWARD ($)(2) SARS (#)(2) ($)(3)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Clement B. Knapp, Jr., Chairman, 1995 $112,030 $17,400 $--- ---/--- $6,998
President and Chief Executive 1994 109,612 17,400 --- ---/--- 5,342
Officer 1993 106,450 20,400 --- ---/--- 3,840
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amount includes fees received as a director.
(2) Pursuant to the Stock Option Plan, the Company intends to grant Mr. Knapp
options to purchase 28,103 shares of Common Stock at an exercise price
equal to the fair market value per share on the date of grant. See
"Proposal I - 1996 Stock Option and Incentive Plan." In addition, pursuant
to the RRP, the Company intends to grant to Mr. Knapp 11,241 shares of
restricted stock. See "Proposal II - Recognition and Retention Plan."
(3) Includes contributions made by the Bank to a 401(k) Plan, plus interest
paid on the contribution on behalf of Mr. Knapp and interest paid on
deferred amounts of his salary under the Bank's Deferred Compensation Plans
equal to $6,010 and $988, respectively for fiscal 1995, $4,761 and $581,
respectively for fiscal 1994, and $3,627 and $213, respectively for fiscal
1993.
EMPLOYMENT AGREEMENTS
The Bank entered into employment agreements with Messrs. Knapp, Poludniak
and Green and Mrs. Knapp. The employment agreements are designed to assist the
Bank in maintaining a stable and competent management team. The continued
success of the Bank depends to a significant degree on the skills and competence
of its officers. The employment agreements became effective upon completion of
the Bank's mutual to stock conversion and provide for an annual base salary in
an amount not less than the employee's current salary and an initial term, in
the case
3
<PAGE>
of Mr. Knapp, of three years and in the case of the other recipients, of one
year. The agreements provide for extensions for a period of one year on each
annual anniversary date, subject to review and approval of the extension by
disinterested members of the Board of Directors of the Bank. The agreements
provide for termination upon the employee's death, for cause or in certain
events specified by federal regulations. The employment agreements are also
terminable by the employee upon 90 days notice to the Bank.
The employment agreements provide for payment to the employee of his salary
for the remainder of the term of the agreement, plus up to 100% (299% in the
case of Mr. Knapp) of the employee's base compensation, in the event there is a
"change in control" of the Bank and employment terminates involuntarily in
connection with such change in control or within twelve months thereafter. This
termination payment may not exceed three times the employee's average annual
compensation over the most recent five year period or be non-deductible by the
Bank for federal income tax purposes. For the purposes of the employment
agreements, a "change in control" is defined as any event which would require
the filing of an application for acquisition of control or notice of change in
control pursuant to federal change in control regulations (12 C.F.R. Section
574.3 or 4). Such filings are generally triggered prior to the acquisition or
control of 10% of the Company's common stock. The agreements guarantee
participation in an equitable manner in employee benefits applicable to
executive personnel.
Based on current salaries, if the employment of Messrs. Knapp, Green and
Poludniak, and Mrs. Knapp had been terminated as of December 31, 1995, under
circumstances entitling them to severance pay as described above, they would
have been entitled to receive a lump sum cash payment of approximately $361,000,
$79,500, $72,400 and $35,500, respectively.
BENEFIT PLANS
GENERAL. American Savings currently provides health care benefits to its
employees, including hospitalization, disability and major medical insurance,
subject to certain deductibles and copayments by employees.
PENSION PLANS. The Bank sponsors a defined benefit pension plan for its
employees (the "Pension Plan"). An employee is eligible to participate in the
Pension Plan following the completion of 12 months of service and reaching the
age of 21 years. A participant must reach two years of service before he
attains a vested interest in his retirement benefits. After completing six
years of service, a participant will be 100% vested in his retirement benefits.
The Pension Plan is funded solely through contributions made by American
Savings. The Pension Plan contribution for the plan year ended August 31, 1996,
was $43,000 which was funded by a contribution from the Bank.
The benefit provided to a participant at normal retirement age (65) is
based on the average of the participant's monthly compensation during the five
consecutive years during which his compensation was highest ("average monthly
compensation"). Compensation for this purpose includes all taxable compensation
paid to the participant. The monthly benefit provided to a participant who
retires at age 65 is equal to 1.4% of average monthly compensation for each year
of service without offset of the participant's anticipated Social Security
benefits. The Pension Plan also provides for disability and death benefits.
4
<PAGE>
The following table sets forth, as of December 31, 1995, estimated annual
pension benefits for individuals at age 65 payable in the form of an annuity
with a minimum of 10 years of benefits under the most advantageous plan
provisions for various levels of compensation and years of service. The figures
in this table are based upon the assumption that the Pension Plan continues in
its present form and does not reflect offsets for Social Security benefits and
does not reflect benefits payable under the ESOP. As required by the Code, the
Pension Plan may not provide annual benefits which exceed certain maximum limits
or which are based on annual compensation in excess of $235,840 in 1995. At
December 31, 1995, Mr. Knapp had 27 years of credited service under the Pension
Plan.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
PENSION PLAN TABLE
- --------------------------------------------------------------------------------------------------------------------------
YEARS OF CREDITED SERVICE
- --------------------------------------------------------------------------------------------------------------------------
REMUNERATION 10 15 20 25 30 35
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 7,000 $10,500 $14,000 $17,500 $21,000 $24,500
100,000 $14,000 $21,000 $28,000 $35,000 $42,000 $49,000
150,000 $21,000 $31,500 $42,000 $52,500 $63,000 $73,500
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
DEFERRED COMPENSATION PLANS. In 1992, the Bank adopted a plan to allow the
Bank's executive officers to defer 6% of their salaries with 50% of the deferred
amount matched by the Bank up to 3% of salary. Under the terms of the plan, the
deferred amounts earn interest at an annual rate of 10%. Upon normal
retirement, the employee receives the deferred amounts plus interest over a 180
month period.
The Bank purchased whole life insurance policies with projected values
equivalent to the estimated actuarial cost of the deferred obligations. Since
the deferred compensation plan is not tax qualified, the obligations are not
secured and would not receive a preference in the event of the insolvency of the
Bank.
Under a separate deferred fee plan, the Bank's directors are permitted to
defer their board fees on a similar basis as the officers' plan except that
directors' contributions are not matched.
EMPLOYEE SEVERANCE COMPENSATION PLAN. The Bank's Board of Directors
intends to establish the American Savings Employee Severance Compensation Plan
("Compensation Plan") which will provide certain employees with severance pay
benefits in the event of a change in control of the Bank or the Company
following Conversion. Officers with employment agreements are not eligible to
participate in the Compensation Plan. The purpose of the Compensation Plan is
to recognize the valuable services and contributions of the Bank's employees and
the uncertainties relating to continuing employment, reduced employee benefits,
management changes and relocations in the event of a change in control. The
Bank believes that the Compensation Plan will assist it in attracting and
retaining highly qualified individuals and reduce the distractions and other
adverse effects on the employees' performance in the event of a change in
control. The Compensation Plan vests in each participant a contractual right to
the benefits such participant is entitled to thereunder. Under the Compensation
Plan, in the event of a change in control as defined in the Compensation Plan,
eligible employees who are terminated or who voluntarily terminate employment
(for reasons specified under the Compensation Plan) within one year of a change
in control will be entitled to receive a severance payment. Payments pursuant
to the Compensation Plan are equal to the product of two weeks salary (as
defined in the Compensation Plan) times the number of years of service up to a
maximum of twelve years in the case of officers or seven years in the case of
other employees. Such payments may tend to discourage takeover attempts by
increasing costs to be incurred by the Bank in the event of a takeover.
If a change in control were deemed to have occurred as of September 30,
1995 and all of the Bank's employees (excluding officers with employment
agreements who are not eligible to participate in the Compensation
5
<PAGE>
Plan) terminated in connection therewith, the maximum amount payable under the
Compensation Plan would have been approximately $50,000. It is management's
belief that substantially all of the Bank's employees would be retained in the
event of a change in control, and that any amount payable under the Compensation
Plan, therefore, would be considerably less than the maximum amount that could
possibly be paid under the Compensation Plan. The Compensation Plan may be
amended or terminated by the Board of Directors by a majority vote at any time
prior to a change in control but may not be amended or terminated thereafter.
EMPLOYEE STOCK OWNERSHIP PLAN. The Boards of Directors of American Savings
and the Company have approved the adoption of an ESOP for the benefit of
employees of the Company and its subsidiaries, including American Savings. The
ESOP is designed to meet the requirements of an employee stock ownership plan as
described at Section 4975(e)(7) of the Code and Section 407(d)(6) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The ESOP
may borrow in order to finance purchases of the Company's Common Stock. The
ESOP was funded with a loan from the Company.
Generally accepted accounting principles generally require that any
borrowing by the ESOP from an unaffiliated lender be reflected as a liability in
the Company's Consolidated Financial Statements, whether or not such borrowing
is guaranteed by, or constitutes a legally binding contribution commitment of,
the Company or the Bank. The funds used to acquire the ESOP shares were
borrowed from the Company. If the Company finances the ESOP debt, the ESOP debt
will be eliminated through consolidation and no liability will be reflected on
the Company's consolidated financial statements. In addition, shares purchased
with borrowed funds will, to the extent of the borrowings, be excluded from
stockholders' equity, representing unearned compensation to employees for future
services not yet performed. Consequently, if the ESOP purchases already-issued
shares in the open market, the Company's consolidated liabilities will increase
to the extent of the ESOP's borrowings, and total and per share stockholders'
equity will be reduced to reflect such borrowings. If the ESOP purchases newly
issued shares from the Company, total stockholders' equity would neither
increase nor decrease, but per share stockholders' equity and per share net
income would decrease because of the increase in the number of outstanding
shares. In either case, as the borrowings used to fund ESOP purchases are
repaid, total stockholders' equity will correspondingly increase.
All employees of the Bank are eligible to participate in the ESOP after
they attain age 21 and complete one year of service. Employees will be credited
for years of service to the Bank prior to the adoption of the ESOP for
participation and vesting purposes. The Bank's contribution to the ESOP is
allocated among participants on the basis of compensation. Each participant's
account will be credited with cash and shares of Company Common Stock based upon
compensation earned during the year with respect to which the contribution is
made. Contributions credited to a participant's account are vested on a
graduated basis and become fully vested when such participant completes seven
years of service. ESOP participants are entitled to receive distributions from
their ESOP accounts only upon termination of service. Distributions will be
made in cash and in whole shares of the Company's Common Stock. Fractional
shares will be paid in cash. Participants will not incur a tax liability until
a distribution is made.
Each participating employee is entitled to instruct the trustee of the ESOP
as to how to vote the shares allocated to his or her account. The trustee will
not be affiliated with the Company or American Savings.
The ESOP may be amended by the Board of Directors, except that no amendment
may be made which would reduce the interest of any participant in the ESOP trust
fund or divert any of the assets of the ESOP trust fund to purposes other than
the benefit of participants or their beneficiaries.
STOCK OPTION AND INCENTIVE PLAN. The Stock Option Plan was adopted by the
Board of Directors, subject to ratification by stockholders at the Meeting. See
"Proposal I - 1996 Stock Option and Incentive Plan."
RECOGNITION AND RETENTION PLAN. The Board has adopted a Recognition and
Retention Plan subject to ratification by stockholders at the Meeting. See
"Proposal II - Recognition and Retention Plan."
6
<PAGE>
INDEBTEDNESS OF MANAGEMENT
The Bank has followed a policy of granting loans to eligible directors,
officers, employees and members of their immediate families for the financing of
their personal residences and for consumer purposes. Under the Bank's current
policy, all such loans to directors and senior officers are required to be made
in the ordinary course of business and on the same terms, including collateral
and interest rates, as those prevailing at the time for comparable transactions
and do not involve more than the normal risk of collectability. However, prior
to August 1989, the Bank waived loan origination fees on loans to directors and
employees.
Set forth below is certain information as to those loans made by the Bank
to its directors and executive officers whose aggregate indebtedness to the Bank
exceeded $60,000 at any time since January 1, 1994 on which the Bank waived the
loan fees pursuant to the Bank's loan policy at the time such loans were made.
Each of the loans was made in the ordinary course of business and did not
involve more than the normal risk of collectibility. All loans are first
mortgage loans secured by the borrower's principal place of residence.
<TABLE>
<CAPTION>
LARGEST AMOUNT BALANCE AT
DATE OF OUTSTANDING SINCE DECEMBER 31,
NAME AND POSITION ORIGINATION JANUARY 1, 1994 1995
----------------- ----------- ------------------ ------------
<S> <C> <C> <C>
Clement B. Knapp, Jr. 6/10/87 $94,983 $90,428
Chairman of the Board,
President and Chief
Executive Officer
</TABLE>
PROPOSAL I - 1996 STOCK OPTION AND INCENTIVE PLAN
GENERAL
ESTABLISHMENT AND IMPLEMENTATION OF THE STOCK OPTION PLAN IS SUBJECT TO
RATIFICATION BY STOCKHOLDERS. THE STOCK OPTION PLAN IS IN COMPLIANCE WITH OTS
REGULATIONS, HOWEVER, THE OTS HAS NOT ENDORSED OR APPROVED THE STOCK OPTION PLAN
AND NO WRITTEN OR ORAL REPRESENTATION TO THE CONTRARY IS MADE HEREBY.
The Stock Option Plan has been adopted by the Board of Directors of the
Company, subject to ratification by stockholders at the Meeting. Ratification
by stockholders of the adoption of the Stock Option Plan will ratify the awards
proposed thereunder and as described in "Awards Under the Stock Option Plan"
herein, and will ratify the granting of additional awards pursuant to the
provisions of the Stock Option Plan. Pursuant to the Stock Option Plan, the
Company will reserve for issuance thereunder either from authorized but unissued
shares or from issued shares reacquired and held as treasury shares, 112,412
shares of the Common Stock. Management may, to the extent practicable and
feasible, fund the Stock Option Plan from issued shares reacquired by the
Company in the open market. To the extent the Company utilizes authorized but
unissued Common Stock to fund the Stock Option Plan, the exercise of stock
options will have the effect of diluting the holdings of persons who own the
Common Stock. Assuming all options under the Stock Option Plan are awarded and
exercised through the use of authorized but unissued Common Stock, current
stockholders would be diluted by approximately 9.1%. Upon ratification of the
Stock Option Plan by stockholders, it is proposed that options to purchase an
aggregate of 100,042 shares of Common Stock will be awarded.
The Board of Directors believes that it is appropriate for the Company to
adopt a flexible and comprehensive Stock Option Plan which permits the granting
of a variety of long-term incentive awards to directors, officers and employees
as a means of enhancing and encouraging the recruitment and retention of those
individuals on whom the continued success of the Company most depends. However,
because the awards are granted only to persons affiliated with the Company, the
adoption of the Stock Option Plan could make it more difficult for a third
7
<PAGE>
party to acquire control of the Company and therefore could discourage offers
for the Company's stock that may be viewed by the Company's stockholders to be
in their best interest. In addition, certain provisions included in the
Company's Certificate of Incorporation and Bylaws may discourage potential
takeover attempts, particularly those that have not been negotiated directly
with the Board of Directors of the Company. Included are provisions (i)
limiting the voting power of shares held by persons owning 10% or more of the
Common Stock, (ii) requiring a supermajority vote of stockholders for approval
of certain business combinations, (iii) establishing a staggered Board of
Directors, (iv) permitting special meetings of stockholders to be called only by
the Board of Directors and (v) authorizing a class of preferred stock with terms
to be established by the Board of Directors. These provisions could prevent the
sale or merger of the Company even where a majority of the stockholders approve
of such transaction.
In addition, federal regulations prohibit the beneficial ownership of more
than 10% of the stock of a converted savings institution or its holding company
without prior approval of the OTS. Federal law and regulations also require OTS
approval prior to the acquisition of "control" (as defined in the OTS
regulations) of an insured institution, including a holding company thereof.
These regulations could have the effect of discouraging takeover attempts of the
Company.
Attached as Exhibit A to this Proxy Statement is the complete text of the
Stock Option Plan. The principal features of the Stock Option Plan are
summarized below.
PRINCIPAL FEATURES OF THE STOCK OPTION PLAN
The Stock Option Plan provides for awards in the form of stock options,
stock appreciation rights ("SARs") and limited stock appreciation rights
("LSARs"). Each award shall be on such terms and conditions, consistent with
the Stock Option Plan and applicable OTS regulations, as the committee
administering the Stock Option Plan may determine. Subject to certain
exceptions described herein, awards made under such plan vest at a rate of at
least one-fifth of the initial award per year, subject to the participant
maintaining continuous service to the Company or its subsidiaries from the date
of grant.
Pursuant to OTS regulations, each non-employee director of the Company and
all non-employee directors of the Company as a group, may not be awarded more
than 5% and 30% of the total shares subject to the Stock Option Plan,
respectively. In addition, no individual may be granted awards with respect to
more than 25% of the total shares subject to the Stock Option Plan.
Shares awarded pursuant to the Stock Option Plan may be either authorized
but unissued shares or reacquired shares held by the Company in its treasury.
Any shares subject to an award which expires or is terminated unexercised will
again be available for issuance under the Stock Option Plan or any other plan of
the Company or its subsidiaries. Generally, no award or any right or interest
therein is assignable or transferable except under certain limited exceptions
set forth in the Stock Option Plan.
The Stock Option Plan is administered by the Compensation Committee of the
Board of Directors of the Company (the "Compensation Committee"), which is
comprised of non-employee directors of the Company. Directors Pastrick,
McLaughlin and Harle have been appointed as the present members of the
Compensation Committee. Pursuant to the terms of the Stock Option Plan, any
director, officer or employee of the Company or its affiliates is eligible to
participate in the Stock Option Plan, which currently includes approximately 35
persons. In granting awards under the Stock Option Plan, the Compensation
Committee considers, among other things, position and years of service, value of
the participant's services to the Company and the Bank and the added
responsibilities of such individuals as employees, directors and officers of a
public company.
STOCK OPTIONS
The term of stock options may not exceed ten years from the date of grant.
The Compensation Committee may grant either "incentive stock options" as defined
under Section 422 of the Code or stock options not intended to qualify as such
("non-qualified stock options").
8
<PAGE>
In general, stock options will not be exercisable after the expiration of
their terms. Unless otherwise determined by the Compensation Committee, in the
event a participant ceases to maintain continuous service (as defined in the
Stock Option Plan) with the Company or one of its affiliates, for any reason
(excluding death, disability and termination for cause), an exercisable stock
option will continue to be exercisable for three months thereafter but in no
event after the expiration date of the option. Unless otherwise provided by the
Compensation Committee, in the event of disability of a participant during such
service, all options not then exercisable shall become exercisable in full and
remain exercisable for a period of three months from the date of such
disability. Unless otherwise provided by the Compensation Committee, in the
event of death of a participant, all options not then exercisable shall become
exercisable in full. Unless otherwise provided by the Compensation Committee,
in the event of the death of a participant during such service or within the
three-month period described above following termination of service described
above, an exercisable option will continue to be exercisable for one year, to
the extent exercisable by the participant upon his death, but in no event later
than ten years after grant. Following the death of any participant, the
Compensation Committee may, as an alternative means of settlement of an option,
elect to pay to the holder thereof an amount of cash equal to the amount by
which the market value of the shares covered by the option on the date of
exercise exceeds the exercise price. A stock option will automatically
terminate and will no longer be exercisable as of the date a participant is
notified of termination for cause.
The exercise price for the purchase of shares subject to a stock option at
the date of grant may not be less than 100% of the market value of the shares
covered by the option on that date. The exercise price must be paid in full in
cash or, if permitted by the Compensation Committee, shares of Common Stock, or
a combination of both.
The Stock Option Plan provides for the grant of a non-qualified stock
option to purchase 5,620 shares of Common Stock to each director who is not a
full-time employee of the Company and each director emeritus, as of the date of
stockholder ratification of the Stock Option Plan. Such options have a term of
ten years, are not transferable, and vest at the rate of 20% per year commencing
on the one-year anniversary of the date of grant. The exercise price per share
of such options shall be equal to the fair market value of the Common Stock on
the date of grant.
STOCK APPRECIATION RIGHTS
The Compensation Committee may grant SARs at any time, whether or not the
participant then holds stock options, granting the right to receive the excess
of the market value of the shares represented by the SARs on the date exercised
over the exercise price. SARs generally will be subject to the same terms and
conditions and exercisable to the same extent as stock options, as described
above. Upon the exercise of a SAR, the participant will receive the amount due
in cash or shares, or a combination of both, as determined by the Compensation
Committee. SARs may be related to stock options ("tandem SARs"), in which case
the exercise of one will reduce to that extent the number of shares represented
by the other.
SARs will require an expense accrual by the Company each year for the
appreciation on the SARs which it is anticipated will be exercised. The amount
of the accrual is dependent upon whether and the extent to which the SARs are
granted and the amount, if any, by which the market value of the SARs exceeds
the exercise price.
LIMITED STOCK APPRECIATION RIGHTS
Limited SARs will be exercisable only for a limited period in the event of
a tender or exchange offer for shares of the Company's Common Stock, other than
by the Company, where 25% or more of the outstanding shares are acquired in that
offer or any other offer which expires within 60 days of that offer. The amount
paid on exercise of a Limited SAR will be the excess of (a) the market value of
the shares on the date of exercise, or (b) the highest price paid pursuant to
the offer, over the exercise price. Payment upon exercise of a Limited SAR will
be in cash.
9
<PAGE>
Limited SARs may be granted at the time of, and must be related to, the
grant of a stock option or SAR. The exercise of one will reduce to that extent
the number of shares represented by the other. Subject to vesting requirements
contained in OTS regulations, Limited SARs will be exercisable only for the 45
days following the expiration of the tender or exchange offer, during which
period the related stock option or SAR will be exercisable. However, no Limited
SAR will be exercisable by a director, Senior Officer or Ten Percent Beneficial
Owner of the Company within six months of the date of its grant.
EFFECT OF MERGER AND OTHER ADJUSTMENTS
Shares as to which awards may be granted under the Stock Option Plan, and
shares then subject to awards, will be adjusted appropriately by the
Compensation Committee in the event of any merger, consolidation,
reorganization, recapitalization (including a return of capital), combination or
exchange of shares, stock dividend, stock split or other change in the corporate
structure or Common Stock of the Company.
In the event of any merger, consolidation or combination of the Company
with or into another company or other entity, whereby either the Company is not
the continuing entity or its outstanding shares of Common Stock are converted
into or exchanged for different securities, cash or property, or any combination
thereof, pursuant to a plan or agreement the terms of which are binding upon all
stockholders, any participant to whom a stock option or SAR has been granted at
least six months prior to such event will have the right upon exercise of the
option or SAR (subject to the terms of the Stock Option Plan and any other
limitation or vesting period applicable to such option or SAR) to an amount
equal to the excess of fair market value on the date of exercise of the
consideration receivable in the merger, consolidation or combination with
respect to the shares covered or represented by the stock option or SAR over the
exercise price of the option or SAR multiplied by the number of shares with
respect to which the option or SAR has been exercised.
AMENDMENT AND TERMINATION
The Board of Directors of the Company may at any time amend, suspend or
terminate the Stock Option Plan or any portion thereof, subject to compliance
with OTS regulations, but may not, without the prior ratification of the
stockholders, make any amendment which shall (i) increase the aggregate number
of securities which may be issued under the Stock Option Plan (except as
specifically set forth under the Stock Option Plan), (ii) materially change the
requirements as to eligibility for participation in the Stock Option Plan or
(iii) change the class of persons eligible to participate in the Stock Option
Plan, provided, however, that no such amendment, suspension or termination shall
impair the rights of any participant, without his consent, in any award made
pursuant to the Stock Option Plan. Unless previously terminated, the Stock
Option Plan shall continue in effect for a term of ten years, after which no
further awards may be granted under the Stock Option Plan.
FEDERAL INCOME TAX CONSEQUENCES
Under present federal income tax laws, awards under the Stock Option Plan
will have the following consequences:
(1) The grant of an award will neither, by itself, result in the recognition of
taxable income to the participant nor entitle the Company to a deduction at
the time of such grant.
(2) In order to qualify as an "Incentive Stock Option," a stock option awarded
under the Stock Option Plan must meet the conditions contained in Section
422 of the Code, including the requirement that the shares acquired upon
the exercise of the stock option be held for one year after the date of
exercise and two years after the grant of the option. The exercise of an
Incentive Stock Option will generally not, by itself, result in the
recognition of taxable income to the participant nor entitle the Company to
a deduction at the time of such exercise. However, the difference between
the exercise price and the fair market value of the option shares on the
date of exercise is an item of tax preference which may, in certain
situations, trigger the alternative minimum tax. The alternative minimum
tax is incurred only when it exceeds the regular income tax. The
alternative minimum tax will be payable at the rate of 26% on the first
$175,000 of "minimum taxable income" above the exemption amount ($33,750
single person or $45,000 married person filing jointly). This tax applies
10
<PAGE>
at a flat rate of 28% of so much of the taxable excess as exceeds $175,000
and 28% on minimum taxable income more than $175,000 above the applicable
exemption amounts. If a taxpayer has alternative minimum taxable income in
excess of $150,000 (married persons filing jointly) or $112,500 (single
person), the $45,000 or $33,750 exemptions are reduced by an amount equal
to 25% of the amount by which the alternative minimum taxable income of the
taxpayer exceeds $150,000 or $112,500, respectively. Provided the
applicable holding periods described above are satisfied, the participant
will recognize long term capital gain or loss upon the resale of the shares
received upon such exercise.
(3) The exercise of a stock option which is not an Incentive Stock Option will
result in the recognition of ordinary income by the participant on the date
of exercise in an amount equal to the difference between the exercise price
and the fair market value on the date of exercise of the shares acquired
pursuant to the stock option.
(4) The exercise of a SAR will result in the recognition of ordinary income by
the participant on the date of exercise in an amount of cash, and/or the
fair market value on that date of the shares, acquired pursuant to the
exercise.
(5) The Company will be allowed a deduction at the time, and in the amount of,
any ordinary income recognized by the participant under the various
circumstances described above, provided that the Company meets its federal
withholding tax obligations.
AWARDS UNDER THE STOCK OPTION PLAN
The following table presents information at August 30, 1996 with respect to
the number of awards of options which are currently intended to be granted under
the Stock Option Plan, subject to stockholder ratification of the Stock Option
Plan, to (i) the Company's Chief Executive Officer, (ii) all executive officers
of the Company and the Bank as a group and (iii) directors who are not executive
officers of the Company and the Bank and director emeritus as a group. On
August 30, 1996, the closing price for the Common Stock as quoted on the Nasdaq
Small-Cap Market was $10.375 per share.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
1996 STOCK OPTION AND INCENTIVE PLAN
- ---------------------------------------------------------------------------------------------------------------
Name and Position Dollar Value (1) Number of Shares
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Clement B. Knapp, Jr., Chairman of the Board, President
and Chief Executive Officer. . . . . . . . . . . . . . . . . . . . . . $ --- 28,103
Executive Officer Group (6 persons). . . . . . . . . . . . . . . . . . --- 66,322
Non-Executive Director and Director Emeritus Group (6 persons) . . . . --- 33,720
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------------
(1) Any value realized will be the difference between the exercise price and
the market value upon exercise. Since the options have not been granted,
there is no current value.
Subject to the conditions of the Stock Option Plan, the proposed awards
described in the preceding table will vest in not less than five equal annual
installments with the first installment vesting on the one-year anniversary of
the date of grant and the additional installments vesting ratably on each
subsequent anniversary of the date of grant. Pursuant to the terms of the Stock
Option Plan, all options are required to be granted with an exercise price equal
to not less than the fair market value of the shares on the date of grant. To
the extent permitted under
11
<PAGE>
applicable law, all options granted to officers are intended to be incentive
stock options. All awards to directors who are not full time employees of the
Company will be non-qualified stock options.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE ADOPTION OF THE 1996 STOCK OPTION AND INCENTIVE PLAN.
PROPOSAL II - RECOGNITION AND RETENTION PLAN
GENERAL
ESTABLISHMENT AND IMPLEMENTATION OF THE RRP IS SUBJECT TO RATIFICATION BY
STOCKHOLDERS. THE RRP IS IN COMPLIANCE WITH OTS REGULATIONS, HOWEVER, THE OTS
HAS NOT ENDORSED OR APPROVED THE RRP AND NO WRITTEN OR ORAL REPRESENTATION TO
THE CONTRARY IS MADE HEREBY.
The RRP has been adopted by the Board of Directors of the Company, subject
to stockholder ratification. The RRP is designed to provide directors, officers
and employees with a proprietary interest in the Company in a manner designed to
encourage such individuals to remain with the Company and the Bank.
Ratification by stockholders of the adoption of the RRP will ratify the awards
proposed thereunder and as described in "Awards under the RRP" herein, and will
ratify the granting of additional restricted stock awards pursuant to the
provisions of the RRP. Pursuant to the RRP, 44,965 shares of Common Stock,
funded from either authorized but unissued shares or issued shares subsequently
reacquired and held as treasury shares, will be available for awards.
Management currently intends, to the extent practicable and feasible, to fund
the RRP from issued shares reacquired by the Company in the open market. To the
extent the Company utilizes authorized but unissued shares to fund the RRP the
interests of current stockholders will be diluted. Assuming all RRP Shares are
awarded through the use of authorized but unissued Common Stock, current
stockholders would be diluted by approximately 3.85%. Upon ratification of the
RRP by stockholders, it is proposed that 43,616 shares of Common Stock available
for awards under the RRP will be awarded to directors and officers of the
Company and the Bank.
Attached as Exhibit B to this Proxy Statement is the complete text of the
form of the RRP. The principal features of the RRP are summarized below.
PRINCIPLE FEATURES OF THE RRP
The RRP provides for the award of shares of Common Stock ("RRP Shares")
subject to the restrictions described below. Each award under the RRP will be
made on such terms and conditions, consistent with the terms of the RRP and
applicable OTS regulations, as the Compensation Committee shall determine.
The RRP is administered by the Company's Compensation Committee. The
Compensation Committee will select the recipients and terms of awards pursuant
to the RRP. For information regarding the membership of this Committee, see
"Proposal I - Ratification of the 1996 Stock Option and Incentive Plan." In
determining to whom and in what amount to grant awards, the Compensation
Committee considers the position and responsibilities of eligible individuals,
the value of their services to the Company and the Bank and other factors it
deems relevant. Pursuant to the terms of the RRP, any director, officer or
employee of the Company or its affiliates may be selected by the Compensation
Committee to participate in the RRP, which currently includes eligible
participants of approximately 35 persons.
The RRP provides that RRP Shares used to fund awards under the RRP may be
either authorized but unissued shares or reacquired shares held by the Company
in its treasury. Any RRP Shares which are forfeited will again be available for
issuance under the RRP.
As required by OTS regulations, award recipients earn (I.E., become vested
in) awards, over a period of time as determined by the Compensation Committee at
the time of grant, provided that no award may vest earlier than one year from
the date of stockholder approval of the RRP and shall vest at a rate not to
exceed 20% of the
12
<PAGE>
initial award per year except in the event of death or disability. Pursuant to
OTS Regulations, no director who is not an employee of the Company shall be
granted awards with respect to more than 5% of the total shares subject to the
RRP. All non-employee directors of the Company, in the aggregate, may not be
granted awards with respect to more than 30% of the total RRP Shares and no
individual shall be granted awards with respect to more than 25% of the total
RRP Shares. It is intended that no award granted to an executive officer of the
Company or its affiliates shall vest in any fiscal year (and shall be carried
over to the subsequent fiscal year) in which the Bank fails to meet all of its
fully phased-in capital requirements.
Subject to compliance with OTS regulations, the Compensation Committee may,
in its discretion, accelerate the time at which any or all restrictions will
lapse, or may remove any or all of the restrictions. In the event a participant
ceases to maintain continuous service with the Company or the Bank by reason of
death or disability, RRP Shares still subject to restrictions will be free of
these restrictions and shall not be forfeited. In the event of termination for
any other reason, all shares will be forfeited and returned to the Company.
Holders of RRP Shares may not vote or sell, assign, transfer, pledge or
otherwise encumber any of the RRP Shares during the restricted period. During
the restricted period, RRP Shares will be voted by an independent trustee and
not by the holder of such shares. In addition, all dividends declared and paid
on RRP Shares still subject to restrictions will be deferred and held for the
account of the participant thereof until the earlier to lapse of the
restrictions on such shares or the death or disability of the participant.
Finally, the RRP provides for an award as of the date of stockholder
ratification of the RRP of 2,248 shares to each director who is not a full-time
employee of the Company. As provided in the RRP, no RRP shares granted to a
non-employee director shall be earned in any fiscal year (and shall be carried
over to the subsequent fiscal year) in which the Bank fails to meet all of its
fully phased-in capital requirements.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
RRP Shares awarded under the RRP will be adjusted by the Compensation
Committee in the event of a reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or other
change in corporate structure or the Common Stock of the Company.
FEDERAL INCOME TAX CONSEQUENCES
Holders of RRP Shares will recognize ordinary income on the date that the
RRP Shares are no longer subject to a substantial risk of forfeiture, in an
amount equal to the fair market value of the shares on that date. In certain
circumstances, a holder may elect to recognize ordinary income and determine
such fair market value on the date of the grant of the RRP Shares. Holders of
RRP Shares will also recognize ordinary income equal to their dividend or
dividend equivalent payments when such payments are received. Generally, the
amount of income recognized by participants will be a deductible expense for tax
purposes for the Company.
AMENDMENT TO THE RRP
The Board of Directors of the Company may amend, suspend or terminate the
RRP or any portion thereof at any time, subject to OTS Regulations, provided,
however, that no such amendment, suspension or termination shall impair the
rights of any participant, without his consent, in any award theretofore made
pursuant to the RRP.
13
<PAGE>
AWARDS UNDER THE RRP
The following table presents information at August 30, 1996 with respect to
the number of RRP Shares which are currently intended to be granted under the
RRP, subject to stockholder ratification of the RRP, to (i) the Company's Chief
Executive Officer, (ii) all executive officers of the Company and the Bank as a
group, and (iii) directors who are not executive officers of the Company or the
Bank and director emeritus as a group.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
RECOGNITION AND RETENTION PLAN
- -------------------------------------------------------------------------------------------------------------
Number of Shares of
Name and Position Dollar value(1) Restricted Stock
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Clement B. Knapp, Jr., Chairman of the Board, President
and Chief Executive Officer . . . . . . . . . . . . . . . . . . $116,625 11,241
Executive Officer Group (6 persons) . . . . . . . . . . . . . . . 312,578 30,128
Non-Executive Director and Director Emeritus Group (6 persons . . 139,938 13,488
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
(1) Assumes an aggregate market value of the RRP Shares based on the closing
price of the Common Stock of $10.375 as reported on the Nasdaq Small-Cap
Market on August 30, 1996.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE ADOPTION OF THE RECOGNITION AND RETENTION PLAN.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
the next annual meeting of stockholders, any stockholder proposal to take action
at such meeting must have been received at the Company's office located at 8230
Hohman Avenue, Munster, Indiana 46321-1578, no later than November 25, 1996.
Any such proposal shall be subject to the requirements of the proxy rules
adopted under the Exchange Act.
14
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. The Company has retained Regan &
Associates, Inc. to assist in the solicitation of proxies for a fee not to
exceed $3,250, plus out-of-pocket expenses, not to exceed $1,650. In addition,
directors, officers and regular employees of the Company and/or the Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation.
Munster, Indiana
September 12, 1996
15
<PAGE>
EXHIBIT A
AMB FINANCIAL CORP.
1996 STOCK OPTION AND INCENTIVE PLAN
1. PLAN PURPOSE. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, advisory directors, directors emeriti,
officers and employees of the Corporation and its Affiliates. It is intended
that designated Options granted pursuant to the provisions of this Plan to
persons employed by the Corporation or its Affiliates will qualify as Incentive
Stock Options. Options granted to persons who are not employees will be
Non-Qualified Stock Options.
2. DEFINITIONS. The following definitions are applicable to the Plan:
"Affiliate" - means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Bank" - means American Savings, FSB and any successor entity.
"Award" - means the grant of an Incentive Stock Option, a Non-Qualified
Stock Option, a Stock Appreciation Right, a Limited Stock Appreciation Right or
any combination thereof, as provided in the Plan.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee referred to in Section 3 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, advisory director, director emeritus,
officer or employee of the Corporation or an Affiliate, except that when used
with respect to any Options or Rights which at the time of exercise are intended
to be Incentive Stock Options, continuous service means the absence of any
interruption or termination of service as an employee of the Corporation or an
Affiliate. Service shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Corporation
or in the case of transfers between payroll locations of the Corporation or
between the Corporation, its parent, its subsidiaries or its successor. With
respect to any advisory director or director emeritus, continuous service shall
mean availability to perform such functions as may be required of such persons.
"Corporation" - means AMB Financial Corp., a Delaware corporation.
"Disinterested Person" - means any member of the Board of Directors of the
Corporation who (a) is an outside director as defined under Section 162 (m) of
the Code and the regulations thereunder ; (b) is not currently a Senior Officer
of the Corporation or its Affiliates, or otherwise currently employed by the
Corporation or its Affiliates; (c) does not receive compensation, either
directly or indirectly, from the Corporation or its Affiliates, for services
rendered as a consultant or in any capacity, other than as a director, except
for an amount that does not exceed the dollar amount for which disclosure would
be required to Rule 404(a) of Regulation S-K under the Securities and Exchange
Commission Regulations; and (d) does not possess an interest in any other
transaction for which disclosure would be required pursuant to Rule 404(a) of
Regulation S-K of the Securities and Exchange Commission Regulations.
"Employee" - means any person, including an officer or director, who is
employed by the Corporation or any Affiliate.
"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
"Exercise Price" - means (i) in the case of an Option, the price per Share
at which the Shares subject to such Option may be purchased upon exercise of
such Option and (ii) in the case of a Right, the price per Share
A-1
<PAGE>
(other than the Market Value per Share on the date of exercise and the Offer
Price per Share as defined in Section 10 hereof) which, upon grant, the
Committee determines shall be utilized in calculating the aggregate value which
a Participant shall be entitled to receive pursuant to Sections 9, 10 or 12
hereof upon exercise of such Right.
"Incentive Stock Option" - means an option to purchase Shares granted by
the Committee pursuant to Section 6 hereof which is subject to the limitations
and restrictions of Section 8 hereof and is intended to qualify under
Section 422(b) of the Code.
"Limited Stock Appreciation Right" - means a stock appreciation right with
respect to Shares granted by the Committee pursuant to Sections 6 and 10 hereof.
"Market Value" - means the average of the high and low quoted sales price
on the date in question (or, if there is no reported sale on such date, on the
last preceding date on which any reported sale occurred) of a Share on the
Composite Tape for the New York Stock Exchange-Listed Stocks, or, if on such
date the Shares are not quoted on the Composite Tape, on the New York Stock
Exchange, or, if the Shares are not listed or admitted to trading on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which the Shares are listed or admitted
to trading, or, if the Shares are not listed or admitted to trading on any such
exchange, the mean between the closing high bid and low asked quotations with
respect to a Share on such date on the Nasdaq National Stock Market, or any
similar system then in use, or, if no such quotations are available, the fair
market value on such date of a Share as the Committee shall determine.
"Non-Qualified Stock Option" - means an option to purchase Shares granted
by the Committee pursuant to Section 6 hereof, which is not intended to qualify
under Section 422(b) of the Code.
"Option" - means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" - means any director, advisory director, director emeritus,
officer or employee of the Corporation or any Affiliate who is selected by the
Committee to receive an Award or who is granted an Award pursuant to Section 19
hereof.
"Plan" - means the 1996 Stock Option and Incentive Plan of the
Corporation.
"Related" - means (i) in the case of a Right, a Right which is granted in
connection with, and to the extent exercisable, in whole or in part, in lieu of,
an Option or another Right and (ii) in the case of an Option, an Option with
respect to which and to the extent a Right is exercisable, in whole or in part,
in lieu thereof has been granted.
"Right" - means a Limited Stock Appreciation Right or a Stock Appreciation
Right.
"Shares" - means the shares of common stock, par value $.01 per share, of
the Corporation.
"Senior Officer" - means the Corporation's president, principal financial
officer, principal accounting officer (or if there is no such accounting
officer, the controller), any vice president of the Corporation in charge of a
principal business unit, division or function (such as sales, administration or
finance), any other officer who performs a policy-making function, or any other
person who performs similar policy-making functions for the Corporation.
Officers of the Corporation's Affiliates shall be deemed Senior Officers of the
Corporation if they perform such policy-making functions for the Corporation.
"Stock Appreciation Right" - means a stock appreciation right with respect
to Shares granted by the Committee pursuant to Sections 6 and 9 hereof.
3. ADMINISTRATION. The Plan shall be administered by a Committee
consisting of two or more members, each of whom shall be a Disinterested Person.
The members of the Committee shall be appointed by the Board of Directors of the
Corporation. Except as limited by the express provisions of the Plan, the
Committee shall have sole and complete authority and discretion, subject to
Office of Thrift Supervision Regulations, to (i) select Participants and grant
Awards; (ii) determine the number of Shares to be subject to types of Awards
generally, as
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well as to individual Awards granted under the Plan; (iii) determine the terms
and conditions upon which Awards shall be granted under the Plan; (iv) prescribe
the form and terms of instruments evidencing such grants; and (v) establish from
time to time regulations for the administration of the Plan, interpret the Plan,
and make all determinations deemed necessary or advisable for the administration
of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee. Under applicable OTS regulations, the maximum amount
of awards under the Plan that may be granted to any single employee, to any non-
employee director, and to all non-employee directors as a group is 25%, 5% and
30%, respectively, of the Plan shares.
4. PARTICIPATION IN COMMITTEE AWARDS. The Committee may select from time
to time Participants in the Plan from those directors (including advisory
directors and directors emeriti), officers and employees (other than
Disinterested Persons), of the Corporation or its Affiliates who, in the opinion
of the Committee, have the capacity for contributing to the successful
performance of the Corporation or its Affiliates.
5. SHARES SUBJECT TO PLAN. Subject to adjustment by the operation of
Section 11 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 112,412 Shares. The Shares with respect to which
Awards may be made under the Plan may be either authorized and unissued shares
or issued shares heretofore or hereafter reacquired and held as treasury shares.
Shares which are subject to Related Rights and Related Options shall be counted
only once in determining whether the maximum number of Shares with respect to
which Awards may be granted under the Plan has been exceeded. An Award shall
not be considered to have been made under the Plan with respect to any Option or
Right which terminates and new Awards may be granted under the Plan with respect
to the number of Shares as to which such termination has occurred. Any award
made pursuant to this Plan, which Award is subject to the requirements of Office
of Thrift Supervision Regulations, shall vest in five equal annual installments
with the first installment vesting on the one-year anniversary of the date of
grant, except in the event of death or disability.
In the event Office of Thrift Supervision Regulations are amended (the
"Amended Regulations") to permit shorter vesting periods, any Award made
pursuant to this Plan, which Award is subject to the requirements of such
Amended Regulations, may vest, at the sole discretion of the Committee, in
accordance with such Amended Regulations.
6. GENERAL TERMS AND CONDITIONS OF OPTIONS AND RIGHTS. The Committee
shall have full and complete authority and discretion, subject to Office of
Thrift Supervision Regulations and except as expressly limited by the Plan, to
grant Options and/or Rights and to provide the terms and conditions (which need
not be identical among Participants) thereof. In particular, the Committee
shall prescribe the following terms and conditions: (i) the Exercise Price of
any Option or Right, which shall not be less than the Market Value per Share at
the date of grant of such Option or Right, (ii) the number of Shares subject to,
and the expiration date of, any Option or Right, which expiration date shall not
exceed ten years from the date of grant, (iii) the manner, time and rate
(cumulative or otherwise) of exercise of such Option or Right, and (iv) the
restrictions, if any, to be placed upon such Option or Right or upon Shares
which may be issued upon exercise of such Option or Right. The Committee may,
as a condition of granting any Option or Right, require that a Participant agree
not to thereafter exercise one or more Options or Rights previously granted to
such Participant. Notwithstanding the foregoing and subject to compliance with
applicable Office of Thrift Supervision Regulations, no individual shall be
granted Awards in any calendar year with respect to more than 25% of the total
shares subject to the Plan.
Furthermore, at the time of any Award, the Participant shall enter into an
agreement with the Corporation in a form specified by the Committee, agreeing to
the terms and conditions of the Award and such other matters as the Committee,
in its sole discretion, shall determine (the "Option Agreement").
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7. EXERCISE OF OPTIONS OR RIGHTS.
(a) Except as provided herein, an Option or Right granted under the Plan shall
be exercisable during the lifetime of the Participant to whom such Option
or Right was granted only by such Participant and, except as provided in
paragraphs (c) and (d) of this Section 7, no such Option or Right may be
exercised unless at the time such Participant exercises such Option or
Right, such Participant has maintained Continuous Service since the date
of grant of such Option or Right.
(b) To exercise an Option or Right under the Plan, the Participant to whom
such Option or Right was granted shall give written notice to the
Corporation in form satisfactory to the Committee (and, if partial
exercises have been permitted by the Committee, by specifying the number
of Shares with respect to which such Participant elects to exercise such
Option or Right) together with full payment of the Exercise Price, if any
and to the extent required. The date of exercise shall be the date on
which such notice is received by the Corporation. Payment, if any is
required, shall be made either (i) in cash (including check, bank draft or
money order) or (ii) if permitted by the Committee, by delivering (A)
Shares already owned by the Participant and having a fair market value
equal to the applicable exercise price, such fair market value to be
determined in such appropriate manner as may be provided by the Committee
or as may be required in order to comply with or to conform to
requirements of any applicable laws or regulations, or (B) a combination
of cash and such Shares.
(c) If a Participant to whom an Option or Right was granted shall cease to
maintain Continuous Service for any reason (excluding death, disability
and termination of employment by the Corporation or any Affiliate for
cause), such Participant may, but only within the period of three months
immediately succeeding such cessation of Continuous Service and in no
event after the expiration date of such Option or Right, exercise such
Option or Right to the extent that such Participant was entitled to
exercise such Option or Right at the date of such cessation, provided,
however, that such right of exercise after cessation of Continuous Service
shall not be available to a Participant if the Committee otherwise
determines and so provides in the applicable instrument or instruments
evidencing the grant of such Option or Right. If a Participant to whom an
Option or Right was granted shall cease to maintain Continuous Service by
reason of death or disability then, unless the Committee shall have
otherwise provided in the instrument evidencing the grant of an Option or
Right, all Options and Rights granted and not fully exercisable shall
become exercisable in full upon the happening of such event and shall
remain so exercisable (i) in the event of death for the period described
in paragraph (d) of this Section 7 and (ii) in the event of disability for
a period of three months following such date. If the Continuous Service
of a Participant to whom an Option or Right was granted by the Corporation
is terminated for cause, all rights under any Option or Right of such
Participant shall expire immediately upon the effective date of such
termination.
(d) In the event of the death of a Participant while in the Continuous Service
of the Corporation or an Affiliate or within the three-month period
referred to in paragraph (c) of this Section 7, the person to whom any
Option or Right held by the Participant at the time of his death is
transferred by will or the laws of descent and distribution, or in the
case of an Award other than an Incentive Stock Option, pursuant to a
qualified domestic relations order, as defined in the Code or Title 1 of
ERISA or the rules thereunder may, but only to the extent such Participant
was entitled to exercise such Option or Right upon his death as provided
in paragraph (c) above, exercise such Option or Right at any time within a
period of one year succeeding the date of death of such Participant, but
in no event later than ten years from the date of grant of such Option or
Right. Following the death of any Participant to whom an Option was
granted under the Plan, irrespective of whether any Related Right shall
have theretofore been granted to the Participant or whether the person
entitled to exercise such Related Right desires to do so, the Committee
may, as an alternative means of settlement of such Option, elect to pay to
the person to whom such Option is transferred by will or by the laws of
descent and distribution, or in the case of an Option other than an
Incentive Stock Option, pursuant to a qualified domestic relations order,
as defined in the Code or Title I of ERISA or the rules thereunder, the
amount by which the Market Value per Share on the date of exercise of such
Option shall exceed the Exercise Price of such Option, multiplied by the
number of Shares with respect to which such Option is properly exercised.
Any such settlement of an Option shall be considered an exercise of such
Option for all purposes of the Plan.
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(e) Notwithstanding the provisions of subparagraphs (c) and (d) above, the
Committee may, in its sole discretion, establish different terms and
conditions pertaining to the effect of termination to the extent permitted
by applicable federal and state law.
8. INCENTIVE STOCK OPTIONS. Incentive Stock Options may be granted only
to Participants who are Employees. Any provision of the Plan to the contrary
notwithstanding, (i) no Incentive Stock Option shall be granted more than ten
years from the date the Plan is adopted by the Board of Directors of the
Corporation and no Incentive Stock Option shall be exercisable more than ten
years from the date such Incentive Stock Option is granted, (ii) the Exercise
Price of any Incentive Stock Option shall not be less than the Market Value per
Share on the date such Incentive Stock Option is granted, (iii) any Incentive
Stock Option shall not be transferable by the Participant to whom such Incentive
Stock Option is granted other than by will or the laws of descent and
distribution, and shall be exercisable during such Participant's lifetime only
by such Participant, (iv) no Incentive Stock Option shall be granted to any
individual who, at the time such Incentive Stock Option is granted, owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Corporation or any Affiliate unless the Exercise Price
of such Incentive Stock Option is at least 110 percent of the Market Value per
Share at the date of grant and such Incentive Stock Option is not exercisable
after the expiration of five years from the date such Incentive Stock Option is
granted, and (v) the aggregate Market Value (determined as of the time any
Incentive Stock Option is granted) of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by a Participant in any
calendar year shall not exceed $100,000.
9. STOCK APPRECIATION RIGHTS. A Stock Appreciation Right shall, upon its
exercise, entitle the Participant to whom such Stock Appreciation Right was
granted to receive a number of Shares or cash or combination thereof, as the
Committee in its discretion shall determine, the aggregate value of which (i.e.,
the sum of the amount of cash and/or Market Value of such Shares on date of
exercise) shall equal (as nearly as possible, it being understood that the
Corporation shall not issue any fractional shares) the amount by which the
Market Value per Share on the date of such exercise shall exceed the Exercise
Price of such Stock Appreciation Right, multiplied by the number of Shares with
respect of which such Stock Appreciation Right shall have been exercised. A
Stock Appreciation Right may be Related to an Option or may be granted
independently of any Option as the Committee shall from time to time in each
case determine. At the time of grant of an Option the Committee shall determine
whether and to what extent a Related Stock Appreciation Right shall be granted
with respect thereto, provided, however, and notwithstanding any other provision
of the Plan, that if the Related Option is an Incentive Stock Option, the
Related Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Stock Appreciation Right were
an Incentive Stock Option and as if other rights which are Related to Incentive
Stock Options were Incentive Stock Options. In the case of a Related Option,
such Related Option shall cease to be exercisable to the extent of the Shares
with respect to which the Related Stock Appreciation Right was exercised. Upon
the exercise or termination of a Related Option, any Related Stock Appreciation
Right shall terminate to the extent of the Shares with respect to which the
Related Option was exercised or terminated.
10. LIMITED STOCK APPRECIATION RIGHTS. At the time of grant of an Option
or Stock Appreciation Right to any Participant, the Committee shall have full
and complete authority and discretion to also grant to such Participant a
Limited Stock Appreciation Right which is Related to such Option or Stock
Appreciation Right, provided, however and notwithstanding any other provision of
the Plan, that if the Related Option is an Incentive Stock Option, the Related
Limited Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Limited Stock Appreciation
Right were an Incentive Stock Option and as if all other Rights which are
Related to Incentive Stock Options were Incentive Stock Options. Subject to
vesting requirements contained in 12 C.F.R. Section 563b.3(g)(4) or any
successor regulation, a Limited Stock Appreciation Right shall be exercisable
only during the period beginning on the first day following the date of
expiration of any "offer" (as such term is hereinafter defined) and ending on
the forty-fifth day following such date.
A Limited Stock Appreciation Right shall, upon its exercise, entitle the
Participant to whom such Limited Stock Appreciation Right was granted to receive
an amount of cash equal to the amount by which the "Offer Price per Share" (as
such term is hereinafter defined) or the Market Value on the date of such
exercise, as shall have been provided by the Committee in its discretion at the
time of grant, shall exceed the Exercise Price of such Limited Stock
Appreciation Right, multiplied by the number of Shares with respect to which
such Limited Stock Appreciation Right shall have been exercised. Upon the
exercise of a Limited Stock Appreciation Right, any
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Related Option and/or Related Stock Appreciation Right shall cease to be
exercisable to the extent of the Shares with respect to which such Limited Stock
Appreciation Right was exercised. Upon the exercise or termination of a Related
Option or Related Stock Appreciation Right, any Related Limited Stock
Appreciation Right shall terminate to the extent of the Shares with respect to
which such Related Option or Related Stock Appreciation Right was exercised or
terminated.
For the purposes of this Section 10, the term "Offer" shall mean any
tender offer or exchange offer for Shares other than one made by the
Corporation, provided that the corporation, person or other entity making the
offer acquires pursuant to such offer either (i) 25% of the Shares outstanding
immediately prior to the commencement of such offer or (ii) a number of Shares
which, together with all other Shares acquired in any tender offer or exchange
offer (other than one made by the Corporation) which expired within sixty days
of the expiration date of the offer in question, equals 25% of the Shares
outstanding immediately prior to the commencement of the offer in question. The
term "Offer Price per Share" as used in this Section 10 shall mean the highest
price per Share paid in any Offer which Offer is in effect any time during the
period beginning on the sixtieth day prior to the date on which a Limited Stock
Appreciation Right is exercised and ending on the date on which such Limited
Stock Appreciation Right is exercised. Any securities or property which are
part or all of the consideration paid for Shares in the Offer shall be valued in
determining the Offer Price per Share at the higher of (A) the valuation placed
on such securities or property by the corporation, person or other entity making
such Offer or (B) the valuation placed on such securities or property by the
Committee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
change in the outstanding Shares subsequent to the effective date of the Plan by
reason of any reorganization, recapitalization, cash distribution in excess of
normal dividend levels, stock split, stock dividend, combination or exchange of
shares, merger, consolidation or any change in the corporate structure or Shares
of the Corporation, the maximum aggregate number and class of shares as to which
Awards may be granted under the Plan and the number, class and exercise price of
shares with respect to which Awards theretofore have been granted under the Plan
shall be appropriately adjusted by the Committee, whose determination shall be
conclusive.
12. EFFECT OF MERGER. In the event of any merger, consolidation or
combination of the Corporation (other than a merger, consolidation or
combination in which the Corporation is the continuing entity and which does not
result in the outstanding Shares being converted into or exchanged for different
securities, cash or other property, or any combination thereof) pursuant to a
plan or agreement the terms of which are binding upon all stockholders of the
Corporation (except to the extent that dissenting stockholders may be entitled,
under statutory provisions or provisions contained in the certificate or
articles of incorporation, to receive the appraised or fair value of their
holdings), any Participant to whom an Option or Right has been granted at least
six months prior to such event shall have the right (subject to the provisions
of the Plan and any limitation or vesting period applicable to such Option or
Right), thereafter and during the term of each such Option or Right, to receive
upon exercise of any such Option or Right an amount equal to the excess of the
fair market value on the date of such exercise of the securities, cash or other
property, or combination thereof, receivable upon such merger, consolidation or
combination in respect of a Share over the Exercise Price of such Right or
Option, multiplied by the number of Shares with respect to which such Option or
Right shall have been exercised. Such amount may be payable fully in cash,
fully in one or more of the kind or kinds of property payable in such merger,
consolidation or combination, or partly in cash and partly in one or more of
such kind or kinds of property, all in the discretion of the Committee.
13. ASSIGNMENTS AND TRANSFERS. No Award nor any right or interest of a
Participant under the Plan in any instrument evidencing any Award under the Plan
may be assigned, encumbered or transferred except, in the event of the death of
a Participant, by will or the laws of descent and distribution or in the case of
Awards other than Incentive Stock Options pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or the rules
thereunder.
14. EMPLOYEE RIGHTS UNDER THE PLAN. No director, officer or employee
shall have a right to be selected as a Participant nor, having been so selected,
to be selected again as a Participant and no director, officer, employee or
other person shall have any claim or right to be granted an Award under the Plan
or under any other incentive or similar plan of the Corporation or any
Affiliate. Neither the Plan nor any action taken thereunder shall be construed
as giving any employee any right to be retained in the employ of the Corporation
or any Affiliate.
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15. DELIVERY AND REGISTRATION OF STOCK. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933 or any other Federal, state or local
securities legislation or regulation. It may be provided that any
representation requirement shall become inoperative upon a registration of the
Shares or other action eliminating the necessity of such representation under
such Securities Act or other securities legislation. The Corporation shall not
be required to deliver any Shares under the Plan prior to (i) the admission of
such shares to listing on any stock exchange or other system on which Shares may
then be listed, and (ii) the completion of such registration or other
qualification of such Shares under any state or Federal law, rule or regulation,
as the Committee shall determine to be necessary or advisable.
This Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934. Any provision of the Plan which is inconsistent with said
Rule shall, to the extent of such inconsistency, be inoperative and shall not
affect the validity of the remaining provisions of the Plan.
16. WITHHOLDING TAX. The Corporation shall have the right to deduct from
all amounts paid in cash with respect to the exercise of a Right under the Plan
any taxes required by law to be withheld with respect to such cash payments.
Where a Participant or other person is entitled to receive Shares pursuant to
the exercise of an Option or Right pursuant to the Plan, the Corporation shall
have the right to require the Participant or such other person to pay the
Corporation the amount of any taxes which the Corporation is required to
withhold with respect to such Shares, and may, in its sole discretion, withhold
sufficient Shares to cover the amount of taxes which the Corporation is required
to withhold.
17. AMENDMENT OR TERMINATION. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time,
subject to Office of Thrift Supervision Regulations, but no amendment shall be
made without approval of the stockholders of the Corporation which shall, (i)
increase the aggregate number of Shares with respect to which Awards may be made
under the Plan (except pursuant to Section 4), (ii) materially change the
requirements as to eligibility for participation in the Plan or (iii) change the
class of persons eligible to participate in the Plan; provided, however, that no
such amendment, suspension or termination shall impair the rights of any
Participant, without his consent, in any Award theretofore made pursuant to the
Plan.
18. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective
upon its ratification by stockholders of the Corporation. It shall continue in
effect for a term of ten years unless sooner terminated under Section 17 hereof.
19. INITIAL GRANT. By, and simultaneously with, the ratification of this
Plan by the stockholders of the Corporation, each member of the Board of
Directors of the Corporation and each advisory director or director emeritus at
the time of stockholder ratification of this Plan who is not a full-time
Employee, is hereby granted a ten-year, Non-Qualified Stock Option to purchase
5,620 Shares. Each such Option shall be evidenced by a Non-Qualified Stock
Option Agreement in a form approved by the Board of Directors and shall be
subject in all respects to the terms and conditions of this Plan, which are
controlling. All Options granted pursuant to this section shall vest in five
equal annual installments with the first installment vesting on the first
anniversary of the date of grant, subject to the Director maintaining Continuous
Service with the Corporation or its Affiliates since the date of grant.
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EXHIBIT B
AMB FINANCIAL CORP.
RECOGNITION AND RETENTION PLAN
1. PLAN PURPOSE. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, executive officers and employees of the
Corporation and its Affiliates.
2. DEFINITIONS. The following definitions are applicable to the Plan:
"Award" - means the grant of Restricted Stock pursuant to the terms of
Section 13 of the Plan or by the Committee, as provided in the Plan.
"Affiliate" - means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Bank" - means American Savings, FSB, a savings institution and its
successors.
"Beneficiary" - means the person or persons designated by a Participant to
receive any benefits payable under the Plan in the event of such Participant's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Participant's surviving spouse, if
any, or if none, his estate.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee of the Board of Directors of the
Corporation referred to in Section 6 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, director emeritus, advisory director,
executive officer or employee of the Corporation or any Affiliate. Service
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Corporation or any Affiliate or in
the case of transfers between payroll locations of the Corporation or between
the Corporation, its Affiliates or its successor. With respect to any director
emeritus or advisory director, continuous service shall mean the availability to
perform such functions as may be required of such individuals.
"Corporation" - means AMB Financial Corp., a Delaware corporation.
"Disability" - means any physical or mental impairment which qualifies an
employee, director, director emeritus or advisor director for disability
benefits under any applicable long-term disability plan maintained by the Bank
or an Affiliate, or, if no such plan applies, which renders such employee or
director, in the judgment of the Committee, unable to perform his customary
duties and responsibilities.
"Disinterested Person" - means any member of the Board of Directors of the
Corporation who: (a) is an outside director as defined under Section 162(m) of
the Code and the regulations thereunder; (b) is not currently a Senior Officer
of the Corporation or its Affiliates, or otherwise currently employed by the
Corporation or its Affiliates; (c) does not receive compensation, either
directly or indirectly, from the Corporation or its Affiliates, for services
rendered as a consultant or in any capacity, other than as a director, except
for an amount that does not exceed the dollar amount for which disclosure would
be required to Rule 404(a) of Regulation S-K of the Securities and Exchange
Commission Regulations; and (d) does not possess an interest in any other
transaction for which disclosure would be required pursuant to Rule 404(a) of
Regulation S-K of the Securities and Exchange Commission Regulations.
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"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
"Participant" - means any director, director emeritus, advisory director,
executive officer or employee of the Corporation or any Affiliate who is
selected by the Committee to receive an Award or is granted an Award pursuant to
Section 12.
"Plan" - means the 1996 Recognition and Retention Plan of the Corporation.
"Restricted Period" - means the period of time selected by the Committee
for the purpose of determining when restrictions are in effect under Section 3
hereof with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" - means Shares which have been contingently awarded to
a Participant by the Committee subject to the restrictions referred to in
Section 3 hereof, so long as such restrictions are in effect.
"Senior Officer" - means the Corporation's president, principal financial
officer or principal accounting officer (or if there is no such accounting
officer, the controller), any vice president of the Corporation in charge of a
principal business unit, division or function (such as sales, administration or
finance), any other officer who performs a policy-making function, or any other
person who performs similar policy-making functions for the Corporation.
Officers of the Corporation's Affiliates shall be deemed Senior Officers of the
Corporation if they perform such policy-making functions for the Corporation.
"Shares" - means the common stock, par value $0.01 per share, of the
Corporation.
3. TERMS AND CONDITIONS OF RESTRICTED STOCK. The Committee shall have
full and complete authority, subject to the limitations of the Plan, to grant
Awards and, in addition to the terms and conditions contained in paragraphs (a)
through (f) of this Section 3, to provide such other terms and conditions (which
need not be identical among Participants) in respect of such Awards, and the
vesting thereof, as the Committee shall determine, subject to OTS regulations.
(a) At the time of an Award, the Committee shall establish for each
Participant a Restricted Period which shall not be less than five years,
during which or at the expiration of which, as the Committee shall
determine and provide in the agreement referred to in paragraph (d) of
this Section 3, the Shares awarded as Restricted Stock shall vest, and
subject to any such other terms and conditions as the Committee shall
provide, Shares of Restricted Stock may not be sold, assigned,
transferred, pledged, voted or otherwise encumbered by the Participant,
except as hereinafter provided, during the Restricted Period. Except for
such restrictions, and subject to paragraphs (c) and (e) of this Section 3
and Section 4 hereof, the Participant as owner of such shares shall have
all the rights of a stockholder. The Committee shall have the authority,
in its discretion, subject to compliance with OTS regulations, to
accelerate the time at which any or all of the restrictions shall lapse
with respect to an Award, or to remove any or all of such restrictions,
whenever it may determine that such action is appropriate by reason of
changes in applicable tax or other laws or other changes in circumstances
occurring after the commencement of such Restricted Period.
(b) Except as provided in Section 5 hereof, if a Participant ceases to
maintain Continuous Service for any reason (other than death or
disability), unless the Committee shall otherwise determine, all Shares of
Restricted Stock theretofore awarded to such Participant and which at the
time of such termination of Continuous Service are subject to the
restrictions imposed by paragraph (a) of this Section 3 shall upon such
termination of Continuous Service be forfeited and returned to the
Corporation. If a Participant ceases to maintain Continuous Service by
reason of death, or disability, Restricted Stock then still subject to
restrictions imposed by paragraph (a) of this Section 3 will be free of
those restrictions.
(c) Each certificate in respect of Shares of Restricted Stock awarded under
the Plan shall be registered in the name of the Participant and deposited
by the Participant, together with a stock power endorsed in blank, with
the Corporation and shall bear the following (or a similar) legend:
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The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the 1996 Recognition and Retention Plan of AMB
Financial Corp. Copies of such Plan are on file in the offices of the
Secretary of AMB Financial Corp., 8230 Hohman Avenue, Munster, Indiana
46321.
(d) At the time of the granting of any Award, the Participant shall enter into
an Agreement with the Corporation in a form specified by the Committee,
agreeing to the terms and conditions of the Award and such other matters
as the Committee, in its sole discretion, shall determine (the "Restricted
Stock Agreement").
(e) The payment to the Participant of any dividends declared or paid by the
Corporation on any Restricted Stock shall be deferred and held by the
Corporation for the account of the Participant until the earlier to occur
of (i) the lapsing of the restrictions imposed under paragraph (a) of this
Section 3 or (ii) the forfeiture of such shares under paragraph (b) of
this Section 3. There shall be credited at the end of each year (or
portion thereof) interest on the amount of the Participant's account at a
rate per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends, together with interest accrued thereon,
shall be made upon the earlier to occur of the lapsing of the restrictions
imposed under paragraph (a) of this Section 3 or upon death or disability.
Shares of Restricted Stock shall not be voted by the Participant during
the Restricted Period. Shares of Restricted Stock still subject to
restriction shall be voted by an independent party to be named in the
Restricted Stock Agreement.
(f) At the lapsing of the restrictions imposed by paragraph (a) of this
Section 3, the Corporation shall deliver to the Participant (or where the
relevant provision of paragraph (b) of this Section 3 applies in the case
of a deceased Participant, to his legal representative, beneficiary or
heir) the certificate(s) and stock power deposited with it pursuant to
paragraph (c) of this Section 3 and the Shares represented by such
certificate(s) shall be free of the restrictions referred to in
paragraph (a) of this Section 3.
4. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan and the
number and class of shares with respect to which Awards theretofore have been
granted under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any shares of stock or other securities
received, as a result of any of the foregoing, by a Participant with respect to
Restricted Stock shall be subject to the same restrictions and the
certificate(s) or other instruments representing or evidencing such shares or
securities shall be legended and deposited with the Corporation in the manner
provided in Section 3 hereof.
5. ASSIGNMENTS AND TRANSFERS. During the Restricted Period, no Award nor
any right or interest of a Participant under the Plan in any instrument
evidencing any Award under the Plan may be assigned, encumbered or transferred
except (i) in the event of the death of a Participant, by will or the laws of
descent and distribution, or (ii) pursuant to a qualified domestic relations
order as defined in the Code or Title I of ERISA or the rules thereunder.
6. ADMINISTRATION. The Plan shall be administered by a Committee
consisting of two or more members, each of whom shall be a Disinterested Person.
The members of the Committee shall be appointed by the Board of Directors of the
Corporation. Except as limited by the express provisions of the Plan, the
Committee shall have sole and complete authority and discretion, subject to OTS
regulations, to: (i) select Participants and grant Awards; (ii) determine the
number of Shares to be subject to types of Awards generally, as well as
individual Awards granted under the Plan; (iii) determine the terms and
conditions upon which Awards shall be granted under the Plan; (iv) prescribe the
form and terms of instruments evidencing such grants; and (v) establish from
time to time regulations for the administration of the Plan, interpret the Plan,
and make all determinations deemed necessary or advisable for the administration
of the Plan. Under applicable rules of the OTS, the maximum amount of Awards
under this Plan which may be granted to any single employee, to any single non-
employee director and to all employees as a group may not exceed 25%, 5% and
30%, respectively, of the Plan shares. The Committee may maintain, and update
from time to time as appropriate, a list designating selected directors as
Disinterested Persons.
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The purpose of such list shall be to evidence the status of such individuals as
Disinterested Persons, and the Board of Directors may appoint to the Committee
any individual actually qualifying as a Disinterested Person, regardless of
whether identified as such on said list.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.
7. SHARES SUBJECT TO PLAN. Subject to adjustment by the operation of
Section 4 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 44,965 Shares. The Shares with respect to which
Awards may be made under the Plan may be either authorized and unissued Shares
or issued Shares heretofore or hereafter reacquired and held as treasury Shares.
An Award shall not be considered to have been made under the Plan with respect
to Restricted Stock which is forfeited and new Awards may be granted under the
Plan with respect to the number of Shares as to which such forfeiture has
occurred. Any Award made pursuant to this Plan, which Award is subject to the
requirements of Office of Thrift Supervision Regulations, shall vest in five
equal annual installments with the first installment vesting on the one year
anniversary of the date of grant, except in the event of death or disability in
which case all unvested shares shall vest immediately.
In the event that Office of Thrift Supervision Regulations are amended (the
"Amended Regulations") to permit shorter vesting periods, any Award made
pursuant to this Plan, which Award is subject to the requirements of such
Amended Regulations, may vest, at the sole discretion of the Committee, in
accordance with such Amended Regulations.
The Corporation's obligation to deliver Shares with respect to an Award
shall, if the Committee so requests, be conditioned upon the receipt of a
representation as to the investment intention of the Participant to whom such
Shares are to be delivered, in such form as the Committee shall determine to be
necessary or advisable to comply with the provisions of the Securities Act of
1933 or any other Federal, state or local securities legislation or regulation.
It may be provided that any representation requirement shall become inoperative
upon a registration of the Shares or other action eliminating the necessity of
such representation under such Securities Act or other securities legislation.
The Corporation shall not be required to deliver any Shares under the Plan prior
to (i) the admission of such shares to listing on any stock exchange on which
Shares may then be listed, and (ii) the completion of such registration or other
qualification of such Shares under any state or Federal law, rule or regulation,
as the Committee shall determine to be necessary or advisable.
8. EMPLOYEE RIGHTS UNDER THE PLAN. No director, director emeritus,
advisory director, officer or employee shall have a right to be selected as a
Participant nor, having been so selected, to be selected again as a Participant
and no director, officer, employee or other person shall have any claim or right
to be granted an Award under the Plan or under any other incentive or similar
plan of the Corporation or any Affiliate. Neither the Plan nor any action taken
thereunder shall be construed as giving any officer or employee any right to be
retained in the employ of the Corporation, the Bank or any Affiliate.
9. WITHHOLDING TAX. Upon the termination of the Restricted Period with
respect to any shares of Restricted Stock (or at such earlier time, if any, that
an election is made by the Participant under Section 83(b) of the Code, or any
successor provision thereto, to include the value of such shares in taxable
income), the Corporation may, in its sole discretion, withhold from any payment
or distribution made under this Plan sufficient Shares or withhold sufficient
cash to cover any applicable withholding and employment taxes. The Corporation
shall have the right to deduct from all dividends paid with respect to shares of
Restricted Stock the amount of any taxes which the Corporation is required to
withhold with respect to such dividend payments. No discretion or choice shall
be conferred upon any Participant with respect to the form, timing or method of
any such tax withholding.
10. AMENDMENT OR TERMINATION. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time,
subject to OTS regulations; provided, however, that no such amendment,
suspension or termination shall impair the rights of any Participant, without
his consent, in any Award theretofore made pursuant to the Plan.
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<PAGE>
11. TERM OF PLAN. The Plan shall become effective upon its ratification by
the stockholders of the Corporation. It shall continue in effect for a term of
ten years unless sooner terminated under Section 11 hereof.
This Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934. Any provision of the Plan which is inconsistent with said
Rule shall, to the extent of such inconsistency, be inoperative and shall not
affect the validity of the remaining provisions of the Plan.
12. DIRECTOR AWARDS. By, and simultaneously with, the ratification of this
Plan by the stockholders of the Corporation, each non-employee member of the
Board of Directors of the Corporation or its Affiliates is and each advisory
director and director emeritus hereby granted an Award equal to 2,248 Shares.
Each such Award shall be evidenced by a Restricted Stock Agreement in a form
approved by the Corporation and shall be subject in all respects to the terms
and conditions of this Plan, which are controlling. All Awards granted pursuant
to this Section 12 shall be earned in five equal annual installments, with the
first installment vesting on the one-year anniversary of the date of grant, as
long as the director maintains Continuous Service with the Corporation or its
Affiliates, PROVIDED, HOWEVER, no Award shall be earned in any fiscal year (and
shall be carried over to the subsequent fiscal year) in which the Bank fails to
meet its capital requirements.
B-5
<PAGE>
REVOCABLE PROXY
AMB FINANCIAL CORP.
SPECIAL MEETING OF STOCKHOLDERS
October 23, 1996
The undersigned hereby appoints the Board of Directors of AMB Financial
Corp. (the "Company"), and its survivor, with full power of substitution, to act
as attorneys and proxies for the undersigned to vote all shares of common stock
of the Company which the undersigned is entitled to vote at the Special Meeting
of Stockholders (the "Meeting"), to be held on October 23, 1996 at the main
office of the Company located at 8230 Hohman Avenue, Munster, Indiana, at 10:00
a.m., and at any and all adjournments thereof, as follows:
I. Ratification of the adoption of the Company's 1996 Stock Option and
Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
II. Ratification of the adoption of the Company's Recognition and Retention
Plan.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxies are authorized to vote on such other
matters as may properly come before the Meeting or any adjournments or
postponements thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSALS.
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this Proxy, then the power of such attorneys and proxies shall be
deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from the Company, prior to the
execution of this Proxy, of Notice of the Special Meeting and a Proxy Statement
dated September 12, 1996.
Dated:
-----------------------
- ------------------------------ ----------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------ ----------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears above on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
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PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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