GREAT AMERICAN BANCORP, INC.
1311 South Neil Street
Champaign, Illinois 61820
(217) 356-2265
March 26, 1999
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Great American Bancorp, Inc., the holding company for First Federal Savings Bank
of Champaign-Urbana, which will be held on Tuesday, April 27, 1999, at
9:30 a.m., Central Time, at the offices of First Federal Savings Bank of
Champaign-Urbana, 1311 South Neil Street, Champaign, Illinois 61820.
The attached notice of the annual meeting and the proxy statement describe
the formal business to be transacted at the annual meeting. Directors and
officers of Great American Bancorp, Inc., as well as representatives of Olive
LLP, whom the Company has appointed as independent auditors for the fiscal year
ending December 31, 1999 will be present.
The Board of Directors of Great American Bancorp, Inc. has determined that
the matters to be considered at the annual meeting are in the best interests of
Great American and its stockholders. For the reasons set forth in the proxy
statement, the Board of Directors unanimously recommends that you vote "FOR"
each matter to be considered.
Your cooperation is appreciated since a majority of the common stock must
be represented, either in person or by proxy, to constitute a quorum for the
conduct of business. Whether or not you expect to attend, please sign, date and
return the enclosed proxy card promptly in the postage-paid envelope provided so
that your shares will be represented.
On behalf of the Board of Directors and all of the employees of Great
American Bancorp, Inc. and First Federal Savings Bank of Champaign-Urbana, I
thank you for your continued interest and support.
Sincerely yours,
George R. Rouse
President and Chief
Executive Officer
GREAT AMERICAN BANCORP, INC.
1311 South Neil Street
Champaign, Illinois 61820
(217) 356-2265
__________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 27, 1999
__________________________________
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Annual Meeting") of Great American Bancorp, Inc. (the "Company") will be held
on Tuesday, April 27, 1999, at 9:30 a.m., Central Time, at the offices of
First Federal Savings Bank of Champaign-Urbana (the "Bank"), 1311 South Neil
Street, Champaign, Illinois 61820.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of one director to a three-year term of office;
2. The ratification of the appointment of Olive LLP as independent
auditors of the Company for the fiscal year ending December 31,
1999; and
3. Such other matters as may properly come before the Annual Meeting
and at any adjournments thereof, including whether or not to adjourn
the meeting.
The Board of Directors has established March 2, 1999, as the record date
for the determination of stockholders entitled to receive notice of and to vote
at the Annual Meeting and at any adjournments thereof. Only record holders of
the common stock of the Company as of the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. In the event there are not sufficient votes for a quorum or to approve
or ratify any of the foregoing proposals at the time of the Annual Meeting, the
Annual Meeting may be adjourned in order to permit further solicitation of
proxies by the Company. A list of stockholders entitled to vote at the Annual
Meeting will be available at Great American Bancorp, Inc., 1311 South Neil
Street, Champaign, Illinois 61820, for a period of ten days prior to the Annual
Meeting and will also be available at the meeting itself.
By Order of the Board of Directors
Jane F. Adams
Corporate Secretary
Champaign, Illinois
March 26, 1999
GREAT AMERICAN BANCORP, INC.
_______________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 27, 1999
_______________________
Solicitation and Voting of Proxies
This proxy statement is being furnished to stockholders of Great American
Bancorp, Inc. (the "Company") in connection with the solicitation by the Board
of Directors ("Board of Directors" or "Board") of proxies to be used at the
annual meeting of stockholders (the "Annual Meeting"), to be held on Tuesday,
April 27, 1999, at 9:30 a.m., Central Time, at the offices of First Federal
Savings Bank of Champaign-Urbana, 1311 South Neil Street, Champaign, Illinois
61820 and at any adjournments thereof. The 1998 Annual Report to Stockholders,
including consolidated financial statements for the fiscal year ended December
31, 1998, and a proxy card, accompanies this proxy statement, which is first
being mailed to record holders on or about March 26, 1999.
Regardless of the number of shares of common stock owned, it is important
that record holders of a majority of the outstanding shares of common stock be
represented by proxy or in person at the Annual Meeting. Stockholders are
requested to vote by completing the enclosed proxy card and returning it signed
and dated in the enclosed postage-paid envelope. Stockholders are urged to
indicate their vote in the spaces provided on the proxy card. Proxies solicited
by the Board of Directors of the Company will be voted in accordance with the
directions given therein. Where no instructions are indicated, signed proxy
cards will be voted "FOR" the election of the nominee for director named in this
proxy statement, and "FOR" the ratification of Olive LLP as independent auditors
for the fiscal year ending December 31, 1999.
Other than the matters set forth on the attached Notice of Annual Meeting
of Stockholders, the Board of Directors knows of no additional matters that will
be presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxy holders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting and at any adjournments
thereof, including a motion as to whether or not to adjourn the Annual Meeting.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
stockholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Annual Meeting.
The cost of solicitation of proxies on behalf of the Board of Directors
will be borne by the Company. Proxies may also be solicited personally or by
mail or telephone by directors, officers and other employees of the Company and
its subsidiary, the Bank, without additional compensation therefor. The Company
will also request persons, firms and corporations holding shares in their names,
or in the name of their nominees, which are beneficially owned by others, to
send proxy material to and obtain proxies from such beneficial owners, and will
reimburse such holders for their reasonable expenses in doing so.
Voting Securities
The securities which may be voted at the Annual Meeting consist of shares
of common stock of the Company ("Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Annual Meeting, except as
described below. There is no cumulative voting for the election of directors.
The close of business on March 2, 1999 has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 1,319,883 shares.
In accordance with the provisions of the Company's certificate of
incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. A person or
entity is deemed to beneficially own shares owned by an affiliate of, as well as
by persons acting in concert with, such person or entity. The Company's
certificate of incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit, including determining
whether persons or entities are acting in concert, and (ii) to demand that any
person who is reasonably believed to beneficially own stock in excess of the
Limit supply information to the Company to enable the Board of Directors to
implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after giving
effect to the Limit described above, if applicable) is necessary to constitute
a quorum at the Annual Meeting. In the event that there are not sufficient
votes for a quorum, or to approve or ratify any matter being presented at the
time of the Annual Meeting, the Annual Meeting may be adjourned in order to
permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided by the
Board of Directors enables a stockholder to vote "FOR" the election of the
nominee proposed by the Board of Directors, or to "WITHHOLD AUTHORITY" to vote
for the nominee being proposed. Under Delaware law and the Company's bylaws,
directors are elected by a plurality of votes cast, without regard to either
broker non-votes, or proxies as to which authority to vote for one or more of
the nominees being proposed is withheld.
As to the approval of Olive LLP as independent auditors of the Company and
all other matters that may properly come before the Annual Meeting, by checking
the appropriate box, a stockholder may: (i) vote "FOR" the item; (ii) vote
"AGAINST" the item; or (iii) "ABSTAIN" from voting on the item. Under the
Company's bylaws, unless otherwise required by law, all such matters shall be
determined by a majority of the votes cast, without regard to either broker
non-votes, or proxies marked "ABSTAIN" as to that matter.
Proxies solicited hereby will be returned to the Company's transfer agent,
and will be tabulated by inspectors of election designated by the Board of
Directors, who will not be employed by, or be a director of, the Company or any
of its affiliates. After the final adjournment of the Annual Meeting, the
proxies will be returned to the Company for safekeeping.
Security Ownership of Certain Beneficial Owners
The following table sets forth information as to those persons believed by
the Company to be beneficial owners of more than 5% of the Company's outstanding
shares of Common Stock on the Record Date as disclosed in certain reports
regarding such ownership filed by such persons with the Company and with the
Securities and Exchange Commission ("SEC"), in accordance with Sections 13(d)
and 13(g) of the Securities Exchange Act of 1934, as amended ("Exchange Act").
Other than those persons listed below, the Company is not aware of any person,
as such term is defined in the Exchange Act, that owns more than 5% of the
Company's Common Stock as of the Record Date.
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address Beneficial Percent of
Title of Class of Beneficial Owner Ownership Class
- -------------- ------------------------------ ----------- ----------
<S> <C> <C> <C>
Common Stock First Federal Savings Bank of 157,061 (1) 11.90%
Champaign-Urbana Employee Stock
Ownership Plan ("ESOP")
1311 South Neil Street
Champaign, Illinois 61820
Common Stock Clinton C. Atkins 131,975 (2) 9.97%
2001 Kankakee Drive
Champaign, IL 61821
Common Stock George R. Rouse 85,489 (3) 6.33%
1311 South Neil Street
Champaign, IL 61820
(footnotes on following page)
</TABLE>
_______________________________
(1) Shares of Common Stock were acquired by the ESOP in the Conversion. The
Personnel and Salary Committee of the board of directors administers the
ESOP. The ESOP Trustee, U.S. Bancorp, must vote all allocated shares held
in the ESOP in accordance with the instructions of the participants. As
of March 2, 1999, 93,363 shares had been allocated under the ESOP. Under
the ESOP, unallocated shares will be voted by the ESOP Trustee in a manner
calculated to most accurately reflect the instructions received from
participants regarding the allocated stock so long as such vote is in
accordance with the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(2) Includes 126,575 shares owned directly by Mr. Atkins, 1,200 shares of
unvested stock awards held by a trust established for the 1995 Great
American Bancorp, Inc. Incentive Plan (the "Incentive Plan" and "Incentive
Plan Trust") and 4,200 shares subject to immediately exercisable options
granted under the Incentive Plan.
(3) Includes 33,445 shares held an Individual Retirement Account for Mr. Rouse,
12,842 shares held in the ESOP which have been allocated to Mr. Rouse,
8,210 shares of unvested stock awards held by the Incentive Plan Trust,
200 shares held by Mr. Rouse's spouse and children, and 30,792 shares
subject to immediately exercisable options granted under the Incentive
Plan.
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. ELECTION OF DIRECTOR
The Board of Directors of the Company currently consists of five (5)
directors and is divided into three classes. Currently, each of the members of
the Board of Directors of the Company also serves as a director of the Bank,
with the exception of Mr. Atkins. There are a total of nine directors of the
Bank. Directors of the Company are elected for staggered terms of three years
each, with the term of office of only one of the three classes of directors
expiring each year. Directors serve until their successors are elected and
qualified.
Mr. James S. Acheson, a director of the Company since its inception in
1995 and a director of the Bank since 1977 will be retiring from both Boards of
Directors effective with the Annual Meeting. Mr. Acheson's retirement
corresponds with the completion of his terms with both Boards of Directors. The
nominee proposed for election at the Annual Meeting, who, if elected, will
replace Mr. Acheson on the Board of Directors of the Company, is Jack B.
Troxell, who has served as a director of the Bank since 1997.
In the event that Mr. Troxell is unable to serve or declines to serve for
any reason, it is intended that the proxies will be voted for the election of
such other person as may be designated by the present Board of Directors. The
Board of Directors has no reason to believe that Mr. Troxell will be unable or
unwilling to serve. Unless authority to vote for the nominee is withheld, it is
intended that the shares represented by the enclosed proxy card, if executed and
returned, will be voted "FOR" the election of the nominee proposed by the Board
of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE
NOMINEE NAMED IN THIS PROXY STATEMENT.
Information with Respect to the Nominee, Continuing Directors and Certain
Executive Officers
The following table sets forth, as of the Record Date, the names of the
nominee, continuing directors and "named executive officers" of the Company, as
defined below, their ages, a brief description of their recent business
experience, including present occupations and employment, certain directorships
held by each, the year in which each became a director of the Bank, and the year
in which their terms (or in the case of the nominee, proposed term) as director
of the Company expire. The table also sets forth the amount of Common Stock and
the percent thereof beneficially owned by each director and named executive
officer and all directors and executive officers as a group as of the Record
Date.
<TABLE>
<CAPTION>
Shares of
Name and Principal Expiration Common Stock
Occupation at Present Director of Term as Beneficially Percent of
and for Past Five Years Age Since(1) Director Owned(2)(3)(4) Class
----------------------- --- -------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C>
NOMINEE
Jack B. Troxell 54 1997 2002 3,030 0.23%
Owner and President of C-U
Liquor LTD, retail beverage
stores. Director of the Bank
since 1997.
CONTINUING DIRECTORS
Clinton C. Atkins 53 1984 2000 131,975 9.97%
Chairman of Hobbico Inc., a
Hobby retailer and supplier,
Chairman of Herr's, Inc., a craft
wholesale retailer, and owner of
The Atkins Group, North Pointe
Development and Stone Creek
Development, all real estate
development concerns.
Ronald Kiddoo 56 1987 2000 17,000 1.28%
Chairman of the Board and Chief
Investment Officer, Cozad Asset
Management, Inc., an investment
advisory concern; Mr. Kiddoo
also serves as a director of the
Bank's wholly-owned subsidiary
Park Avenue Service Corporation,
("PASC").
Dr. Morgan C. Powell 63 1977 2001 8,200 0.62%
Chairman of the Board of the
Company; self-employed
orthodontist. Director of PASC.
<CAPTION>
Shares of
Name and Principal Expiration Common Stock
Occupation at Present Director of Term as Beneficially Percent of
and for Past Five Years Age Since(1) Director Owned(2)(3)(4) Class
----------------------- --- -------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C>
George R. Rouse (5) 48 1982 2001 85,489 6.33%
President and Chief Executive
Officer of the Company;
President of the Bank and
PASC.
Stock Ownership of all Directors
and Executive Officers
as a Group (12 persons)(6)(7) -- -- -- 331,992 23.84%
</TABLE>
_______________________________
(1) Includes years of service as a director of the Bank.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting or dispositive power as to shares reported
herein (except as noted).
(3) The shares shown include the following unvested stock awards granted under
the Great American Bancorp, Inc. 1995 Incentive Plan ("Incentive Plan"):
Mr. Atkins, 1,200 shares; Mr. Kiddoo, 1,200 shares; Dr. Powell, 1,200
shares; Mr. Rouse, 8,210 shares; and Mr. Troxell, 1,449 shares. Stock
awards granted under the Incentive Plan vest in five equal annual
installments from the grant date. The shares granted to Director's
Atkins, Kiddoo, Powell and Rouse were awarded on February 14, 1996 and the
shares granted to Mr. Troxell were awarded on March 10, 1997.
(4) The shares shown include the following shares subject to options which were
granted under the Incentive Plan and are currently exercisable or
exercisable within 60 days: Mr. Atkins, 4,200 shares; Mr. Kiddoo, 4,200
shares; Dr. Powell, 4,200 shares; Mr. Rouse, 30,792 shares; and Mr.
Troxell, 1,119 shares. The shares shown do not include the following
shares subject to options which were granted under the Incentive Plan and
are not currently exercisable or exercisable within 60 days: Mr. Atkins,
2,800 shares; Mr. Kiddoo, 2,800 shares; Dr. Powell, 2,800 shares; Mr.
Rouse, 20,527 shares; and Mr. Troxell, 4,475 shares. Stock options
granted under the Incentive Plan vest in five equal annual installments
from the grant date. The options granted to Director's Atkins, Kiddoo,
Powell and Rouse were awarded on February 14, 1996, while the options
granted to Mr. Troxell were awarded on March 10, 1997.
(5) Mr. Rouse is the sole Named Executive Officer of the Company.
(6) The shares shown include a total of 23,597 shares of common stock
granted under the Incentive Plan, and a total of 72,549 shares subject to
options which are currently exercisable or exercisable within 60 days granted
under the Incentive Plan. The shares shown exclude a total of 59,552
shares subject to options which are not currently exercisable or
exercisable within 60 days granted under the Incentive Plan.
(7) Includes directors and executive officers of the Bank.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers (as
defined in regulations promulgated by the SEC thereunder) and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the SEC. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on a review of copies of such reports of ownership furnished
to the Company, or written representations that no forms were necessary, the
Company believes that during the past fiscal year all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with except that one report containing one transaction made
by Mr. Acheson, in which securities Mr. Acheson is deemed to have a direct
pecuniary interest, was not filed on a timely basis on Form 4. This transaction
was subsequently reported.
Meetings of the Board of Directors and Committees of the Board of Directors
The Board of Directors conducts its business through meetings of the Board
of Directors and through activities of its committees. The Board of Directors
meets monthly and may have additional meetings as needed. During fiscal 1998,
the Board of Directors of the Company held 13 meetings. All of the directors of
the Company attended at least 75% of the total number of the Company's Board
meetings held and committee meetings on which such directors served during
fiscal 1998.
The Boards of Directors of the Company and the Bank maintain committees,
the nature and composition of which are described below:
Audit Committee. The Audit Committee of the Company consists of Messrs.
Kiddoo (Chairman) and Atkins and Dr. Powell, all of whom are Outside Directors.
This committee meets quarterly or as called by the committee chairman. The
purpose of this committee is to provide assurance that financial disclosures
made by management portray the financial condition and results of operations.
The committee also maintains a liaison with the outside auditors and reviews
the adequacy of internal controls. The Audit Committee met 2 times in fiscal
1998.
Nominating Committee. The Company's Nominating Committee for the 1999
Annual Meeting consists of Messrs. Acheson, Atkins and Kiddoo. The committee
considers and recommends the nominees for director to stand for election at the
Company's annual meeting of stockholders. The Company's bylaws also provide for
stockholder nominations of directors. These provisions require such nominations
to be made pursuant to timely notice in writing to the Secretary of the Company.
The stockholder's notice of nomination must contain all information relating to
the nominee which is required to be disclosed by the Company's bylaws and by the
Exchange Act. The Nominating Committee met on February 8, 1999.
Compensation/Benefits Committee. The Compensation/Benefits Committee of
the Company consists of Messrs. Powell (Chairman), Acheson, Kiddoo and Atkins.
This committee meets to establish compensation for the Chief Executive Officer,
approves the compensation of senior officers and various compensation and
benefits to be paid to employees and to review the incentive compensation
programs when necessary. The Compensation/Benefits Committee met 1 time in
fiscal 1998.
Directors' Compensation
Directors' Fees. For fiscal 1998, directors of the Company and directors
of the Bank received a monthly fee of $500 per month for serving on each board,
and no additional fees were paid for serving on board committees. The Chairman
of the Board received a monthly fee of $500 in addition to any board fees.
Incentive Plan. The Company maintains the Great American Bancorp, Inc.
1995 Incentive Plan. Under the Incentive Plan, each Outside Director was
granted non-statutory stock options to purchase 7,000 shares of Common Stock and
Stock Awards for 3,000 shares of Common Stock on February 14, 1996. The
Incentive Plan previously provided that to the extent options for shares are
available for grant under the Incentive Plan, each subsequently elected Outside
Director would be granted non-statutory stock options to purchase 2,791 shares
of Common Stock and Stock Awards for 316 shares of Common Stock. In January
1997, the Incentive Plan was amended to, among other things, remove the
limitations on the amount of common stock and stock options which may be awarded
to subsequently elected outside directors. On March 10, 1997, three newly
elected Outside Directors of the Bank were each granted non-statutory options to
purchase 5,594 shares of Common Stock and Stock Awards for 1,811 shares. All
options granted to Directors under the Incentive Plan were granted with an
exercise price equal to the fair market value of the Company's common stock as
of the date of grant. Unless otherwise accelerated, the options and Stock
Awards granted to Outside Directors vest 20% per year over a five-year period
and will continue to vest each year in which the Outside Director remains on the
Board or serves as a consultant or advisory director. Upon a change in control,
death, or disability, all unvested Stock Awards or unexercisable options will
vest immediately.
Executive Compensation
Summary Compensation Table. The following table shows, for the fiscal
years ended December 31, 1998, 1997, and 1996, the cash compensation paid by the
Bank, as well as certain other compensation paid or accrued for those years, to
the chief executive officer and executive officers of the Company and the Bank
who received salary and bonuses in excess of $100,000 in fiscal year 1998
("Named Executive Officer").
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------
Annual Compensation(1) Awards Payouts
------------------------------------- -------------------------------------
Other Restricted Securities
Name and Annual Stock Underlying LTIP All Other
Principal Bonus Compensation Awards Options/ Payouts Compensation
Positions Year Salary($)(1) ($)(1) ($)(2) ($)(3) SARs(#)(4) ($)(5) ($)(6)
- --------------- ---- ------------ -------- ------------ ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George R. Rouse 1998 $172,100 $6,500 -- -- -- -- $41,216
President 1997 167,500 6,200 -- -- -- -- 61,028
1996 198,250 14,750 -- $287,392 51,319 -- 96,548
</TABLE>
(footnotes on following page)
_______________________________
(1) Under Annual Compensation, the column titled "Salary" includes directors
fees of $14,000, $12,500 and $12,000 in fiscal 1998, 1997 and 1996,
respectively. In November 1995, the Company changed its fiscal year end
from September 30 to December 31, and accordingly, salary, bonus and
director fees for the three months ended December 31, 1995 are included in
the total amounts for 1996.
(2) There were no (a) perquisites over the lesser of $50,000 or 10% of the
individual's total salary and bonus for the year; (b) payments of
above-market preferential earnings on deferred compensation; (c) payments
of earnings with respect to long-term incentive plans prior to settlement
or maturation; (d) tax payment reimbursements; or (e) preferential
discounts on stock.
(3) Pursuant to the Incentive Plan, Mr. Rouse held an aggregate of 20,528
shares of common stock which had a market value of $14 per share on the
effective date of grant, February 14, 1996. Awards to Mr. Rouse vest in
five equal annual installments, the first of which commenced on February
14, 1997, the first anniversary date of the effective date of the award.
All awards vest immediately upon termination of employment due to death,
disability or change of control. As of December 31, 1998, 8,212 shares of
stock awarded to Mr. Rouse under the Incentive Plan had vested. As of
December 31, 1998, the market value of the 12,316 unvested shares held by
Mr. Rouse was $178,582.
(4) Includes options awarded under the Incentive Plan. Options granted to
Mr. Rouse become exercisable in five equal annual installments, the first of
which commenced on February 14, 1997, the first anniversary date of the
grant. To the extent not already exercisable, the options become
exercisable upon death, disability or a change of control. As of December
31, 1998, 20,526 options granted to Mr. Rouse were exercisable. See
"Incentive Plan."
(5) For 1998, 1997 and 1996, the Bank had no long-term incentive plans,
accordingly, there were no payouts or awards under any long-term incentive
plan.
(6) Reflects 2,944 shares allocated to Mr. Rouse under the Bank's Employee
Stock Ownership Plan for 1998, 3,380 shares allocated in 1997 and 6,518
shares allocated in 1996.
Employment Agreements. The Bank and the Company have entered into
employment agreements with Mr. Rouse (the "Executive"). These employment
agreements are intended to ensure that the Bank and the Company will be able to
maintain a stable and competent management base. The continued success of the
Bank and the Company depends, to a significant degree, on the skills and
competence of Mr. Rouse.
The Bank's and the Company's employment agreements (collectively, the
"Employment Agreements") provide for a three-year term. The Company's
employment agreement provides for automatic daily extensions such that the
remaining term of the agreement shall be three years unless written notice of
non-renewal is provided by either the Board of Directors or the Executive.
The Bank's employment agreement provides that, commencing on the first
anniversary date and continuing each anniversary date thereafter, the Board of
Directors may extend the agreement for an additional year so that the remaining
term shall be three years, unless written notice of non-renewal is given by the
Board of Directors after conducting a performance evaluation of the Executive.
The Employment Agreements provide that the Executive's base salary will be
reviewed annually. In this regard, the current base salary of Mr. Rouse is
$161,200. In addition to base salary, the Employment Agreements provide for,
among other things, participation in stock benefit plans and other fringe
benefits applicable to executive personnel. The Employment Agreements provide
for termination of the Executive by the Bank or the Company for cause as defined
in the Employment Agreements at any time. In the event the Bank or the Company
chooses to terminate the Executive's employment for reasons other than for
cause, or in the event of the Executive's resignation from the Bank and the
Company upon (i) failure to re-elect the Executive to his current offices, (ii)
a material change in the Executive's functions, duties or responsibilities,
(iii) a relocation of the Executive's principal place of employment by more
than fifty miles, (iv) liquidation or dissolution of the Bank or the Company, or
(v) a breach of the Employment Agreement by the Bank or the Company, the
Executive or, in the event of death, his beneficiary would be entitled to an
amount equal to the remaining salary payments under the Employment Agreement
and the contributions that would have been made on the Executive's behalf to any
employee benefit plans of the Bank or the Company during the remaining term of
the Agreements. The Bank and the Company would also continue the Executive's
life, health and disability coverage for the remaining term of the Employment
Agreements.
Under the agreements, if termination, voluntary or involuntary, follows a
change in control of the Bank or the Company, as defined in the Employment
Agreements, the Executive or, in the event of death, his beneficiary, would be
entitled to a severance payment equal to the greater of (i) the payments due for
the remaining terms of the agreement or (ii) three times the average of the five
preceding years' annual compensation. In addition, the Bank and the Company
would continue the Executive's life, health, and disability coverage for
thirty-six months. Payments to the Executive under the Bank's employment
agreement are guaranteed by the Company in the event that payments or benefits
are not paid by the Bank.
Payments and benefits under the Employment Agreements together with
payments from other benefit plans may constitute an excess parachute payment
under Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), resulting in the imposition of an excise tax on the recipient and
denial of the deduction for such excess amount to the Company and the Bank.
In the event of Mr. Rouse's termination following a change in control,
based solely upon the salary, bonus and other items of cash compensation
received by or payable to Mr. Rouse during 1998, Mr. Rouse would receive
approximately $535,800 in severance payments under the Employment Agreement.
Such amount does not include the effect of any non-cash benefits provided for
under the Employment Agreements, such as common stock or options which vested
or were awarded to Mr. Rouse in 1998.
Incentive Plan.
The Company maintains the Incentive Plan which provides discretionary
awards of common stock and options to purchase common stock to officers and key
employees as determined by a committee of non-employee directors. There were no
grants of options or stock appreciation rights ("SAR's) under the Incentive Plan
to the Named Executive Officers for fiscal 1998.
The following table provides certain information with respect to the
number of shares of Common Stock represented by outstanding options held by the
Named Executive Officer as of March 2, 1999. Also reported are the values for
"in-the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the year end price of the Common
Stock. There were no exercises of stock options or SARs during fiscal 1998 by
the Named Executive Officer.
<TABLE>
<CAPTION>
FISCAL YEAR END OPTION/SAR VALUES
Securities Underlying Number of Value of Unexercised In-the-Money
Unexercised Options/SARs at Fiscal Year Options/SARs at Fiscal Year End (S)(1)
End (#)
--------------------------------------- ---------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
George R. Rouse 30,792 20,527 15,396 10,264
</TABLE>
_______________________________
(1) Market value of underlying securities at fiscal year end ($14.50) minus
the exercise or base price ($14) per share. Options vest at an annual rate of
20% of the original amount granted beginning on February 14, 1997, unless
otherwise accelerated.
Transactions with Certain Related Persons
It is the policy of the Bank to make loans to directors and executive
officers on their principal residence. The Bank also makes available to each
director of the Bank and each director of the Company an approved line of credit
in an amount up to $100,000. The directors may then apply for a loan from the
Bank which may be approved by the Bank's loan officers without further Board
approval, provided that terms of such loan applied for thereunder, including the
collateral securing such loan, are consistent with the Bank's loan underwriting
policies for loans generally available to its customers. The Bank's policy
provides that all loans made by the Bank to its directors and officers,
including the lines of credit to directors, are made in the ordinary course of
business, are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectibility or
present other unfavorable features. As of December 31, 1998, all outstanding
loans to directors and executive officers were made by the Bank in the ordinary
course of business, were not made with favorable terms, and did not involve more
than the normal risk of collectibility or present other unfavorable features.
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's Board of Directors has appointed Olive LLP as independent
auditors for the Bank and the Company for the year ending December 31, 1999,
subject to ratification of such appointment by the stockholders.
Representatives of Olive LLP will be present at the Annual Meeting. They
will be given an opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions from stockholders present
at the Annual Meeting.
Unless marked to the contrary, the shares represented by the enclosed
proxy card will be voted "FOR" ratification of the appointment of Olive LLP as
the independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF OLIVE LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
Stockholder Proposals
To be considered for inclusion in the Company's proxy statement and form
of proxy relating to the 2000 Annual Meeting of Stockholders, a stockholder
proposal must be received by the Secretary of the Company at the address set
forth on the first page of this Proxy Statement not later than November 27,
1999. Any such proposal will be subject to 17 C.F.R. 240.14a-8 of the
Rules and Regulations under the Securities Exchange Act of 1934, as amended.
Notice of Business to be Conducted at an Annual Meeting
The bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an Annual Meeting. The
stockholder must give written advance notice to the Secretary of the Company
not less than ninety (90) days before the date originally fixed for such
meeting, provided, however, that in the event that less than one hundred (100)
days notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be received
not later than the close of business on the tenth day following the date on
which the Company's notice to stockholders of the annual meeting date was
mailed or such public disclosure was made. In order for notice of a
stockholder proposal for consideration at the Company's 2000 Annual Meeting
to be timely, the Company would have to receive such notice no later than
January 28, 2000, assuming that the 2000 Annual Meeting is held on
April 27, 2000 and the Company provides at least 100 days notice or public
disclosure of the date of the Annual Meeting. The advance notice by
stockholders must include the stockholder's name and address, as they appear on
the Company's record of stockholders, a brief description of the proposed
business, the reason for conducting such business at the Annual Meeting, the
class and number of shares of the Company's capital stock that are beneficially
owned by such stockholder and any material interest of such stockholder in the
proposed business. In the case of nominations to the Board of Directors,
certain information regarding the nominee must be provided. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement or the proxy relating to an annual meeting any stockholder proposal
which does not meet all of the requirements for inclusion established by the
SEC in effect at the time such proposal is received.
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought
before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters
in accordance with their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting.
By Order of the Board of Directors
Jane F. Adams
Corporate Secretary
Champaign, Illinois
March 26, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
