SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
PS FINANCIAL, INC.
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(Name of Registrant as Specified in Its Charter)
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(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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
PS FINANCIAL, INC.
4800 South Pulaski Road
Chicago, Illinois 60632-4195
(773) 376-3800
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April 24, 1997
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of PS Financial,
Inc. (the "Company"), I cordially invite you to attend the first Annual Meeting
of Stockholders of the Company. The meeting will be held at 11:00 a.m., local
time, on May 28, 1997 at the main office of the Company located at 4800 South
Pulaski Road, Chicago, Illinois.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. In addition to the election of two
directors and the ratification of Crowe, Chizek & Company L.L.P. as the
Company's auditors, stockholders are being asked to consider and vote upon the
proposals to ratify the adoption of the 1997 Stock Option and Incentive Plan and
the 1997 Recognition and Retention Plan. The Board of Directors has carefully
considered these proposals and believes their approval will enhance the ability
of the Company to recruit and retain quality directors and management.
Accordingly, your Board of Directors unanimously recommends that you vote "for"
the proposals.
We encourage you to attend the meeting in person. Whether or not you
plan to attend, however, please read the enclosed Proxy Statement and then
complete, sign and date the enclosed proxy and return it in the accompanying
postpaid return envelope as promptly as possible. This will save the Company
additional expense in soliciting proxies and will ensure that your shares are
represented at the meeting.
Very truly yours,
Kimberly P. Rooney
President, Chief Executive Officer and Director
PS Financial, Inc.
4800 South Pulaski Road
Chicago, Illinois 75711
(773) 376-3800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on May 28, 1997
Notice is hereby given that the first Annual Meeting of Stockholders
(the "Meeting") of PS Financial, Inc. (the "Company") will be held at the main
office of the Company located at 4800 South Pulaski Road, Chicago, Illinois on
May 28, 1997 at 11:00 a.m., local time.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of the adoption of the Company's 1997 Stock
Option and Incentive Plan;
3. The ratification of the adoption of the Company's 1997
Recognition and Retention Plan;
4. The ratification of the appointment of Crowe, Chizek and
Company, LLP as auditors for the Company for the fiscal year
ending December 31, 1997;
and such other matters as may properly come before the Meeting, or at any
adjournments or postponements thereof. The Board of Directors is not aware of
any other business to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on April
16, 1997 are the stockholders entitled to vote at the Meeting, and any
adjournments or postponements thereof.
You are requested to complete and sign the enclosed Proxy Card which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The Proxy will not be used if you attend and vote at the
Meeting in person.
By Order of the Board of Directors
Kimberly P. Rooney
President, Chief Executive Officer and Director
Chicago, Illinois
April 23, 1997
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
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PROXY STATEMENT
PS Financial, Inc.
4800 South Pulaski Road
Chicago, Illinois 75711
(773) 376-3800
ANNUAL MEETING OF STOCKHOLDERS
May 28, 1997
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of PS Financial, Inc. (the "Company") of
proxies to be used at the first Annual Meeting of Stockholders (the "Meeting")
which will be held at the main office of the Company located at 4800 South
Pulaski Road, Chicago, Illinois on May 28, 1997 at 11:00 a.m., local time, and
all adjournments or postponements of the Meeting. The accompanying Notice of
Annual Meeting of Stockholders and this Proxy Statement are first being mailed
to stockholders on or about April 23, 1997. Certain of the information provided
herein relates to Preferred Savings Bank (the "Bank"), a wholly-owned subsidiary
and predecessor of the Company.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon (i) the election of two directors of the Company; (ii) the
ratification of the adoption of the Company's 1996 Stock Option and Incentive
Plan; (iii) the ratification of the adoption of the Company's 1996 Recognition
and Retention Plan; and (iv) the ratification of the appointment of Crowe,
Chizek and Company, LLP as the Company's independent auditors for the fiscal
year ending December 31, 1997.
VOTE REQUIRED AND PROXY INFORMATION
All shares of common stock of the Company, par value $.01 per share
(the "Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the nominees and the
adoption of the proposals set forth in this Proxy Statement. The Company does
not know of any matters, other than as described in the Notice of Annual Meeting
of Stockholders, that are to come before the Meeting. If any other matters are
properly presented at the Meeting for action, the persons named in the enclosed
Proxy Card and acting pursuant thereto will have the discretion to vote on such
matters in accordance with their best judgment.
Directors shall be elected by a plurality of the votes present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors. Proposals to ratify the adoption of the Stock Option Plan
and the RRP require the affirmative vote of a majority of shares entitled to
vote at the Meeting. The ratification of Crowe, Chizek and Company, LLP requires
the affirmative vote of the majority of shares present in person or represented
by proxy at the Meeting and entitled to vote on the matter. Proxies marked to
abstain with respect to a proposal will have the same effect as votes against
the proposal. Broker non-votes will have no effect on the vote. One-third of the
shares of the Common Stock, present in person or represented by proxy, shall
constitute a quorum for purposes of the Meeting. Abstentions and broker
non-votes will be treated as shares present at the Meeting for purposes of
determining a quorum.
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments or postponements thereof. Proxies may be
revoked by: (i) filing with the Secretary of the Company at or before the
Meeting a written notice of revocation bearing a later date than the proxy, (ii)
duly executing a subsequent proxy relating to the same shares and delivering it
to the Secretary of the Company at or before the Meeting or (iii) attending the
Meeting and voting in person (although attendance at the Meeting will not in and
of itself constitute revocation of a proxy). Any written notice revoking a proxy
should be delivered to L.G. Ptak, Secretary, at the address shown above.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on April 16, 1997
will be entitled to one vote for each share then held. As of that date, the
Company had 2,182,125 shares of Common Stock issued and outstanding. The
following table sets forth, as of April 16, 1997, information regarding share
ownership of: (i) those persons or entities known by management to beneficially
own more than five percent of the Common Stock; (ii) the Chief Executive
Officer; and (iii) all directors and executive officers of the Company and the
Bank as a group. For information regarding the beneficial ownership of Common
Stock by directors of the Company, see "Proposal I--Election of
Directors--General."
Shares Percent
Beneficially of
Beneficial Owner Owned Class
---------------- ----- -----
Jerome H. Davis(1) 215,200 9.86%
11 Baldwin Farms North
Greenwich, Connecticut 06831
Wellington Management Company, LLP(2) 139,000 6.37
75 State Street
Boston, Massachusetts 02109
PS Financial, Inc.(3) 174,570 8.00
Employee Stock Ownership Plan
4800 South Pulaski Road
Chicago, Illinois 60632-4195
Kimberly P. Rooney, President, 34,200 1.57
Chief Executive Officer and Director
4800 South Pulaski Road
Chicago, Illinois 60632-4195
All directors and executive 113,858 5.22
officers (7 persons) as a group(4)
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(1) The amount shown is as reported by Jerome H. Davis in a Schedule 13-D
dated December 11, 1996. Pursuant to such report, Mr. Davis reported
sole voting and sole dispositive power over 136,200 shares and shared
voting and shared dispositive power over 79,000 shares.
(2) The amount shown is as reported by Wellington Management Company, LLP
in a Schedule 13-G dated January 24, 1997. Pursuant to such report,
Wellington Management reported sole voting and dispositive power over
no shares and shared voting and dispositive power over 139,000 shares.
(3) The amount reported represents shares held by the Employee Stock
Ownership Plan ("ESOP"), 5,498 of which have been allocated to accounts
of participants. First Bankers Trust, Quincy, Illinois, the trustee of
the ESOP, may be deemed to beneficially own the shares held by the ESOP
which have not been allocated to accounts of participants. Participants
in the ESOP are entitled to instruct the trustee as to the voting of
shares allocated to their accounts under the ESOP. Unallocated shares
for which no voting instructions are received are voted by the trustee
in the same proportion as allocated shares voted by participants.
(4) Amount includes shares held directly, as well as shares allocated to
such individuals under the ESOP, shares held jointly with family
members, shares held in retirement accounts, shares held in a fiduciary
capacity or by certain family members, with respect to which shares the
group members may be deemed to have sole voting and/or investment
power. The amounts reported exclude shares proposed to be awarded to
such individuals pursuant to the Stock Option Plan and the RRP, subject
to the ratification of such plans by stockholders at the Meeting.
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PROPOSAL I - ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors currently consists of six members,
each of whom is also a director of the Bank with the exception of L.G. Ptak. The
Board is divided into three classes, and approximately one-third of the
directors are elected annually. Directors of the Company are generally elected
to serve for a three-year term or until their respective successors are elected
and qualified.
The following table sets forth certain information, as of April 16,
1997, regarding the composition of the Company's Board of Directors, including
each director's term of office. The Board of Directors acting as the nominating
committee has recommended and approved the nominees identified in the following
table. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to a nominee)
will be voted at the Meeting FOR the election of the nominees identified below.
If a nominee is unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute nominee as the Board of
Directors may recommend. At this time, the Board of Directors knows of no reason
why any nominee may be unable to serve, if elected. Except as disclosed herein,
there are no arrangements or understandings between the nominees and any other
person pursuant to which the nominees were selected.
Shares of
Common Stock Percent
Position(s) Held Director Term to Beneficially of
Name Age in the Company Since(1) Expire Owned(2) Class
---- --- -------------- -------- ------ -------- -----
NOMINEES
Jeanine M. McInerney 39 Director 1996 2000 3,000 .14%
Rocco DiIorio 65 Director 1990 2000 6,000 .27
DIRECTORS CONTINUING IN OFFICE
Sylvester J. Ptak 72 Chairman of the Board 1969 1999 39,400 1.81
Kimberly P. Rooney 40 President, Chief Executive 1989 1999 34,200 1.57
Officer and Director
Edward Wolak 73 Director 1969 1998 10,000 .46
Lorraine G. Ptak 72 Director 1975 1998 39,400 1.81
(1) Includes service as director of Preferred Savings Bank.
(2) Amount includes shares held directly, as well as shares allocated to
such individuals under the ESOP, shares held jointly with family
members, shares held in retirement accounts, shares held in a fiduciary
capacity or by certain family members, with respect to which shares the
group members may be deemed to have sole voting and/or investment
power. The amounts reported exclude shares proposed to be awarded to
such individuals pursuant to the Stock Option Plan and the RRP, subject
to the ratification of such plans by stockholders at the Meeting.
The principal occupation of each director of the Company and each
nominee for director is set forth below. All directors and nominees have held
their present positions for at least 5 years unless otherwise indicated.
Jeanine McInerney. Ms. McInerney is a clinical nurse consultant with
Healthpoint Medical. She has been employed as a nurse for approximately 15
years.
Rocco Di Mr. Di Iorio is a retired sewer contractor.
Sylvester J. Ptak. Mr. Ptak is the Chairman of the Board and Vice
President of the Bank, a position he has held since 1995. Mr. Ptak has been a
member of the Board of Directors of the Bank since 1969. He also
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served as Secretary of the Bank from 1969 to 1975 and President and Chief
Executive Officer of the Bank from 1975 to 1995. Mr. Ptak is the father of
President Rooney and husband of Secretary-Treasurer Lorraine Ptak. As Chairman
of the Board and Vice President of the Bank, Mr. Ptak supervises the lending
department.
Kimberly P. Rooney. Ms. Rooney is currently serving as President and
Chief Executive Officer of the Bank, a position she had held since 1995. Prior
to joining the Bank as President, Ms. Rooney served as an attorney for the Bank.
From time to time, Ms. Rooney performs legal work for long-time clients. Ms.
Rooney is the daughter of Chairman Ptak and Secretary-Treasurer Lorraine Ptak.
Edward Wolak. Mr. Wolak is a retired plant engineer with Crown Stove,
Inc., a position he held for approximately 40 years. Mr. Wolak is the spouse of
Lorraine Ptak's sister.
Lorraine G. Ptak, age 71. Ms. Ptak is currently serving as
Secretary-Treasurer of the Bank, a position she has held since 1975. Mrs. Ptak
is also a director of the Holding Company. Ms. Ptak is the wife of Chairman S.J.
Ptak and the mother of President Rooney.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Meetings of the Company's Board of Directors generally are held on a
quarterly basis. The Board of Directors met twice during the fiscal year ended
December 31, 1996. During fiscal 1996, no incumbent director of the Company
attended fewer than 75% of the aggregate of the total number of Board meetings.
The Company has standing Nominating, Audit and Compensation Committees.
The Bank's Board of Directors generally meets monthly and may have
additional special meetings upon request of the Chairman of the Board, the
President or one-third of the directors. The Board of Directors of the Bank met
13 times during the year ended December 31, 1996. During fiscal 1996, no
incumbent director of the Bank attended fewer than 75% of the aggregate of the
total number of Board meetings and the total number of meetings held by the
committees of the Board of Directors on which he served. The Board of Directors
has standing Nominating, Loan, Investment, Audit, CRA and Interest Rate Risk
Committees.
The Nominating Committee is composed of Directors S.J. Ptak, Kimberly
Rooney and L.G. Ptak and selects the annual nominees for election as directors.
This Committee met one time during the fiscal year ended December 31, 1996.
The Loan Committee meets to approve all loans originated by the Bank
and sets interest rates for all loan types. The entire Board of Directors
comprises the Loan Committee. This Committee met approximately 12 times during
calendar year 1996.
The Investment Committee develops investment objectives and performance
standards consistent with the Bank's financial needs and reviews the Bank's
investment policies and recommends changes to the full Board. This Committee is
comprised of Chairman Ptak, President Rooney and Chief Financial Officer Przybyl
and met 12 times during calendar year 1996.
The Audit Committee meets at least annually to review and recommend the
Company's and the Bank's engagement of external auditors. Such Committee reviews
audit reports and related matters and acts as the liaison with Preferred
Savings' external auditors and the Board. Directors Di Iorio, McInerney and
Wolak currently comprise the Committee. This Committee met one time in 1996.
The Compensation Committee is responsible for administration of the
Stock Option Plan and the RRP. The members of the Compensation Committee are
Directors McInerney, Wolak and Di Iorio. This Committee did not meet during
fiscal 1996.
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The CRA Committee meets on a monthly basis to review compliance with
the Community Reinvestment Act. The CRA Committee is composed of the entire
Board of Directors and Executive Officer Maciejewski. This Committee met 12
times during calendar year 1996.
The Interest Rate Risk Committee is comprised of Chairman Ptak,
Director Rooney and officer Przybyl. This Committee meets quarterly to review
the Bank's interest rate risk position and product mix and make recommendations
for adjustments to the full Board. This Committee met four times in fiscal 1996.
DIRECTOR COMPENSATION
The Board of Directors of the Company are paid a fee of $250 for each
Board Meeting attended beginning in 1997. The Board of Directors of the Bank are
also paid a monthly fee of $300 for service on the Board. Directors do not
receive any compensation for Committee meetings attended.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
for services in all capacities to the Company for the fiscal year ended December
31, 1996 of the Company's Chief Executive Officer. No executive officer's
aggregate annual compensation (salary plus bonus) exceeded $100,000 in fiscal
1996.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------- ------------
Awards
Restricted
Stock Options/ All Other
Fiscal Salary Bonus Award(s) SARs Compensation
Name and Principal Position Year ($) ($) ($) (#)(1) ($)
- - ------------------------------------------------- ----------- ------------------------- ------------ -----------------
Kimberly P. Rooney, President, 1996 $72,000 $ 6,000 $ (1) $ (1) $ ---
Chief Executive Officer and
Director 1995 55,200 24,000 N/A N/A ---
1994 36,000 20,000 N/A N/A ---
================================================= =========== ========================= ============ =================
(1) Pursuant to the proposed Stock Option Plan, the Company intends to grant to
Ms. Rooney an option to purchase a number of shares equal to 54,000 shares,
subject to stockholder ratification of the Stock Option Plan. See "Proposal
II - Ratification of the 1997 Stock Option and Incentive Plan." In
addition, pursuant to the proposed RRP, the Company intends to grant to Ms.
Rooney 21,821 shares of restricted stock. See "Proposal III -- Ratification
of the 1997 Recognition and Retention Plan."
EMPLOYMENT AGREEMENT AND SEVERANCE AGREEMENTS
The Bank has entered into employment agreements with Chairman Ptak and
President Rooney providing for an initial term of three years. The agreements
provide for an annual base salary in an amount not less than each individual's
respective salary and provide for an annual extension subject to the performance
of an annual formal evaluation by disinterested members of the Board of
Directors of the Bank. The agreements also provide for termination upon the
employee's death, for cause or in certain events specified by OTS regulations.
The employment agreements are also terminable by the employee upon 90 days'
notice to the Bank.
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In addition, in the event of an "involuntary termination" in which the
employment of the employee is terminated without the written consent of the
employee and includes a material diminution of or interference with the
employee's duties, responsibilities and benefits as specified in the agreements,
the employee will be entitled to the benefits under the agreement for the
remaining term of the agreement.
The employment agreements provide for payment to Chairman Ptak and
President Rooney of an amount equal to 299% of their five-year annual average
base compensation, respectively, in the event there is a "change in control" of
the Bank where employment involuntarily terminates in connection with such
change in control or within twelve months thereafter. For the purposes of the
employment agreements, a "change in control" is defined as any event which would
require the filing of an application for acquisition of control or notice of
change in control pursuant to 12 C.F.R. ss. 574.3 or 4. Such events are
generally triggered prior to the acquisition or control of 25% of the Holding
Company's common stock. If the employment of Chairman Ptak or President Rooney
had been terminated as of December 31, 1996 under circumstances entitling them
to severance pay as described above, they would have been entitled to receive a
lump sum cash payment of approximately $135,000 and $225,000, respectively. The
agreements also provide for the continued payment to Chairman Ptak and President
Rooney of health benefits for the remainder of the term of this contract in the
event such individual is involuntarily terminated in the event of change in
control.
The Bank entered into change in control severance agreements with
Officers Jeffrey Przybyl, Marinanne Maciejewski and Linda Peterson. The
agreements became effective upon completion of the Conversion and provide for an
initial term of 18 months. The agreements provide for extensions of one year, on
each anniversary of the effective date of the agreement, subject to a formal
performance evaluation performed by disinterested members of the Board of
Directors of the Bank. The agreements provide for termination for cause or in
certain events specified by OTS regulations.
The agreements provide for a lump sum payment to the employee of
$40,000 and the continued payment for the remaining term of the contract of life
and health insurance coverage maintained by the Bank in the event there is a
"change in control" of the Bank where employment terminates involuntarily in
connection with such change in control. This termination payment is subject to
reduction by the amount of all other compensation to the employee deemed for
purposes of the Code to be contingent on a "change in control," and may not
exceed three times the employee's average annual compensation over the most
recent five-year period or be non-deductible by the Bank for federal income tax
purposes. For the purposes of the agreements, a "change in control" is defined
as any event which would require the filing of an application for acquisition of
control or notice of change in control pursuant to 12 C.F.R. ss. 574.3 or 4 or
any successor regulation. Such events are generally triggered prior to the
acquisition of control of 25% of the Company's Common Stock.
PROPOSAL II - RATIFICATION OF THE 1997 STOCK OPTION AND INCENTIVE PLAN
GENERAL
Establishment and implementation of the Stock Option Plan is subject to
ratification by stockholders. The Stock Option Plan is in compliance with OTS
regulations, however, the OTS has not endorsed or approved the Stock Option Plan
and no written or oral representation to the contrary is made hereby.
The Stock Option Plan has been adopted by the Board of Directors of the
Company, subject to ratification by stockholders at the Meeting. Ratification by
stockholders of the adoption of the Stock Option Plan will ratify the awards
proposed thereunder and, as described in "Awards Under the Stock Option Plan"
herein, will ratify the granting of additional awards pursuant to the provisions
of the Stock Option Plan. Pursuant to the Stock Option Plan, the Company will
reserve for issuance thereunder either from authorized but unissued shares or
from issued shares reacquired and held as treasury shares, 218,212 shares of the
Common Stock (10% of the shares issued in the Bank's conversion to stock form).
Management may, to the extent practicable and feasible, fund the Stock Option
Plan from issued shares reacquired by the Company in the open market. To the
extent the Company utilizes authorized but unissued Common Stock to fund the
Stock Option Plan, the exercise of stock options will have the effect of
diluting the holdings of persons who own the Common Stock. Assuming all options
under the Stock Option Plan are awarded and exercised through the use of
authorized but unissued Common Stock, current
6
stockholders would be diluted by approximately 9.1%. Upon ratification of the
Stock Option Plan by stockholders, it is proposed that options to purchase an
aggregate of 181,144 shares of Common Stock will be awarded, which will leave
available 37,068 shares for future awards.
The Board of Directors believes that it is appropriate for the Company
to adopt a flexible and comprehensive Stock Option Plan which permits the
granting of a variety of long-term incentive awards to directors, officers and
employees as a means of enhancing and encouraging the recruitment and retention
of those individuals on whom the continued success of the Company most depends.
However, because the awards are granted only to persons affiliated with the
Company, the adoption of the Stock Option Plan could make it more difficult for
a third party to acquire control of the Company and therefore could discourage
offers for the Company's stock that may be viewed by the Company's stockholders
to be in their best interest. In addition, certain provisions included in the
Company's Certificate of Incorporation and Bylaws may discourage potential
takeover attempts, particularly those that have not been negotiated directly
with the Board of Directors of the Company. Included among these provisions are
provisions (i) limiting the voting power of shares held by persons owning 10% or
more of the Common Stock, (ii) requiring a supermajority vote of stockholders
for approval of certain business combinations, (iii) establishing a staggered
Board of Directors, (iv) permitting special meetings of stockholders to be
called only by the Board of Directors and (v) authorizing a class of preferred
stock with terms to be established by the Board of Directors. These provisions
could prevent the sale or merger of the Company even where a majority of the
stockholders approve of such transaction.
In addition, federal regulations prohibit the beneficial ownership of
more than 10% of the stock of a converted savings institution or its holding
company without prior approval of the OTS. Federal law and regulations also
require OTS approval prior to the acquisition of "control" (as defined in the
OTS regulations) of an insured institution, including a holding company thereof.
These regulations could have the effect of discouraging takeover attempts of the
Company.
Attached as Exhibit A to this Proxy Statement is the complete text of
the Stock Option Plan. The principal features of the Stock Option Plan are
summarized below.
PRINCIPAL FEATURES OF THE STOCK OPTION PLAN
The Stock Option Plan provides for awards in the form of stock options,
stock appreciation rights ("SARs") and limited stock appreciation rights
("LSARs"). Each award shall be on such terms and conditions, consistent with the
Stock Option Plan and applicable OTS regulations, as the committee administering
the Stock Option Plan may determine. Subject to certain exceptions described
herein, awards made under such plan vest at a rate of at least one-fifth of the
initial award per year, subject to the participant maintaining continuous
service to the Company or its subsidiaries from the date of grant.
Shares awarded pursuant to the Stock Option Plan may be either
authorized but unissued shares or reacquired shares held by the Company in its
treasury. Any shares subject to an award which expires or is terminated
unexercised will again be available for issuance under the Stock Option Plan or
any other plan of the Company or its subsidiaries. Generally, no award or any
right or interest therein is assignable or transferable except under certain
limited exceptions set forth in the Stock Option Plan.
The Stock Option Plan is administered by the Compensation Committee of
the Board of Directors of the Company (the "Compensation Committee"), which is
comprised of non-employee directors of the Company. Directors Wolak, McInerney
and Di Iorio have been appointed as the present members of the Compensation
Committee. Pursuant to the terms of the Stock Option Plan, any director, officer
or employee of the Company or its affiliates is eligible to participate in the
Stock Option Plan, which currently includes approximately 15 persons. In
granting awards under the Stock Option Plan, the Compensation Committee
considers, among other things, position and years of service, value of the
participant's services to the Company and the Bank and the added
responsibilities of such individuals as employees, directors and officers of a
public company.
Pursuant to OTS regulations, each non-employee director of the Company
and all non-employee directors of the Company as a group, may not be awarded
more than 5% and 30%, respectively, of the total shares subject
7
to the Stock Option Plan. In addition, no individual may be granted awards with
respect to more than 25% of the total shares subject to the Stock Option Plan.
STOCK OPTIONS
The term of stock options may not exceed ten years from the date of
grant. The Compensation Committee may grant either "incentive stock options" as
defined under Section 422 of the Code or stock options not intended to qualify
as such ("non-qualified stock options").
In general, stock options will not be exercisable after the expiration
of their terms. Unless otherwise determined by the Compensation Committee, in
the event a participant ceases to maintain continuous service (as defined in the
Stock Option Plan) with the Company or one of its affiliates, for any reason
(excluding death, disability and termination for cause), an exercisable stock
option will continue to be exercisable for three months thereafter but in no
event after the expiration date of the option. Unless otherwise provided by the
Compensation Committee, in the event of disability of a participant during such
service, all options not then exercisable shall become exercisable in full and
remain exercisable for a period of three months from the date of such
disability. Unless otherwise provided by the Compensation Committee, in the
event of death of a participant, all options not then exercisable shall become
exercisable in full. Unless otherwise provided by the Compensation Committee, in
the event of the death of a participant during such service or within the
three-month period described above following termination of service described
above, an exercisable option will continue to be exercisable for one year, to
the extent exercisable by the participant upon his death, but in no event later
than ten years after grant. Following the death of any participant, the
Compensation Committee may, as an alternative means of settlement of an option,
elect to pay to the holder thereof an amount of cash equal to the amount by
which the market value of the shares covered by the option on the date of
exercise exceeds the exercise price. A stock option will automatically terminate
and will no longer be exercisable as of the date a participant is notified of
termination for cause.
The exercise price for the purchase of shares subject to a stock option
at the date of grant may not be less than 100% of the market value of the shares
covered by the option on that date. The exercise price must be paid in full in
cash or, if permitted by the Compensation Committee, shares of Common Stock, or
a combination of both.
The Stock Option Plan provides for the grant of a non-qualified stock
option to purchase 10,911 shares of Common Stock to each director who is not a
full-time employee of the Company, as of the date of stockholder ratification of
the Stock Option Plan. Such options have a term of ten years, are not
transferable, and vest at the rate of 20% per year commencing on the one-year
anniversary of the date of grant. The exercise price per share of such options
shall be equal to the fair market value of the Common Stock on the date of
grant.
STOCK APPRECIATION RIGHTS
The Compensation Committee may grant SARs at any time, whether or not
the participant then holds stock options, granting the right to receive the
excess of the market value of the shares represented by the SARs on the date
exercised over the exercise price. SARs generally will be subject to the same
terms and conditions and exercisable to the same extent as stock options, as
described above. Upon the exercise of a SAR, the participant will receive the
amount due in cash or shares, or a combination of both, as determined by the
Compensation Committee. SARs may be related to stock options ("tandem SARs"), in
which case the exercise of one will reduce to that extent the number of shares
represented by the other. Notwithstanding the foregoing, no SAR may be
exercisable by a director, Senior Officer (as defined below) or Ten Percent
Beneficial Owner (as defined below) of the Company within six months of the date
of its grant.
"Senior Officer" means the Company's president, principal financial
officer or principal accounting officer, any vice president of the Company in
charge of a principal business unit, division or function (such as sales,
administration or finance), any other officer who performs a policy-making
function, or any other person who performs similar policy-making functions for
the Company. Officers of the Company's affiliates shall be deemed Senior
Officers of the Company if they perform such policy-making functions for the
Company. "Ten Percent
8
Beneficial Owner" means the beneficial owner of more than ten percent of any
class of the Company's equity securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
SARs may require an expense accrual by the Company on a quarterly basis
depending on the appreciation of the Company's stock during such quarters. The
amount of the accrual is dependent upon whether and the extent to which the SARs
are granted and vested and the amount, if any, by which the market value of the
SARs exceeds the exercise price.
LIMITED STOCK APPRECIATION RIGHTS
Limited SARs will be exercisable only for a limited period in the event
of a tender or exchange offer for shares of the Company's Common Stock, other
than by the Company, where 25% or more of the outstanding shares are acquired in
that offer or any other offer which expires within 60 days of that offer. The
amount paid on exercise of a Limited SAR will be the excess of (a) the market
value of the shares on the date of exercise, or (b) the highest price paid
pursuant to the offer, over the exercise price. Payment upon exercise of a
Limited SAR will be in cash.
Limited SARs may be granted at the time of, and must be related to, the
grant of a stock option or SAR. The exercise of one will reduce to that extent
the number of shares represented by the other. Subject to vesting requirements
contained in OTS regulations, Limited SARs will be exercisable only for the 45
days following the expiration of the tender or exchange offer, during which
period the related stock option or SAR will be exercisable. However, no Limited
SAR will be exercisable by a director, Senior Officer or Ten Percent Beneficial
Owner of the Company within six months of the date of its grant.
EFFECT OF MERGER AND OTHER ADJUSTMENTS
Shares as to which awards may be granted under the Stock Option Plan,
and shares then subject to awards, will be adjusted appropriately by the
Compensation Committee in the event of any merger, consolidation,
reorganization, recapitalization (including a return of capital), combination or
exchange of shares, stock dividend, stock split or other change in the corporate
structure or Common Stock of the Company.
In the event of any merger, consolidation or combination of the Company
with or into another company or other entity, whereby either the Company is not
the continuing entity or its outstanding shares of Common Stock are converted
into or exchanged for different securities, cash or property, or any combination
thereof, pursuant to a plan or agreement the terms of which are binding upon all
stockholders, any participant to whom a stock option or SAR has been granted at
least six months prior to such event will have the right upon exercise of the
option or SAR (subject to the terms of the Stock Option Plan and any other
limitation or vesting period applicable to such option or SAR) to an amount
equal to the excess of fair market value on the date of exercise of the
consideration receivable in the merger, consolidation or combination with
respect to the shares covered or represented by the stock option or SAR over the
exercise price of the option or SAR multiplied by the number of shares with
respect to which the option or SAR has been exercised.
AMENDMENT AND TERMINATION
The Board of Directors of the Company may at any time amend, suspend or
terminate the Stock Option Plan or any portion thereof, subject to compliance
with OTS regulations, but may not, without the prior ratification of the
stockholders, make any amendment which shall (i) increase the aggregate number
of securities which may be issued under the Stock Option Plan (except as
specifically set forth under the Stock Option Plan), (ii) materially increase
the benefits accruing to participants, (iii) materially change the requirements
as to eligibility for participation in the Stock Option Plan or (iv) change the
class of persons eligible to participate in the Stock Option Plan, provided,
however, that no such amendment, suspension or termination shall impair the
rights of any participant, without his consent, in any award made pursuant to
the Stock Option Plan. Unless previously
9
terminated, the Stock Option Plan shall continue in effect for a term of ten
years, after which no further awards may be granted under the Stock Option Plan.
FEDERAL INCOME TAX CONSEQUENCES
Under present federal income tax laws, awards under the Stock Option
Plan will have the following consequences:
(1) The grant of an award will neither, by itself, result in the
recognition of taxable income to the participant nor entitle the Company to a
deduction at the time of such grant.
(2) In order to qualify as an "Incentive Stock Option," a stock option
awarded under the Stock Option Plan must meet the conditions contained in
Section 422 of the Code, including the requirement that the shares acquired upon
the exercise of the stock option be held for one year after the date of exercise
and two years after the grant of the option. The exercise of an Incentive Stock
Option will generally not, by itself, result in the recognition of taxable
income to the participant nor entitle the Company to a deduction at the time of
such exercise. However, the difference between the exercise price and the fair
market value of the option shares on the date of exercise is an item of tax
preference which may, in certain situations, trigger the alternative minimum
tax. The alternative minimum tax is incurred only when it exceeds the regular
income tax. The alternative minimum tax will be payable at the rate of 26% on
the first $175,000 of "minimum taxable income" above the exemption amount
($33,750 single person or $45,000 married person filing jointly). This tax
applies at a flat rate of 28% of so much of the taxable excess as exceeds
$175,000 and 28% on minimum taxable income more than $175,000 above the
applicable exemption amounts. If a taxpayer has alternative minimum taxable
income in excess of $150,000 (married persons filing jointly) or $112,500
(single person), the $45,000 or $33,750 exemptions are reduced by an amount
equal to 25% of the amount by which the alternative minimum taxable income of
the taxpayer exceeds $150,000 or $112,500, respectively. Provided the applicable
holding periods described above are satisfied, the participant will recognize
long term capital gain or loss upon the resale of the shares received upon such
exercise.
(3) The exercise of a stock option which is not an Incentive Stock
Option will result in the recognition of ordinary income by the participant on
the date of exercise in an amount equal to the difference between the exercise
price and the fair market value on the date of exercise of the shares acquired
pursuant to the stock option.
(4) The exercise of a SAR will result in the recognition of ordinary
income by the participant on the date of exercise in an amount of cash, and/or
the fair market value on that date of the shares, acquired pursuant to the
exercise.
(5) The Company will be allowed a deduction at the time, and in the
amount of, any ordinary income recognized by the participant under the various
circumstances described above, provided that the Company meets its federal
withholding tax obligations.
AWARDS UNDER THE STOCK OPTION PLAN
The following table presents information at April 16, 1997 with respect
to the number of awards of options which are currently intended to be granted
under the Stock Option Plan, subject to stockholder ratification of the Stock
Option Plan, to (i) the Named Officers, (ii) all executive officers of the
Company and the Bank as a group, (iii) directors who are not executive officers
of the Company and the Bank as a group and (iv) all non-executive officer
employees of the Company or the Bank as a group. On April 16, 1997, the closing
price for the Common Stock as quoted on the Nasdaq National Market System was
$13.13 per share.
10
1996 STOCK OPTION AND INCENTIVE PLAN
===================================================================================================================
Name and Position Dollar Value(1) Number of Shares
----------------- --------------- ----------------
Kimberly P. Rooney, President, Chief Executive Officer
and Director.......................................................... $ --- 54,000
Executive Group (6 persons)............................................ --- 143,911
Non-Executive Director Group (3 persons)............................... --- 32,733
Non-Executive Officer Employee Group (3 persons)....................... --- 4,500
====================================================================================================================
- - ------
(1) Any value realized will be the difference between the exercise price and the
market value upon exercise. Since the options have not been granted, there
is no current value.
Subject to the conditions of the Stock Option Plan, the proposed awards
described in the preceding table will vest in not less than five equal annual
installments with the first installment vesting on the one-year anniversary of
the date of grant and the additional installments vesting ratably on each
subsequent anniversary of the date of grant. Pursuant to the terms of the Stock
Option Plan, all options are required to be granted with an exercise price equal
to not less than the fair market value of the shares on the date of grant. To
the extent permitted under applicable law, all options granted to officers are
intended to be incentive stock options. All awards to directors who are not full
time employees of the Company will be non-qualified stock options.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE ADOPTION OF THE 1997 STOCK OPTION AND INCENTIVE PLAN.
PROPOSAL III - RATIFICATION OF THE 1997 RECOGNITION AND RETENTION PLAN
GENERAL
Establishment and implementation of the RRP is subject to ratification
by stockholders. The RRP is in compliance with OTS regulations, however, the OTS
has not endorsed or approved the RRP and no written or oral representation to
the contrary is made hereby.
The RRP has been adopted by the Board of Directors of the Company,
subject to stockholder ratification. The RRP is designed to provide directors,
officers and employees with a proprietary interest in the Company in a manner
designed to encourage such individuals to remain with the Company and the Bank.
Ratification by stockholders of the adoption of the RRP will ratify the awards
proposed thereunder and as described in "Awards under the RRP" herein, and will
ratify the granting of additional restricted stock awards pursuant to the
provisions of the RRP. Pursuant to the RRP, 87,285 shares of Common Stock (or
4.0% of the shares sold in the Bank's conversion to stock form), funded from
either authorized but unissued shares or issued shares subsequently reacquired
and held as treasury shares, will be available for awards. The Company currently
intends, to the extent practicable and feasible, to fund the RRP from issued
shares reacquired by the Company in the open market. To the extent the Company
utilizes authorized but unissued shares to fund the RRP, the interests of
current stockholders will be diluted. Assuming all RRP Shares are awarded
through the use of authorized but unissued Common Stock, current stockholders
would be diluted by approximately 3.85%. Upon ratification of the RRP by
stockholders, it is proposed that an aggregate of 64,006 shares of Common Stock
will be awarded to directors and officers of the Company and the Bank, which
will leave 23,279 shares available for future awards.
Attached as Exhibit B to this Proxy Statement is the complete text of
the form of the RRP. The principal features of the RRP are summarized below.
11
PRINCIPAL FEATURES OF THE RRP
The RRP provides for the award of shares of Common Stock ("RRP Shares")
subject to the restrictions described below. Each award under the RRP will be
made on such terms and conditions, consistent with the terms of the RRP and
applicable OTS regulations, as the Compensation Committee shall determine.
The RRP is administered by the Company's Compensation Committee. The
Compensation Committee will select the recipients and terms of awards pursuant
to the RRP. See "Proposal II - Ratification of the 1997 Stock Option and
Incentive Plan." In determining to whom and in what amount to grant awards, the
Compensation Committee considers the position and responsibilities of eligible
individuals, the value of their services to the Company and the Bank and other
factors it deems relevant. Pursuant to the terms of the RRP, any director,
officer or employee of the Company or its affiliates may be selected by the
Compensation Committee to participate in the RRP, which currently includes
eligible participants of approximately 15 persons.
As required by OTS regulations, award recipients earn (i.e., become
vested in) awards, over a period of time as determined by the Compensation
Committee at the time of grant, provided that no award may vest earlier than one
year from the date of stockholder approval of the RRP and shall not vest at a
rate in excess of 20% of the initial award per year except in the event of death
or disability. Pursuant to the terms of the RRP, no director who is not an
employee of the Company shall be granted awards with respect to more than 5% of
the total shares subject to the RRP. All non-employee directors of the Company,
in the aggregate, may not be granted awards with respect to more than 30% of the
total RRP Shares and no individual shall be granted awards with respect to more
than 25% of the total RRP Shares. It is intended that no award granted to an
executive officer of the Company or its affiliates shall vest in any fiscal year
(and shall be carried over to the subsequent fiscal year) in which the Bank
fails to meet all of its fully phased-in capital requirements.
Subject to compliance with OTS regulations, the Compensation Committee
may, in its discretion, accelerate the time at which any or all restrictions
will lapse, or may remove any or all of the restrictions. In the event a
participant ceases to maintain continuous service with the Company or the Bank
by reason of death or disability, RRP Shares still subject to restrictions will
be free of these restrictions and shall not be forfeited. In the event of
termination for any other reason, all shares will be forfeited and returned to
the Company. Any RRP Shares which are forfeited will again be available for
issuance under the RRP.
Holders of RRP Shares may not vote or sell, assign, transfer, pledge or
otherwise encumber any of the RRP Shares during the restricted period. During
the restricted period, RRP Shares will be voted by an independent trustee and
not by the holder of such shares. In addition, all dividends declared and paid
on RRP Shares still subject to restrictions will be deferred and held for the
account of the participant thereof until the earlier to lapse of the
restrictions on such shares or the death or disability of the participant.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
RRP Shares awarded under the RRP will be adjusted by the Compensation
Committee in the event of a reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or other
change in corporate structure or the Common Stock of the Company.
FEDERAL INCOME TAX CONSEQUENCES
Holders of RRP Shares will recognize ordinary income on the date that
the RRP Shares are no longer subject to a substantial risk of forfeiture, in an
amount equal to the fair market value of the shares on that date. In certain
circumstances, a holder may elect to recognize ordinary income and determine
such fair market value on the date of the grant of the RRP Shares. Holders of
RRP Shares will also recognize ordinary income equal to their dividend or
dividend equivalent payments when such payments are received. Generally, the
amount of income recognized by participants will be a deductible expense for tax
purposes for the Company.
12
AMENDMENT TO THE RRP
The Board of Directors of the Company may amend, suspend or terminate
the RRP or any portion thereof at any time, subject to OTS Regulations, but no
amendment shall be made without the approval of the stockholders of the Company
which shall, (i) increase the aggregate number of shares with respect to which
awards may be made under the RRP (except pursuant to Section 4 of the RRP), (ii)
materially increase the benefits accruing to participants, (iii) materially
change the requirements as to eligibility for participation in the RRP or (iv)
change the class of persons eligible to participate in the RRP; provided,
however, that no such amendment, suspension or termination shall impair the
rights of any participant, without his consent, in any award theretofore made
pursuant to the RRP.
AWARDS UNDER THE RRP
The following table presents information at April 16, 1997 with respect
to the number of RRP Shares which are currently intended to be granted under the
RRP, subject to stockholder ratification of the RRP, to (i) the Named Officers,
(ii) all executive officers of the Company and the Bank as a group, (iii)
directors who are not executive officers of the Company or the Bank as a group,
and (iv) all non-executive officer employees of the Company or the Bank as a
group.
1997 RECOGNITION AND RETENTION PLAN
=================================================================== ===============================================
Name and Position Dollar value(1) Shares of Restricted Stock
----------------- --------------- --------------------------
Kimberly P. Rooney, President, Chief Executive Officer and
Director......................................................... $286,510 21,821
Executive Group (6 persons)........................................ 722,229 55,006
Non-Executive Director Group (3 persons)........................... 109,819 8,364
Non-Executive Officer Employee Group (11 persons).................. 65,650 5,000
=================================================================== ===============================================
- - ------
(1) Assumes an aggregate market value of the RRP Shares based on the closing
price of the Common Stock of $13.13 as reported on the Nasdaq National
Market System on April 16, 1997.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE ADOPTION OF THE 1997 RECOGNITION AND RETENTION PLAN.
CERTAIN TRANSACTIONS
The Bank has followed a policy of granting loans to officers, directors
and employees, if such loans are made in the ordinary course of business and on
the same terms and conditions, including interest rates and collateral, as those
of comparable transactions prevailing at the time, in accordance with the Bank's
underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features. Loans to Executive
Officers and Directors must be approved by a majority of the disinterested
directors and loans to other officers and employees must be approved by the
Bank's loan committee. All loans by the Bank to its Executive Officers and
Directors are subject to OTS regulations restricting loan and other transactions
with affiliated persons of the Bank. Federal law currently requires that all
loans to Executive Officers and Directors be made on terms and conditions
comparable to those for similar transactions with non-affiliates. Loans to all
Executive Officers and Directors and their associates totalled approximately
$191,000 at December 31, 1996, which amount was less than .60% of stockholders'
equity at that date.
13
PROPOSAL IV
RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has renewed the Company's arrangement for Crowe,
Chizek and Company, LLP to be its auditors for the 1997 fiscal year, subject to
the ratification of the appointment by the Company's stockholders. A
representative of Crowe, Chizek and Company, LLP is expected to attend the
Meeting to respond to appropriate questions and will have an opportunity to make
a statement if he so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AND COMPANY, LLP AS THE
COMPANY'S AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received no later than December 24, 1997, at the
Company's main office located at 4800 South Pulaski Road, Chicago, Illinois
60632-4195. Any such proposal shall be subject to the requirements of the proxy
rules adopted under the Exchange Act.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. The Company has retained Regan &
Associates, Inc. to assist in the solicitation of proxies, for a fee estimated
to be approximately $3,500, plus reasonable out-of-pocket expenses. In addition
to solicitation by mail, directors, officers and regular employees of the
Company and/or the Bank may solicit proxies personally or by telegraph or
telephone without additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
Kimberly P. Rooney
President, Chief Executive Officer and Director
Chicago, Illinois
April 24, 1997
14
Appendix A
PS FINANCIAL, INC.
1997 STOCK OPTION AND INCENTIVE PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, advisory directors, directors emeriti,
officers and employees of the Corporation and its Affiliates. It is intended
that designated Options granted pursuant to the provisions of this Plan to
persons employed by the Corporation or its Affiliates will qualify as Incentive
Stock Options. Options granted to persons who are not employees will be
Non-Qualified Stock Options.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" - means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Bank" - means Preferred Savings Bank and any successor entity.
"Award" - means the grant of an Incentive Stock Option, a Non-Qualified
Stock Option, a Stock Appreciation Right, a Limited Stock Appreciation Right or
any combination thereof, as provided in the Plan.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee referred to in Section 3 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, advisory director, director emeritus,
officer or employee of the Corporation or an Affiliate, except that when used
with respect to any Options or Rights which at the time of exercise are
intended to be Incentive Stock Options, continuous service means the absence of
any interruption or termination of service as an employee of the Corporation or
an Affiliate. Service shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Corporation
or in the case of transfers between payroll locations of the Corporation or
between the Corporation, its parent, its subsidiaries or its successor. With
respect to any advisory director or director emeritus, continuous service shall
mean availability to perform such functions as may be required of such persons.
"Corporation" - means PS Financial, Inc., a Delaware corporation.
"Employee" - means any person, including an officer or director, who is
employed by the Corporation or any Affiliate.
"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
"Exercise Price" - means (i) in the case of an Option, the price per Share
at which the Shares subject to such Option may be purchased upon exercise of
such Option and (ii) in the case of a Right, the price per Share (other than the
Market Value per Share on the date of exercise and the Offer Price per Share as
defined in Section 10 hereof) which, upon grant, the Committee determines shall
be utilized in calculating the aggregate value which a Participant shall be
entitled to receive pursuant to Sections 9, 10 or 12 hereof upon exercise of
such Right.
"Incentive Stock Option" - means an option to purchase Shares granted by
the Committee pursuant to Section 6 hereof which is subject to the limitations
and restrictions of Section 8 hereof and is intended to qualify under Section
422(b) of the Code.
"Limited Stock Appreciation Right" - means a stock appreciation right with
respect to Shares granted by the Committee pursuant to Sections 6 and 10 hereof.
A-1
"Market Value" - means the average of the high and low quoted sales price
on the date in question (or, if there is no reported sale on such date, on the
last preceding date on which any reported sale occurred) of a Share on the
Composite Tape for the New York Stock Exchange-Listed Stocks, or, if on such
date the Shares are not quoted on the Composite Tape, on the New York Stock
Exchange, or, if the Shares are not listed or admitted to trading on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which the Shares are listed or admitted
to trading, or, if the Shares are not listed or admitted to trading on any such
exchange, the mean between the closing high bid and low asked quotations with
respect to a Share on such date on the NASDAQ System, or any similar system then
in use, or, if no such quotations are available, the fair market value on such
date of a Share as the Committee shall determine.
"Non-Employee Director" - means a director who a) is not currently an
officer or employee of the Corporation; b) is not a former employee of the
Corporation who receives compensation for prior services (other than from a
tax-qualified retirement plan); c) has not been an officer of the Corporation;
d) does not receive remuneration from the Corporation in any capacity other than
as a director; and e) does not possess an interest in any other transactions or
is not engaged in a business relationship for which disclosure would be required
under Item 404(a) or (b) of Regulation S-K.
"Non-Qualified Stock Option" - means an option to purchase Shares granted
by the Committee pursuant to Section 6 hereof which is not intended to qualify
under Section 422(b) of the Code.
"Option" - means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" - means any director, advisory director, director emeritus,
officer or employee of the Corporation or any Affiliate who is selected by the
Committee to receive an Award or who is granted an Award pursuant to Section 19
hereof.
"Plan" - means the 1997 Stock Option and Incentive Plan of the
Corporation.
"Related" - means (i) in the case of a Right, a Right which is granted in
connection with, and to the extent exercisable, in whole or in part, in lieu of,
an Option or another Right and (ii) in the case of an Option, an Option with
respect to which and to the extent a Right is exercisable, in whole or in part,
in lieu thereof has been granted.
"Right" - means a Limited Stock Appreciation Right or a Stock Appreciation
Right.
"Shares" - means the shares of common stock of the Corporation.
"Stock Appreciation Right" - means a stock appreciation right with respect
to Shares granted by the Committee pursuant to Sections 6 and 9 hereof.
"Ten Percent Beneficial Owner" - means the beneficial owner of more than
ten percent of any class of the Corporation's equity securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members, each of whom shall be a Non-Employee
Director. The members of the Committee shall be appointed by the Board of
Directors of the Corporation. Except as limited by the express provisions of the
Plan, the Committee shall have sole and complete authority and discretion,
subject to Office of Thrift Supervision Regulations, to (i) select Participants
and grant Awards; (ii) determine the number of Shares to be subject to types of
Awards generally, as well as to individual Awards granted under the Plan; (iii)
determine the terms and conditions upon which Awards shall be granted under the
Plan; (iv) prescribe the form and terms of instruments evidencing such grants;
and (v) establish from time to time regulations for the administration of the
Plan, interpret the Plan, and make all determinations deemed necessary or
advisable for the administration of the Plan.
A-2
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.
4. Participation in Committee Awards. The Committee may select from time
to time Participants in the Plan from those directors (including advisory
directors and directors emeriti), officers and employees of the Corporation or
its Affiliates who, in the opinion of the Committee, have the capacity for
contributing to the successful performance of the Corporation or its
Affiliates.
5. Shares Subject to Plan. Subject to adjustment by the operation of
Section 11 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 10% of the total Shares issued in the Bank's
conversion to the capital stock form. The Shares with respect to which Awards
may be made under the Plan may be either authorized and unissued shares or
issued shares heretofore or hereafter reacquired and held as treasury shares.
Shares which are subject to Related Rights and Related Options shall be counted
only once in determining whether the maximum number of Shares with respect to
which Awards may be granted under the Plan has been exceeded. An Award shall not
be considered to have been made under the Plan with respect to any Option or
Right which terminates and new Awards may be granted under the Plan with respect
to the number of Shares as to which such termination has occurred.
6. General Terms and Conditions of Options and Rights. The Committee shall
have full and complete authority and discretion, subject to Office of Thrift
Supervision Regulations and except as expressly limited by the Plan, to grant
Options and/or Rights and to provide the terms and conditions (which need not be
identical among Participants) thereof. In particular, the Committee shall
prescribe the following terms and conditions: (i) the Exercise Price of any
Option or Right, which shall not be less than the Market Value per Share at the
date of grant of such Option or Right, (ii) the number of Shares subject to, and
the expiration date of, any Option or Right, which expiration date shall not
exceed ten years from the date of grant, (iii) the manner, time and rate
(cumulative or otherwise) of exercise of such Option or Right, and (iv) the
restrictions, if any, to be placed upon such Option or Right or upon Shares
which may be issued upon exercise of such Option or Right. As required by Office
of Thrift Supervision Regulations, each non-employee director of the Corporation
may not be granted Awards with respect to more than 5% of the total shares
subject to the Plan and all non-employee directors of the Corporation, in the
aggregate, may not be granted Awards with respect to more than 30% of the total
shares subject to the Plan. Notwithstanding the foregoing and subject to
compliance with applicable Office of Thrift Supervision Regulations, no
individual shall be granted Awards in any calendar year with respect to more
than 25% of the total shares subject to the Plan in any calendar year or during
the entire term of the Plan.
Any Award made pursuant to this Plan, which Award is subject to the
requirements of Office of Thrift Supervision Regulations, shall vest in five
equal annual installments with the first installment vesting on the one-year
anniversary of the date of grant, except in the event of death or disability. In
the event Office of Thrift Supervision Regulations are amended (the "Amended
Regulations") to permit shorter vesting periods, any Award made pursuant to this
Plan, which Award is subject to the requirements of such Amended Regulations,
may vest, at the sole discretion of the Committee, in accordance with such
Amended Regulations.
Furthermore, at the time of any Award, the Participant shall enter into an
agreement with the Corporation in a form specified by the Committee, agreeing to
the terms and conditions of the Award and such other matters as the Committee,
in its sole discretion, shall determine (the "Option Agreement").
7. Exercise of Options or Rights.
(a) Except as provided herein, an Option or Right granted under the Plan shall
be exercisable during the lifetime of the Participant to whom such Option
or Right was granted only by such Participant and, except as provided in
paragraphs (c) and (d) of this Section 7, no such Option or Right may be
exercised unless at the time such Participant exercises such Option or
Right, such Participant has maintained Continuous Service since the date
of grant of such Option or Right.
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(b) To exercise an Option or Right under the Plan, the Participant to whom
such Option or Right was granted shall give written notice to the
Corporation in form satisfactory to the Committee (and, if partial
exercises have been permitted by the Committee, by specifying the number
of Shares with respect to which such Participant elects to exercise such
Option or Right) together with full payment of the Exercise Price, if any
and to the extent required. The date of exercise shall be the date on
which such notice is received by the Corporation. Payment, if any is
required, shall be made either (i) in cash (including check, bank draft or
money order) or (ii) by delivering (A) Shares already owned by the
Participant and having a fair market value equal to the applicable
exercise price, such fair market value to be determined in such
appropriate manner as may be provided by the Committee or as may be
required in order to comply with or to conform to requirements of any
applicable laws or regulations, or (B) a combination of cash and such
Shares.
(c) If a Participant to whom an Option or Right was granted shall cease to
maintain Continuous Service for any reason (excluding death, disability
and termination of employment by the Corporation or any Affiliate for
cause), such Participant may, but only within the period of three months
immediately succeeding such cessation of Continuous Service and in no
event after the expiration date of such Option or Right, exercise such
Option or Right to the extent that such Participant was entitled to
exercise such Option or Right at the date of such cessation, provided,
however, that such right of exercise after cessation of Continuous Service
shall not be available to a Participant if the Committee otherwise
determines and so provides in the applicable instrument or instruments
evidencing the grant of such Option or Right. If a Participant to whom an
Option or Right was granted shall cease to maintain Continuous Service by
reason of death or disability then, unless the Committee shall have
otherwise provided in the instrument evidencing the grant of an Option or
Right, all Options and Rights granted and not fully exercisable shall
become exercisable in full upon the happening of such event and shall
remain so exercisable (i) in the event of death for the period described
in paragraph (d) of this Section 7 and (ii) in the event of disability for
a period of three months following such date. If the Continuous Service of
a Participant to whom an Option or Right was granted by the Corporation is
terminated for cause, all rights under any Option or Right of such
Participant shall expire immediately upon the effective date of such
termination.
(d) In the event of the death of a Participant while in the Continuous Service
of the Corporation or an Affiliate or within the three-month period
referred to in paragraph (c) of this Section 7, the person to whom any
Option or Right held by the Participant at the time of his death is
transferred by will or the laws of descent and distribution, or in the
case of an Award other than an Incentive Stock Option, pursuant to a
qualified domestic relations order, as defined in the Code or Title 1 of
ERISA or the rules thereunder may, but only to the extent such Participant
was entitled to exercise such Option or Right upon his death as provided
in paragraph (c) above, exercise such Option or Right at any time within a
period of one year succeeding the date of death of such Participant, but
in no event later than ten years from the date of grant of such Option or
Right. Following the death of any Participant to whom an Option was
granted under the Plan, irrespective of whether any Related Right shall
have theretofore been granted to the Participant or whether the person
entitled to exercise such Related Right desires to do so, the Committee
may, as an alternative means of settlement of such Option, elect to pay to
the person to whom such Option is transferred by will or by the laws of
descent and distribution, or in the case of an Option other than an
Incentive Stock Option, pursuant to a qualified domestic relations order,
as defined in the Code or Title I of ERISA or the rules thereunder, the
amount by which the Market Value per Share on the date of exercise of such
Option shall exceed the Exercise Price of such Option, multiplied by the
number of Shares with respect to which such Option is properly exercised.
Any such settlement of an Option shall be considered an exercise of such
Option for all purposes of the Plan.
8. Incentive Stock Options. Incentive Stock Options may be granted only to
Participants who are Employees. Any provision of the Plan to the contrary
notwithstanding, (i) no Incentive Stock Option shall be granted more than ten
years from the date the Plan is adopted by the Board of Directors of the
Corporation and no Incentive Stock Option shall be exercisable more than ten
years from the date such Incentive Stock Option is granted, (ii) the Exercise
Price of any Incentive Stock Option shall not be less than the Market Value per
Share on the date such Incentive Stock Option is granted, (iii) any Incentive
Stock Option shall not be transferable by the Participant to whom such Incentive
Stock Option is granted other than by will or the laws of descent and
distribution, and shall be exercisable during such Participant's lifetime only
by such Participant, (iv) no Incentive Stock Option shall be
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granted to any individual who, at the time such Incentive Stock Option is
granted, owns stock possessing more than ten percent of the total combined
voting power of all classes of stock of the Corporation or any Affiliate unless
the Exercise Price of such Incentive Stock Option is at least 110 percent of the
Market Value per Share at the date of grant and such Incentive Stock Option is
not exercisable after the expiration of five years from the date such Incentive
Stock Option is granted, and (v) the aggregate Market Value (determined as of
the time any Incentive Stock Option is granted) of the Shares with respect to
which Incentive Stock Options are exercisable for the first time by a
Participant in any calendar year shall not exceed $100,000.
9. Stock Appreciation Rights. A Stock Appreciation Right shall, upon its
exercise, entitle the Participant to whom such Stock Appreciation Right was
granted to receive a number of Shares or cash or combination thereof, as the
Committee in its discretion shall determine, the aggregate value of which (i.e.,
the sum of the amount of cash and/or Market Value of such Shares on date of
exercise) shall equal (as nearly as possible, it being understood that the
Corporation shall not issue any fractional shares) the amount by which the
Market Value per Share on the date of such exercise shall exceed the Exercise
Price of such Stock Appreciation Right, multiplied by the number of Shares with
respect of which such Stock Appreciation Right shall have been exercised. A
Stock Appreciation Right may be Related to an Option or may be granted
independently of any Option as the Committee shall from time to time in each
case determine. At the time of grant of an Option the Committee shall determine
whether and to what extent a Related Stock Appreciation Right shall be granted
with respect thereto, provided, however, and notwithstanding any other provision
of the Plan, that if the Related Option is an Incentive Stock Option, the
Related Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Stock Appreciation Right were
an Incentive Stock Option and as if other rights which are Related to Incentive
Stock Options were Incentive Stock Options. In the case of a Related Option,
such Related Option shall cease to be exercisable to the extent of the Shares
with respect to which the Related Stock Appreciation Right was exercised. Upon
the exercise or termination of a Related Option, any Related Stock Appreciation
Right shall terminate to the extent of the Shares with respect to which the
Related Option was exercised or terminated.
10. Limited Stock Appreciation Rights. At the time of grant of an Option
or Stock Appreciation Right to any Participant, the Committee shall have full
and complete authority and discretion to also grant to such Participant a
Limited Stock Appreciation Right which is Related to such Option or Stock
Appreciation Right, provided, however and notwithstanding any other provision of
the Plan, that if the Related Option is an Incentive Stock Option, the Related
Limited Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Limited Stock Appreciation
Right were an Incentive Stock Option and as if all other Rights which are
Related to Incentive Stock Options were Incentive Stock Options. Subject to
vesting requirements contained in 12 C.F.R. ss. 563b.3(g)(4) or any successor
regulation, a Limited Stock Appreciation Right shall be exercisable only during
the period beginning on the first day following the date of expiration of any
"offer" (as such term is hereinafter defined) and ending on the forty-fifth day
following such date.
A Limited Stock Appreciation Right shall, upon its exercise, entitle the
Participant to whom such Limited Stock Appreciation Right was granted to receive
an amount of cash equal to the amount by which the "Offer Price per Share" (as
such term is hereinafter defined) or the Market Value on the date of such
exercise, as shall have been provided by the Committee in its discretion at the
time of grant, shall exceed the Exercise Price of such Limited Stock
Appreciation Right, multiplied by the number of Shares with respect to which
such Limited Stock Appreciation Right shall have been exercised. Upon the
exercise of a Limited Stock Appreciation Right, any Related Option and/or
Related Stock Appreciation Right shall cease to be exercisable to the extent of
the Shares with respect to which such Limited Stock Appreciation Right was
exercised. Upon the exercise or termination of a Related Option or Related
Stock Appreciation Right, any Related Limited Stock Appreciation Right shall
terminate to the extent of the Shares with respect to which such Related Option
or Related Stock Appreciation Right was exercised or terminated.
For the purposes of this Section 10, the term "Offer" shall mean any
tender offer or exchange offer for Shares other than one made by the
Corporation, provided that the corporation, person or other entity making the
offer acquires pursuant to such offer either (i) 25% of the Shares outstanding
immediately prior to the commencement of such offer or (ii) a number of Shares
which, together with all other Shares acquired in any tender offer or exchange
offer (other than one made by the Corporation) which expired within sixty days
of the expiration date of
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the offer in question, equals 25% of the Shares outstanding immediately prior to
the commencement of the offer in question. The term "Offer Price per Share" as
used in this Section 10 shall mean the highest price per Share paid in any Offer
which Offer is in effect any time during the period beginning on the sixtieth
day prior to the date on which a Limited Stock Appreciation Right is exercised
and ending on the date on which such Limited Stock Appreciation Right is
exercised. Any securities or property which are part or all of the consideration
paid for Shares in the Offer shall be valued in determining the Offer Price per
Share at the higher of (A) the valuation placed on such securities or property
by the corporation, person or other entity making such Offer or (B) the
valuation placed on such securities or property by the Committee.
11. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan and the
number, class and exercise price of shares with respect to which Awards
theretofore have been granted under the Plan shall be appropriately adjusted by
the Committee, whose determination shall be conclusive.
12. Effect of Merger. In the event of any merger, consolidation or
combination of the Corporation (other than a merger, consolidation or
combination in which the Corporation is the continuing entity and which does not
result in the outstanding Shares being converted into or exchanged for different
securities, cash or other property, or any combination thereof) pursuant to a
plan or agreement the terms of which are binding upon all stockholders of the
Corporation (except to the extent that dissenting stockholders may be entitled,
under statutory provisions or provisions contained in the certificate or
articles of incorporation, to receive the appraised or fair value of their
holdings), any Participant to whom an Option or Right has been granted at least
six months prior to such event shall have the right (subject to the provisions
of the Plan and any limitation or vesting period applicable to such Option or
Right), thereafter and during the term of each such Option or Right, to receive
upon exercise of any such Option or Right an amount equal to the excess of the
fair market value on the date of such exercise of the securities, cash or other
property, or combination thereof, receivable upon such merger, consolidation or
combination in respect of a Share over the Exercise Price of such Right or
Option, multiplied by the number of Shares with respect to which such Option or
Right shall have been exercised. Such amount may be payable fully in cash, fully
in one or more of the kind or kinds of property payable in such merger,
consolidation or combination, or partly in cash and partly in one or more of
such kind or kinds of property, all in the discretion of the Committee.
13. Assignments and Transfers. No Award nor any right or interest of a
Participant under the Plan in any instrument evidencing any Award under the Plan
may be assigned, encumbered or transferred except, in the event of the death of
a Participant, by will or the laws of descent and distribution or in the case of
Awards other than Incentive Stock Options pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or the rules
thereunder.
14. Employee Rights Under the Plan. No director, officer or employee shall
have a right to be selected as a Participant nor, having been so selected, to be
selected again as a Participant and no director, officer, employee or other
person shall have any claim or right to be granted an Award under the Plan or
under any other incentive or similar plan of the Corporation or any Affiliate.
Neither the Plan nor any action taken thereunder shall be construed as giving
any employee any right to be retained in the employ of the Corporation or any
Affiliate.
15. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933 or any other Federal, state or local
securities legislation or regulation. It may be provided that any representation
requirement shall become inoperative upon a registration of the Shares or other
action eliminating the necessity of such representation under such Securities
Act or other securities legislation. The Corporation shall not be required to
deliver any Shares under the Plan prior to (i) the admission of such shares to
listing on any stock exchange or other system on which Shares
A-6
may then be listed, and (ii) the completion of such registration or other
qualification of such Shares under any state or Federal law, rule or regulation,
as the Committee shall determine to be necessary or advisable.
16. Withholding Tax. The Corporation shall have the right to deduct from
all amounts paid in cash with respect to the exercise of a Right under the Plan
any taxes required by law to be withheld with respect to such cash payments.
Where a Participant or other person is entitled to receive Shares pursuant to
the exercise of an Option or Right pursuant to the Plan, the Corporation shall
have the right to require the Participant or such other person to pay the
Corporation the amount of any taxes which the Corporation is required to
withhold with respect to such Shares, and may, in its sole discretion, withhold
sufficient Shares to cover the amount of taxes which the Corporation is required
to withhold.
17. Amendment or Termination. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time,
subject to Office of Thrift Supervision Regulations, but (except as provided in
Section 11 hereof) no amendment shall be made without approval of the
stockholders of the Corporation which shall (i) increase the aggregate number of
Shares with respect to which Awards may be made under the Plan, (ii) materially
increase the benefits accruing to Participants, (iii) materially change the
requirements as to eligibility for participation in the Plan or (iv) change the
class of persons eligible to participate in the Plan; provided, however, that no
such amendment, suspension or termination shall impair the rights of any
Participant, without his consent, in any Award theretofore made pursuant to the
Plan.
18. Effective Date and Term of Plan. The Plan shall become effective upon
its ratification by stockholders of the Corporation. It shall continue in effect
for a term of ten years unless sooner terminated under Section 17 hereof.
19. Initial Grant. By, and simultaneously with, the ratification of this
Plan by the stockholders of the Corporation, each member of the Board of
Directors of the Corporation at the time of stockholder ratification of this
Plan who is not a full-time Employee, is hereby granted a ten-year,
Non-Qualified Stock Option to purchase .5% of the shares sold in the Conversion
at an Exercise Price per share equal to the Market Value per share of the Shares
on the date of grant. Each such Option shall be evidenced by a Non-Qualified
Stock Option Agreement in a form approved by the Board of Directors and shall be
subject in all respects to the terms and conditions of this Plan, which are
controlling. All Options granted pursuant to this section shall vest in five
equal annual installments with the first installment vesting on the first
anniversary of the date of grant, subject to the Director maintaining Continuous
Service with the Corporation or its Affiliates since the date of grant. All
Options granted pursuant to this Section 19 shall be rounded down to the nearest
whole share to the extent necessary to ensure that no Options to purchase stock
representing fractional shares are granted.
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Appendix B
PS FINANCIAL, INC.
1997 RECOGNITION AND RETENTION PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, executive officers and employees of the
Corporation and its Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Award" - means the grant of Restricted Stock pursuant to the terms of
Section 12 of the Plan or by the Committee, as provided in the Plan.
"Affiliate" - means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Bank" - means Preferred Savings Bank, a savings institution and its
successors.
"Beneficiary" - means the person or persons designated by a Participant to
receive any benefits payable under the Plan in the event of such Participant's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Participant's surviving spouse, if
any, or if none, his estate.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee of the Board of Directors of the
Corporation referred to in Section 6 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, director emeritus, advisory director,
executive officer or employee of the Corporation or any Affiliate. Service shall
not be considered interrupted in the case of sick leave, military leave or any
other leave of absence approved by the Corporation or any Affiliate or in the
case of transfers between payroll locations of the Corporation or its Affiliates
or between the Corporation, its Affiliates or its successor. With respect to any
director emeritus or advisory director, continuous service shall mean
availability to perform such functions as may be required of such individuals.
"Conversion" - means the conversion of the Bank from the mutual to the
stock form of organization.
"Corporation" - means PS Financial, Inc., a Delaware corporation.
"Disability" - means any physical or mental impairment which qualifies an
employee, director, director emeritus or advisor director for disability
benefits under any applicable long-term disability plan maintained by the Bank
or an Affiliate, or, if no such plan applies to such individual, which renders
such employee or director, in the judgment of the Committee, unable to perform
his customary duties and responsibilities.
"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
"Non-Employee Director" - means a director who a) is not currently an
officer or employee of the Corporation; b) is not a former employee of the
Corporation who receives compensation for prior services (other than from a
tax-qualified retirement plan); c) has not been an officer of the Corporation;
d) does not
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receive remuneration from the Corporation in any capacity other than as a
director; and e) does not possess an interest in any other transactions or is
not engaged in a business relationship for which disclosure would be required
under Item 404(a) or (b) of Regulation S-K.
"Participant" - means any director, director emeritus, advisory director,
executive officer or employee of the Corporation or any Affiliate who is
selected by the Committee to receive an Award or a director who is granted an
award pursuant to Section 12.
"Plan" - means the 1997 Recognition and Retention Plan of the Corporation.
"Restricted Period" - means the period of time selected by the Committee
for the purpose of determining when restrictions are in effect under Section 3
hereof with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" - means Shares which have been contingently awarded to
a Participant by the Committee subject to the restrictions referred to in
Section 3 hereof, so long as such restrictions are in effect.
"Shares" - means the common stock, par value $0.01 per share, of the
Corporation.
3. Terms and Conditions of Restricted Stock. The Committee shall have full
and complete authority, subject to the limitations of the Plan, to grant Awards
and, in addition to the terms and conditions contained in paragraphs (a) through
(f) of this Section 3, to provide such other terms and conditions (which need
not be identical among Participants) in respect of such Awards, and the vesting
thereof, as the Committee shall determine, subject to Office of Thrift
Supervision Regulations.
(a) At the time of an award of Restricted Stock, the Committee shall establish
for each Participant a Restricted Period, during which or at the
expiration of which, as the Committee shall determine and provide in the
agreement referred to in paragraph (d) of this Section 3, the Shares
awarded as Restricted Stock shall vest, and subject to any such other
terms and conditions as the Committee shall provide, shares of Restricted
Stock may not be sold, assigned, transferred, pledged, voted or otherwise
encumbered by the Participant, except as hereinafter provided, during the
Restricted Period. Except for such restrictions, and subject to paragraphs
(c) and (e) of this Section 3 and Section 4 hereof, the Participant as
owner of such shares shall have all the rights of a stockholder.
No director who is not an employee of the Corporation shall be granted
Awards with respect to more than 5% of the total shares subject to the
Plan. All non-employee directors of the Corporation, in the aggregate, may
not be granted Awards with respect to more than 30% of the total shares
subject to the Plan and no individual shall be granted Awards with respect
to more than 25% of the total shares subject to the Plan. No Awards shall
begin vesting earlier than one year from the date the Plan is approved by
stockholders of the Corporation and no Award shall vest at a rate in
excess of 20% per year, except in the event of death or disability. In the
event Office of Thrift Supervision Regulations are amended (the "Amended
Regulations") to permit shorter vesting periods, any Award made pursuant
to this Plan, which Award is subject to the requirements of such Amended
Regulations, may vest, at the sole discretion of the Committee, in
accordance with such Amended Regulations.
Subject to compliance with Office of Thrift Supervision Regulations, the
Committee shall have the authority, in its discretion, to accelerate the
time at which any or all of the restrictions shall lapse with respect to
an Award, or to remove any or all of such restrictions, whenever it may
determine that such action is appropriate by reason of changes in
applicable tax or other laws or other changes in circumstances occurring
after the commencement of such Restricted Period.
(b) Except as provided in Section 5 hereof, if a Participant ceases to
maintain Continuous Service for any reason (other than death or
disability), unless the Committee shall otherwise determine, all Shares
of
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Restricted Stock theretofore awarded to such Participant and which at
the time of such termination of Continuous Service are subject to the
restrictions imposed by paragraph (a) of this Section 3 shall upon such
termination of Continuous Service be forfeited and returned to the
Corporation. If a Participant ceases to maintain Continuous Service by
reason of death or disability, Restricted Stock then still subject to
restrictions imposed by paragraph (a) of this Section 3 will be free of
those restrictions.
(c) Each certificate in respect of Shares of Restricted Stock awarded under
the Plan shall be registered in the name of the Participant and
deposited by the Participant, together with a stock power endorsed in
blank, with the Corporation and shall bear the following (or a similar)
legend:
The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the 1997 Recognition and Retention Plan of
PS Financial, Inc. Copies of such Plan are on file in the offices of
the Secretary of PS Financial, Inc., 4800 South Pulaski Road,
Chicago, Illinois 60632.
(d) At the time of any Award, the Participant shall enter into an Agreement
with the Corporation in a form specified by the Committee, agreeing to the
terms and conditions of the Award and such other matters as the Committee,
in its sole discretion, shall determine (the "Restricted Stock
Agreement").
(e) The payment to the Participant of dividends or other distributions
declared or paid on such shares by the Corporation shall be deferred until
the lapsing of the restrictions imposed under paragraph (a) of this
Section 3, and such dividends or other distributions shall be held by the
Corporation for the account of the Participant until such time. There
shall be credited at the end of each year (or portion thereof) interest on
the amount of the deferred dividends or other distributions at a rate per
annum as the Committee, in its discretion, may determine. Payment of
deferred dividends or other distributions, together with interest accrued
thereon, shall be made upon the earlier to occur of the lapsing of the
restrictions imposed under paragraph (a) of this Section 3 or upon death
or disability of the Participant.
(f) At the lapsing of the restrictions imposed by paragraph (a) of this
Section 3, the Corporation shall deliver to the Participant (or where the
relevant provision of paragraph (b) of this Section 3 applies in the case
of a deceased Participant, to his legal representative, beneficiary or
heir) the certificate(s) and stock power deposited with it pursuant to
paragraph (c) of this Section 3 and the Shares represented by such
certificate(s) shall be free of the restrictions referred to in paragraph
(a) of this Section 3.
4. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan and the
number and class of shares with respect to which Awards theretofore have been
granted under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any shares of stock or other securities
received as a result of any of the foregoing by a Participant with respect to
Restricted Stock shall be subject to the same restrictions and the
certificate(s) or other instruments representing or evidencing such shares or
securities shall be legended and deposited with the Corporation in the manner
provided in Section 3 hereof.
5. Assignments and Transfers. During the Restricted Period, no Award nor
any right or interest of a Participant under the Plan in any instrument
evidencing any Award under the Plan may be assigned, encumbered or transferred
except (i) in the event of the death of a Participant, by will or the laws of
descent and distribution, or (ii) pursuant to a qualified domestic relations
order as defined in the Code or Title I of ERISA or the rules thereunder.
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6. Administration. The Plan shall be administered by a Committee
consisting of two or more members, each of whom shall be a Non-Employee
Director. The members of the Committee shall be appointed by the Board of
Directors of the Corporation. Except as limited by the express provisions of the
Plan, the Committee shall have sole and complete authority and discretion,
subject to Office of Thrift Supervision Regulations, to (i) select Participants
and grant Awards; (ii) determine the number of Shares to be subject to types of
Awards generally, as well as individual Awards granted under the Plan; (iii)
determine the terms and conditions upon which Awards shall be granted under the
Plan; (iv) prescribe the form and terms of instruments evidencing such grants;
and (v) establish from time to time regulations for the administration of the
Plan, interpret the Plan, and make all determinations deemed necessary or
advisable for the administration of the Plan. The Committee may maintain, and
update from time to time as appropriate, a list designating selected directors
as Disinterested Persons. The purpose of such list shall be to evidence the
status of such individuals as Disinterested Persons, and the Board of Directors
may appoint to the Committee any individual actually qualifying as a
Disinterested Person, regardless of whether identified as such on said list.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.
7. Shares Subject to Plan. Subject to adjustment by the operation of
Section 4 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 4% of the total Shares issued in the Association's
Conversion. The Shares with respect to which Awards may be made under the Plan
may be either authorized and unissued Shares or issued Shares heretofore or
hereafter reacquired and held as treasury Shares. An Award shall not be
considered to have been made under the Plan with respect to Restricted Stock
which is forfeited and new Awards may be granted under the Plan with respect to
the number of Shares as to which such forfeiture has occurred.
The Corporation's obligation to deliver Shares with respect to an Award
shall, if the Committee so requests, be conditioned upon the receipt of a
representation as to the investment intention of the Participant to whom such
Shares are to be delivered, in such form as the Committee shall determine to be
necessary or advisable to comply with the provisions of the Securities Act of
1933 or any other Federal, state or local securities legislation or regulation.
It may be provided that any representation requirement shall become inoperative
upon a registration of the Shares or other action eliminating the necessity of
such representation under such Securities Act or other securities legislation.
The Corporation shall not be required to deliver any Shares under the Plan prior
to (i) the admission of such shares to listing on any stock exchange on which
Shares may then be listed, and (ii) the completion of such registration or other
qualification of such Shares under any state or Federal law, rule or regulation,
as the Committee shall determine to be necessary or advisable.
8. Employee Rights Under the Plan. No director, director emeritus,
advisory director, officer or employee shall have a right to be selected as a
Participant nor, having been so selected, to be selected again as a Participant
and no director, officer, employee or other person shall have any claim or right
to be granted an Award under the Plan or under any other incentive or similar
plan of the Corporation or any Affiliate. Neither the Plan nor any action taken
thereunder shall be construed as giving any officer or employee any right to be
retained in the employ of the Corporation, the Bank or any Affiliate.
9. Withholding Tax. Upon the termination of the Restricted Period with
respect to any shares of Restricted Stock (or at such earlier time, if any, that
an election is made by the Participant under Section 83(b) of the Code, or any
successor provision thereto, to include the value of such shares in taxable
income), the Corporation may, in its sole discretion, withhold from any payment
or distribution made under this Plan sufficient Shares or withhold sufficient
cash to cover any applicable withholding and employment taxes. The Corporation
shall have the right to deduct from all dividends paid with respect to shares of
Restricted Stock
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the amount of any taxes which the Corporation is required to withhold with
respect to such dividend payments. No discretion or choice shall be conferred
upon any Participant with respect to the form, timing or method of any such tax
withholding.
10. Amendment or Termination. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time,
subject to Office of Thrift Supervision Regulations, but (except as provided in
Section 4 hereof) no amendment shall be made without approval of the
stockholders of the Corporation which shall (i) increase the aggregate number of
Shares with respect to which Awards may be made under the Plan, (ii) materially
increase the benefits accruing to Participants, (iii) materially change the
requirements as to eligibility for participation in the Plan or (iv) change the
class of persons eligible to participate in the Plan; provided, however, that no
such amendment, suspension or termination shall impair the rights of any
Participant, without his consent, in any Award theretofore made pursuant to the
Plan.
11. Term of Plan. The Plan shall become effective upon its ratification by
the stockholders of the Corporation. It shall continue in effect for a term of
ten years unless sooner terminated under Section 11 hereof.
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