EXHIBIT 99.5
Proxy Statement for Annual Meeting of Stockholders
of First Federal Bank, A Federal Savings Bank
November __, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
First Federal Bank, A Federal Savings Bank ("Bank"), which will be held at the
main office of the Bank, 220 Federal Drive, N.W., Corydon, Indiana, on ________,
December ___, 1998, at ____:____ _.m., Eastern Standard Time.
The Notice of Annual Meeting of Stockholders and Proxy Statement appearing
on the following pages describe the formal business to be transacted at the
meeting. At the meeting, in addition to the routine matters of electing
directors and ratifying the appointment of independent auditors, you will be
asked to approve a Plan of Conversion and Agreement and Plan of Reorganization
("Plan of Conversion"). The Plan of Conversion provides for the conversion of
First Capital, Inc., M.H.C. from a mutual holding company to a stock holding
company, to be known as First Capital, Inc. ("Holding Company"), and the
reorganization of the Bank as a wholly-owned subsidiary of the Holding Company.
During the meeting, we will also report on the operations of the Bank.
Directors and Officers of the Bank, as well as a representative of Monroe Shine
& Co., Inc., the Bank's independent auditors, will be present to respond to
appropriate questions from stockholders.
Detailed information regarding the Bank's activities and operating
performance during the fiscal year ended June 30, 1998, is contained in the
Holding Company's Prospectus dated November ___, 1998, which is also enclosed.
The Prospectus is provided in lieu of the Bank's traditional Annual Report to
Stockholders.
Your vote is important, regardless of the number of shares you own. THE
BOARD OF DIRECTORS URGES YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS
SOON AS POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. This
will not prevent you from voting in person at the Annual Meeting, but will
assure that your vote is counted if you are unable to attend.
Sincerely,
James G. Pendleton
Chairman of the Board and Chief Executive Officer
FIRST FEDERAL BANK, A FEDERAL SAVINGS BANK
220 FEDERAL DRIVE, N.W.
CORYDON, INDIANA 47112
(812) 738-2198
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER____, 1998
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of First Federal Bank, A Federal Savings Bank ("Bank") will be held at
the main office of the Bank, 220 Federal Drive, N.W., Corydon, Indiana, on
_________, December ___, 1998, at __:__ _.m., Eastern Standard Time, for the
following purposes:
1. To consider and vote upon a proposal to approve a Plan of Conversion
from Mutual Holding Company to Stock Holding Company and Agreement and
Plan of Reorganization ("Plan of Conversion") adopted by First
Capital, Inc., M.H.C. ("MHC") and the Bank, pursuant to which (i) the
MHC will convert to a federally chartered interim stock savings bank
and merge into the Bank, with the Bank being the surviving
institution, (ii) the Bank and a newly formed federally chartered
interim stock savings bank will merge, with the Bank being the
surviving institution and becoming a wholly-owned subsidiary of a
newly formed stock corporation named First Capital, Inc. ("Holding
Company") and (iii) the Holding Company will sell shares of its common
stock to the public and issue shares of its common stock in exchange
for shares of the Bank's common stock, all on and subject to the terms
and conditions contained therein;
2. The election of three directors of the Bank;
3. The approval of the appointment of Monroe Shine & Co., Inc. as
independent auditors for the Bank for the fiscal year ending June 30,
1999; and
4. To consider and act upon such other matters as may properly come
before the Annual Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at the Annual
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Annual Meeting may be adjourned. Pursuant to
the Bank's Bylaws, the Board of Directors has fixed the close of business on
_________, 1998 as the record date for the determination of the stockholders
entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof.
Please complete and sign the enclosed form of Proxy, which is solicited by
the Board of Directors, and mail it promptly in the enclosed envelope. The
Proxy will not be used if you attend the Annual Meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
JOEL E. VOYLES
Secretary
Corydon, Indiana
November ___, 1998
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR BANK THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
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PROXY STATEMENT
OF
FIRST FEDERAL BANK, FEDERAL SAVINGS BANK
220 FEDERAL DRIVE, N.W.
CORYDON, INDIANA 47112
(812) 738-2198
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ANNUAL MEETING OF STOCKHOLDERS
DECEMBER____, 1998
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of First Federal Bank, A Federal Savings Bank
("Bank") to be used at the Annual Meeting of Stockholders (as may be adjourned
or postponed, the "Annual Meeting") of the Bank. The Annual Meeting will be
held at the Bank's main office, 220 Federal Drive, N.W., Corydon, Indiana, on
_________, December ___, 1998, at __:__ _.m., Eastern Standard Time. The
accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement
are being first mailed to stockholders on or about November ____, 1998.
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VOTING AND PROXY PROCEDURE
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Stockholders Entitled to Vote. Stockholders of record as of the close of
business on __________, 1998 ("Voting Record Date") are entitled to one vote for
each share of common stock ("Common Stock") of the Bank then held. As of the
close of business on the Voting Record Date, the Bank had ____________ shares of
Common Stock issued and outstanding of which 300,000 were owned by First
Capital, Inc., M.H.C. ("MHC"), the Bank's mutual holding company.
Quorum. The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of Common Stock entitled to vote is necessary
to constitute a quorum at the Annual Meeting. Abstentions will be counted as
shares present and entitled to vote at the Annual Meeting for purposes of
determining the existence of a quorum. Broker non-votes (i.e., shares held by
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brokers or nominees as to which instructions have not been received and the
broker or nominee does not have discretionary voting power) will be considered
shares present and will be included in determining whether a quorum is present.
SINCE THE MHC OWNS MORE THAN 50% OF THE OUTSTANDING SHARES OF COMMON STOCK, THE
BANK IS GUARANTEED TO ACHIEVE A QUORUM.
Voting. The Board of Directors solicits proxies so that each stockholder
has the opportunity to vote on the proposals to be considered at the Annual
Meeting. When a proxy card is returned properly signed and dated the shares
represented thereby will be voted in accordance with the instructions on the
proxy card. If a stockholder of record attends the Annual Meeting, he or she
may vote by ballot. Where no instructions are indicated, proxies will be voted
in accordance with the recommendations of the Board of Directors. The Board
recommends a vote FOR approval of all proposals submitted to stockholders at the
Annual Meeting.
The nominees for directors who receive a plurality of the votes cast by the
holders of the outstanding Common Stock entitled to vote at the Annual Meeting
will be elected. Votes may be cast for or withheld from each nominee. Votes
that are withheld will have no effect on the outcome of the election because
directors will be elected by a plurality of votes cast.
With respect to the ratification of the appointment of independent auditors
and the adoption of the Plan of Conversion, stockholders may vote for the
proposal, against the proposal or may abstain from voting. The affirmative
majority of the votes cast is required to ratify the appointment of independent
auditors. Adoption of the Plan of Conversion will require the affirmative vote
of (i) the holders of at least two-thirds of the outstanding shares of Common
Stock, and (ii) the holders of at least a majority of the outstanding shares of
Common Stock present in
person or by proxy at the Special Meeting (other than those held by the MHC) and
entitled to vote. SINCE THE MHC OWNS MORE THAN TWO-THIRDS OF THE OUTSTANDING
SHARES OF COMMON STOCK, THE BANK IS GUARANTEED TO RECEIVE THE FIRST REQUIRED
APPROVAL. Abstentions will have the same effect as a vote "against" approval of
the Plan of Conversion. Broker non-votes will have the same effect as a vote
"against" adoption of the Plan of Conversion with respect to the approval of the
conversion by the holders of at least two-thirds of the outstanding shares of
Common Stock and will have no effect on the voting with respect to the adoption
of the Plan of Conversion by a majority of the shares (other than those held by
the MHC) present and entitled to vote.
Revocation of a Proxy. Stockholders who execute proxies retain the right
to revoke them at any time before they are voted. Proxies may be revoked by
written notice delivered in person or mailed to the Secretary of the Bank or by
filing a later proxy prior to a vote being taken on a particular proposal at the
Annual Meeting. Attendance at the Annual Meeting will not automatically revoke
a proxy, but a stockholder of record in attendance may request a ballot and vote
in person, thereby revoking a prior granted proxy.
Persons and groups beneficially owning in excess of 5% of the Common Stock
are required to file certain reports with the Office of Thrift Supervision
("OTS"), and furnish a copy to the Bank, disclosing such ownership pursuant to
the Securities Exchange Act of 1934, as amended ("Exchange Act"). Based on such
reports, the following table sets forth as of the close of business on the
Voting Record Date, certain information as to those persons who were beneficial
owners of more than 5% of the Bank's outstanding shares of Common Stock and as
to the shares of Common Stock beneficially owned by each director and by all
directors and officers of the Bank as a group. Management knows of no persons
other than those set forth below who owned more than 5% of the Bank's
outstanding shares of Common Stock as of the close of business on the Voting
Record Date.
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership(1) Outstanding
- ------------------- ------------ ------------
First Capital, Inc., M.H.C. 300,000 59.52%
220 Federal Drive, N.W.
Corydon, Indiana 47112
Directors and Named Executive Officer(2):
James G. Pendleton 7,300 1.4
Mark D. Shireman 7,300 1.4
Dennis L. Huber 600 *
Samuel E. Uhl 7,440(3) 1.5
Kenneth R. Saulman 1,660 *
John W. Buschemeyer 7,300 1.4
Gerald L. Uhl 7,400(4) 1.5
All executive officers
and directors as a
group (11 persons) 40,430(5) 19.8
__________________
(*) Less than 1%.
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for purposes of this table, of any shares of the
Common Stock if he or she has shared voting and/or investment power with
respect to such security. The table includes shares owned by spouses,
other immediate family members in trust, shares held in retirement accounts
or funds for the benefit of the named individuals, and other
2
forms of ownership, over which shares the persons named in the table may
possess voting and investment power. Also includes shares that may be
acquire through the exercise of stock options that are exercisable within
60 days after the Voting Record Date.
(2) Under OTS regulations the term "named executive officer(s)" is defined to
include the chief executive officer, regardless of compensation level, and
the four most highly compensated executive officers, other than the chief
executive officer, whose total annual salary and bonus for the last
completed fiscal year exceeded $100,000. James G. Pendleton, the Bank's
Chairman of the Board and Chief Executive Officer, was the only "named
executive officer" during the fiscal year ended June 30, 1998.
(3) Includes 2,000 shares subject to outstanding stock options exercisable
within 60 days from the Voting Record Date.
(4) Includes 60 shares subject to outstanding stock options exercisable by
spouse within 60 days from the Voting Record Date.
(5) Includes 3,320 shares subject to outstanding stock options exercisable
within 60 days from the Voting Record Date.
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INCORPORATION BY REFERENCE
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Each person receiving this Proxy Statement is also receiving the Prospectus
of First Capital, Inc. dated November ___, 1998. Although such Prospectus is
incorporated herein by reference, this Proxy Statement does not constitute an
offer to sell or a solicitation of an offer to buy the common stock of the
Holding Company. Such offer and solicitation is made only by the Prospectus in
such jurisdictions where it is lawful to do so.
The Bank urges each recipient of this Proxy Statement to read carefully the
sections of the Prospectus that describe the following:
(i) the conversion (see "THE CONVERSION" in the Prospectus);
(ii) the business of the Holding Company and the Bank (see "BUSINESS OF
THE HOLDING COMPANY" and "BUSINESS OF THE BANK" in the Prospectus);
(iii) the reasons for the conversion and management's belief that the
conversion is in the best interests of the Bank and its stockholders (see
"THE CONVERSION -- Purposes of Conversion" in the Prospectus);
(iv) employment agreements, severance agreements, and stock benefit plans
that the Bank and/or the Holding Company intend to implement in connection
with the conversion (see "MANAGEMENT OF THE BANK" in the Prospectus);
(v) the common stock of the Holding Company (see "DESCRIPTION OF CAPITAL
STOCK OF THE HOLDING COMPANY" in the Prospectus);
(vi) the historical capitalization of the Bank and the pro forma
capitalization of the Holding Company (see "CAPITALIZATION" in the
Prospectus);
(vii) the historical and pro forma capital compliance of the Bank (see
"HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE" in the
Prospectus);
(viii) pro forma financial information with respect to the conversion (see
"PRO FORMA DATA" in the Prospectus);
(ix) the Holding Company and the Bank's respective intended use of
proceeds of the offering (see "USE OF PROCEEDS" in the Prospectus);
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(x) the Holding Company's proposed dividend policy (see "DIVIDEND
POLICY" in the Prospectus);
(xi) restrictions on the acquisition of the Holding Company, including
anti-takeover provisions in the Holding Company's Certificate of
Incorporation and Bylaws (see "RESTRICTIONS ON ACQUISITION OF THE HOLDING
COMPANY" in the Prospectus);
(xii) a comparison of the rights of the holders of Common Stock and rights
of the holders of the Holding Company's common stock (see "COMPARISON OF
STOCKHOLDERS' RIGHTS" in the Prospectus); and
(xiii) the financial statements of the Bank appearing in the Prospectus.
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PROPOSAL I -- APPROVAL OF PLAN OF CONVERSION
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On June 18, 1998, the Boards of Directors of the MHC and the Bank
unanimously adopted the Plan of Conversion, pursuant to which the Bank will
convert from the mutual holding company form of organization to the stock
holding company form of organization. THE FOLLOWING DISCUSSION OF THE PLAN OF
CONVERSION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN OF CONVERSION,
WHICH IS ATTACHED AS EXHIBIT A TO THIS PROXY STATEMENT. The OTS has approved
the Plan of Conversion, subject to its approval by the members of the MHC and
the stockholders of the Bank and to the satisfaction of certain other
conditions.
Pursuant to the Plan of Conversion, (i) the MHC will convert from a
federally-chartered mutual holding company to a federally-chartered interim
stock savings bank (Interim A) and simultaneously merge with and into the Bank
and (ii) an interim federal stock savings bank (Interim B) will be formed as a
wholly-owned subsidiary of the Holding Company and Interim B will merge with and
into the Bank. As a result of the merger of Interim A with and into the Bank,
the MHC will cease to exist and the shares of Bank common stock held by the MHC
will be canceled. As a result of the merger of Interim B with and into the
Bank, the Bank will become a wholly owned subsidiary of the Holding Company and
the common stock of the Bank will be converted into common stock of the Holding
Company pursuant to the Exchange Ratio, which will result in the holders of such
shares owning in the aggregate approximately the same percentage of the Holding
Company common stock to be outstanding upon the completion of the conversion as
the percentage of the Bank common stock owned by them in the aggregate
immediately prior to consummation of the conversion, but before giving effect to
(a) the payment of cash in lieu of issuing fractional shares and (b) any shares
of common stock purchased by the Bank's stockholders in this offering.
As part of the conversion, the Holding Company is offering shares of its
common stock in a subscription offering to holders of subscription rights in the
following order of priority: (i) Eligible Account Holders (depositors of the
Bank with $50.00 or more on deposit as of the close of business on March 31,
1997); (ii) Supplemental Eligible Account Holders (depositors of the Bank with
$50.00 or more on deposit as of the close of business on September 30, 1998);
and (iii) Other Members (depositors of the Bank as of the close of business on
________________ and borrowers of the Bank with loans outstanding as of the
close of business on February 1, 1993, which continue to be outstanding as of
the close of business on ________________) ("Subscription Offering").
Concurrently with the Subscription Offering, any shares of common stock not
subscribed for in the Subscription Offering may be offered for sale in the
Direct Community Offering to members of the general public, with priority being
given first to stockholders of the Bank as of the close of business on the
Voting Record Date (who are not Eligible Account Holders, Supplemental Eligible
Account Holders or Other Members) and then to natural persons and trusts of
natural persons residing in the Local Community. Shares of common stock not
sold in the Subscription Offering and the Direct Community Offering may be
offered in the Syndicated Community Offering. Regulations require that the
Direct Community Offering and the Syndicated Community Offering be completed
within 45 days after completion of the fully extended Subscription Offering
unless extended by the Bank or the Holding Company with the approval of the
regulatory authorities. If the Syndicated Community Offering is determined not
to be feasible because of market conditions or otherwise, the Board of Directors
of the Bank will consult with the regulatory authorities to determine an
appropriate alternative method for selling the unsubscribed shares of common
stock. The Plan of
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Conversion provides that the conversion must be completed within 24 months after
the date of the approval of the Plan of Conversion by the members of the MHC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF PLAN OF
CONVERSION.
STOCKHOLDERS OF THE BANK SHOULD NOT SEND THEIR STOCK CERTIFICATES TO THE
BANK FOR EXCHANGE AT THIS TIME.
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RIGHTS OF DISSENTING STOCKHOLDERS
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Under regulations of the OTS, any public stockholder of the Bank who does
not wish to accept shares of common stock of the Holding Company in the
conversion has the right to dissent from the conversion and to demand appraisal
of, and payment for, his or her shares of common stock of the Bank, provided
that he or she complies with all provisions of 12 C.F.R. Section 552.14
("Section 552.14"). If holders of common stock of the Bank have exercised
dissenters' rights in connection with the Plan of Conversion under Section
552.14, the holders of any dissenting shares will not participate in the
conversion, but will receive such consideration as may be determined to be due
with respect to such dissenting shares pursuant to Section 552.14 as described
below. Section 552.14 contains detailed information as to a dissenting
stockholder's right to payment and the procedural steps to be followed by a
dissenting stockholder. THE FOLLOWING DESCRIPTION IS ONLY A SUMMARY OF THESE
PROVISIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SECTION 552.14, A
COPY OF WHICH IS ATTACHED TO THIS PROXY STATEMENT AS EXHIBIT B AND IS
INCORPORATED HEREIN BY REFERENCE. A DISSENTING STOCKHOLDER NEED NOT VOTE
AGAINST THE PLAN OF CONVERSION IN ORDER TO PRESERVE HIS DISSENTER'S RIGHTS AFTER
FILING HIS NOTICE OF DISSENT, BUT WILL LOSE HIS DISSENTER'S RIGHTS IF HE OR SHE
VOTES FOR OR CONSENTS IN WRITING TO THE PLAN OF CONVERSION.
If the Plan of Conversion is approved by the required vote of stockholders
of the Bank and is not abandoned or terminated, each holder of shares of common
stock of the Bank who votes against the Plan of Conversion or who fails to vote
and who follows the procedures set forth in Section 552.14 will be entitled to
demand appraisal of and payment for his or her shares. A stockholder's vote in
favor of the Plan of Conversion constitutes a waiver of such stockholder's
dissenters' rights.
A stockholder electing to exercise his or her rights to dissent from the
conversion is required to file with the Bank, prior to the vote on the Plan of
Conversion at the Special Meeting, a written statement identifying himself or
herself and stating his or her intention to demand appraisal of and payment for
his or her shares if the conversion is completed. A stockholder may not dissent
to less than all of the shares beneficially owned by him or her.
If the conversion is completed, within ten days after the effective date of
the conversion ("effective date"), the Holding Company must (i) give notice of
the effective date by mail to any dissenting stockholders who have given the
Bank the required notice and have not voted in favor of the conversion (ii) make
a written offer to each stockholder to pay for dissenting shares at a specified
price deemed by the Bank to be the fair value thereof; and (iii) inform such
stockholders that, within 60 days of the effective date, they must satisfy
certain conditions in order to perfect their demand for payment.
If, within 60 days of the effective date, the fair value is agreed upon
between the Bank and the dissenting stockholder, payment for those shares must
be made within 90 days of the effective date. If, within 60 days of the
effective date, the Bank and the dissenting stockholder do not agree on the fair
value of the shares, then such stockholder may file a petition with the OTS
(with a copy to the Bank) demanding a determination of the fair market value of
the stock of such stockholder. A stockholder entitled to file such a petition
and who fails to file such a petition is deemed to have accepted the terms of
the conversion.
5
Within 60 days of the effective date, each stockholder demanding appraisal
and payment must submit to the stock transfer agent his or her certificates of
stock for notation thereon that an appraisal and payment for his or her shares
have been demanded and that appraisal proceedings are pending. Any stockholder
who fails to submit his or her stock certificates for such notation shall no
longer be entitled to appraisal rights and shall be deemed to have accepted the
terms of the conversion. At any time within 60 days after the effective date,
any stockholder has the right to withdraw his or her demand for appraisal and to
accept the terms of the conversion.
Pursuant to Section 552.14, the OTS may either appoint one or more
independent persons or direct an appropriate office of the OTS to appraise the
shares to determine their fair market value, as of the effective date, exclusive
of any element of value arising from the accomplishment or expectation of the
conversion. The OTS shall review and provide an opinion on appraisals prepared
by independent persons as to the suitability of the appraisal methodology and
the adequacy of the analysis and supportive data. If it concurs in the
valuation of the shares, the OTS shall direct payment by the Bank of the
appraised fair market value of the shares upon surrender of the stock
certificates. Payment is to be made, with interest from the effective date, at
a rate deemed equitable by the OTS.
Costs and expenses of any proceeding under these provisions may be
apportioned and assessed by the OTS as it may deem equitable against all or some
of the parties. In making its determination, the OTS is to consider whether any
party acted arbitrarily, vexatiously, or not in good faith.
Any stockholder who has demanded appraisal rights will thereafter neither
be entitled to vote such shares for any purpose nor be entitled to the payment
of dividends or other distributions on the stock except for dividends or other
distributions payable to, or a vote to be taken by stockholders of record at a
date which is on or prior to the effective date. However, if any stockholder
becomes unentitled to appraisal and payment of appraised value with respect to
such stock and accepts or is deemed to have accepted the terms offered upon the
Reorganization, such stockholder shall thereupon be entitled to vote and receive
the distributions.
BECAUSE OF THE DETAILED PROVISIONS AND REQUIREMENTS OF SECTION 552.14, EACH
DISSENTING STOCKHOLDER SHOULD CONSULT WITH HIS OR HER OWN LEGAL COUNSEL
CONCERNING THE PROCEDURES AND REMEDIES AVAILABLE TO HIM OR HER. FAILURE TO
FOLLOW THE DETAILED PROCEDURES SET FORTH IN SECTION 552.14 MAY RESULT IN A
STOCKHOLDER LOSING HIS OR HER RIGHT TO CLAIM FAIR VALUE AS DESCRIBED HEREIN. IF
ANY HOLDER OF SHARES OF COMMON STOCK OF THE BANK WHO DEMANDS APPRAISAL OF AND
PAYMENT FOR HIS OR HER SHARES UNDER SECTION 552.14 FAILS TO PERFECT, OR
EFFECTIVELY WITHDRAWS OR LOSES, HIS OR HER RIGHT TO SUCH PAYMENT, SUCH HOLDER
WILL PARTICIPATE IN THE CONVERSION PURSUANT TO THE PLAN OF CONVERSION.
DISSENTING STOCKHOLDERS SHOULD NOT SEND THEIR STOCK CERTIFICATES TO THE
BANK AT THIS TIME.
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PROPOSAL II -- ELECTION OF DIRECTORS
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The Bank's Board of Directors consists of seven members, divided into three
classes as nearly equal in number as possible. The term of office of only one
class expires each year, and their successors will be elected for terms of three
years and until their successors are elected and qualified.
The Bank Board of Directors, acting as the Nominating Committee, has
nominated Kenneth R. Saulman, John W. Buschemeyer and Gerald L. Uhl each for
their respective term set forth in the following table or until their respective
successors shall have been elected and qualified. Unless otherwise specified in
the proxy, it is intended that the persons named in the proxies solicited by the
Board of Directors will vote for the election of the nominees.
The Bank's Bylaws permit stockholders to cumulate their votes for the
election of directors. In accordance with the Bylaws, every stockholder who is
entitled to vote at an election of directors shall have the right to vote, in
6
person or by proxy, the number of shares owned by the shareholder for as many
persons as there are directors to be elected and for whose election the
shareholder has a right to vote. However, your shares have cumulative voting
rights (i.e., a stockholder may cast votes for any one nominee equal to the
----
product of your eligible shares multiplied by the number of nominees named
herein or distribute such cumulative votes among any number of the nominees).
Should a stockholder decide to exercise his or her cumulative voting rights,
mark the enclosed revocable proxy accordingly by writing the number of votes to
cast for each nominee beside the nominee's name. Unless a proxy is so marked,
the Bank does not reserve the authority to cumulate votes cast as a result of
the proxies it receives.
If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute nominee as the Board
of Directors may recommend, or the Board of Directors may amend the Bylaws and
reduce the size of the Board. At this time, the Board of Directors knows of no
reason why any nominee might be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ALL OF THE
NOMINEES NAMED BELOW.
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The following table sets forth certain information as to each nominee and
director continuing in office. Gerald L. Uhl and Samuel E. Uhl are brothers.
Year First Year
Principal Occupation Elected or Term
Name Age(1) During Last Five Years Appointed Expires
---- ------ ---------------------- ---------- -------
BOARD NOMINEES
Kenneth R. Saulman(2) 57 Right-of-way supervisor for Clark 1997 1999(3)
County REMC, an electrical service
company in Sellersburg, Indiana, since
March 1995; Area supervisor for
Asplundhi Tree Trimming in Ramsey,
Indiana, from July 1991 to March 1995.
John W. Buschemeyer 58 Vice Chairman of the Board of the 1973 2001(3)
Bank; President and sole owner of
Hurst Lumber Co., Corydon, Indiana.
Gerald L. Uhl 57 Business Manager for Jacobi Sales, 1973 2001(3)
Inc., Palmyra, Indiana, a farm machinery
and lawn and garden equipment retailer
and servicer.
DIRECTORS CONTINUING IN OFFICE AFTER ANNUAL MEETING
Samuel E. Uhl 52 President of the Savings Bank 1995 1999
since October 1996; Senior Vice
President of the Savings Bank
from 1994 to 1996; former Vice
President with First Nationwide Bank,
St. Louis, Missouri.
James G. Pendleton 64 Chairman of the Board (since 1963 2000
November 1996) and Chief
Executive Officer of the Savings
Bank; President of the Savings Bank
from 1961 to October 1996.
Mark D. Shireman 46 President and minority stockholder 1989 2000
of James L. Shireman Co. Inc., a
general and commercial contractor
in Corydon, Indiana.
Dennis L. Huber(2) 52 President and minority stockholder 1997 2000
of O'Bannon Publishing Co., Inc.,
Corydon, Indiana, a newspaper publisher.
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_________________
(1) As of June 30, 1997.
(2) Mr. Saulman was appointed to the Board of Directors in October 1997 to
replace Darrell Rothrock who retired.
(3) Assuming election or re-election at the Meeting.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings and
committees of the Board. The Board of Directors held 12 meetings during the
fiscal year ended June 30, 1998. No director attended fewer than 75% of the
total meetings of the Board of Directors and committee meetings on which he
served during the fiscal year ended June 30, 1998.
The Executive Committee, which consists of Directors Buschemeyer, Saulman,
Shireman and Pendleton, meets as necessary between meetings of the full Board of
Directors. All actions of the Executive Committee must be ratified by the full
Board of Directors. The Executive Committee reviews directors' and officers'
compensation and makes recommendations to the full Board of Directors in this
regard. The Executive Committee met two times during the fiscal year ended June
30, 1998.
The Audit Committee, consisting of Directors Pendleton, G. Uhl and
Shireman, is responsible for developing and monitoring the Bank's audit program.
The Audit Committee selects the outside auditor and meets with them to discuss
the results of the annual audit and any related matters. The Audit Committee
also receives and reviews all the reports and findings and other information
presented to them by officers regarding financial reporting policies and
practices. The Audit Committee meets as necessary and met once during the fiscal
year ended June 30, 1998.
The Compensation Committee, consisting of Directors S. Uhl, Buschemeyer and
Shireman, is responsible for establishing and recommending employee and
executive compensation policy to the full Board of Directors. The Compensation
Committee met once during the fiscal year ended June 30, 1998.
The full Board of Directors serves as a nominating committee. The Board of
Directors met once in its capacity as the nominating committee during the 1998
fiscal year.
DIRECTORS' COMPENSATION
FEES. Members of the Bank's Board of Directors receive $400 per month.
Members of committees of the Board of Directors also receive $50 per committee
meeting attended. The Bank paid total Board and committee fees of approximately
$33,000 for the fiscal year ended June 30, 1998.
DIRECTORS' DEFERRED COMPENSATION PLAN. Directors may elect to defer their
monthly directors' fees until retirement with no income tax payable by the
director until retirement benefits are received. Upon the director's
termination of service on or after attaining age 70, the retired director
receives between $217 and $676 per month for 180 months. Benefits are also
payable upon disability, early retirement, other termination of service or
death. All directors participate in the plan other than Directors S. Uhl, Huber
and Saulman, who have elected not to participate.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following information is furnished for the
Chief Executive Officer of the Bank and for each executive officer of the Bank
who received salary and bonus in excess of $100,000 during the year ended June
30, 1998.
9
Long-Term Compensation
-----------------------------
Annual Compensation Awards
------------------------------------- -----------------------------
Restricted Securities
Name and Fiscal Other Annual Stock Underlying All Other
Position Year Salary Bonus Compensation Award Options(#) Compensation(1)
- -------- ------ ------- ----- ------------ ----- ---------- ---------------
James G. Pendleton 1998 $82,409 615 2,262 -- -- 8,810
Chairman of the 1997 77,484 650 2,792 -- -- 7,159
Board and Chief 1996 72,480 600 539 -- -- 7,557
Executive Officer
______________________
(1) Includes directors' fees from the Bank.
EXECUTIVE RETIREMENT INCOME AGREEMENTS. The Bank has entered into an
agreement with James G. Pendleton to provide him with additional retirement
income. The agreement provides for an annual benefit of $24,500 upon Mr.
Pendleton's retirement at or after attaining age 65, payable for 15 years
following retirement. Benefits are also payable upon disability, early
retirement, other termination of service or death. The Bank has purchased a
life insurance policy with Mr. Pendleton as insured to assist in funding the
Bank's obligation under the agreement. During the fiscal year ended June 30,
1998, the Bank accrued compensation expense of $19,700 with respect to its
obligation under the agreement.
TRANSACTIONS WITH THE BANK
Director Gerald L. Uhl is a shareholder and the Business Manager of Jacobi
Sales, Inc. ("JSI"), a farm implement dealership that has contracted with the
Bank to provide sales financing to customers of JSI. The Bank does not grant
preferential credit under this arrangement. All sales contracts are presented
to the Bank on a 50% recourse basis, with JSI responsible for the sale and
disposition of any repossessed equipment. During the fiscal year ended June 30,
1998, the Bank granted approximately $612,000 of credit to JSI customers.
Federal regulations require that all loans or extensions of credit by the
Bank to executive officers and directors must generally be made on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons (unless the loan or
extension of credit is made under a benefit program generally available to all
other employees and does not give preference to any insider over any other
employee) and must not involve more than the normal risk of repayment or present
other unfavorable features. The Bank's policy is not to make any new loans or
extensions of credit to the Bank's executive officers and directors at different
rates or terms than those offered to the general public. In addition, loans
made to a director or executive officer in an amount that, when aggregated with
the amount of all other loans to such person and his or her related interests,
are in excess of the greater of $25,000, or 5% of the Bank's capital and surplus
(up to a maximum of $500,000) must be approved in advance by a majority of the
disinterested members of the Board of Directors. The aggregate amount of loans
by the Bank to its executive officers and directors and their associates was
approximately $960,000 at June 30, 1998.
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PROPOSAL III -- APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
Monroe Shine & Co., Inc. was the Bank's independent auditors for the fiscal
year ended June 30, 1998. The Board of Directors has appointed Monroe Shine &
Co., Inc. as independent auditors for the fiscal year ending June 30, 1999,
subject to approval by the Bank's stockholders. A representative of Monroe
Shine & Co., Inc. is expected to be present at the Annual Meeting to respond to
stockholders' questions and will have the opportunity to make a statement if he
so desires.
10
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COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
- --------------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the executive officers and
directors of the Bank and persons who beneficially own more than 10% of any
registered class of the Bank's capital stock to file reports of ownership and
changes in ownership with the OTS. Based solely on a review of the reports and
written representations provided to the Bank by the above referenced persons,
the Bank believes that during fiscal 1998 all filing requirements applicable to
its reporting officers, directors and greater than 10% beneficial owners were
complied with properly and in a timely manner.
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OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors of the Bank is not aware of any business to come
before the Annual Meeting other than those matters described above in this Proxy
Statement. However, if any other matters should properly come before the Annual
Meeting, it is intended that executed proxies in the accompanying form will be
voted in respect thereof in accordance with the judgment of the person or
persons voting the proxies.
The cost of solicitation of proxies will be borne by the Bank. In addition
to solicitations by mail, directors, officers and regular employees of the Bank
may solicit proxies personally or by telecopier or telephone without additional
compensation. In addition, the Bank has retained Charles Webb & Company for the
solicitation of proxies, account consolidation, proxy tabulation and inspection.
The fees for such services is included in the fees to be received by Charles
Webb & Company in connection with the conversion. See "THE CONVERSION -- Plan
of Distribution and Selling Commissions" in the Prospectus for further
information.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
Upon consummation of the conversion, the public stockholders of the Bank
will become stockholders of the Holding Company. It is anticipated that the
first annual meeting of stockholders of the Holding Company will be held in
October 1999. In order to be eligible for inclusion in the Holding Company's
proxy materials for its first annual meeting of stockholders, any stockholder
proposal to take action at such meeting must be received at the Holding
Company's main office at 220 Federal Drive, N.W., Corydon, Indiana, no later
than _________, 1999. Any such proposals shall be subject to the requirements
of the proxy solicitation rules adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
JOEL E. VOYLES
Secretary
Corydon, Indiana
November ___, 1998
11
APPENDIX B
TITLE 12 OF THE CODE OF FEDERAL REGULATIONS, SECTION 552.14
(S)552.14 DISSENTER AND APPRAISAL RIGHTS.
(A) RIGHT TO DEMAND PAYMENT OF FAIR OR APPRAISED VALUE. Except as provided
in paragraph (b) of this section, any stockholder of a Federal stock association
combining in accordance with '552.13 of this part shall have the right to demand
payment of the fair or appraised value of his stock: Provided, that such
stockholder has not voted in favor of the combination and complies with the
provisions of paragraph (c) of this section.
(B) EXCEPTIONS. No Stockholder required to accept only qualified
consideration for his or her stock shall have the right under this section to
demand payment of the stock's fair or appraised value, if such stock was listed
on a national securities exchange or quoted on the National Association of
Securities Dealers' Automated Quotation System ("NASDAQ") on the date of the
meeting at which the combination was acted upon or stockholder action is not
required for a combination made pursuant to '552.13(h)(2) of this part.
"Qualified consideration" means cash, shares of stock of any association or
corporation which at the effective date of the combination will be listed on a
national securities exchange or quoted on NASDAQ or any combination of such
shares of stock and cash.
(C) PROCEDURE.
(1) NOTICE. Each constituent Federal stock association shall
notify all stockholders entitled to rights under this section, not less than
twenty days prior to the meeting at which the combination agreement is to be
submitted for stockholder approval, of the right to demand payment of
appraised value of shares, and shall include in such notice a copy of this
section. Such written notice shall be mailed to stockholders of record and
may be part of the management's proxy solicitation for such meeting.
(2) DEMAND FOR APPRAISAL AND PAYMENT. Each stockholder electing to
make a demand under this section shall deliver to the Federal stock
association, before voting on the combination, a writing identifying himself
or herself and stating his or her intention thereby to demand appraisal of
and payment for his or her shares. Such demand must be in addition to and
separate from any proxy or vote against the combination by the stockholder.
(3) NOTIFICATION OF EFFECTIVE DATE AND WRITTEN OFFER. Within ten days
after the effective date of the combination, the resulting association
shall:
(i) Give written notice by mail to stockholders of constituent
Federal Stock associations who have complied with the provisions of
paragraph (c)(2) of this section and have not voted in favor of the
combination, of the effective date of the combination;
(ii) Make a written offer to each stockholder to pay for
dissenting shares at a specified price deemed by the resulting
association to be the fair value thereof; and
(iii) Inform them that, within sixty days of such date, the
respective requirements of paragraphs (c)(5) and (6) of this section
(set out in the notice) must be satisfied.
The notice and offer shall be accompanied by a balance sheet and statement
of income of the association the shares of which the dissenting stockholder
holds, for a fiscal year ending not more than sixteen months before the
date of notice and offer, together with the latest available interim
financial statements.
B-1
(4) ACCEPTANCE OF OFFER. If within sixty days of the effective date
of the combination the fair value is agreed upon between the resulting
association and any stockholder who has complied with the provisions of
paragraph (c)(2) of this section, payment therefor shall be made within
ninety days of the effective date of the combination.
(5) PETITION TO BE FILED IF OFFER NOT ACCEPTED. If within sixty days
of the effective date of the combination the resulting association and any
stockholder who has complied with the provisions of paragraph (c)(2) of
this section do not agree as to the fair value, then any such stockholder
may file a petition with the Office, with a copy by registered or certified
mail to the resulting association, demanding a determination of the fair
market value of the stock of all such stockholders. A stockholder entitled
to file a petition under this section who fails to file such petition
within sixty days of the effective date of the combination shall be deemed
to have accepted the terms offered under the combination.
(6) STOCK CERTIFICATES TO BE NOTED. Within sixty days of the
effective date of the combination, each stockholder demanding appraisal and
payment under this section shall submit to the transfer agent his
certificates of stock for notation thereon that an appraisal and payment
have been demanded with respect to such stock and that appraisal
proceedings are pending. Any stockholder who fails to submit his stock
certificates for such notation shall no longer be entitled to appraisal
rights under this section and shall be deemed to have accepted the terms
offered under the combination.
(7) WITHDRAWAL OF DEMAND. Notwithstanding the foregoing, at any time
within sixty days after the effective date of the combination, any
stockholder shall have the right to withdraw his or her demand for
appraisal and to accept the terms offered upon the combination.
(8) VALUATION AND PAYMENT. The Director shall, as he or she may
elect, either appoint one or more independent persons or direct appropriate
Staff of the Office to appraise the shares to determine their fair market
value, as of the effective date of the combination, exclusive of any
element of value arising from the accomplishment or expectation of the
combination. Appropriate Staff of the Office shall review and provide an
opinion on appraisals prepared by independent persons as to the suitability
of the appraisal methodology and the adequacy of the analysis and
supportive data. The Director after consideration of the appraisal report
and the advice of the appropriate staff shall, if he or she concurs in the
valuation of the shares, direct payment by the resulting association of the
appraised fair market value of the shares, upon surrender of the
certificates representing such stock. Payment shall be made, together with
interest from the effective date of the combination, at a rate deemed
equitable by the Director.
(9) COSTS AND EXPENSES. The costs and expenses of any proceeding
under this section may be apportioned and assessed by the Director as he or
she may deem equitable against all or some of the parties. In making this
determination the Director shall consider whether any party has acted
arbitrarily, vexatiously, or not in good faith in respect to the rights
provided by this section.
(10) VOTING AND DISTRIBUTION. Any stockholder who has demanded
appraisal rights as provided in paragraph (c)(2) of this section shall
thereafter neither be entitled to vote such stock for any purpose nor be
entitled to the payment of dividends or other distributions on the stock
(except dividends or other distribution payable to, or a vote to be taken
by stockholders of record at a date which is on or prior to, the effective
date of the combination): Provided, that if any stockholder becomes
unentitled to appraisal and payment of appraised value with respect to such
stock and accepts or is deemed to have accepted the terms offered upon the
combination, such stockholder shall thereupon be entitled to vote and
receive the distributions described above.
B-2
(11) STATUS. Shares of the resulting association into which shares of
the stockholders demanding appraisal rights would have been converted or
exchanged, had they assented to the combination, shall have the status of
authorized and unissued shares of the resulting association.
* * *
B-3