Exhibit 2.1
PLAN OF CONVERSION
OF
PEOPLES FEDERAL SAVINGS BANK
TABLE OF CONTENTS
SECTION
NUMBER PAGE
1. Introduction............................................................................. 1
2. Definitions.............................................................................. 1
3. General Procedure for Conversion......................................................... 6
4. Total Number of Shares and Purchase Price of Conversion Stock............................ 7
5. Subscription Rights of Eligible Account Holders.......................................... 8
6. Subscription Rights of Tax-Qualified Employee Stock Benefit Plans........................ 8
7. Subscription Rights of Supplemental Eligible Account Holders............................. 9
8. Subscription Rights of Other Members..................................................... 10
9. Subscription Rights of Directors, Officers and Employees................................. 10
10. Community Offering, Syndicated Community Offering, Public Offering
and Other Offerings.................................................................... 11
11. Limitations on Subscriptions and Purchases of Conversion Stock........................... 13
12. Timing of Subscription Offering, Manner of Exercising Subscription
Rights and Order Forms................................................................. 14
13. Payment for Conversion Stock............................................................. 16
14. Account Holders in Nonqualified States or Foreign Countries.............................. 17
15. Voting Rights of Stockholders............................................................ 18
16. Liquidation Account...................................................................... 18
17. Transfer of Deposit Accounts............................................................. 19
18. Requirements Following Conversion for Registration, Market Making
and Stock Exchange Listing............................................................. 20
19. Directors and Officers of the Bank....................................................... 20
20. Requirements for Stock Purchases by Directors and Officers Following
Conversion.............................................................................. 20
21. Restrictions on Transfer of Stock........................................................ 21
22. Restrictions on Acquisition of Stock of the Holding Company.............................. 21
23. Adoption of Federal Stock Charter and Bylaws............................................. 22
24. Tax Rulings or Opinions.................................................................. 22
25. Stock Compensation Plans ................................................................ 22
26. Dividend and Repurchase Restrictions on Stock............................................ 23
27. Payment of Fees to Brokers............................................................... 23
28. Establishment and Funding of Charitable Foundation....................................... 23
29. Effective Date........................................................................... 24
30. Amendment or Termination of the Plan..................................................... 24
31. Interpretation of the Plan............................................................... 24
PLAN OF CONVERSION
OF
PEOPLES FEDERAL SAVINGS BANK
1. INTRODUCTION.
The Board of Directors of the Peoples Federal Savings Bank (the "Bank")
believes that a conversion of the Bank to stock form pursuant to this Plan of
Conversion is in the best interests of the Bank, as well as in the best
interests of the Bank's depositors, employees, customers and the communities
historically served by the Bank. The Conversion will result in the Bank being
wholly owned by a stock holding company. In addition, the Conversion will result
in the raising of additional capital which will provide the Bank, through the
holding company structure, greater organizational and operational flexibility,
including greater flexibility for effecting mergers and acquisitions of
financial institutions.
The Conversion is intended to provide a larger capital base to support
the Bank's lending and investment activities, possible diversification into
other related financial services activities and future growth through possible
acquisitions of other financial institutions. In addition, the Conversion is
intended to further enhance the Bank's capabilities to serve the borrowing and
other financial needs of the communities it currently serves. In furtherance of
the Bank's commitment to the communities which it serves, this Plan provides for
the establishment of a charitable foundation in connection with the Conversion.
The charitable foundation is intended to complement the Bank's existing
community reinvestment activities in a manner that will allow the Bank's local
community to share in the growth and profitability of the Holding Company and
the Bank. Consistent with the Bank's goal, the funding of the charitable
foundation will be accomplished by the Bank contributing funds thereto prior to
the Conversion or, immediately following the Conversion, the Holding Company
donating a number of shares of its authorized but unissued Holding Company
Common Stock not to exceed 8% of the number of shares of Conversion Stock issued
in the Conversion or a combination thereof.
2. DEFINITIONS.
As used in this Plan, the terms set forth below have the following
meaning:
2.1 ACTUAL PURCHASE PRICE means the price per share at which the
Conversion Stock is ultimately sold by the Holding Company to Participants in
the Subscription Offering and Persons in the Community Offering and/or
Syndicated Community Offering in accordance with the terms hereof.
2.2 AFFILIATE means a Person who, directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified.
2.3 APPLICATION FOR CONVERSION shall have the meaning set forth in
Section 3(a) hereof.
2.4 ASSOCIATE when used to indicate a relationship with any Person,
means (i) a corporation or organization (other than the Bank, a majority-owned
subsidiary of the Bank or the Holding Company) of which such Person is a
director, officer or partner or is, directly or indirectly, the beneficial owner
of 10% or more of any class of equity securities, (ii) any trust or other estate
in which such Person has a substantial beneficial interest or as to which such
Person serves as trustee or in a similar fiduciary capacity, provided, however,
that such terms shall not include any Tax-Qualified Employee Stock Benefit Plan
or Non-Tax-Qualified Employee Stock Benefit Plan of the Holding Company or the
Bank in which such Person has a substantial beneficial interest or serves as a
trustee or in a similar fiduciary capacity, and (iii) any relative or spouse of
such Person, or any relative of such spouse of such Person, who has the same
home as such Person or who is a director or officer of the Bank or the Holding
Company or any of the subsidiaries of the foregoing.
2.5 BANK means Peoples Federal Savings Bank, in its mutual or stock
form, as the sense of the reference requires.
2.6 BANK BENEFIT PLANS includes, but is not limited to, Tax-Qualified
Employee Stock Benefit Plans and Non-Tax-Qualified Employee Stock Benefit Plans.
2.7 CODE means the Internal Revenue Code of 1986, as amended.
2.8 COMMUNITY OFFERING means the offering for sale by the Holding
Company of any shares of Conversion Stock not subscribed for in the Subscription
Offering to (i) natural persons residing in counties in Indiana in which the
Bank has a branch office, and (ii) such other Persons within or without the
State of Indiana as may be selected by the Holding Company and the Bank within
their sole discretion.
2.9 CONTROL (including the terms "controlling," "controlled by," and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
2.10 CONVERSION means (i) the adoption of a federal stock charter by
the Bank to authorize the issuance of shares of capital stock and otherwise to
conform to the requirements of a stock savings bank organized under the laws of
the United States (ii) the issuance of Conversion Stock by the Holding Company
as provided herein and (iii) the purchase by the Holding Company of all of the
capital stock of the Bank to be issued by the Bank in connection with its
conversion from mutual to stock form.
2.11 CONVERSION STOCK means the Holding Company Common Stock to be
issued and sold in the Offering pursuant to the Plan of Conversion, which stock
cannot and will not be insured by the FDIC.
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2.12 DEPOSIT ACCOUNT means withdrawable or repurchasable shares,
investment certificates or deposits or other savings accounts, including money
market deposit accounts and negotiable order of withdrawal accounts, held by an
account holder of the Bank.
2.13 DIRECTOR, OFFICER AND EMPLOYEE means the terms as applied
respectively to any person who is a director, officer or employee of the Bank or
any subsidiary thereof.
2.14 ESOP means a Tax-Qualified Employee Stock Benefit Plan adopted by
the Company and the Bank in connection with the Conversion, the purpose of which
shall be to acquire capital stock of the Company, including Conversion Stock.
2.15 ELIGIBLE ACCOUNT HOLDER means any Person holding a Qualifying
Deposit on the Eligibility Record Date for purposes of determining Subscription
Rights and establishing subaccount balances in the liquidation account to be
established pursuant to Section 16 hereof.
2.16 ELIGIBILITY RECORD DATE means the date for determining Qualifying
Deposits of Eligible Account Holders and is the close of business on December
31, 1999.
2.17 ESTIMATED PRICE RANGE means the range of the estimated aggregate
pro forma market value of the total number of shares of Conversion Stock to be
issued in the Conversion, as determined by the Independent Appraiser in
accordance with Section 4 hereof.
2.18 FDIC means the Federal Deposit Insurance Corporation or any
successor thereto.
2.19 HOLDING COMPANY means the corporation organized at the direction
of the Board of Directors of the Bank to hold all of the capital stock of the
Bank, which shall be incorporated under the laws of such state as so determined
by the Bank's Board of Directors.
2.20 HOLDING COMPANY COMMON STOCK means the common stock of the Holding
Company.
2.21 INDEPENDENT APPRAISER means the independent investment banking or
financial consulting firm retained by the Bank to prepare an appraisal of the
estimated pro forma market value of the Conversion Stock.
2.22 INITIAL PURCHASE PRICE means the price per share to be paid
initially by Participants for shares of Conversion Stock subscribed for in the
Subscription Offering and by Persons for shares of Conversion Stock ordered in
the Community Offering and/or Syndicated Community Offering.
2.23 MEMBER means any Person qualifying as a member of the Bank in
accordance with its mutual charter and bylaws and the laws of the United States.
2.24 OFFERINGS means the Subscription Offering, the Community Offering
and the Syndicated Community Offering or Public Offering.
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2.25 OFFICER means the president, executive vice president, senior vice
president, vice president, secretary, treasurer or principal financial officer,
comptroller or principal accounting officer and any other person performing
similar functions with respect to any organization whether incorporated or
unincorporated.
2.26 ORDER FORM means the form or forms provided by the Bank,
containing all such terms and provisions as set forth in Section 12 hereof, to a
Participant or other Person by which Conversion Stock may be ordered in the
Subscription Offering, the Community Offering and/or the Syndicated Community
Offering.
2.27 OTHER MEMBER means a Voting Member who is not an Eligible Account
Holder or Supplemental Eligible Account Holder.
2.28 OTS means the Office of Thrift Supervision or any successor
thereto.
2.29 PARTICIPANT means any Eligible Account Holder, Tax-Qualified
Employee Stock Benefit Plan, Supplemental Eligible Account Holder, Other Member
and Director, Officer and Employee.
2.30 PERSON means an individual, a corporation, a partnership, an
association, a joint stock company, a trust, an unincorporated organization or a
government or any political subdivision thereof.
2.31 PLAN and PLAN OF CONVERSION mean this Plan of Conversion as
adopted by the Board of Directors of the Bank and any amendment hereto approved
as provided herein.
2.32 PROSPECTUS means the one or more documents to be used in offering
the Conversion Stock in the Subscription Offering and, to the extent applicable,
Community Offering and Syndicated Community Offering and for providing
information to Participants and other Persons in connection with such offerings.
2.33 PUBLIC OFFERING means an underwritten firm commitment offering to
the public through one or more underwriters.
2.34 QUALIFYING DEPOSIT means the aggregate balance of all Deposit
Accounts in the Bank of (i) an Eligible Account Holder at the close of business
on the Eligibility Record Date, provided such aggregate balance is not less than
$50 and (ii) a Supplemental Eligible Account Holder at the close of business on
the Supplemental Eligibility Record Date, provided such aggregate balance is not
less than $50.
2.35 SEC means the Securities and Exchange Commission.
2.36 SPECIAL MEETING means the special meeting of Members of the Bank
called for the purpose of submitting this Plan to the Members for their
approval, including adoption of a federal
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stock charter and new bylaws to authorize the issuance of capital stock and
otherwise to read in a form consistent with a federally chartered stock form
savings bank, and any adjournments of such meeting.
2.37 SUBSCRIPTION OFFERING means the offering of the Conversion Stock
to Participants.
2.38 SUBSCRIPTION RIGHTS means non-transferable rights to subscribe for
Conversion Stock granted to Participants pursuant to the terms of this Plan.
2.39 SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER if applicable, means any
Person, except Directors and Officers of the Bank and their Associates, holding
a Qualifying Deposit at the close of business on the Supplemental Eligibility
Record Date.
2.40 SUPPLEMENTAL ELIGIBILITY RECORD DATE if applicable, means the date
for determining Qualifying Deposits of Supplemental Eligible Account Holders and
shall be required if the Eligibility Record Date is more than 15 months prior to
the date of the latest amendment to the application for Conversion filed prior
to approval of such application by the OTS. If applicable, the Supplemental
Eligibility Record Date shall be the last day of the calendar quarter preceding
OTS approval of the application for Conversion submitted by the Bank pursuant to
this Plan of Conversion.
2.41 SYNDICATED COMMUNITY OFFERING means the offering for sale by a
syndicate of broker-dealers to the general public of shares of Conversion Stock
not purchased in the Subscription Offering and the Community Offering.
2.42 TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN means any defined
benefit plan or defined contribution plan, including the Employee Stock
Ownership Plan established by the Company and the Bank in connection with the
Conversion, a stock bonus plan, profit-sharing plan or other plan, which is
established for the benefit of the employees of the Holding Company and the Bank
and which, with its related trust, meets the requirements to be "qualified"
under Section 401 of the Code as from time to time in effect. A
"Non-Tax-Qualified Employee Stock Benefit Plan" is any defined benefit plan or
defined contribution stock benefit plan which is not so qualified.
2.43 VOTING MEMBER means a Person who at the close of business on the
Voting Record Date is entitled to vote as a member of the Bank in accordance
with its federal mutual charter and bylaws.
2.44 VOTING RECORD DATE means the date for determining the eligibility
of Members to vote at the Special Meeting.
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31. GENERAL PROCEDURE FOR CONVERSION.
(a) The Bank will take the necessary steps to prepare and file an
Application for Conversion, including the Plan, together with all requisite
material, to the OTS for approval. The Bank also will cause notice of the
adoption of the Plan by the Board of Directors of the Bank to be given by
publication in a newspaper having general circulation in each community in which
an office of the Bank is located, and will cause copies of the Plan to be made
available at each office of the Bank for inspection by account holders. The Bank
will post the notice of the filing of its Application for Conversion in each of
its offices and will again cause to be published, in accordance with the
requirements of applicable regulations of the OTS, a notice of the filing with
the OTS of an application to convert from mutual to stock form.
(b) Promptly following approval of the Bank's Application for
Conversion by the OTS, this Plan will be submitted to the Members for their
consideration and approval at the Special Meeting. The Bank may, at its option,
mail to all Members as of the Voting Record Date, at their last known address
appearing on the records of the Bank, a proxy statement in either long or
summary form describing the Plan which will be submitted to a vote of the
Members at the Special Meeting. If the Bank provides a summary form proxy
statement, the Bank shall also mail to all Eligible Account Holders and
Supplemental Eligible Account Holders who are not Members of the Bank as of the
Voting Record Date a letter informing them of their right to receive a
Prospectus and Order Form for the purchase of Conversion Stock. Under such
circumstances, Participants will be given the opportunity to request a
Prospectus and Order Form and other materials relating to the Conversion by
returning a postage prepaid card which will be distributed with the proxy
statement or letter. If the Plan is approved by the affirmative vote of a
majority of the total number of votes eligible to be cast by Voting Members at
the Special Meeting, the Bank shall take all other necessary organizational
steps pursuant to applicable laws and regulations to amend its charter and
bylaws to authorize the issuance of its capital stock to the Holding Company at
the time the Conversion of the Bank to stock form is consummated.
(c) As soon as practicable after the adoption of the Plan by the Board
of Directors of the Bank, the Bank shall cause the Holding Company to be
incorporated and the Board of Directors of the Holding Company shall adopt the
Plan by at least a two-thirds vote. The Holding Company shall submit or cause to
be submitted to the OTS such applications as may be required for approval of the
Holding Company's acquisition of the Bank and a Registration Statement to the
SEC to register the Conversion Stock under the Securities Act of 1933, as
amended. The Holding Company shall also register the Conversion Stock under any
applicable state securities laws, subject to Section 14 hereof. Upon
registration and after the receipt of all required regulatory approvals, the
Conversion Stock shall be first offered for sale in a Subscription Offering to
Eligible Account Holders, Tax-Qualified Employee Stock Benefit Plans,
Supplemental Eligible Account Holders, if applicable, Other Members and
Directors, Officers and Employees. It is anticipated that any shares of
Conversion Stock remaining unsold after the Subscription Offering will be sold
through a Community Offering and/or a Syndicated Community Offering. The
purchase price per share for the Conversion Stock shall be a uniform price
determined in accordance with Section 4 hereof. The Holding Company
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shall purchase all of the capital stock of the Bank with an amount of the net
proceeds received by the Holding Company from the sale of Conversion Stock as
shall be determined by the Boards of Directors of the Holding Company and the
Bank and as shall be approved by the OTS.
(d) The Holding Company and the Bank may retain and pay for the
services of financial and other advisors and investment bankers to assist in
connection with any or all aspects of the Conversion, including in connection
with the Subscription Offering, Community Offering and/or any Syndicated
Community Offering, the payment of fees to brokers and investment bankers for
assisting Persons in completing and/or submitting Order Forms. All fees,
expenses, retainers and similar items shall be reasonable.
4. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK.
(a) The aggregate price at which all shares of Conversion Stock shall
be sold shall be based on a pro forma valuation of the aggregate market value of
the Conversion Stock prepared by the Independent Appraiser. The valuation shall
be based on financial information relating to the Holding Company and the Bank,
economic and financial conditions, a comparison of the Holding Company and the
Bank with selected publicly-held financial institutions and holding companies
and with comparable financial institutions and holding companies and such other
factors as the Independent Appraiser may deem to be important, including, but
not limited to, the projected operating results and financial condition of the
Holding Company and the Bank. The valuation shall be stated in terms of an
Estimated Price Range, the maximum of which shall generally be no more than 15%
above the average of the minimum and maximum of such price range and the minimum
of which shall generally be no more than 15% below such average. The valuation
shall be updated during the Conversion as market and financial conditions
warrant and as may be required by the OTS.
(b) Based upon the independent valuation, the Boards of Directors of
the Holding Company and the Bank shall fix the Initial Purchase Price and the
number of shares of Conversion Stock to be offered in the Subscription Offering,
Community Offering and/or Syndicated Community Offering. The Actual Purchase
Price and the total number of shares of Conversion Stock to be issued in the
Offerings shall be determined by the Boards of Directors of the Holding Company
and the Bank upon conclusion of such offerings in consultation with the
Independent Appraiser and any financial advisor or investment banker retained by
the Bank in connection with such offerings.
(c) Subject to the approval of the OTS, the Estimated Price Range may
be increased or decreased to reflect market and economic conditions prior to
completion of the Conversion or to fill the order of the Tax-Qualified Employee
Stock Benefit Plans, and under such circumstances the Holding Company may
increase or decrease the total number of shares of Conversion Stock to be issued
in the Conversion to reflect any such change. Notwithstanding anything to the
contrary contained in this Plan, no resolicitation of subscribers shall be
required and subscribers shall not be permitted to modify or cancel their
subscriptions unless the gross proceeds from the sale of the Conversion Stock
issued in the Conversion are less than the minimum or more than 15% above the
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maximum of the Estimated Price Range set forth in the Prospectus. In the event
of an increase in the total number of shares offered in the Conversion due to an
increase in the Estimated Price Range, the priority of share allocation shall be
as set forth in this Plan.
5. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS.
(a) Each Eligible Account Holder shall receive, without payment,
non-transferable Subscription Rights to purchase up to the greater of (i)
$125,000 of Conversion Stock (or such maximum purchase limitation as may be
established for the Community Offering and/or Syndicated Community Offering or
Public Offering), (ii) one-tenth of 1% of the total offering of shares in the
Subscription Offering and (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of Conversion
Stock offered in the Subscription Offering by a fraction, of which the numerator
is the amount of the Qualifying Deposits of the Eligible Account Holder and the
denominator is the total amount of all Qualifying Deposits of all Eligible
Account Holders.
(b) In the event of an oversubscription for shares of Conversion Stock
pursuant to Section 5(a), available shares shall be allocated among subscribing
Eligible Account Holders so as to permit each such Eligible Account Holder, to
the extent possible, to purchase a number of shares which will make his or her
total allocation equal to the lesser of the number of shares subscribed for or
100 shares. Any available shares remaining after each subscribing Eligible
Account Holder has been allocated the lesser of the number of shares subscribed
for or 100 shares shall be allocated among the subscribing Eligible Account
Holders in the proportion which the Qualifying Deposit of each such subscribing
Eligible Account Holder bears to the total Qualifying Deposits of all such
subscribing Eligible Account Holders, provided that no fractional shares shall
be issued. Subscription Rights of Eligible Account Holders shall be subordinated
to the priority rights of the ESOP to purchase shares in excess of the Maximum
Shares, as defined in Section 6 below. Subscription Rights of Eligible Account
Holders who are also Directors or Officers of the Bank and their Associates
shall be subordinated to those of other Eligible Account Holders to the extent
that they are attributable to increased deposits during the one year period
preceding the Eligibility Record Date.
6. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLANS
Tax-Qualified Employee Stock Benefit Plans, including the ESOP, shall
receive, without payment, non-transferable Subscription Rights to purchase in
the aggregate up to 10% of the Conversion Stock, including shares of Conversion
Stock to be issued in the Conversion as a result of an increase in the Estimated
Price Range after commencement of the Subscription Offering and prior to
completion of the Conversion. The subscription rights granted to Tax-Qualified
Employee Stock Benefit Plans shall be subject to the availability of shares of
Conversion Stock after taking into account the shares of Conversion Stock
purchased by Eligible Account Holders, provided, however, that in the event that
the total number of shares offered in the Conversion is increased to an amount
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greater than the number of shares representing the maximum of the Estimated
Price Range as set forth in the Prospectus ("Maximum Shares"), the ESOP shall
have a priority right to purchase any such shares exceeding the Maximum Shares
up to an aggregate of 8% of Conversion Stock. Shares of Conversion Stock
purchased by any individual participant ("Plan Participant") in a Tax-Qualified
Employee Stock Benefit Plan using funds therein pursuant to the exercise of
subscription rights granted to such Participant in his individual capacity as an
Eligible Account Holder and/or Supplemental Eligible Account Holder and/or
purchases by such Plan Participant in the Community Offering shall not be deemed
to be purchases by a Tax-Qualified Employee Stock Benefit Plan for purposes of
calculating the maximum amount of Conversion Stock that Tax-Qualified Employee
Stock Benefit Plans may purchase pursuant to the first sentence of this Section
6 if the individual Plan Participant controls or directs the investment
authority with respect to such account or subaccount. Consistent with applicable
laws and regulations and policies and practices of the OTS, the ESOP may use
funds contributed by the Holding Company or the Bank and/or borrowed from an
independent financial institution to exercise such Subscription Rights, and the
Holding Company and the Bank may make scheduled discretionary contributions
thereto, provided that such contributions do not cause the Holding Company or
the Bank to fail to meet any applicable capital maintenance requirements.
7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS.
(a) In the event that the Eligibility Record Date is more than 15
months prior to the date of the latest amendment to the Application for
Conversion filed prior to OTS approval, then, and only in that event, each
Supplemental Eligible Account Holder shall receive, without payment,
non-transferable Subscription Rights to purchase up to the greater of (i)
$125,000 of Conversion Stock (or such maximum purchase limitation as may be
established for the Community Offering and/or Syndicated Community Offering or
Public Offering), (ii) one-tenth of 1% of the total offering of shares in the
Subscription Offering and (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of Conversion
Stock offered in the Subscription Offering by a fraction, of which the numerator
is the amount of the Qualifying Deposits of the Supplemental Eligible Account
Holder and the denominator is the total amount of all Qualifying Deposits of all
Supplemental Eligible Account Holders, subject to the availability of shares of
Common Stock for purchase after taking into account the shares of Conversion
Stock purchased by Eligible Account Holders and the ESOP through the exercise of
Subscription Rights under Sections 5 and 6 hereof.
(b) In the event of an oversubscription for shares of Conversion Stock
pursuant to Section 7(a), available shares shall be allocated among subscribing
Supplemental Eligible Account Holders so as to permit each such Supplemental
Eligible Account Holder, to the extent possible, to purchase a number of shares
sufficient to make his or her total allocation (including the number of shares,
if any, allocated in accordance with Section 5(a)) equal to the lesser of the
number of shares subscribed for or 100 shares. Any remaining available shares
shall be allocated among subscribing Supplemental Eligible Account Holders in
the proportion that the amount of their respective
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Qualifying Deposits bears to the total amount of the Qualifying Deposits of all
subscribing Supplemental Eligible Account Holders, provided that no fractional
shares shall be issued.
8. SUBSCRIPTION RIGHTS OF OTHER MEMBERS.
(a) Each Other Member shall receive, without payment, non-transferable
Subscription Rights to purchase up to the greater of (i) $125,000 of Conversion
Stock (or such maximum purchase limitation as may be established for the
Community Offering and/or Syndicated Community Offering or Public Offering) and
(ii) one-tenth of 1% of the total offering of shares in the Subscription
Offering, in each case if and only to the extent that shares of Conversion Stock
are available for purchase after taking into account the shares of Conversion
Stock purchased by Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans and Supplemental Eligible Account Holders through the exercise of
Subscription Rights under Sections 5, 6 and 7 hereof.
(b) If, pursuant to this Section 8, Other Members subscribe for a
number of shares of Conversion Stock in excess of the total number of shares of
Conversion Stock remaining, shares shall be allocated so as to permit each such
Other Member, to the extent possible, to purchase a number of shares which will
make his or her total allocation equal to the lesser of the number of shares
subscribed for or 100 shares. Any shares remaining will be allocated among the
subscribing Other Members whose subscriptions remain unsatisfied on an equal
number of shares basis per order until all orders have been filled or the
remaining shares have been allocated, provided no fractional shares shall be
issued.
9. SUBSCRIPTION RIGHTS OF DIRECTORS, OFFICERS AND EMPLOYEES.
(a) To the extent that there are sufficient shares remaining after
satisfaction of all subscriptions under the above categories, Directors,
Officers and Employees of the Bank shall receive, without payment,
non-transferable subscription rights to purchase in this category, in the
aggregate, up to 23% of the shares of Conversion Stock offered in the
Subscription Offering.
(b) In the event of oversubscription pursuant to Section 9(a),
Subscription Rights for the purchase of such shares shall be allocated among the
individual Directors, Officers and Employees of the Bank on a point system
basis, whereby a point will be assigned for each year of employment and for each
salary increment of $5,000 per annum and five points for each office held in the
Bank, including a directorship. If any such Director, Officer or Employee does
not subscribe for his or her full allocation of shares, any shares not
subscribed for may be purchased by other Directors, Officers and Employees in
proportion to their respective subscriptions, provided that no fractional shares
shall be issued.
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10. COMMUNITY OFFERING, SYNDICATED COMMUNITY OFFERING, PUBLIC OFFERING AND OTHER
OFFERINGS.
(a) If less than the total number of shares of the Conversion Stock are
sold in the Subscription Offering, it is anticipated that all remaining shares
of Conversion Stock shall, if practicable, be sold directly by the Holding
Company and the Bank in a Community Offering and/or a Syndicated Community
Offering. Subject to the requirements set forth herein, Conversion Stock sold in
the Community Offering and/or the Syndicated Community Offering shall achieve
the widest possible distribution of such stock.
(b) In the event of a Community Offering, all shares of Conversion
Stock which are not subscribed for in the Subscription Offering shall be offered
for sale by means of a direct community marketing program, which may provide for
the use of brokers, dealers or investment banking firms experienced in the sale
of financial institution securities. Any available shares in excess of those not
subscribed for in the Subscription Offering will be available for purchase by
members of the general public to whom a Prospectus is delivered by the Holding
Company or on its behalf, with preference given to natural persons residing in
counties in Indiana in which the Bank has a branch office ("Preferred
Subscribers").
(c) A Prospectus and Order Form shall be furnished to such Persons as
the Holding Company and the Bank may select in connection with the Community
Offering and each order for Conversion Stock in the Community Offering shall be
subject to the absolute right of the Holding Company and the Bank to accept or
reject any such order in whole or in part either at the time of receipt of an
order or as soon as practicable following completion of the Community Offering.
Available shares will be allocated first to each Preferred Subscriber whose
order is accepted by the Holding Company, in an amount equal to the lesser of
100 shares or the number of shares subscribed for by each such Preferred
Subscriber, if possible. Thereafter, any shares remaining will be allocated
among the Preferred Subscribers whose subscriptions remain unsatisfied on an
equal number of shares basis per order until all orders have been filled or the
remaining shares have been allocated, provided no fractional shares shall be
issued. If there are any shares remaining after all subscriptions by Preferred
Subscribers have been satisfied, such remaining shares shall be allocated to
other members of the general public who purchase in the Community Offering
applying the same allocation described above for Preferred Subscribers.
(d) The amount of Conversion Stock that any Person together with any
Associate thereof or group of Persons acting in concert may purchase in the
Community Offering shall not exceed the greater of (i) $125,000 or (ii)
one-tenth of 1% of the total offering of shares in the Subscription Offering,
provided, however, that this amount may be increased to 5% of the total offering
of shares in the Subscription Offering, subject to any required regulatory
approval but without the further approval of Members; provided, further, that
orders for Conversion Stock in the Community Offering shall first be filled to a
maximum of 2% of the total number of shares of Conversion Stock sold in the
Conversion and thereafter any remaining shares shall be allocated on an equal
number of shares basis per order until all orders have been filled, provided no
fractional shares shall be
-11-
issued. The Holding Company and the Bank may commence the Community Offering
concurrently with, at any time during, or as soon as practicable after the end
of, the Subscription Offering, and the Community Offering must be completed
within 45 days after the completion of the Subscription Offering, unless
extended by the Holding Company and the Bank with any required regulatory
approval.
(e) Subject to such terms, conditions and procedures as may be
determined by the Holding Company and the Bank, all shares of Conversion Stock
not subscribed for in the Subscription Offering or ordered in the Community
Offering may be sold by a syndicate of broker-dealers to the general public in a
Syndicated Community Offering. Each order for Conversion Stock in the Syndicated
Community Offering shall be subject to the absolute right of the Holding Company
and the Bank to accept or reject any such order in whole or in part either at
the time of receipt of an order or as soon as practicable after completion of
the Syndicated Community Offering. The amount of Conversion Stock that any
Person together with any Associate thereof or group of Persons acting in concert
may purchase in the Syndicated Community Offering shall not exceed $125,000
provided, however, that this amount may be increased to 5% of the total offering
of shares in the Subscription Offering, subject to any required regulatory
approval but without the further approval of Members; provided further that
orders for Conversion Stock in the Syndicated Community Offering shall first be
filled to a maximum of 2% of the total number of shares of Conversion Stock sold
in the Conversion and thereafter any remaining shares shall be allocated on an
equal number of shares basis per order until all orders have been filled,
provided no fractional shares shall be issued. The Holding Company and the Bank
may commence the Syndicated Community Offering concurrently with, at any time
during, or as soon as practicable after the end of the Subscription Offering
and/or Community Offering, and the Syndicated Community Offering must be
completed within 45 days after the completion of the Subscription Offering,
unless extended by the Holding Company and the Bank with any required regulatory
approval.
(f) The Holding Company and the Bank may sell any shares of Conversion
Stock remaining following the Subscription Offering, Community Offering and/or
the Syndicated Community Offering in a Public Offering. The provisions of
Section 11 hereof shall not be applicable to the sales to underwriters for
purposes of the Public Offering but shall be applicable to sales by the
underwriters to the public. The price to be paid by the underwriters in such an
offering shall be equal to the Actual Purchase Price less an underwriting
discount to be negotiated among such underwriters and the Bank and the Holding
Company, subject to any required regulatory approval or consent.
(g) If for any reason a Syndicated Community Offering or Public
Offering of shares of Conversion Stock not sold in the Subscription Offering and
the Community Offering cannot be effected, or in the event that any
insignificant residue of shares of Conversion Stock is not sold in the
Subscription Offering, Community Offering or Syndicated Community Offering, the
Holding Company and the Bank shall use their best efforts to obtain other
purchasers for such shares in such manner and upon such conditions as may be
satisfactory to the OTS.
-12-
11. LIMITATIONS ON SUBSCRIPTIONS AND PURCHASES OF CONVERSION STOCK.
(a) The maximum number of shares of Conversion Stock which may be
purchased in the Conversion by the ESOP shall not exceed 8% and all
Tax-Qualified Employee Stock Benefit Plans shall not exceed 10% of the total
number of shares of Conversion Stock sold in the Conversion, in each instance,
including any shares which may be issued in the event of an increase in the
maximum of the Estimated Price Range to reflect changes in market and economic
conditions after commencement of the Subscription Offering and prior to the
completion of the Conversion; provided; however, that purchases of Conversion
Stock which are made by Plan Participants pursuant to the exercise of
subscription rights granted to such Plan Participant in his individual capacity
as an Eligible Account Holder or Supplemental Eligible Account Holder or
purchases by a Plan Participant in the Community Offering using the funds
thereof held in Tax-Qualified Employee Stock Benefit Plans shall not be deemed
to be purchases by a Tax-Qualified Employee Stock Benefit Plan for purposes of
this Section 11(a).
(b) Except in the case of Tax-Qualified Employee Stock Benefit Plans in
the aggregate, as set forth in Section 11(a) hereof, and certain Eligible
Account Holders and Supplemental Eligible Account Holders, and in addition to
the other restrictions and limitations set forth herein, the maximum amount of
Conversion Stock which any Person together with any Associate or group of
Persons acting in concert may, directly or indirectly, subscribe for or purchase
in the Conversion (including without limitation the Subscription Offering,
Community Offering and/or Syndicated Community Offering) shall not exceed
$250,000 of Conversion Stock. The purchase limitation set forth herein shall not
apply to the Holding Company Common Stock contributed to the charitable
foundation in accordance with the provisions of Section 28 hereof nor shall such
shares be deemed Conversion Stock.
(c) The number of shares of Conversion Stock which Directors and
Officers and their Associates may purchase in the aggregate in the Conversion
shall not exceed 33% of the total number of shares of Conversion Stock offered
in the Conversion, including any shares which may be issued in the event of an
increase in the maximum of the Estimated Price Range to reflect changes in
market and economic conditions after commencement of the Subscription Offering
and prior to completion of the Conversion.
(d) No Person may purchase fewer than 25 shares of Conversion Stock in
the Conversion, to the extent such shares are available; provided, however, that
if the Actual Purchase Price is greater than $20.00 per share, such minimum
number of shares shall be adjusted so that the aggregate Actual Purchase Price
for such minimum shares will not exceed $500.00.
(e) For purposes of the foregoing limitations and the determination of
Subscription Rights, (i) Directors and Officers shall not be deemed to be
Associates or a group acting in concert solely as a result of their capacities
as such, (ii) shares purchased by Tax-Qualified Employee Stock Benefit Plans
shall not be attributable to the individual trustees or beneficiaries of any
such plan for purposes
-13-
of determining compliance with the limitations set forth in Section 11(b)
hereof, and (iii) shares purchased by Tax-Qualified Employee Stock Benefit Plans
shall not be attributable to the individual trustees or beneficiaries of any
such plan for purposes of determining compliance with the limitation set forth
in Section 11(c) hereof.
(f) Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the Members of
the Bank or resolicitation of subscribers, the Holding Company and the Bank may
increase or decrease any of the individual or aggregate purchase limitations set
forth herein to a percentage which does not exceed 5% or fall below .10% of the
total offering of shares in the Subscription Offering whether prior to, during
or after the Subscription Offering, Community Offering, Syndicated Community
Offering and/or Public Offering. In the event that an individual purchase
limitation is increased after commencement of the Subscription Offering or any
other offering, the Holding Company and the Bank shall permit any Person who
subscribed for the maximum number of shares of Conversion Stock to purchase an
additional number of shares such that such Person shall be permitted to
subscribe for the then maximum number of shares permitted to be subscribed for
by such Person, subject to the rights and preferences of any Person who has
priority Subscription Rights. In the event that an individual purchase
limitation is decreased after commencement of the Subscription Offering or any
other offering, the orders of any Person who subscribed for the maximum number
of shares of Conversion Stock shall be decreased by the minimum amount necessary
so that such Person shall be in compliance with the then maximum number of
shares permitted to be subscribed for by such Person.
(g) The Holding Company and the Bank shall have the right to take all
such action as they may, in their sole discretion, deem necessary, appropriate
or advisable in order to monitor and enforce the terms, conditions, limitations
and restrictions contained in this Section 11 and elsewhere in this Plan and the
terms, conditions and representations contained in the Order Form, including,
but not limited to, the absolute right (subject only to any necessary regulatory
approvals or concurrence) to reject, limit or revoke acceptance of any
subscription or order and to delay, terminate or refuse to consummate any sale
of Conversion Stock which they believe might violate, or is designed to, or is
any part of a plan to, evade or circumvent such terms, conditions, limitations,
restrictions and representations. Any such action shall be final, conclusive and
binding on all persons and the Holding Company and the Bank and their respective
Boards shall be free from any liability to any Person on account of any such
action.
12. TIMING OF SUBSCRIPTION OFFERING, MANNER OF EXERCISING SUBSCRIPTION RIGHTS
AND ORDER FORMS.
(a) The Subscription Offering may be commenced concurrently with or at
any time after the mailing to Voting Members of the proxy statement to be used
in connection with the Special Meeting. The Subscription Offering may be closed
before the Special Meeting, provided that the offer and sale of the Conversion
Stock shall be conditioned upon the approval of the Plan by Voting Members at
the Special Meeting.
-14-
(b) The exact timing of the commencement of the Subscription Offering
shall be determined by the Holding Company and the Bank in consultation with the
Independent Appraiser and any financial or advisory or investment banking firm
retained by them in connection with the Conversion. The Holding Company and the
Bank may consider a number of factors, including, but not limited to, their
current and projected future earnings, local and national economic conditions
and the prevailing market for stocks in general and stocks of financial
institutions in particular. The Holding Company and the Bank shall have the
right to withdraw, terminate, suspend, delay, revoke or modify any such
Subscription Offering, at any time and from time to time, as it in its sole
discretion may determine, without liability to any Person, subject to compliance
with applicable securities laws and any necessary regulatory approval or
concurrence.
(c) The Holding Company and the Bank shall, promptly after the SEC has
declared the Prospectus effective and all required regulatory approvals have
been obtained, distribute or make available the Prospectus, together with Order
Forms for the purchase of Conversion Stock, to all Participants for the purpose
of enabling them to exercise their respective Subscription Rights, subject to
Section 14 hereof. The Holding Company and the Bank may elect to mail a
Prospectus and Order Form only to those Participants who request such materials
by returning a postage-paid card to the Holding Company and the Bank by a date
specified in the letter informing them of their Subscription Rights. Under such
circumstances, the Subscription Offering shall not be closed until the
expiration of 30 days after the mailing by the Holding Company and the Bank of
the postage-paid card to Participants.
(d) A single Order Form for all Deposit Accounts maintained with the
Bank by an Eligible Account Holder and a Supplemental Eligible Account Holder
may be furnished irrespective of the number of Deposit Accounts maintained with
the Bank on the Eligibility Record Date and Supplemental Eligibility Record
Date, respectively. No person holding a subscription right may exceed any
otherwise applicable purchase limitation by submitting multiple orders for
Conversion Stock. Multiple orders are subject to adjustment, as appropriate, on
a pro rata basis and deposit balances will be divided equally among such orders
in allocating shares in the event of an oversubscription.
(e) The recipient of an Order Form shall have no less than 20 days and
no more than 45 days from the date of mailing of the Order Form (with the exact
termination date to be set forth on the Order Form) to properly complete and
execute the Order Form and deliver it to the Bank. The Holding Company and the
Bank may extend such period by such amount of time as they determine is
appropriate. Failure of any Participant to deliver a properly executed Order
Form to the Bank, along with payment (or authorization for payment by
withdrawal) for the shares of Conversion Stock subscribed for, within the time
limits prescribed, shall be deemed a waiver and release by such person of any
rights to subscribe for shares of Conversion Stock. Each Participant shall be
required to confirm to the Holding Company and the Bank by executing an Order
Form that such Person has fully complied with all of the terms, conditions,
limitations and restrictions in the Plan.
-15-
(f) The Holding Company and the Bank shall have the absolute right, in
their sole discretion and without liability to any Participant or other Person,
to reject any Order Form, including, but not limited to, any Order Form (i) that
is improperly completed or executed; (ii) that is not timely received; (iii)
that is submitted by facsimile or is photocopied; (iv) that is not accompanied
by the proper payment (or authorization of withdrawal for payment) or, in the
case of institutional investors in the Community Offering, not accompanied by an
irrevocable order together with a legally binding commitment to pay the full
amount of the purchase price prior to 48 hours before the completion of the
Offerings; (v) submitted by a Person whose representations the Holding Company
and the Bank believe to be false or who they otherwise believe, either alone, or
acting in concert with others, is violating, evading or circumventing, or
intends to violate, evade or circumvent, the terms and conditions of the Plan.
Furthermore, in the event Order Forms (i) are not delivered and are returned to
the Bank by the United States Postal Service or the Bank is unable to locate the
addressee, or (ii) are not mailed pursuant to a "no mail" order placed in effect
by the account holder, the subscription rights of the person to which such
rights have been granted will lapse as though such person failed to return the
contemplated Order Form within the time period specified thereon. The Holding
Company and the Bank may, but will not be required to, waive any irregularity on
any Order Form or may require the submission of corrected Order Forms or the
remittance of full payment for shares of Conversion Stock by such date as they
may specify. The interpretation of the Holding Company and the Bank of the terms
and conditions of the Order Forms shall be final and conclusive.
13. PAYMENT FOR CONVERSION STOCK.
(a) Payment for shares of Conversion Stock subscribed for by
Participants in the Subscription Offering and payment for shares of Conversion
Stock ordered by Persons in the Community Offering shall be equal to the Initial
Purchase Price per share multiplied by the number of shares which are being
subscribed for or ordered, respectively. Such payment may be made in cash, if
delivered in person, or by check or money order at the time the Order Form is
delivered to the Bank. The Bank, in its sole and absolute discretion, may also
elect to receive payment for shares of Conversion Stock by wire transfer. In
addition, the Holding Company and the Bank may elect to provide Participants
and/or other Persons who have a Deposit Account with the Bank the opportunity to
pay for shares of Conversion Stock by authorizing the Bank to withdraw from such
Deposit Account an amount equal to the aggregate Initial Purchase Price of such
shares. Payment may also be made by a Participant using funds held for such
Participant's benefit by a Bank Benefit Plan to the extent that such plan allows
participants or any related trust established for the benefit of such
participants to direct that some or all of their individual accounts or
sub-accounts be invested in Conversion Stock. If the Actual Purchase Price is
less than the Initial Purchase Price, the Bank shall refund the difference to
all Participants and other Persons, unless the Holding Company and the Bank
choose to provide Participants and other Persons the opportunity on the Order
Form to elect to have such difference applied to the purchase of additional
whole shares of Conversion Stock. If the Actual Purchase Price is more than the
Initial Purchase Price, the Bank shall reduce the number of shares of Conversion
Stock ordered by Participants and other Persons and refund any remaining amount
which is attributable to a fractional share interest, unless the Bank chooses to
provide
-16-
Participants and other Persons the opportunity to increase the Actual Purchase
Price submitted to it.
(b) Consistent with applicable laws and regulations and policies and
practices of the OTS, payment for shares of Conversion Stock subscribed for by
the ESOP may be made with funds contributed by the Holding Company or the Bank
and/or funds obtained pursuant to a loan from an unrelated financial institution
pursuant to a loan commitment which is in force from the time that any such plan
submits an Order Form until the closing of the transactions contemplated hereby.
(c) If a Participant or other Person authorizes the Bank to withdraw
the amount of the Initial Purchase Price from his or her Deposit Account, the
Bank shall have the right to make such withdrawal or to freeze funds equal to
the aggregate Initial Purchase Price upon receipt of the Order Form.
Notwithstanding any regulatory provisions regarding penalties for early
withdrawals from certificate accounts, the Bank may allow payment by means of
withdrawal from certificate accounts without the assessment of such penalties.
In the case of an early withdrawal of only a portion of such account, the
certificate evidencing such account shall be cancelled if any applicable minimum
balance requirement ceases to be met. In such case, the remaining balance will
earn interest at the regular passbook rate. However, where any applicable
minimum balance is maintained in such certificate account, the rate of return on
the balance of the certificate account shall remain the same as prior to such
early withdrawal. This waiver of the early withdrawal penalty applies only to
withdrawals made in connection with the purchase of Conversion Stock and is
entirely within the discretion of the Holding Company and the Bank.
(d) The Bank shall pay interest, at not less than the passbook rate,
for all amounts paid in cash, by check or money order to purchase shares of
Conversion Stock in the Subscription Offering and the Community Offering from
the date payment is received until the date the Conversion is completed or
terminated.
(e) The Bank shall not knowingly loan funds or otherwise extend credit
to any Participant or other Person to purchase Conversion Stock.
(f) Each share of Conversion Stock shall be non-assessable upon payment
in full of the Actual Purchase Price.
14. ACCOUNT HOLDERS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES.
The Holding Company and the Bank shall make reasonable efforts to
comply with the securities laws of all jurisdictions in the United States in
which Participants reside. However, no Participant will be offered or receive
any Conversion Stock under the Plan if such Participant resides in a foreign
country or in a jurisdiction of the United States with respect to which all of
the following apply: (a) there are few Participants otherwise eligible to
subscribe for shares under this Plan who reside in such jurisdiction; (b) the
granting of Subscription Rights or the offer or sale of shares of Conversion
Stock to such Participants would require the Holding Company or the Bank or
their
-17-
respective Directors and Officers, under the laws of such jurisdiction, to
register as a broker or dealer, salesman or selling agent or to register or
otherwise qualify the Conversion Stock for sale in such jurisdiction, or the
Holding Company or the Bank would be required to qualify as a foreign
corporation or file a consent to service of process in such jurisdiction; and
(c) such registration or qualification in the judgment of the Holding Company
and the Bank would be impracticable or unduly burdensome for reasons of cost or
otherwise.
15. VOTING RIGHTS OF STOCKHOLDERS.
Following Conversion, voting rights with respect to the Bank shall be
held and exercised exclusively by the Holding Company as holder of the Bank's
voting capital stock and voting rights with respect to the Holding Company shall
be held and exercised exclusively by the holders of the Holding Company's voting
capital stock. No Person shall have any rights as a stockholder of the Holding
Company unless and until the Conversion Stock has been issued to such Person.
16. LIQUIDATION ACCOUNT.
(a) At the time of Conversion, the Bank shall establish a liquidation
account in an amount equal to the Bank's net worth as reflected in its latest
statement of financial condition contained in the final prospectus utilized in
the Conversion. The function of the liquidation account will be to preserve the
rights of certain holders of Deposit Accounts in the Bank who maintain such
accounts in the Bank following Conversion to a priority to distributions in the
unlikely event of a liquidation of the Bank subsequent to Conversion.
(b) The liquidation account shall be maintained for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders, if any, who
maintain their Deposit Accounts in the Bank after Conversion. Each such account
holder will, with respect to each Deposit Account held, have a related inchoate
interest in a portion of the liquidation account balance, which interest will be
referred to in this Section 16 as the "subaccount balance." All Deposit Accounts
having the same social security number will be aggregated for purposes of
determining the initial subaccount balance with respect to such Deposit
Accounts, except as provided in Section 16(d) hereof.
(c) In the event of a complete liquidation of the Bank subsequent to
Conversion (and only in such event), each Eligible Account Holder and
Supplemental Eligible Account Holder, if any, shall be entitled to receive a
liquidation distribution from the liquidation account in the amount of the then
current subaccount balances for Deposit Accounts then held (adjusted as
described below) before any liquidation distribution may be made with respect to
the capital stock of the Bank. No merger, consolidation, sale of bulk assets or
similar combination transaction with another FDIC-insured institution in which
the Bank is not the surviving entity shall be considered a complete liquidation
for this purpose. In any such transaction, the liquidation account shall be
assumed by the surviving entity.
(d) The initial subaccount balance for a Deposit Account held by an
Eligible Account Holder and Supplemental Eligible Account Holder, if any, shall
be determined by multiplying the
-18-
opening balance in the liquidation account by a fraction, of which the numerator
is the amount of the Qualifying Deposits of such account holder and the
denominator is the total amount of Qualifying Deposits of all Eligible Account
Holders and, if applicable, Supplemental Eligible Account Holders. For Deposit
Accounts in existence at both the Eligibility Record Date and the Supplemental
Eligibility Record Date, if applicable, separate initial subaccount balances
shall be determined on the basis of the Qualifying Deposits in such Deposit
Accounts on each such record date. Initial subaccount balances shall not be
increased, and shall be subject to downward adjustment as provided below.
(e) If the aggregate deposit balance in any Deposit Account(s) of any
Eligible Account Holder or Supplemental Eligible Account Holder at the close of
business on any June 30 annual closing date, commencing June 30, 2002, is less
than the lesser of (a) the deposit balance in such Deposit Account(s) at the
close of business on any other annual closing date subsequent to such record
dates or (b) the deposit balance in such Deposit Account(s) as of the
Eligibility Record Date or the Supplemental Eligibility Record Date, if any, the
subaccount balance for such Deposit Account(s) shall be adjusted by reducing
such subaccount balance in an amount proportionate to the reduction in such
deposit balance. In the event of such a downward adjustment, the subaccount
balance shall not be subsequently increased, notwithstanding any increase in the
deposit balance of the related Deposit Account(s). The subaccount balance of an
Eligible Account Holder or Supplemental Eligible Account Holder, if any, shall
be reduced to zero if such holder ceases to maintain a Deposit Account at the
Bank that has the same social security number as appeared on his or her Deposit
Account(s) at the Eligibility Record Date or, if applicable, the Supplemental
Eligibility Record Date.
(f) Subsequent to Conversion, the Bank may not pay cash dividends
generally on deposit accounts and/or capital stock of the Bank, or repurchase
any of the capital stock of the Bank, if such dividend or repurchase would
reduce the Bank's net worth below the aggregate amount of the then current
subaccount balances for Deposit Accounts then held; otherwise, the existence of
the liquidation account shall not operate to restrict the use or application of
any of the net worth accounts of the Bank.
(g) For purposes of this Section 16, a Deposit Account includes a
predecessor or successor account which is held only by an account holder with
the same social security number.
17. TRANSFER OF DEPOSIT ACCOUNTS.
Each Deposit Account in the Bank at the time of the consummation of the
Conversion shall become, without further action by the holder, a Deposit Account
in the Bank equivalent in withdrawable amount to the withdrawal value (as
adjusted to give effect to any withdrawal made for the purchase of Conversion
Stock), and subject to the same terms and conditions (except as to voting and
liquidation rights) as such Deposit Account in the Bank immediately preceding
consummation of the Conversion. Holders of Deposit Accounts in the Bank shall
not, as such holders, have any voting rights.
-19-
18. REQUIREMENTS FOLLOWING CONVERSION FOR REGISTRATION, MARKET MAKING AND STOCK
EXCHANGE LISTING.
In connection with the Conversion, the Holding Company shall register
its common stock pursuant to the Securities Exchange Act of 1934, as amended,
and shall undertake not to deregister such stock for a period of three years
thereafter. The Holding Company also shall use its best efforts to (i) encourage
and assist a market maker to establish and maintain a market for its common
stock; and (ii) list its common stock on a national or regional securities
exchange or to have quotations for its common stock disseminated on the Nasdaq
Stock Market.
19. DIRECTORS AND OFFICERS OF THE BANK.
Each person serving as a Director or Officer of the Bank at the time of
the Conversion shall continue to serve as a Director or Officer of the Bank for
the balance of the term for which the person was elected prior to the
Conversion, and until a successor is elected and qualified.
20. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING
CONVERSION.
For a period of three years following the Conversion, the Directors and
Officers of the Holding Company and the Bank and their Associates may not
purchase, without the prior written approval of the OTS, the Holding Company
Common Stock except from a broker or dealer registered with the SEC. This
prohibition shall not apply, however, to (i) a negotiated transaction arrived at
by direct negotiation between buyer and seller and involving more than 1% of the
outstanding common stock of the Holding Company, (ii) purchases of stock made by
and held by any Tax-Qualified Employee Stock Benefit Plan (and purchases of
stock made by and held by any Non-Tax-Qualified Employee Stock Benefit Plan
following receipt of stockholder approval of such plan) that may be attributable
to individual Officers or Directors and (iii) the exercise of any options
pursuant to any stock benefit plan of the Holding Company.
The foregoing restriction on purchases of Holding Company Common Stock
shall be in addition to any restrictions that may be imposed by federal and
state securities laws.
21. RESTRICTIONS ON TRANSFER OF STOCK.
All shares of the Conversion Stock which are purchased by Persons other
than Directors and Officers shall be transferable without restriction, except in
connection with a transaction proscribed by Section 22 of this Plan. Shares of
Conversion Stock purchased by Directors and Officers of the Holding Company and
the Bank on original issue from the Holding Company (by subscription or
otherwise) shall be subject to the restriction that such shares shall not be
sold or otherwise disposed of for value for a period of one year following the
date of purchase, except for any disposition of such shares following the death
of the original purchaser or pursuant to any merger or similar transaction
approved by the OTS. The shares of Conversion Stock issued by the Holding
Company
-20-
to Directors and Officers shall bear the following legend giving appropriate
notice of such one-year restriction:
"The shares of stock evidenced by this Certificate are restricted as to
transfer for a period of one year from the date of this Certificate
pursuant to Part 563b of the Rules and Regulations of the Office of
Thrift Supervision. These shares may not be transferred during such
one-year period without a legal opinion of counsel for the Company that
said transfer is permissible under the provisions of applicable law and
regulation. This restrictive legend shall be deemed null and void after
one year from the date of this Certificate."
In addition, the Holding Company shall give appropriate instructions to
the transfer agent for the Holding Company Common Stock with respect to the
applicable restrictions relating to the transfer of restricted stock. Any shares
issued at a later date as a stock dividend, stock split or otherwise with
respect to any such restricted stock shall be subject to the same holding period
restrictions as may then be applicable to such restricted stock.
The foregoing restriction on transfer shall be in addition to any
restrictions on transfer that may be imposed by federal and state securities
laws.
22. RESTRICTIONS ON ACQUISITION OF STOCK OF THE HOLDING COMPANY.
Upon consummation of the Conversion, the certificate of
incorporation of the Holding Company shall prohibit any Person together with
Associates or group of Persons acting in concert from offering to acquire or
acquiring, directly or indirectly, beneficial ownership of more than 10% of
any class of equity securities of the Holding Company, or of securities
convertible into more than 10% of any such class, for such period of time
following completion of the Conversion as may be determined by the Board of
Directors of the Holding Company. The certificate of incorporation of the
Holding Company also shall provide that all equity securities beneficially
owned by any Person in excess of 10% of any class of equity securities shall
be considered "excess shares," and that excess shares shall not be counted as
shares entitled to vote and shall not be voted by any Person or counted as
voting shares in connection with any matters submitted to the stockholders
for a vote. The foregoing restrictions shall not apply to (i) any offer with
a view toward public resale made exclusively to the Holding Company by
underwriters or a selling group acting on its behalf, (ii) the purchase of
shares by a Tax-Qualified Employee Stock Benefit Plan established for the
benefit of the employees of the Holding Company and its subsidiaries which is
exempt from approval requirements under 12 C.F.R. Section 574.3(c)(1)(vi) or
any successor thereto, and (iii) any offer or acquisition approved in advance
by a specified affirmative vote of the entire Board of Directors of the
Holding Company. Directors, Officers or employees of the Holding Company or
the Bank or any subsidiary thereof shall not be deemed to be Associates or a
group acting in concert with respect to their individual acquisitions of any
class of equity securities of the Holding Company solely as a result of their
capacities as such.
-21-
23. ADOPTION OF FEDERAL STOCK CHARTER AND BYLAWS.
As part of the Conversion, the Bank shall take all appropriate steps to
adopt a federal stock charter and bylaws to authorize the issuance of capital
stock and otherwise to read in a form consistent with a federally chartered
stock form savings bank.
24. TAX RULINGS OR OPINIONS.
Consummation of the Conversion is expressly conditioned upon prior
receipt by the Bank of either a ruling or an opinion of counsel with respect to
federal tax laws, and either a ruling or an opinion of counsel with respect to
Indiana tax laws, to the effect that consummation of the transactions
contemplated hereby will not result in a taxable reorganization under the
provisions of the applicable codes or otherwise result in any adverse tax
consequences to the Holding Company, the Bank and its account holders receiving
Subscription Rights before or after the Conversion, except in each case to the
extent, if any, that Subscription Rights are deemed to have fair market value on
the date such rights are issued.
25. STOCK COMPENSATION PLANS.
(a) The Holding Company and the Bank are authorized to adopt
Tax-Qualified Employee Stock Benefit Plans in connection with the Conversion,
including, without limitation, the ESOP. Subsequent to the Conversion, the
Holding Company and the Bank are authorized to adopt Non-Tax Qualified Employee
Stock Benefit Plans, including without limitation, stock option plans and
restricted stock plans, provided however that, with respect to any such plan
implemented during the one-year period subsequent to the date of consummation of
the Conversion, any such plan: (i) shall be disclosed in the proxy solicitation
materials for the Special Meeting of Members and in the Prospectus; (ii) in the
case of stock option plans, shall have a total number of shares of common stock
for which options may be granted of not more than 10% of the amount of shares
issued in the Conversion; (iii) in the case of management or employee
recognition or grant plans, shall have a total number of shares of common stock
of not more than 4% of the amount of shares issued in the Conversion; (iv) in
the case of stock option plans and employee recognition or grant plans, shall be
submitted for approval by the holders of the Holding Company Common Stock no
earlier than six months following consummation of the Conversion; and (v) shall
comply with all other applicable requirements of the OTS.
(b) Existing as well as any newly created Tax-Qualified Employee Stock
Benefit Plans may purchase shares of Conversion Stock in the Offerings, to the
extent permitted by the terms of such benefit plans and this Plan.
(c) The Holding Company and the Bank are authorized to enter into
employment or severance agreements with their executive officers.
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26. DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK.
(a) Following consummation of the Conversion, any repurchases of shares
of capital stock by the Holding Company will be made in accordance with then
applicable laws and regulations.
(b) The Bank may not declare or pay a cash dividend on, or repurchase
any of, its capital stock if the effect thereof would cause the regulatory
capital of the Bank to be reduced below the amount required for the liquidation
account. Any dividend declared or paid on, or repurchase of, the Bank's capital
stock shall be made in compliance with Section 563.134 of the Regulations
Applicable to All Savings Associations, or any successor thereto.
27. PAYMENT OF FEES TO BROKERS.
The Bank may elect to offer to pay fees on a per share basis to
securities brokers who assist Persons in determining to purchase shares in the
Offerings.
28. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION.
As part of the Conversion, the Holding Company and the Bank intend to
establish a charitable foundation that will qualify as an exempt organization
under Section 501(c)(3) of the Code (the "Foundation"). To fund the Foundation,
the Bank will contribute funds prior to completion of the Conversion or,
immediately subsequent to the Conversion, the Holding Company will contribute
authorized but unissued shares of Holding Company Common Stock in an amount not
to exceed 8% of the number of shares of Conversion Stock issued in the
Conversion (provided, however, that such amount may be reduced by the Holding
Company and the Bank), or a combination thereof, subject to the receipt of any
required regulatory approval or consent. The Foundation is being formed in
connection with the Conversion in order to complement the Bank's existing
community reinvestment activities and to share with the Bank's local community a
part of the Bank's financial success as a locally headquartered, community
minded, financial services institution.
The Foundation will be dedicated to the promotion of charitable
purposes including community development, grants, or donations to support
housing assistance and affordable housing programs, not-for-profit community
groups and other similar types of organizations or civic minded projects. In
order to serve the purposes for which it was formed and maintain its
qualification under Section 501(c)(3) of the Code, the Foundation may sell, on
an annual basis, a limited portion of the Holding Company Common Stock
contributed to it by the Holding Company.
The Board of Directors of the Foundation may be comprised of
individuals who are Officers and/or Directors of the Bank or the Holding
Company. The Board of Directors of the Foundation will be responsible for
establishing the polices of the Foundation with respect to grants or donations,
consistent with the stated purposes of the Foundation.
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The establishment and funding of the Foundation as part of the
Conversion and Reorganization is subject to the receipt of any required
regulatory approval or consent.
29. EFFECTIVE DATE.
The effective date of the Conversion shall be the date of the closing
of the sale of all shares of Conversion Stock. The closing of the sale of all
shares of Conversion Stock sold in the Offerings shall occur simultaneously and
shall be conditioned upon the prior receipt of all requisite regulatory and
other approvals.
30. AMENDMENT OR TERMINATION OF THE PLAN.
If deemed necessary or desirable by the Board of Directors of the Bank,
this Plan may be substantively amended, as a result of comments from regulatory
authorities or otherwise, at any time prior to the solicitation of proxies from
Members to vote on the Plan and at any time thereafter with the concurrence of
the OTS. Any amendment to this Plan made after approval by the Members with the
concurrence of the OTS shall not necessitate further approval by the Members
unless otherwise required by the OTS. This Plan shall terminate if the sale of
all shares of Conversion Stock is not completed within 24 months from the date
of the Special Meeting (subject to extension by the OTS). Prior to the Special
Meeting, this Plan may be terminated by the Board of Directors of the Bank
without approval of the OTS; after the Special Meeting, the Board of Directors
may terminate this Plan only with the approval of the OTS.
31. INTERPRETATION OF THE PLAN.
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Holding
Company and the Bank shall be final, subject to the authority of the OTS.
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