United Trust Group, Inc. Employee and Director Stock Purchase Plan
COMMON STOCK
(no par value)
Background
United Trust Group, Inc. is an Illinois corporation and an insurance holding
company.
We desire to offer employees and directors of United Trust Group, Inc. and its
subsidiaries the opportunity to invest in shares of our common stock. This
document describes the plan we have established under which employees and
directors may purchase shares of United Trust Group, Inc. common stock.
Investing in shares under the plan is not without risks. The price at which
shares are being offered under this plan is not based on market price, and
employees and directors investing in shares under the plan will be required to
execute a stock restriction agreement. The stock restriction agreement imposes
significant restrictions on the transferability of shares, and fixes the price
at which a participant in the plan may be required to sell shares back to United
Trust Group, Inc. based on the change in the book value of the shares, not
market value.
A note about United Trust Group, Inc.
United Trust Group, Inc. is a publicly-held company that files reports with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934. Until recently, our common stock was traded on the Nasdaq Small Cap Stock
Market. Effective December 31, 2001, we voluntarily de-listed our shares from
Nasdaq, and our shares are now traded sporadically in the over-the-counter
market.
Jesse Correll, and his affiliates and associates own a majority of our
outstanding shares of common stock.
How many shares may be issued under the plan
The board of directors has authorized the issuance of a total of 400,000 shares
of common stock pursuant to this plan. The number of shares authorized to be
issued under the plan will be subject to adjustment proportionately if there is
a stock dividend, stock split or similar recapitalization event resulting in a
change in shares of United Trust Group, Inc.
How the plan operates
Annual offering of shares. Eligible employees and directors of United Trust
Group, Inc. and its subsidiaries may be offered the opportunity to purchase a
limited amount of shares of United Trust Group under the plan annually. Each
annual offering, if made, will remain open for a period of 30 days, during which
directors and eligible employees selected by our board of directors may elect to
purchase shares of United Trust Group, Inc. under the plan. An election to
purchase shares will not be valid unless the employee/director meets the
eligibility requirements to participate in the plan and, prior to the end of the
offering period,
(1) the employee/director delivers to United Trust Group, Inc. a signed,
completed subscription agreement, in the form attached as Exhibit A,
together with payment in full of the purchase price of the shares, and
(2) the employee/director signs and delivers to United Trust Group, Inc. a
stock restriction agreement, in the form attached as Exhibit B.
Limit on number of shares that may be purchased annually. The board of
directors of United Trust Group, Inc. shall have discretion to determine the
number of shares to be offered in any annual offering subject to the limitations
in this plan and to determine the number of shares, if any, to be offered to
each director or eligible employee in an annual offering under the plan. No
fractional shares will be issued, and any fractions will be rounded down to the
next whole number.
Closing of annual offering. The closing of an annual offering will occur
within [5] business days following the end of the annual offering period. At
that time, certificates representing the shares purchased by a participating
employee in an annual offering will be issued, in the name of the participating
employee, and, if there has been an oversubscription, any excess funds received
will be returned, by check, to participating employees (without interest).
Timing of annual offerings. The board of directors of United Trust Group,
Inc. will determine if and when annual offerings of shares under the plan will
be made.
Price of shares in an annual offering. The price at which shares will be
offered in the first annual offering has been arbitrarily set at $12.00 per
share. At each annual offering thereafter, the board of directors of United
Trust Group, Inc. will fix the price at which shares will be offered under the
plan at the time it authorizes the annual offering. In any case, the price at
which shares will be offered under the plan will not be less than 100% of the
fair market value of shares of United Trust Group, Inc. at the time the offering
is authorized by the United Trust Group, Inc. board of directors.
Eligibility requirements for participants
The board of directors of United Trust Group, Inc. shall have discretion to
select the directors and eligible employees who will be extended the opportunity
to purchase shares in any annual offering under the plan. Only individual
employees of United Trust Group, Inc. or its subsidiaries who either (1) serve
as directors of United Trust Group, Inc. or its subsidiaries or (2) have been
employed full-time by United Trust Group, Inc. or its subsidiaries for at least
1 year at the time of an offering of shares under the plan are eligible to
participate and purchase shares in that offering under the plan. Any person
serving as a director of United Trust Group, Inc. or any of its subsidiaries at
the time of an offering of shares under the plan is eligible to participate and
purchase shares in that offering under the plan.
The board of directors of United Trust Group, Inc. may refuse to issue any
shares to a person if it determines, in good faith, that the foregoing
eligibility requirement was not met either during the annual offering period and
at the time of the closing of the offering. Independent contractors and other
individuals who are not employees or directors are not eligible to participate
in the plan.
The employment relationship will be treated as continuing intact while an
employee is on sick leave or other bona fide leave of absence for a period not
to exceed 90 days. Where the period of leave exceeds 90 days, the employment
relationship will be deemed terminated on the 91st day of such leave.
The opportunity to participate in the plan is personal to eligible employees and
directors selected by the board of directors. No right with regard to
participation in the plan or right to purchase and receive shares of United
Trust Group, Inc. under the plan may be assigned, transferred, pledged or
otherwise disposed of in any way by a participating employee or director. Any
such attempted assignment, transfer, pledge, or other disposition will be
without effect. An eligible employee's or director's right to purchase shares
under the plan may be exercised only during the employee's or director's
lifetime.
A participating employee or director will have no interest in, or rights to, any
shares under the plan until the certificate represented shares purchased by that
participating employee has been issued.
Who administers the plan
The plan is administered by the board of directors of United Trust Group, Inc.
The board of directors of United Trust Group, Inc. has full power and authority
to construe, interpret and administer the plan and may adopt rules and
regulations for carrying out the plan. The board of directors may make
arrangements for individuals or organizations to assist in the administration of
the plan. Decisions made by the board of directors of United Trust Group, Inc.
in the administration of the plan are final and binding absent manifest error.
Conditions of the plan
It is a condition of any offer of shares under this plan that the offer and sale
of the shares are either exempt from the registration requirements imposed under
the Securities Act of 1933 and applicable state securities laws or are duly
registered in compliance with such registration requirements, and will be
administered accordingly. United Trust Group, Inc. will not be obligated to
offer or issue any shares under this plan if it determines, in good faith, that
the offering or issuance of such sale violates any law.
Until the shareholders of United Trust Group, Inc. approve the participation of
directors in the plan, directors of United Trust Group, Inc. will not be
entitled to participate in the plan, or in any offering under the plan, unless
they are otherwise entitled to participate in the plan as eligible employees of
United Trust Group, Inc. and its subsidiaries.
Transfer restrictions
Shares issued under the Plan shall be subject to the restrictions on
transferability contained in the stock restriction agreement and applicable
restrictions under federal and state securities laws.
Amendment and termination of the plan
The plan may be amended or terminated by the board of directors of United Trust
Group, Inc. at any time.
Construction of plan
This plan shall be governed by the laws of Illinois.
No provision of this plan shall be construed as giving any person any right he
would not otherwise have to become or remain an employee of United Trust Group,
Inc. or any of its subsidiaries or any other right not expressly created by such
provision.
No provision of this plan shall be construed as requiring Jesse Correll or any
of his associates or affiliates to acquire or retain ownership of shares of
United Trust Group, Inc., or restrict in any way the issuance of shares of
United Trust Group, Inc. or the transfer of ownership or control of shares of
any of United Trust Group, Inc. or any of its subsidiaries.
This plan is not intended to qualify as an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code.
Date approved by the board of directors of United Trust Group, Inc.: March 26,
2002
Date approved by the shareholders of United Trust Group, Inc.: June 11, 2002
UNITED TRUST GROUP, INC.
/s/ Theodore C. Miller
--------------------------------------------
Theodore C. Miller, Secretary
Exhibit A
United Trust Group, Inc. Employee and Director Stock Purchase Plan
Notice of Offering and
Subscription Agreement
To:
Name:
Residence address:
Positions with United Trust Group,
Inc. and/or its subsidiaries: director and/or employee
Date offer extended:
Date offer expires:
________________________________________________________________________________
Note: The date the offer expires is the deadline for accepting this offer to
purchase shares.
United Trust Group, Inc. (the "Company") is offering selected eligible
employees and directors the opportunity to purchase shares of common stock of
the Company pursuant to the United Trust Group, Inc. Employee and Director Stock
Purchase Plan (the "Plan"). You are being extended the opportunity to purchase
the number of shares set out below in the offering, subject to the terms and
conditions of the Plan.
Aggregate number of shares you can
purchase in the offering:
Price per share:
________________________________________________________________________________
If you desire to accept the offer and purchase the shares, you must deliver to
the Company by the close of business on the date the offer expires:
° The following Subscription Agreement, signed and completed by you, and
° Payment for the shares you elect to purchase, and
° The Stock Restriction and Buy-Back Agreement required by the Plan, signed
by you.
A copy of the Plan and the Prospectus providing information about the Plan
and the shares of common stock being offered accompanies this Notice of Offering
and Subscription Agreement.
The Company reserves the right to terminate this offering at any time.
UNITED TRUST GROUP, INC.
By _____________________________________________
Member, Board of Directors
Subscription Agreement
This Subscription Agreement is being delivered by the undersigned to United
Trust Group, Inc. (the "Company") to purchase shares of Common Stock of the
Company that are being offered to me pursuant to the United Trust Group, Inc.
Employee and Director Stock Purchase Plan (the "Plan"). I accept the Company's
offer and agree to purchase shares of Common Stock of the Company in the
offering pursuant to the Plan as follows:
Number of shares being purchased: ________________________
Price: $____________ per share ($__________________ in the aggregate)
Manner of payment: ____________________________________________________________
Please register the shares I am acquiring in my name (as printed below) at the
following address:
______________________________________________________________________________
[insert the address that will be used for the Company's shareholders' list]
Accompanying this notice is the Stock Restriction and Buy-Sell Agreement which I
have executed and join in as a Shareholder of the Company.
I agree and confirm that:
• I have received and read the Plan and agree to be bound by the terms and
conditions contained in the Plan and in the Stock Restriction and Buy-Sell
Agreement.
• I have received a copy of the Prospectus relating to the shares being
offered under the Plan, and the most recent annual report and annual
meeting proxy materials of the Company.
• I understand that the transferability of the shares I am acquiring is
subject to restrictions under the Stock Restriction and Buy-Sell Agreement.
• I agree that the certificates representing all shares of Common Stock
acquired under the Plan will bear a legend providing notice that such
shares are restricted and bound by the terms and conditions of the Stock
Restriction and Buy-Sell Agreement, as in effect from time to time.
The foregoing agreements, commitments and obligations are being made by and on
behalf of and shall be binding on me and my heirs, legatees and legal
representatives and any transferee with respect to all shares of Common Stock
acquired pursuant to the Plan (or any shares of Common Stock issued pursuant to
a stock dividend or stock split thereon or any securities issued in lieu thereof
or in substitution or exchange therefor).
This Subscription Agreement is being executed and delivered to the Company on
______________________
[insert date]
____________________________________
[signature]
____________________________________
[printed name]
Exhibit B
UNITED TRUST GROUP, INC.
STOCK RESTRICTION AND BUY-SELL AGREEMENT
This Stock Restriction and Buy-Sell Agreement ("Agreement"), dated
___________, 2002, is made and entered into by and among United Trust Group,
Inc., an Illinois corporation (the "Holding Company"), and the undersigned
shareholders of the Holding Company (individually a "Shareholder" and,
collectively, the "Shareholders").
Background
The Holding Company has adopted the United Trust Group, Inc. Employee and
Director Stock Purchase Plan (the "Plan") pursuant to which certain employees
and directors of the Holding Company and its subsidiaries have been afforded the
opportunity to purchase shares of common stock of the Holding Company. Each of
the Shareholders is executing this Agreement concurrently with the purchase of
shares pursuant to the Plan. As a condition to their participation in, and
purchase of shares under, the Plan, the Shareholders are obligated to enter into
this Agreement imposing certain restrictions and obligations on themselves and
any shares of common stock of the Holding Company now or hereafter issued to
them pursuant to the Plan (the "Shares"). As used in this Agreement, the term
"participant" refers to an employee or director of the Holding Company who
purchases Shares from the Holding Company pursuant to the Plan.
Now, therefore, in consideration of the premises and the mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Holding Company and the
Shareholders agree as follows:
1. Restriction on Stock. Except as otherwise provided in this Agreement, no
Shareholder shall sell, transfer or otherwise dispose of (whether voluntarily or
involuntarily or by operation of law) or agree or commit to sell, transfer, or
otherwise dispose of all or any part of the Shares owned by the Shareholder
without complying with the terms of this Agreement.
2. Permitted Transfers and Sales of Shares.
a. Any Shareholder may transfer all or any part of the Shares owned by
such Shareholder by gift to or for the benefit of the Shareholder, the
Shareholder's spouse, or the Shareholder's children. The transferee shall
receive, hold, and/or own such Shares subject to the terms of this
Agreement and the obligations hereunder of the transferor Shareholder.
b. Any Shareholder may pledge, mortgage or otherwise encumber the
Shares owned by such Shareholder; provided, however, that this Agreement
shall be binding upon the person in whose favor the Shareholder pledges,
mortgages or otherwise encumbers any or all of such Shares, and the pledgee
shall receive, hold, and/or own such Shares subject to the terms of this
Agreement and the obligations hereunder of the pledgor Shareholder.
Notwithstanding the provisions of this Paragraph 2.b., any Shareholder may
pledge, mortgage or otherwise encumber any or all of the Shares owned by
them for the purpose of securing a loan or loans on behalf of the Holding
Company or any affiliate of the Holding Company, and the pledgee of any
such Shares shall receive, hold, and/or own such Shares free of the terms
and restrictions contained in this Agreement and free of any obligations
hereunder imposed on any Shareholder or any other person. For purposes of
this Agreement, an "affiliate" shall mean any entity which is controlled by
the Holding Company or by Jesse Correll, either individually or
collectively.
c. Any Shareholder may sell, at any time, all or a portion of the
Shares owned by such Shareholder in accordance with the provisions of this
Paragraph 2.c. or Paragraph 2.d. below.
i. Such Shares must first be offered for sale to the Holding
Company, and, within ten days of its receipt of such offer, the
Holding Company (or its designee) shall purchase such Shares, at the
price and in the manner provided in Paragraph 4; provided, however,
that the selling Shareholder shall sell to the Holding Company not
less than the lesser of:
(1) all of the Shares then owned by such Shareholder; or
(2) that number of Shares whose fair value as determined in
accordance with Paragraph 4 is at least $1,000.
ii. If the Holding Company (or its designee) is unable to
purchase all of the Shares to be sold, then the remaining Shareholders
will have a ten day option to purchase such Shares (or the remainder
of such Shares if the Holding Company purchases less than all of the
Shares offered for sale). All Shareholders who exercise their options
to purchase such Shares may purchase an amount of such Shares equal to
the percentage of Shares they own of the total number of Shares owned
by all of the Shareholders exercising their options, at the price and
in the manner provided in Paragraph 4.
iii. If all or any part of the Shares of the selling Shareholder
are not purchased by the Holding Company or the remaining
Shareholders, or both, in accordance with the provisions of this
Paragraph 2.c, then the selling Shareholder shall be free to sell all,
but not less than all, of the Shares not purchased by Holding Company
or the remaining Shareholders, for a period of 90 days from the
expiration of the option of the remaining Shareholders; provided,
however, that at the end of such 90-day period, all restrictions
imposed by this Agreement shall again be applicable.
d. Any Shareholder may sell, donate or otherwise transfer, at any
time, all or a portion of the Shares owned by such Shareholder with the
prior consent and approval of the board of directors of the Holding
Company. In considering any request by a Shareholder pursuant to this
Paragraph 2.d., the board of directors shall not be deemed to be under any
obligation to consent to or approve of such request and may condition its
consent and approval on such terms and conditions as the board of directors
of the Holding Company deems appropriate, in the exercise of its
discretion.
3. Mandatory Sale and Purchase.
a. Upon the death of any Shareholder, or the termination of any
Shareholder's employment with or service as a director of the Holding
Company or any affiliate of the Holding Company (whether by reason of
retirement, disability or voluntary or involuntary termination of
employment, with or without cause), the Holding Company (or its designee)
shall purchase, and the Shareholder, or his or her personal representative,
spouse and/or children, as the case may be, shall sell, all of such Shares:
i. then held by such Shareholder; or
ii. which were transferred by such Shareholder to or for the
benefit of such Shareholder or his or her spouse or children in
accordance with the terms of Paragraph 2.a of this Agreement; or
iii. which were transferred to such Shareholder's spouse in
accordance with the terms of a decree of divorce.
b. Upon a non-employee, non-director Shareholder's divorce from the
participant in the Plan from whom such Shareholder has acquired Shares, the
Holding Company shall purchase, and the Shareholder shall sell, all of such
Shares then held by such Shareholder, and, at the discretion of the board
of directors of the Holding Company, any Shares which were transferred by
such non-employee, non-director Shareholder to his or her children in
accordance with Paragraph 2.a.
c. Such purchase by the Holding Company under Paragraph 3.a or 3.b
above shall be at the price and in the manner provided in Paragraph 4 of
this Agreement and shall take place within 90 days of such Shareholder's
death or termination of employment or the entry of a decree of divorce.
4. Purchase Price and Terms of Purchase. The purchase price for any Shares
purchased pursuant to this Agreement shall be, on a per Share basis, equal to
the sum of (i) the original purchase price(s) paid to acquire such Shares from
the Holding Company at the time they were sold pursuant to the Plan and (ii) the
consolidated statutory net earnings (loss) per Share of such Shares during the
period from the end of the month next preceding the month in which such Shares
were acquired pursuant to the Plan to the end of the month next preceding the
month in which the closing of such purchase occurs. The consolidated statutory
net earnings per Share shall be computed as the net income of the Holding
Company and its subsidiaries on a consolidated basis in accordance with
statutory accounting principles applicable to insurance companies, as computed
by the Holding Company, less any dividends paid to shareholders. The calculation
of net earnings per Share shall be performed on a monthly basis using the number
of common shares of the Holding Company outstanding as of the end of the
reporting period. The purchase price for any Shares purchased hereunder shall be
paid in cash within 60 days from the date of purchase subject to the receipt of
any required regulatory approvals as provided in Paragraph 6 of this Agreement.
5. Tag-along Rights. If, during the term of this Agreement, Jesse Correll
and his affiliates sell, in one or a series of related transactions, more than
50% of the then outstanding shares of common stock of the Holding Company to any
third party who is not an affiliate of Jesse Correll, then all of the
Shareholders will be given the opportunity to sell their Shares either to such
third party or to the Holding Company on the same terms and conditions as Jesse
Correll and his affiliates.
6. Regulatory Approvals. Should any regulatory approvals be required in
connection with the purchase of any Shares provided for in this Agreement, the
Shares and the purchase price therefor shall be escrowed pending receipt of such
approvals. Interest on the purchase price placed in escrow shall accrue to the
benefit of the selling Shareholder regardless of whether the sale ultimately
takes place. Notwithstanding the necessity of obtaining any regulatory approval,
the sale of any Shares hereunder must close, if at all, within 150 days from the
date the Shares were first offered for sale or the date of death, termination of
employment or divorce of a selling Shareholder.
7. Endorsement on Stock Certificates. All stock certificates representing
the Shares of the Holding Company shall contain the following legend:
"The shares represented by this certificate may not be transferred except
in accordance with the terms contained in a certain Stock Restriction and
Buy-Sell Agreement dated as of ______________, 2002. Transfers in violation
of that Agreement are void. A copy of that Agreement may be obtained from
United Trust Group, Inc."
8. Notice. Any notice required or permitted under this Agreement shall be
in writing, shall be delivered to the residence or principal place of business
of the intended recipient as noted on the stock record books of the Holding
Company, by either registered mail, overnight courier service or hand delivery,
and shall be deemed received the third business day after such notice is
deposited in the U.S. mail, postage prepaid the next business day after deposit
with an overnight courier service or the date of hand delivery.
9. Binding Effect. This Agreement shall be binding on the parties hereto,
their successors, assigns, estates and heirs, and on any transferee of Shares of
the Holding Company. As a condition of any transfer of Shares, including any
transfer on the books of the Holding Company and the issuance of certificates
representing such Shares, the transfer must be made in accordance with this
Agreement and the transferee of such Shares shall execute and become a party to
this Agreement. Any attempt to transfer Shares or to assign rights and
obligations under this Agreement, whether voluntarily or by operation of law,
shall be void and shall not be binding on the Holding Company or its
Shareholders unless done in accordance with the terms of this Agreement.
10. Other Shareholders. The Holding Company may issue additional Shares
pursuant to the Plan for such consideration as may be determined by the Board of
Directors of the Holding Company. The Holding Company agrees that no such Shares
shall be issued pursuant to the Plan except upon agreement by the purchaser
thereof to become a party to and be bound by the provisions of this Agreement by
executing this Agreement in the spaces provided below. From and after the date
of issuance of such Shares, the purchaser thereof shall, for all purposes, be
deemed to be a Shareholder as that term is used in this Agreement.
11. Amendments and Waivers. This Agreement may be amended or modified only
by an instrument in writing signed by the Holding Company and the holders of a
majority of the outstanding Shares that are subject to this Agreement, and any
provision of this Agreement may be waived by the board of directors of the
Holding Company; provided, however, that no such amendment, modification or
waiver shall, unless by an instrument signed by the Holding Company and all of
the Shareholders [i] differ in effect on any Shareholder in a material and
adverse manner from the effect of such amendment, modification or waiver on the
holders of a majority of the Shares, [ii] create any additional obligation for a
Shareholder without creating similar obligations on the other Shareholders
without the prior written consent of the Shareholder so affected, or [iii] alter
the terms of Paragraph 5 of this Agreement.
12. Termination of Agreement. This Agreement may be voluntarily terminated
by the affirmative vote of at least two-thirds of the outstanding Shares. This
Agreement will automatically terminate if Jesse Correll and his affiliates sell
substantially all of their shares of common stock of the Holding Company and all
Shareholders have had the same opportunity to sell their Shares as provided for
in Paragraph 5.
13. Counterparts. This Agreement may be executed in counterparts, all of
which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
UNITED TRUST GROUP, INC.
By___________________________
Title_________________________
UNITED TRUST GROUP, INC.
STOCK RESTRICTION AND BUY-SELL AGREEMENT
The undersigned does hereby execute and become a party to the United Trust
Group, Inc. Stock Restriction and Buy-Sell Agreement dated as of _____________,
2002.
_______________________________
Shareholder Signature
Printed
Name: ________________________
Date: ________________________
