SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FNBH BANCORP, INC.
(Name of registrant as specified in its charter)
(Name of person(s) filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee Paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule, or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
PRELIMINARY PROXY STATEMENT
DATED FEBRUARY 26, 1998
FNBH BANCORP, INC.
101 East Grand River
Howell, Michigan 48844-0800
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 22, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of FNBH Bancorp, Inc. (the "Corporation"), a Michigan corporation,
will be held on April 22, 1998, at 7 p.m. at the main office of First National
Bank in Howell, 101 E. Grand River, Howell, Michigan, for the following
purposes:
1. To elect four (4) directors, each to hold office for three
year terms.
2. To approve an amendment to the Corporation's Articles of
Incorporation to increase the number of authorized shares from
2,100,000 to 4,200,000.
3. To approve the adoption of the Corporation's Long-Term
Incentive Plan.
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed March 1, 1998, as the record date for the
determination of shareholders entitled to notice of and to vote at the meeting
or any adjournment thereof.
By order of the Board of Directors
BARBARA J. NELSON, Secretary
Your vote is important. Even if you plan to attend the meeting, please
date and sign the enclosed proxy form, indicate your choice with
respect to the matters to be voted upon, and return it promptly in the
enclosed envelope. Note that if the stock is held in more than one
name, that all parties must sign the proxy form.
Dated: March , 1998
<PAGE>
PRELIMINARY PROXY STATEMENT
FNBH BANCORP, INC.
101 E. Grand River
Howell, Michigan 48844-0800
PROXY STATEMENT
This Proxy Statement and the enclosed proxy are furnished in connection
with the solicitation of proxies by the Board of Directors of FNBH Bancorp, Inc.
(the "Corporation"), a Michigan bank holding Corporation, to be voted at the
Annual Meeting of Shareholders of the Corporation to be held on Wednesday, April
22, 1998, at 7 p.m., at the main office of First National Bank in Howell (the
"Bank"), 101 E. Grand River, Howell, Michigan, or at any adjournment or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders and in this Proxy Statement.
VOTING AT THE MEETING
This Proxy Statement has been mailed on or about March , 1998, to all
holders of record of common stock of the Corporation as of the record date. The
Board of Directors of the Corporation has fixed the close of business on March
1, 1998, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting of Shareholders and any adjournment
thereof. The Corporation has only one class of common stock, of which there are
presently 1,575,000 shares outstanding. Each outstanding share will entitle the
holder thereof to one vote on each separate matter presented for vote at the
meeting. Votes cast at the meeting and submitted by proxy are counted by the
inspectors of the meeting who are appointed by the Corporation.
If a Proxy in the enclosed form is properly executed and returned to the
Corporation, the shares as represented by the Proxy will be voted at the Annual
Meeting and any adjournment thereof. If a shareholder specifies a choice, the
Proxy will be voted as specified. If no choice is specified, the shares
represented by the Proxy will be voted for the election of all of the nominees
named in the Proxy Statement, for the proposals to increase the Corporation's
authorized shares and the adoption of the Corporation's Long-Term Incentive
Plan, and in accordance with the judgment of the persons named as proxies with
respect to any other matter which may come before the meeting. A proxy may be
revoked before exercise by notifying the Chairman of the Board in writing or in
open meeting, by submitting a proxy of a later date or attending the meeting and
voting in person. All shareholders are encouraged to date and sign the enclosed
proxy form, indicate your choice with respect to the matters to be voted upon,
and return it to the Corporation.
ELECTION OF DIRECTORS
The Articles of Incorporation of the Corporation provide for the division
of the Board of Directors into three (3) classes of nearly equal size with
staggered three year terms of office. Four persons have been nominated for
election to the Board, each to serve three (3) year terms expiring at the 2001
Annual Meeting of Shareholders. The Board has nominated Rebecca S. English, W.
Rickard Scofield, Barbara D. Martin, and Randolph E. Rudisill to serve as
directors for three year terms. All the nominees except Mr. Rudisill are
incumbent directors previously elected by the Corporation's shareholders. Mr.
Rudisill was appointed as a director by the Board in September 1997.
Unless otherwise directed by a shareholder's proxy, the persons named as
proxy holders in the Corporation's proxy will vote for the nominees named above.
In the event any of such nominees shall become unavailable, which is not
anticipated, the Board of Directors in its discretion may designate substitute
nominees, in which event the enclosed proxy will be voted for such substitute
nominees. Proxies cannot be voted for a greater number of persons than the
number of nominees named.
A plurality of the votes cast at the meeting is required to elect the
nominees as directors of the Corporation. As such, the four individuals who
receive the largest number of votes cast at the meeting will be elected as
directors. Shares not voted at the meeting, whether by abstention, broker
nonvote, or otherwise, will not be treated as votes cast at the meeting.
The Board of Directors recommends a vote FOR the election of all the
persons nominated by the Board.
<PAGE>
INFORMATION ABOUT DIRECTORS AND DIRECTOR NOMINEES
The following information relating to the principal occupation or
employment has been furnished to the Corporation by the respective directors and
director nominees. Each of those persons have been engaged in the occupations
stated below for more than five years.
<TABLE>
Director of
Name Principal Occupation Age Corporation Since*
Nominees for Election as Directors for Terms Expiring in 2001
<S> <C> <C> <C>
Rebecca S. English CPA, Partner in Bredernitz, Wagner & Co. 45 1993
W. Rickard Scofield President of May & Scofield, Inc., a manufacturer 45 1992
of automotive subassemblies, since 1993, and
Vice President prior to that time
Randolph E. Rudisill President of Thermofil, Inc., a leading 53 1997
manufacturer of reinforced thermoplastics
Barbara D. Martin President and CEO of Corporation and Bank 51 1984
Directors Whose Terms Expire in 2000
Donald K. Burkel Co-owner of Oasis Truck Plaza, a full facility 62 1991
truck plaza, and Fowlerville Farms, Inc., a
restaurant, gasoline and gift shop operation
Harry E. Griffith Realtor, President of Crandall Realty, Inc., a real 67 1973
estate brokerage and appraisal corporation
Gary R. Boss President of Boss Engineering Co., an engineering 55 1995
and survey corporation
Directors Whose Terms Expire in 1999
R. Michael Yost Manager, Group Operations and Administration, 49 1997
AAA, MI.
Dona Scott Laskey Attorney with Sullivan, Ward, Bone, Tyler & 54 1973
Asher, P.C.
Charles N. Holkins C. N. Holkins & Son, a hardware and lumber sales 58 1984
company
</TABLE>
* The Corporation was formed and organized in 1988; dates preceding 1988
reference status as a director of the Bank. All persons who are
directors of the Corporation are also directors of the Bank.
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<PAGE>
The Audit Committee, comprised of Rebecca English, Dona Laskey, Gary Boss,
and Roy Westran, met on three occasions during 1997. Its primary duties and
responsibilities include annually recommending to the Board of Directors an
independent public accounting firm to be appointed auditors of the Corporation
and the Bank, reviewing the scope and fees for the audit, reviewing all the
reports received from the independent public accountants, and coordinating
matters with the internal auditing department.
The Nominating Committee of the Board, comprised of Messrs. Scofield,
Burkel, Yost, and Westran, Ms. Martin, and Ms. Laskey, met twice during 1997.
This Committee is responsible for reviewing and making recommendations as to the
composition of the Board of Directors, to recommend nominees for election to the
Board and recommends individuals to fill vacancies which may occur between
annual meetings. Under the terms of the Corporation's Restated Articles of
Incorporation, the Committee is authorized to consider Board nominations for
qualified persons recommended by shareholders provided that any recommendation
is submitted in writing, on or before the 60th day preceding the anniversary
date on the previous annual meeting. The recommendation must include a
description of the proposed nominee, his or her consent to serve as a director
and other biographical data on the nominee.
The Board also has a Compensation Committee comprised of Messrs. Griffith,
Yost, Westran, and Holkins and Ms. English. This Committee met six times in
1997. This Committee approves the compensation and benefits of senior management
of the Bank and Corporation. The Board also has other committees, such as the
Finance Committee and the Executive Committee.
The Board of Directors of the Corporation held a total of seven meetings
during 1997. No director attended less than 75% of the aggregate number of
meetings of the Board of Directors and the committees on which he or she served.
There are no family relationships between or among the directors, nominees or
executive officers of the Corporation.
REMUNERATION OF DIRECTORS
Directors are paid $250 for each Board meeting held and $250 for each Board
committee meeting attended; however, no fees are paid to employees of the Bank
who serve on the Board. Members of the Board of Directors of the Bank are paid
at the rate of $700 per Board meeting held, and $250 for each Board committee
meeting attended.
PROPOSED INCREASE IN AUTHORIZED COMMON STOCK
The Company's Board of Directors has proposed that Article III of the
Company's Articles of Incorporation (the "Articles") be amended to read as
follows:
The total authorized capital stock of the corporation is four
million two hundred thousand (4,200,000) shares of Common
Stock without par value, all of one class.
This amendment would increase the Company's authorized common stock from
2,100,000 shares to 4,200,000 shares of common stock, no par value. The purpose
of the amendment is to provide additional shares of common stock for future
issuance. As of March 1, 1998, there were 1,575,000 shares of common stock
issued and outstanding.
The Board of Directors believes it desirable to increase the authorized
number of shares of common stock in order to provide the Company with adequate
flexibility in corporate planning and strategies. The availability of additional
common stock for issuance could be used in connection with a number of purposes,
including corporate financing, future acquisitions, and other corporate purposes
such as the issuance of stock dividends and stock options. There are currently
no agreements or understandings regarding the issuance of any of the additional
shares of common stock that would be available if this proposal is approved.
Such additional authorized shares may be issued for such purposes and for such
consideration as the Board of Directors may determine without further
shareholder approval, unless such action is required by applicable law or the
rules of any stock exchange on which the Company's securities may be listed.
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<PAGE>
The additional shares of Common Stock for which authorization is sought
would be part of the existing class of common stock, and, to the extent issued,
would have the same rights and privileges as the shares of common stock
presently outstanding. Ownership of shares of the Company's common stock confers
no preemptive rights.
The increase in the authorized but unissued shares of common stock which
would result from adoption of the proposed amendment could have a potential
anti-takeover effect with respect to the Company, although management is not
presenting the proposal for that reason and does not presently anticipate using
the increased authorized shares for such a purpose. The potential anti-takeover
effect of the proposed amendment arises because it would enable the Company to
issue additional shares of common stock up to the total authorized number with
the effect that the shareholdings and related voting rights of then existing
shareholders would be diluted to an extent proportionate to the number of
additional shares issued.
The affirmative vote of the holders of a majority of the outstanding shares
of common stock of the Company is required for approval of the proposed
amendment. Unless otherwise directed by a shareholder's proxy, the persons named
as proxy voters in the accompanying proxy will vote FOR the amendment.
The Board of Directors recommends a vote "FOR" the approval of the proposed
amendment to the Company's Articles of Incorporation to increase the number of
shares of authorized common stock.
PROPOSED ADOPTION OF THE FNBH BANCORP, INC.
LONG-TERM INCENTIVE PLAN
On November 13, 1997, the Board of Directors adopted the FNBH Bancorp, Inc.
Long-Term Incentive Plan (the "Plan"), subject to approval by the Corporation's
shareholders. The following summary of the Plan is subject to the specific
provisions contained in the complete text of the Plan, set forth in Appendix I
to this Proxy Statement.
Purpose. The purpose of the Plan is to promote the long-term success of the
Company for the benefit of its shareholders through stock-based compensation, by
aligning the personal interests of the Company's key employees with those of its
shareholders. The Plan is designed to allow key employees of the Company and
certain of its subsidiaries to participate in the Company's future, as well as
to enable the Company to attract, retain, and reward such employees.
Administration. The Plan will be administered by the Compensation Committee
of the Board of Directors (the "Committee"). Each member of the Committee is
required to be a "nonemployee director" within the meaning of Rule 16b-3 of the
General Rules and Regulations under the Securities and Exchange Act of 1934, as
amended, and no member of the Committee is eligible to participate in the Plan.
Subject to the Company's Articles of Incorporation, Bylaws, and the provisions
of the Plan, the Committee has the authority to select key employees to whom
Awards may be awarded; the type of Awards (or combination thereof) to be
granted; the number of shares of Common Stock to be covered by each Award; and
the terms and conditions of any Award, such as conditions of forfeiture,
transfer restrictions and vesting requirements.
The Plan provides for the granting of a variety of stock-based Awards,
described in more detail below, such as Stock Options, including Incentive Stock
Options, as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and Restricted Stock. The term of the Plan is ten (10)
years; no Awards may be granted under the Plan after April 22, 2008.
Types of Awards. The following types of Awards may be granted under the
Plan:
An "Option" is a contractual right to purchase a number of shares at a
price determined at the date the Option is granted. Options include Incentive
Stock Options, as defined in Section 422 of the Code, as well as Nonqualified
Stock Options. The exercise price included in both Incentive Stock Options and
Nonqualified Stock Options must equal at least 100% of the fair market value of
the stock at the date of grant.
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<PAGE>
"Restricted Stock" are shares of Common Stock granted to an employee for no
or nominal consideration. Title to the shares passes to the employee at the time
of the grant; however, the ability to sell or otherwise dispose of the shares is
subject to restrictions and conditions determined by the Committee.
Shares Subject to Plan. One hundred thousand (100,000) shares of Common
Stock are proposed to be set aside for use under the Plan, no more than 50
percent of which may be used for restricted stock grants. The shares to be
offered under the Plan will be authorized and unissued shares, including shares
reacquired by the Company which have that status. The number of shares that may
be issued under the Plan and the number of shares subject to Options are subject
to adjustments in the event of a merger, reorganization, consolidation,
recapitalization, dividend (other than ordinary cash dividends), stock splits,
or other change in corporate structure affecting the Common Stock. Subject to
certain restrictions, unexercised Options, lapsed shares of Restricted Stock,
and shares surrendered in payment for exercising Options may be reissued under
the Plan.
Termination or Amendment of the Plan. The Board may at any time amend,
discontinue, or terminate this Plan or any part thereof; however, unless
otherwise required by law, after shareholder approval, the rights of a
participant may not be impaired without the consent of such participant. In
addition, without the approval of the Company's shareholders, no amendment may
be made which would increase the aggregate number of shares of Common Stock that
may be issued under the Plan, extend the maximum option period under the Plan,
or decrease the Option price of any Option to less than 100% of the fair market
value on the date of grant.
Eligibility. Key employees of the Company and its subsidiaries (which is
presently only the Bank) are eligible to be granted Awards under the Plan.
Eligibility is determined by the Committee.
Participation and Assignability. No Award under the Plan may, except as
otherwise specifically provided by law, be subject in any manner to assignment,
transfer, or encumbrance. For estate planning purposes, the Plan allows
nonqualified stock options to be transferred to certain "Permitted Transferees."
Neither the Plan nor any Award agreement granted under the Plan entitles any
participant or other employee to any right to continued employment by the
Company or any subsidiary.
Federal Tax Consequences. The following summarizes the consequences of the
grant and acquisition of Awards under the Plan for federal income tax purposes.
This summary is necessarily general in nature and does not purport to be
complete.
Options. Plan participants will not recognize taxable income at the time an
Option is granted under the Plan unless the Option has a readily ascertainable
market value at the time of grant. Options to be granted under the Plan will not
have a readily ascertainable market value; therefore, income will not be
recognized by participants before the time of exercise of an Option. For
Nonqualified Stock Options, the difference between the fair market value of the
shares at the time an Option is exercised and the Option price generally will be
treated as ordinary income to the optionee, in which case the Company will be
entitled to a deduction equal to the amount of the optionee's ordinary income.
With respect to Incentive Stock Options, participants will not realize income
for federal income tax purposes as a result of the exercise of such Options. In
addition, if Common Stock acquired as a result of the exercise of an Incentive
Stock Option is disposed of more than two years after the date the Option is
granted and more than one year after the date the Option was exercised, the
entire gain, if any, realized upon disposition of such Common Stock will be
treated for federal income tax purposes as capital gain. If the shares are held
for at least 18 months after exercise, the capital gains rate will be 20%; if
the shares are held for at least 12 months but less than 18 months, the capital
gains rate will be 28%. Under these circumstances, no deduction will be
allowable to the Company in connection with either the grant or exercise of an
Incentive Stock Option.
Exceptions to the general rules apply in the case of a "disqualifying
disposition." If a participant disposes of shares of Common Stock acquired
pursuant to the exercise of an Incentive Stock Option before the expiration of
one year after the date of exercise or two years after the date of grant, the
sale of such stock will be treated as a "disqualifying disposition." As a
result, such a participant would recognize ordinary income and the Company would
be entitled to a deduction in the year in which such disposition occurred. The
amount of the deduction and the ordinary income recognized upon a disqualifying
disposition would generally be equal to the lesser of: (a) the sale price of the
shares sold minus the Option price, or (b) the fair market value of the shares
at the time of exercise and minus the Option price. If
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<PAGE>
the disposition is to a related party (such as a spouse, brother, sister, lienal
descendant, or certain trusts for business entities in which the seller holds a
direct or indirect interest), the ordinary income recognized generally is equal
to the excess of the fair market value of the shares at the time of exercise
over the exercise price. Any additional gain recognized upon disposition, in
excess of the ordinary income, will be taxable as capital gain. In addition, the
exercise of Incentive Stock Options may result in an alternative minimum tax
liability.
Restricted Stock. Recipients of shares of Restricted Stock that are not
"transferable" and are subject to "substantial risk of forfeiture" at the time
of grant will not be subject to federal income taxes until the lapse or release
of the restrictions or sale of the shares, unless the recipient files a specific
election under the Code to be taxed at the time of grant. The recipient's income
and the Company's deduction will be equal to the excess of the then fair market
value (or sale price) of the shares less any purchase price.
Required Vote for Approval. The affirmative vote of a majority of the
Company's Common Stock voted at the Annual Meeting, by person or by proxy, is
required to approve the Plan. While broker nonvotes will not be treated as votes
cast on the approval of this Plan, shares voted as abstentions will be counted
as votes cast. Since a majority of the votes cast is required for approval, the
sum of any negative votes and abstensions will necessitate offsetting
affirmative votes to assure approval. Unless otherwise directed by marking the
Company's proxy, the proxyholders named therein will vote for the approval of
the Plan.
The Board of Directors recommends a vote FOR the approval of the Plan.
COMPENSATION OF EXECUTIVE OFFICERS
Committee Report on Executive Compensation
The Corporation has no paid employees. The Corporation's sole subsidiary,
First National Bank in Howell, employs all officers and staff. Decisions on the
compensation of the Bank's executive officers are made by the Board of Directors
after receiving recommendations from the Board's Compensation Committee. The
Corporation's policies of compensation are designed to reward employees for the
achievement of annual and long-term corporate goals, as well as individual
accomplishments. The various means of compensation, which apply to other
employees as well as executive officers, are intended to encourage management to
increase the value of the Corporation as an asset to its shareholders, to reward
and challenge individuals, to achieve and reward superior operating results, and
to attract and retain superior personnel.
The Corporation's compensation program is comprised of several elements:
salary, incentive bonus, and a defined contribution plan.
The salaries of the Bank's Chief Executive Officer and other Bank
executives are established based on a performance appraisal system. Each
executive's performance, other than that of the Chief Executive Officer, is
evaluated by his or her superior. Wage bands for particular positions are
established based on information obtained from other similar sized banks and the
Michigan Banker's Association annual surveys for use by the Board's Compensation
Committee and the Board of Directors in comparing salaries paid by the Bank with
salaries paid for comparable positions by other banks which are similar in size
to First National Bank in Howell. The Board of Directors and the Compensation
Committee consider other relevant factors such as individual job performance,
experience, expertise, and tenure. The Board intends to maintain the base
salaries of executive officers and senior managers at rates that are competitive
with other banks who are similar in size to the Bank in order to retain superior
personnel and to be able to hire personnel of a high caliber to continue to
achieve and exceed the Bank's operating and financial objectives.
An incentive bonus is paid after year end to all employees employed by the
Bank the entire year, if the Bank's earnings are at least at the 50th percentile
of the Bank's peer group. Employees receive 75% of the incentive based on
performance relative to peers through the first nine month period ending
September 30 of each year, with the balance, if any, paid based on the
performance for the full year. There are three different levels at which profit
share is paid: one for staff, one for supervisor and non-officer exempt
employees, and another for officers. The exact formula for the profit sharing
bonus is determined each year by the Board of Directors.
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The 401k plan covers all employees 21 years of age or older who have
completed one year of service as defined in the plan agreement. Contributions
are equal to 5% of total employee earnings plus 50% of employee contributions
(limited to 10% of their earnings), or the maximum amount permitted by the
Internal Revenue Code.
Chief Executive Officer Compensation
The Compensation Committee reviews Ms. Martin's performance and base salary
as president and chief executive officer annually and recommends adjustments in
her salary to the Board of Directors based on her performance. In making
recommendations to the Board of Directors as to her salary, the Compensation
Committee considers the prevailing salaries for presidents and chief executive
officers of similar sized banks. As a result of that survey, the Committee
established a salary range for Ms. Martin of $116,300 to $174,400 for 1997 The
decision regarding Ms. Martin's 1997 salary was based on the prevailing salary
range, on the Corporation's financial performance for the year and the
Corporation's strong earnings and corporate growth. The Committee further
considered Ms. Martin's leadership in the Corporation and her effectiveness in
implementing the directions and policies of the Board of Directors.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the Bank during the
last three years to its Chief Executive Officer and its other executive officers
whose annual compensation exceeded $100,000 (the "Named Executives"). There are
no employees of the Corporation; all personnel are employed by the Bank.
<TABLE>
All Other
Name and Principal Position Year Salary(1) Bonus Compensation(3)
--------------------------- ---- --------- ----- ---------------
<S> <C> <C> <C> <C>
Barbara D. Martin, President and 1997 $150,000 $33,750(2) $ 9,806
Chief Executive Officer 1996 120,000 17,172 9,806
1995 112,000 22,490 9,609
Barbara Nelson, Senior Vice 1997 $83,000 $18,675(2) $9,751
President and Chief Financial Officer 1996 80,000 11,448 9,806
1995 76,750 15,411 8,044
</TABLE>
(1) Includes amounts deferred pursuant to Section 401(k) of the Internal
Revenue Code.
(2) For bonus payments subsequent to 1996, the amounts reflect only 75% of
the bonus that may be earned for that year, based on the Corporation's
performance through September 30 of that year. The balance of any
bonus, which is not calculable at this time, will be reported in
subsequent proxy statements and/or reports for the year in which it is
earned.
(3) The amounts disclosed in this column include (a) amounts contributed by
the Bank to the Bank's Profit Sharing Plan, pursuant to which
substantially all salaried employees of the Bank participate; and (b)
the dollar value of premiums paid by the Bank for term life insurance
on behalf of the named executives as follows:
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<TABLE>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Barbara D. Martin (a) $9,500 $9,500 $9,240
(b) 306 306 369
Barbara Nelson (a) $9,445 9,500 7,675
(b) 306 306 369
</TABLE>
Neither the Corporation nor the Bank maintain any option or other equity
based compensation plans. The Corporation has adopted a Long-Term Incentive
Plan, as described in this Proxy Statement and subject to shareholder approval,
that would provide for the ability to grant stock options and restricted stock.
CERTAIN TRANSACTIONS WITH MANAGEMENT
Certain directors and officers of the Corporation have had and are expected
to have in the future, transactions with the Bank, or have been directors or
officers of corporations, or members of partnerships, which have had and are
expected to have in the future, transactions with the Bank. All such
transactions with officers and directors, either directly or indirectly, have
been made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the same
time for comparable transactions with other customers, and these transactions do
not involve more than the normal risk of collectibility or present other
unfavorable features. All such future transactions, including transactions with
principal shareholders and other Corporation affiliates, will be made in the
ordinary course of business, on terms no less favorable to the Corporation than
with other customers, and for loans in excess of $200,000, will be subject to
approval by a majority of the Corporation's independent, outside disinterested
directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Securities Exchange Act of 1934, the
Corporation's directors and executive officers, as well as any person holding
more than 10% of its common stock, are required to report initial statements of
ownership of the Corporation's securities and changes in such ownership to the
Securities and Exchange Commission. To the Corporation's knowledge, all the
required reports were filed by such persons during 1997.
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OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of March 1, 1998, as
to the common stock of the Corporation owned beneficially by each director, each
Named Executive in the Summary Compensation Table above, and by all directors
and executive officers of the Corporation as a group. Charles K. and Mary B.
VanWinkle, listed in the table below, are the only shareholders known to the
Corporation to have been the beneficial owner of more than five percent (5%) of
the Corporation's outstanding common stock as of March 1, 1998.
<TABLE>
Number of Shares(1) Percent of Class
<S> <C> <C>
Charles K. and Mary B. VanWinkle (2) 152,508 9.68%
Gary R. Boss 1,500 *
Donald K. Burkel 3,300 *
Rebecca S. English 600 *
Harry E. Griffith 7,164 *
Charles N. Holkins 16,800(3) 1.07%
Dona Scott Laskey 24,000 1.52%
Barbara D. Martin 13,552(4) *
W. Rickard Scofield 1,200 *
R. Michael Yost 600 *
Randolph E. Rudisill 100 *
Barbara J. Nelson 300 *
All Executive Officers and Directors as a
Group (15 persons) 71,226 4.52%
*Represents less than one percent
</TABLE>
(1) This information is based upon the Corporation's records as of March 1,
1998, and information supplied by the persons listed above. The number
of shares stated in this column include shares owned of record by the
shareholder and shares which, under federal securities regulations, are
deemed to be beneficially owned by the shareholder. Unless otherwise
indicated below, the persons named in the table have sole voting and
sole investment power or share voting and investment power with their
respective spouses, with respect to all shares beneficially owned.
(2) Reflects shares held as co-trustees, whose mailing address is 130
Inverness, Howell, Michigan 48843.
(3) Represents 16,800 shares held by Mr. Holkins or his wife as trustees.
(4) Includes 8,899 shares held for the benefit of Ms. Martin's minor
children.
9
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SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Corporation's common stock with
that of the cumulative total return on the NASDAQ Bank Stocks Index and the
NASDAQ Stock Market Index for the five year period ended December 31, 1997. The
following information is based on an investment of $100, on January 1, 1993, in
the Corporation's common stock, the NASDAQ Bank Stocks Index and the NASDAQ
Stock Market Index, with dividends reinvested. There has been only limited
trading in the Corporation's Common Stock, there are no market makers for such
shares, and the Corporation's stock does not trade on any stock exchange or the
NASDAQ market. Accordingly, the returns reflected in the following graph and
table are based on sale prices of the Corporation's stock of which management is
aware. There may have been sales at higher or lower prices of which management
is not aware.
[GRAPHIC OMITTED]
<TABLE>
December 31
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
FNBH Bancorp, Inc. 100 115 139 157 165 255
NASDAQ Bank Stocks Index 100 114 114 169 223 377
NASDAQ Stock Market Index 100 115 112 159 195 239
</TABLE>
10
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements of the Corporation as of and for the year ended
December 31, 1997, have been examined by KPMG Peat Marwick LLP, independent
public accountants. A representative of KPMG Peat Marwick LLP, will be at the
Annual Meeting of Shareholders and will have an opportunity to make a statement
and will be available to answer appropriate questions. KPMG Peat Marwick LLP has
been reappointed by the Board of Directors as the independent public accountants
of the Corporation for the year ending December 31, 1998.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be considered by the Corporation for inclusion
in the 1999 Annual Meeting of Shareholders proxy materials must be received by
the Corporation no later than November , 1998.
OTHER BUSINESS
The Board of Directors is not aware of any matter to be presented for
action at the meeting, other than the matters set forth herein. If any other
business should come before the meeting, the Proxy will be voted in respect
thereof in accordance with the best judgment of the persons authorized therein,
and discretionary authority to do so is included in the proxy. The cost of
soliciting proxies will be borne by the Corporation. In addition to solicitation
by mail, officers and other employees of the Corporation and its subsidiaries
may solicit proxies by telephone or in person, without compensation other than
their regular compensation.
The Summary Annual Report of the Corporation for 1997 is included with this
Proxy Statement. Copies of the report will also be available for all
shareholders attending the Annual Meeting. In addition, certain financial and
related information is included in the Appendix to this Proxy Statement.
Shareholders are urged to sign and return the enclosed proxy in the
enclosed envelope. A prompt response will be helpful and appreciated.
BY ORDER OF THE BOARD OF DIRECTORS
Barbara Nelson
Secretary
March , 1998
11
<PAGE>
FNBH BANCORP, INC.
101 E. Grand River, Howell, MI 48843
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Charles N. Holkins and Helen V. W. McGarry, as
Proxies, each with the power to appoint a substitute, and hereby authorizes them
to represent and to vote, as designated below, all of the shares of common stock
of FNBH Bancorp, Inc. held of record by the undersigned on March 1, 1998, at the
annual meeting of the shareholders to be held on April 22, 1998, or any
adjournment thereof.
1. Elect the following directors to the following classified terms:
[ ] FOR all nominees listed below (except where marked to
the contrary)
[ ] WITHHOLD AUTHORITY to vote for the contrary) all nominees listed
below.
(Instruction: To withhold authority to vote for an individual nominee
strike a line through the nominees's name in the list below.)
Term expiring in 2001: Rebecca S. English Barbara D. Martin
W. Rickard Scofield Randolph E. Rudisill
2. To approve an amendment to the Corporation's Articles of Incorporation
to increase the number of authorized shares from 2,100,000 to
4,200,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the adoption of the Corporation's Long-Term Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
When properly executed, this proxy will be voted in the manner directed by the
undersigned shareholder(s). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES LISTED ABOVE AND "FOR" EACH OF THE PROPOSALS.
The undersigned hereby acknowledge(s) receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement.
PLEASE SIGN AS YOUR NAME APPEARS BELOW. WHEN SHARES ARE HELD JOINTLY, EACH
HOLDER SHOULD SIGN. WHEN SIGNING FOR AN ESTATE, TRUST, OR CORPORATION, THE TITLE
AND CAPACITY SHOULD BE STATED.
Dated ______________
_______________________ ______________________
Signature Signature
<PAGE>
FNBH BANCORP, INC.
LONG-TERM INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 ESTABLISHMENT AND PURPOSE OF THE PLAN...............................1
1.1 Establishment of the Plan....................................1
1.2 Purpose of the Plan..........................................1
1.3 Term of Plan.................................................1
ARTICLE 2 DEFINITIONS.........................................................1
ARTICLE 3 ADMINISTRATION......................................................3
3.1 The Committee................................................3
3.2 Committee Authority..........................................3
ARTICLE 4 COMMON STOCK SUBJECT TO THE PLAN....................................4
ARTICLE 5 ELIGIBILITY.........................................................4
ARTICLE 6 STOCK OPTIONS.......................................................5
6.1 Options......................................................5
6.2 Grants.......................................................5
6.3 Incentive Stock Options......................................5
6.4 Terms of Options.............................................5
ARTICLE 7 RESTRICTED STOCK....................................................7
7.1 Awards of Restricted Stock...................................7
7.2 Awards and Certificates......................................7
7.3 Restrictions and Conditions..................................8
ARTICLE 8 TERMINATION OR AMENDMENT OF THE PLAN................................8
ARTICLE 9 UNFUNDED PLAN.......................................................9
ARTICLE 10 ADJUSTMENT PROVISIONS..............................................9
10.1 Antidilution.................................................9
10.2 Change in Control............................................9
10.3 Adjustments by Committee....................................10
ARTICLE 11 GENERAL PROVISIONS................................................10
11.1 Legend......................................................10
11.2 No Right to Employment......................................10
11.3 Withholding of Taxes........................................10
11.4 No Assignment of Benefits...................................11
11.5 Governing Law...............................................11
11.6 Application of Funds........................................11
11.7 Rights as a Shareholder.....................................11
ARTICLE 12 SHAREHOLDER APPROVAL..............................................11
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FNBH BANCORP, INC.
LONG-TERM INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE OF THE PLAN
1.1 Establishment of the Plan. FNBH Bancorp, Inc., a Michigan corporation
(the "Company"), hereby establishes a stock compensation plan to be known as the
"FNBH Bancorp, Inc. Long-Term Incentive Plan" (the "Plan"), as set forth in this
document. The Plan permits the granting of stock options and restricted stock to
key employees of the Company and its subsidiaries.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
long-term success of the Company for the benefit of the Company's shareholders,
through stock-based compensation, by aligning the personal interests of the
Company's key employees with those of its shareholders. The Plan is also
designed to allow key employees to participate in the Company's future, as well
as to enable the Company to attract, retain and reward such employees.
Compensation related to Awards under the Plan is generally intended to qualify
as "performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Code").
1.3 Term of Plan. No Awards shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date ("Termination Date"), provided
that Awards granted prior to the Termination Date may extend beyond that date.
ARTICLE 2
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings set
forth below:
2.1 Award means any award under this Plan of any Options or Restricted
Stock.
2.2 Award Agreement means an agreement evidencing the grant of an Award
under this Plan. Awards under the Plan shall be evidenced by Award Agreements
that set forth the details, conditions and limitations for each Award, as
established by the Committee and shall be subject to the terms and conditions of
the Plan.
2.3 Award Date means the date that an Award is made, as specified in an
Award Agreement.
2.4 Board means the Board of Directors of the Company.
2.5 Change in Control is defined in Article 12.
2.6 Code means the Internal Revenue Code of 1986, as amended.
2.7 Committee means the Committee, as specified in Article 3, appointed by
the Board to administer the Plan, no members of which shall be eligible to
receive an Award pursuant to the Plan.
2.8 Common Stock means the Common Stock, no par value, of the Company.
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<PAGE>
2.9 Disability means permanent and total disability as determined under the
rules and guidelines established by the Committee for purposes of the Plan.
2.10 Effective Date means April 22, 1998.
2.11 Employee means a salaried employee (including officers and directors
who are also employees) of the Company or Subsidiary.
2.12 Fair Market Value means as long as the Common Stock is not actively
traded in any recognized market, the average price per share at which shares of
Common Stock were bought and sold during the three (3) preceding months (the
"Market Period"), in transactions known to management of the Company, involving
100 or more shares between purchasers and sellers none of whom are directors or
officers of the Company or any Subsidiary, provided that if the total number of
shares purchased or sold during the Market Period is less than 100 shares, the
Market Period shall be the preceding six (6) month period. The determination of
Fair Market Value by the Committee shall be final and binding. If the shares of
Common Stock are actively traded in any recognized market, the "Fair Market
Value" as used in the Plan shall mean the average of the last reported sales
price of Common Stock as of the close of business for each of the last twenty
(20) trading days ending the day immediately preceding the day as of which "Fair
Market Value" is to be determined.
2.13 Incentive Stock Option or ISO means an option to purchase shares of
Common Stock granted under Article 6, which is designated as an Incentive Stock
Option and is intended to meet the requirements of Section 422 of the Code.
2.14 Nonemployee Director has the meaning set forth in Rule 16b-3(b)(3)(i)
or any successor definition adopted by the Securities and Exchange Commission.
2.15 Nonqualified Stock Option or NQSO means an option to purchase shares
of Common Stock, granted under Article 6, which is not an Incentive Stock
Option.
2.16 Option means an Incentive Stock Option or a Nonqualified Stock Option.
2.17 Option Price means the price at which a share of Common Stock may be
purchased by a Participant pursuant to an Option, as determined by the
Committee.
2.18 Participant means an Employee of the Company or Subsidiary who holds
an outstanding Award granted under the Plan.
2.19 Permitted Transferee means (i) a spouse, a child, or a grandchild of a
Participant (each an "Immediate Family Member"), (ii) a trust for the exclusive
benefit of a Participant and/or one or more Immediate Family Members, or (iii) a
partnership or limited liability company whose only partners or members are the
Participant and/or one or more Immediate Family Members.
2.20 Retirement (including Normal, Early and Disability Retirement) means
the termination of a Participant's employment with the Company or a Subsidiary
(i) with eligibility for normal, early or disability retirement benefits under
the terms of the Company's pension plan, as amended and in effect at the time of
such termination of employment, or (ii) whereby such termination of employment
occurs after age 50 and the Participant is not engaged either directly or
indirectly in competition with the Company or a Subsidiary in the provision of
financial services in the state of Michigan.
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<PAGE>
2.21 Restricted Stock means an Award granted to a Participant under Article
7 of this Plan.
2.22 Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the "Act"), as amended
from time to time or any successor rule.
2.23 Subsidiary means any corporation (including any banking corporation or
association) in which the Company owns directly, or indirectly through
subsidiaries, at least fifty percent (50%) of the total combined voting power of
all classes of stock, or any other entity (including, but not limited to,
partnerships and joint ventures) in which the Company owns at least fifty
percent (50%) of the combined equity thereof.
2.24 Termination Date means April 22, 2008.
2.25 Termination of Employment means the termination of a Participant's
employment with the Company or a Subsidiary. A Participant employed by a
Subsidiary shall also be deemed to incur a Termination of Employment if the
Subsidiary ceases to be a Subsidiary and the Participant does not immediately
thereafter become an Employee of the Company or another Subsidiary.
ARTICLE 3
ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Compensation
Committee designated by the Board consisting of not less than three (3)
directors who shall be appointed from time to time by the Board, each of whom
shall qualify as a Non-Employee Director.
3.2 Committee Authority. Subject to the Company's Articles of
Incorporation, Bylaws and the provisions of this Plan, the Committee shall have
full authority to grant Awards to key Employees of the Company or a Subsidiary.
Awards may be granted singly, in combination, or in tandem. The authority of the
Committee shall include the following:
(a) To select the key Employees of the Company or a Subsidiary to whom
Awards may be granted under the Plan;
(b) To determine whether and to what extent Options and Restricted
Stock or any combination thereof are to be granted under the Plan;
(c) To determine the number of shares of Common Stock to be covered by
each Award;
(d) To determine the terms and conditions of any Award Agreement,
including, but not limited to, the Option Price, any vesting restriction or
limitation, any vesting schedule or acceleration thereof, or any forfeiture
restrictions or waiver thereof, regarding any Award and the shares Common
Stock relating thereto, based on such factors as the Committee shall
determine in its sole discretion;
(e) To determine whether, to what extent and under what circumstances
grants of Awards are to operate on a tandem basis and/or in conjunction
with or apart from other cash compensation arrangement made by Company
other than under the terms of this Plan;
(f) To determine under what circumstances an Award may be settled in
cash, Common Stock, or a combination thereof;
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<PAGE>
(g) To determine to what extent and under what circumstances shares of
Common Stock and other amounts payable with respect to an Award shall be
deferred; and
(h) To determine the Fair Market Value of the shares of Common Stock,
in the manner consistent with the provisions of the Plan.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award Agreement) and to
otherwise supervise the administration of the Plan. However, the Committee shall
take no action which will impair any Award previously granted under the Plan or
cause the Plan or the Award not to meet the requirements of Rule 16b-3. A
majority of the Committee shall constitute a quorum, and the acts of a majority
of a quorum at any meeting, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee. The interpretation and construction by the Committee of any
provisions of the Plan or any Award granted under the Plan shall be final and
binding upon the Company, the Board and Participants, including their respective
heirs, executors and assigns. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or an Award granted hereunder.
ARTICLE 4
COMMON STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 10.1, the maximum aggregate
number of shares of Common Stock which may be issued under this Plan shall not
exceed 100,000 shares, which may be either authorized and unissued Common Stock
or issued Common Stock reacquired by the Company ("Plan Shares"), provided that
the maximum number of shares that may be subject to an award of Restricted Stock
shall be 50,000 shares. Determinations as to the number of Plan Shares that
remain available for issuance under the Plan shall be made in accordance with
such rules and procedures as the Committee shall determine from time to time,
which shall be consistent with the requirements of Rule 16b-3 and such
interpretations thereof. If an Award expires unexercised or is forfeited,
cancelled, terminated or settled in cash in lieu of Common Stock, the shares of
Common Stock that were theretofore subject (or potentially subject) to such
Award may again be made subject to an Award Agreement; provided, however, that
any such shares subject to a forfeited or cancelled Award shall not again be
made subject to an Award Agreement to any Participant who received, directly or
indirectly, any of the benefits of ownership of the securities underlying such
Award, excluding the right to vote such shares.
ARTICLE 5
ELIGIBILITY
The persons who shall be eligible to receive Awards under the Plan shall be
such key Employees as the Committee shall select from time to time. In making
such selections, the Committee shall consider such factors as the Committee in
its discretion shall deem relevant. Participants may hold more than one Award,
but only on the terms and subject to the restrictions set forth in the Plan and
their respective Award Agreements.
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<PAGE>
ARTICLE 6
STOCK OPTIONS
6.1 Options. Options may be granted alone or in addition to other Awards
granted under this Plan. Each Option granted under this Plan shall be either an
Incentive Stock Option ("ISO") or a Nonqualified Stock Option ("NQSO").
6.2 Grants. The Committee shall have the authority to grant to any
Participant one or more Incentive Stock Options, Nonqualified Stock Options, or
both types of Options. To the extent that any Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does not
qualify shall constitute a separate Nonqualified Stock Option.
6.3 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section 422. An Incentive
Stock Option shall not be granted to an individual who, on the date of grant,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company. The aggregate Fair Market Value,
determined on the Award Date of the shares of Common Stock with respect to which
one or more Incentive Stock Options (or other incentive stock options within the
meaning of Section 422 of the Code, under all other option plans of the Company)
granted on or after January 1, 1987, that are exercisable for the first time by
a Participant during any calendar year shall not exceed the $100,000 limitation
imposed by Section 422(d) of the Code.
6.4 Terms of Options. Options granted under the Plan shall be evidenced by
Award Agreements in such form as the Committee shall, from time to time approve,
which Agreement shall comply with and be subject to the following terms and
conditions:
(a) Option Price. The Option Price per share of Common Stock
purchasable under an Option shall be determined by the Committee at the
time of grant but shall be not less than one hundred percent (100%) of the
Fair Market Value of the Common Stock at the Award Date.
(b) Option Term. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten (10) years
after the date the Option is granted.
(c) Exercisability. Except as provided in Section 10.2, no Option
shall be exercisable either in whole or in part prior to the first
anniversary of the Award Date. Thereafter, an Option shall be exercisable
at such time or times and subject to such terms and conditions as shall be
determined by the Committee and set forth in the Award Agreement. If the
Committee provides that any Option is exercisable only in installments, the
Committee may at any time waive such installment exercise provisions, in
whole or in part, based on such factors as the Committee may determine.
(d) Method of Exercise. Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, Options may be
exercised in whole or in part at any time during the term of the Option, by
giving written notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied by payment in full
of the purchase price in such form as the Committee may accept.
Notwithstanding the foregoing, an Option shall not be exercisable with
respect to less than 25 shares of Common Stock unless the remaining shares
covered by an Option are fewer than 25 shares. If and to the extent
determined by the
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<PAGE>
Committee in its sole discretion at or after grant, payment in full or in
part may also be made in the form of Common Stock owned for at least six
months by the Participant (and for which the Participant has good title
free and clear of any liens and encumbrances) or Restricted Stock, or by
reduction in the number of shares issuable upon such exercise based, in
each case, on the Fair Market Value of the Common Stock on the last trading
date preceding payment as determined by the Committee (without regard to
any forfeiture restrictions applicable to Restricted Stock). No shares of
stock shall be issued until payment has been made.
A Participant shall generally have the rights to dividends or other
rights of a shareholder with respect to shares subject to the Option when
the optionee has given written notice of exercise, has paid for such shares
as provided herein, and, if requested, has given the representation
described in Section 11.1 of the Plan. Notwithstanding the foregoing, if
payment in full or in part has been made in the form of Restricted Stock,
an equivalent number of shares of Common Stock issued on exercise of the
Option shall be subject to the same restrictions and conditions, and during
the remainder of the Restriction Period [as defined in Section 7.3(a)],
applicable to the shares of Restricted Stock surrendered therefor.
(e) Nontransferability of Options. No Option may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution, provided, however, a
Nonqualified Stock Option may be transferred, without consideration, to a
Permitted Transferee if the Participant satisfies such conditions to the
transfer as may be required by the Committee. A Permitted Transferee shall
succeed to all rights and benefits (except any right to further transfer of
the Option) and be subject to all obligations and limitations applicable to
the original Participant. However, such rights and benefits (except any
right to further transfer of the Option), and obligations and limitations
shall be determined as if the original Participant continued to hold the
Option, whereby provisions of this Plan dealing with termination of
employment, retirement, disability or death of a Participant will continue
to refer to the original Participant regardless of whether a Nonqualified
Stock Option has been transferred to a Permitted Transferee. The Company
shall have no obligation to notify a Permitted Transferee of the
termination of employment, retirement, disability, or death of a
Participant. Further, all Options shall be exercisable, during the
Participant's lifetime, only by such Participant, or, in the case of a
Nonqualified Stock Option, by a Participant or a Permitted Transferee, as
the case may be. The designation of a person entitled to exercise an Option
after a person's death will not be deemed a transfer.
(f) Termination of Employment for Reasons other than Retirement,
Disability, or Death. Upon Termination of Employment for any reason other
than Retirement or on account of Disability or death, each Option held by
the Participant shall, to the extent rights to purchase shares under such
Option have accrued at the date of such Termination of Employment and shall
not have been fully exercised, be exercisable, in whole or in part, at any
time within a period of three (3) months following Termination of
Employment, subject, however, to prior expiration of the term of such
Options and any other limitations on the exercise of such Options in effect
at the date of exercise.
(g) Termination of Employment for Retirement or Disability. Upon
Termination of Employment by reason of Retirement or Disability, each
Option held by such Participant shall, to the extent rights to purchase
shares under the Option have accrued at the date of such Retirement or
Disability and shall not have been fully exercised, remain exercisable in
whole or in part, for a period of twenty-four (24) months following such
Termination of Employment, subject, however, to prior expiration according
to its terms and other limitations imposed by the Plan. If the Participant
dies
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<PAGE>
after such Retirement or Disability, the Participant's Options shall be
exercisable in accordance with Section 6.4(h) below.
(h) Termination of Employment for Death. Upon Termination of
Employment due to death, each Option held by such Participant shall, to the
extent rights to purchase shares under the Options have accrued at the date
of death and shall not have been fully exercised, be exercisable, in whole
or in part, by the personal representative of the Participant's estate, by
any person or persons who shall have acquired the Option directly from the
Participant by bequest or inheritance or a Permitted Transferee, only under
the following circumstances and during the following periods: (i) if the
Participant dies while employed by the Company or a Subsidiary, at any time
within twenty-four (24) months after death, or (ii) if the Participant dies
during the extended exercise period following Termination of Employment
specified in Section 6.4(g), at any time within the longer of such extended
period or twelve (12) months after death, subject, however, in any case, to
the prior expiration of the term of the Option and any other limitation on
the exercise of such Option in effect at the date of exercise.
(i) Termination of Options. Any Option that is not exercised within
whichever of the exercise periods specified in Sections 6.4(f), (g) or (h)
is applicable shall terminate upon expiration of such exercise period.
(j) Purchase and Settlement Provisions. The Committee may at any time
offer to purchase an Option previously granted, based on such terms and
conditions as the Committee shall establish and communicate to the
Participant at the time that such offer is made.
ARTICLE 7
RESTRICTED STOCK
7.1 Awards of Restricted Stock. Shares of Restricted Stock may be issued
either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be made, the number of shares to be
awarded, the price (if any) to be paid by the Participant, the time or times
within which such Awards may be subject to forfeiture, the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
Awards. The Committee may condition the grant of Restricted Stock upon the
achievement of specific business objectives, measurements of individual or
business unit or Company performances, or such other factors as the Committee
may determine. The provisions of Restricted Stock awards need not be the same
with respect to each Participant, and such Awards to individual Participants
need not be the same in subsequent years.
7.2 Awards and Certificates. A prospective Participant selected to receive
a Restricted Stock shall not have any rights with respect to such Award, unless
and until such Participant has executed an Award Agreement evidencing the Award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:
(a) Acceptance. Awards of Restricted Stock must be accepted within a
period of 20 days (or such shorter period as the Committee may specify at
grant) after the Award Date, by executing an Award Agreement and by paying
whatever price (if any) the Committee has designated for such shares of
Restricted Stock.
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(b) Legend. Each Participant receiving a Restricted Stock Award shall
be issued a stock certificate in respect of such shares of Restricted
Stock. Such certificate shall be registered in the name of such
Participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the FNBH Bancorp, Inc.
Long-Term Incentive Plan and related Award Agreement entered
into between the registered owner and the Company, dated .
Copies of such Plan and Agreement are on file in the offices
of the Company."
(c) Custody. The Committee may require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
award of Restricted Stock, the Participant shall have delivered a duly
signed stock power, endorsed in blank, relating to the Common Stock covered
by such Award.
7.3 Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Plan shall be subject to the following restrictions and
conditions:
(a) Restriction Period. Subject to the provisions of this Plan and the
Award Agreement, during a period set by the Committee (the "Restriction
Period"), the Participant shall not be permitted to sell, transfer, pledge,
or assign shares of Restricted Stock awarded under this Plan. Subject to
these limits, the Committee, in its sole discretion, may provide for the
lapse of such restrictions in installments and may accelerate or waive such
restrictions in whole or in part, based on service, performance and/or such
other factors or criteria as the Committee may determine.
(b) Rights as Shareholder. Except as provided in this subsection (b)
and subsection (a) above, the Participant shall have, with respect to the
shares of Restricted Stock, all of the rights of a holder of shares of
Common Stock of the Company including the right to receive any dividends.
The Committee, in its sole discretion, as determined at the time of Award,
may permit or require the payment of dividends to be deferred. If any
dividends or other distributions are paid in shares of Common Stock, such
shares shall be subject to the same restrictions on transferability and
forfeitability as the shares of Restricted Stock with respect to which they
were paid.
(c) Termination of Employment. Subject to the applicable provisions of
the Award Agreement and this Article 7, upon Termination of Employment for
any reason during the Restriction Period, all Restricted Shares still
subject to restriction will vest or be forfeited in accordance with the
terms and conditions established by the Committee as specified in the Award
Agreement.
(d) Lapse of Restrictions. If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock, the certificates for
such shares shall be delivered to the Participant.
ARTICLE 8
TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time amend, discontinue or terminate this Plan or any
part thereof (including any amendment deemed necessary to ensure that the
Company may comply with any applicable regulatory requirement); provided,
however, that, unless otherwise required by law, the rights of a Participant
with respect to Awards granted prior to such amendment, discontinuance or
termination, may not be impaired
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without the consent of such Participant and, provided further, without the
approval of the Company's share holders, no amendment may be made which would
(i) increase the aggregate number of shares of Common Stock that may be issued
under this Plan (except by operation of Section 10.1); (ii) decrease the option
price of any Option to less than one hundred percent (100%) of the Fair Market
Value on the date of grant for an Option; or (iii) cause the Plan not to comply
with either Rule 16b-3, or any successor rule under the Act, or Section 162(m)
of the Code. The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Section 10.2, no such amendment
or other action by the Committee shall impair the rights of any Participant
without the Participant's consent. Awards may not be granted under the Plan
after the Termination Date, but Awards granted prior to such date shall remain
in effect or become exercisable pursuant to their respective terms and the terms
of this Plan.
ARTICLE 9
UNFUNDED PLAN
This Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payment not yet made to a Participant
by the Company, nothing contained herein shall give any such Participant any
rights that are greater than those of a general creditor of the Company.
ARTICLE 10
ADJUSTMENT PROVISIONS
10.1 Antidilution. Subject to the provisions of this Article 10, if the
outstanding shares of Common Stock are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of Common Stock or other securities, through merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment may be made in (i) the
maximum number and kind of shares provided in Article 4 of the Plan, (ii) the
number and kind of shares or other securities subject to the then outstanding
Awards, and (iii) the price for each share or other unit of any other securities
subject to the then outstanding Awards.
10.2 Change in Control. Notwithstanding Section 10.1, upon the occurrence
of a Change in Control, all Awards then outstanding under the Plan will be fully
vested and exercisable and all restrictions will immediately cease, unless, in
the case of a transaction described in clause (iii) or (iv) in the following
definition of Change in Control, provisions are made in connection with such
transaction for the continuance of the Plan and the assumption of or the
substitution for such Awards of new Awards covering the stock of a successor
employer corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices. As used in this
Plan, "Change in Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Act; provided that, for
purposes of this Plan, a Change in Control shall be deemed to have occurred if:
(i) any Person (other than the Company) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company which represent 20% or more of the combined voting power of the
Company's then outstanding securities; (ii) during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election, by the Company's stockholders, of
each new director is approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the period
but excluding any individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such term is used
in Rule 14a-11 of Regulation 14A promulgated under the Act) or other
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actual or threatened solicitation of proxies or consents by or on behalf of a
person other than the Board; (iii) there is consummated any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Common Stock are converted into cash,
securities or other property, other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger; (iv) there is consummated any consolidation or merger of the
Company in which the Company is the continuing or surviving corporation in which
the holders of Common Stock immediately prior to the merger do not own at least
fifty percent (50%), or such greater percentage as shall be set in any agreement
with any Participant, or more of the stock of the surviving corporation
immediately after the merger; (v) there is consummated any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company; or (vi) the
shareholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company.
10.3 Adjustments by Committee. Any adjustments pursuant to this Article 10
will be made by the Committee, whose determination as to what adjustments will
be made and the extent thereof will be final, binding, and conclusive. No
fractional interest will be issued under the Plan on account of any such
adjustments. Only cash payments will be made in lieu of fractional shares.
ARTICLE 11
GENERAL PROVISIONS
11.1 Legend. The Committee may require each person purchasing shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, any applicable Federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
11.2 No Right to Employment. Neither this Plan nor the grant of any Award
hereunder shall give any Participant or other Employee any right with respect to
continuance of employment by the Company or any Subsidiary, nor shall there be a
limitation in any way on the right of the Company or any Subsidiary by which an
Employee is employed to terminate his or her employment at any time.
11.3 Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld. Unless otherwise prohibited by the Committee,
each Participant may satisfy any such withholding tax obligation by any of the
following means or by a combination of such means: (a) tendering a cash payment;
(b) authorizing the Company to withhold from the shares otherwise issuable to
the Participant a number of shares having a Fair Market Value as of the "Tax
Date", less than or equal to the amount of the withholding tax obligation; or
(c) delivering to the Company unencumbered shares owned by the Participant
having a Fair Market Value, as of the Tax Date, less than or equal to the amount
of the
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withholding tax obligation. The "Tax Date" shall be the date that the amount of
tax to be withheld is determined.
11.4 No Assignment of Benefits. No Option, Award or other benefit payable
under this Plan shall, except as otherwise specifically transfer, provided by
law, be subject in any manner to anticipation, alienation, attachment, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, attach, sell, transfer, assign, pledge, encumber or
charge, any such benefits shall be void, and any such benefit shall not in any
manner be liable for or subject to the debts, contracts, liabilities,
engagements or torts of any person who shall be entitled to such benefit, nor
shall it be subject to attachment or legal process for or against such person.
11.5 Governing Law. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws and in the courts of
the state of Michigan.
11.6 Application of Funds. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to Awards granted under this Plan will
be used for general corporate purposes.
11.7 Rights as a Shareholder. Except as otherwise provided in an Award
Agreement, a Participant shall have no rights as a shareholder of the Company
until he or she becomes the holder of record of Common Stock.
ARTICLE 12
SHAREHOLDER APPROVAL
The Plan shall be effective on the Effective Date and shall be submitted
for approval by the shareholders of the Company at the Annual Meeting of
Shareholders in 1998. If the shareholders do not approve the Plan, it, and any
action taken under the Plan, shall be void and of no effect.
