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HEARTLAND COMMUNITY BANK
237 JACKSON STREET
CAMDEN, ARKANSAS 71701-0878
(501) 836-6841
NOTICE OF SPECIAL MEETING OF MEMBERS
Notice is hereby given that a Special Meeting of Members (the "Special
Meeting") of Heartland Community Bank (the "Bank") will be held at
______________________________, ________________________________, Camden,
Arkansas, on ___________, 1997 at __:__ _.m. Business to be taken up at the
Special Meeting shall be:
(1) To consider and vote upon a Plan of Conversion providing for
the conversion of the Bank from a federally chartered mutual
savings bank to a federally chartered stock savings bank as a
wholly owned subsidiary of HCB Bancshares, Inc., a newly
organized Oklahoma corporation formed by the Bank for the
purpose of becoming the holding company for the Bank and the
related transactions provided for in such plan, including the
amendment of the Bank's existing Federal Mutual Charter and
Bylaws to read in the form of a Federal Stock Charter and
Bylaws for the Bank, pursuant to the laws of the United States
and the Rules and Regulations administered by the Office of
Thrift Supervision.
(2) To consider and vote upon any other matters that may lawfully
come before the Special Meeting.
Note: As of the date of mailing of this Notice of Special Meeting of
Members, the Board of Directors is not aware of any other
matters that may come before the Special Meeting.
The members entitled to vote at the Special Meeting shall be those
members of the Bank at the close of business on __________ ___, 1997, who
continue as members until the Special Meeting and, should the Special Meeting
be, from time to time, adjourned to a later time, until the final adjournment
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Paula J. Bergstrom
Secretary
______________, 1997
Camden, Arkansas
______________________
YOUR BOARD OF DIRECTORS URGES YOU TO CONSIDER CAREFULLY THIS PROXY
MATERIAL AND, WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE SPECIAL
MEETING, TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) AS SOON AS
POSSIBLE TO ASSURE THAT YOUR VOTES WILL BE COUNTED. THIS WILL NOT PREVENT YOU
FROM VOTING IN PERSON IF YOU ATTEND THE SPECIAL MEETING.
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HEARTLAND COMMUNITY BANK
237 JACKSON STREET
CAMDEN, ARKANSAS 71701-0878
(501) 836-6841
PROXY STATEMENT
YOUR PROXY, IN THE FORM ENCLOSED, IS SOLICITED BY THE BOARD OF
DIRECTORS OF HEARTLAND COMMUNITY BANK FOR USE AT A SPECIAL MEETING OF ITS
MEMBERS TO BE HELD ON ____________, 1997 AND ANY ADJOURNMENT OF THAT MEETING,
FOR THE PURPOSES SET FORTH IN THE FOREGOING NOTICE OF SPECIAL MEETING. YOUR
BOARD OF DIRECTORS URGES YOU TO VOTE FOR THE PLAN OF CONVERSION.
PURPOSE OF MEETING -- SUMMARY
A Special Meeting of Members (the "Special Meeting") of Heartland
Community Bank (the "Bank") will be held at
___________________________________________________, Camden, Arkansas on
_________________, _____________, 1997, at __:__ _.m., Central Time, for the
purpose of considering and voting upon a Plan of Conversion (the "Plan"), which
was unanimously adopted by the Bank's Board of Directors and which, if approved
by a majority of the total votes eligible to be cast by the members, will permit
the Bank to convert from a federal mutual savings bank to a federal stock
savings bank (the "Converted Bank") as a wholly owned subsidiary of HCB
Bancshares, Inc. (the "Company"), an Oklahoma corporation formed by the Bank for
the purpose of becoming the holding company for the Bank. The conversion of the
Bank to the Converted Bank and the acquisition of control of the Converted Bank
by the Company is referred to herein as the "Conversion". The Conversion is
contingent upon the members' approval of the Plan at the Special Meeting or any
adjournment thereof.
The Plan provides in part that after receiving final authorization from
the Office of Thrift Supervision ("OTS"), the Company will offer for sale shares
of its common stock, par value $.01 per share (the "Common Stock"), through the
issuance of nontransferable subscription rights, first to depositors of the Bank
as of December 31, 1993 with $50.00 or more on deposit in the Bank on that date
("Eligible Account Holders"), second to the Company's Employee Stock Ownership
Plan (the "ESOP") (a tax-qualified employee stock benefit plan of the Company,
as defined in the Plan), third to depositors of the Bank as of ___________,
199__, with $50.00 or more on deposit in the Bank on December 31, 1996, the last
day of the calendar quarter preceding approval of the Plan by the OTS who are
not Eligible Account Holders ("Supplemental Eligible Account Holders"), fourth
to other members, i.e., depositors and borrower members of the Bank, other than
Eligible Account Holders and Supplemental Eligible Account Holders, on
_______________, 1997 ("Other Members"), and fifth to depositors and borrowers
of the Bank's subsidiary capital stock savings bank which operates the Bank's
full service branch offices in Little Rock and Monticello and loan production
office in Bryant, Arkansas, as of _______________, 199__ ("Other Customers")
(the "Subscription Offering"). Subscription rights received in any of the
foregoing categories will be subordinated to the subscription rights of those in
a prior category, with the exception that any shares of Common Stock sold in
excess of the high end of the estimated value range as established in an
independent appraisal, as discussed below, may be first sold to the ESOP. During
or after the Subscription Offering, shares of the Common Stock not sold in the
Subscription Offering may be offered to the general public, in a community
offering (the "Community Offering"). In the Community Offering, preference may
be given to natural persons and trusts of natural persons who are permanent
residents of Calhoun, Cleveland, Dallas, Drew, Grant, Ouachita and Pulaski
Counties in Arkansas (the "Local Community"). Any shares of Common Stock not
purchased in the Subscription and Community Offerings may be sold to a syndicate
of underwriters to be managed by Trident Securities, Inc. ("Trident
Securities"). The aggregate price of the Common Stock to be issued by the
Company under the Plan is currently estimated to be between $17,000,000 and
$23,000,000, subject to adjustment, as determined by an independent appraisal of
the Bank's estimated pro forma market value as converted and as a wholly owned
subsidiary of the Company. See "The Conversion -- Stock Pricing and Number of
Shares to be Issued" in the accompanying Prospectus.
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Adoption of the proposed Charter and Bylaws of the Converted Bank is an
integral part of the Plan. Copies of the Plan and the proposed Charter and
Bylaws for the Converted Bank are attached to this Proxy Statement as exhibits.
These documents provide, among other things, for the termination of voting
rights of members and their rights to receive any surplus remaining in the event
of liquidation of the Bank. These rights, except for the rights of Eligible
Account Holders and Supplemental Eligible Account Holders in the liquidation
account established for their benefit upon completion of the Conversion, will
vest exclusively in the Company as the sole holder of the Converted Bank's
outstanding capital stock. For further information, see "The Conversion --
Effect of Conversion to Stock Form on Depositors and Borrowers of the Bank."
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE BANK UNANIMOUSLY RECOMMENDS THAT YOU
VOTE "FOR" APPROVAL OF THE PLAN. VOTING IN FAVOR OF THE PLAN WILL NOT OBLIGATE
ANY PERSON TO PURCHASE STOCK.
The Conversion will be accomplished through adoption of a new Charter
and Bylaws to authorize the issuance of capital stock by the Bank to the
Company. Under the Plan, 2,000,000 shares of the Common Stock, subject to
adjustment, are being offered for sale by the Company. Upon completion of the
Conversion, the Converted Bank will issue all of its newly issued shares of
capital stock (100,000 shares) to the Company in exchange for at least 50% of
the net proceeds. None of the Bank's assets will be distributed in order to
effect the Conversion other than to pay expenses incident thereto.
The net proceeds from the sale of Common Stock in the Conversion will
substantially increase the Bank's capital, which will increase the amount of
funds available for lending and investment, and support current operations and
the continued growth of the Bank's business. The holding company structure will
provide greater flexibility than the Bank alone would have for diversification
of business activities and geographic operations. Management believes that this
increased capital and operating flexibility will enable the Bank to compete more
effectively with other savings institutions and other types of financial service
organizations. Management also believes that the Conversion will enhance the
future access of the Company and the Converted Bank to the capital markets.
HCB BANCSHARES, INC.
HCB Bancshares, Inc. was incorporated under the laws of the State of
Oklahoma in December 1996 at the direction of the Board of Directors of the Bank
for the purpose of serving as a savings institution holding company of the Bank
and its subsidiary savings bank upon the acquisition of all of the capital stock
to be issued by the Bank upon the Conversion. The Company expects to receive
approval from the OTS to acquire control of the Bank and its subsidiary savings
bank subject to satisfaction of certain conditions. Prior to the Conversion, the
Company has not engaged and will not engage in any material operations. Upon
consummation of the Conversion, the Company will have no significant assets
other than the outstanding capital stock of the Bank, a portion of the net
proceeds of the Conversion and a note receivable from the ESOP. The Company's
principal business will be the business of the Bank.
The holding company structure will permit the Company to expand the
financial services currently offered through the Bank. As a holding company, the
Company will have greater flexibility than the Bank to diversify its business
activities through existing or newly formed subsidiaries or through acquisition
or merger with other financial institutions. The Company will be classified as a
multiple savings institution holding company and will be subject to regulation
by the OTS. As long as the Company remains a multiple savings institution
holding company, the Company will be subject to regulatory restrictions on the
activities in which it and its non-savings institution subsidiaries may engage.
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The Company's executive offices are located at 237 Jackson Street,
Camden, Arkansas 71701-0878, and its telephone number is (501) 836-6841.
HEARTLAND COMMUNITY BANK
Heartland Community Bank was organized as a federally chartered mutual
savings and loan association named "First Federal Savings and Loan Association
of Camden" in 1933, and in 1934 it became a member of the FHLB system and
obtained federal deposit insurance. In May 1996, First Federal acquired the
former Heritage Bank, FSB, which retained its separate federal savings bank
charter and deposit insurance as a wholly owned subsidiary of First Federal, but
whose business operations were fully integrated with those of First Federal. In
September 1996, First Federal and Heritage changed their names to Heartland
Community Bank. The Bank itself currently operates through four full service
banking offices located in Camden (2), Fordyce and Sheridan, Arkansas, and its
subsidiary savings bank operates through two full service banking offices
located in Little Rock and Monticello, Arkansas and a loan production office in
Bryant, Arkansas. At September 30, 1996, the Bank had total assets of $173.0
million, deposits of $147.2 million and equity of $13.5 million, or 7.79% of
total assets.
Historically, the principal business strategy of the Bank, like most
other savings institutions in Arkansas and elsewhere, has been to accept
deposits from residents of the communities served by the Bank's branch offices
and to invest those funds in single-family mortgage loans to those and other
local residents. In this manner, the Bank and countless other independent
community-oriented savings institutions operated safely and soundly for
generations. In recent years, however, as the banking business nationwide and in
the Bank's primary market area in particular has become more competitive,
smaller savings institutions like the Bank have come under increasing market
pressure either to grow and increase their profitability or to be acquired by a
larger institution.
In September 1995, the Bank's Board of Directors carefully considered
the Bank's historical results of operations, current financial condition and
future business prospects and, in consultation with the Bank's executive
officers, determined to strengthen the Bank's competitiveness and profitability
by concentrating its business strategy as an independent community bank on
expanding the Bank's products and services and growing its customer and asset
base. Since then, the Bank has actively sought to implement this strategy by
adding two new executive officers -- Cameron McKeel as Executive Vice President
and William Lyon as Senior Vice President and Chief Lending Officer -- and more
than doubling the Bank's total employees, by acquiring the former Heritage Bank,
FSB, which added to the Bank's branch network additional branches in the growing
and potentially lucrative Little Rock and Monticello banking markets, by
upgrading selected branch office facilities, by expanding the types of loans and
deposit accounts offered by the Bank, by updating the Bank's name and corporate
identity from First Federal Savings and Loan Association of Camden to Heartland
Community Bank and, now, by adopting the Plan. Throughout this period, the
Bank's executive officers have worked with the Bank's directors and with the
Bank's entire staff to formulate and effectuate the Bank's current strategic
plan.
On a going forward basis, the Bank's current business strategy, as
developed and adopted by all of the Bank's directors, officers and employees,
incorporates the following key elements: (i) remaining an independent
community-oriented financial institution by continuing to provide the quality
service that only a locally based institution and its dedicated staff can
deliver, including the possible retention of additional executive officers in
the future as the Bank's growth and other needs may warrant; (ii) strengthening
the Bank's core deposit base and decreasing interest costs and increasing fee
income by expanding the Bank's deposit facilities and products, including the
addition and expansion of branch offices, the planned installation of ATMs, the
introduction of debit cards and a planned emphasis on attracting consumer demand
deposits; (iii) increasing loan yields and fee income while maintaining asset
quality by emphasizing the origination of higher yielding and shorter term
loans, especially commercial and multi-family real estate loans and consumer and
commercial business loans, for the Bank's portfolio while increasingly
originating lower yielding longer term single-family residential loans
principally for resale to investors; (iv) converting from mutual to stock form
and using the capital raised in the Conversion to support the bank's future
growth; and, (v) to complement the Bank's internally generated growth,
potentially acquiring one or
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more banking institutions or other financial companies if attractive
opportunities arise. While it is expected that the Bank may experience
especially high deposit and loan growth in the relatively high income and growth
segments of the Bank's primary market area, particularly in the Sheridan,
Monticello, Bryant and, possibly, Little Rock areas, management expects to find
significant deposit growth and lending opportunities throughout central
Arkansas.
As federally chartered savings institutions, each of the Bank and its
subsidiary savings bank is subject to extensive regulation by the OTS. The
lending activities and other investments of each institution must comply with
various federal regulatory requirements, and the OTS periodically examines each
institution for compliance with various regulatory requirements. The Federal
Deposit Insurance Corporation ("FDIC") also has the authority to conduct special
examinations. Each institution must file reports with OTS describing its
activities and financial condition and is also subject to certain reserve
requirements promulgated by the Federal Reserve Board.
INFORMATION RELATING TO VOTING AT THE SPECIAL MEETING
The Board of Directors of the Bank has fixed the close of business on
________ ___, 1997 as the record date (the "Voting Record Date") for the
determination of members entitled to notice of and to vote at the Special
Meeting. All holders of the Bank's deposit or other authorized accounts and
certain borrowers are members of the Bank under its current mutual charter. All
members of record as of the close of business on the Voting Record Date who
continue as such until the date of the Special Meeting will be entitled to vote
at the Special Meeting or any adjournment thereof.
Each depositor member will be entitled at the Special Meeting to cast
one vote for each $100, or fraction thereof, of the aggregate withdrawal value
of all of his savings accounts in the Bank as of the Voting Record Date. Each
borrower member will be entitled to one vote in addition to the number of votes
to which he is entitled as a depositor. No member may cast more than 1,000
votes.
Approval of the Plan to be presented at the Special Meeting will
require the affirmative vote of at least a majority of the total outstanding
votes of the Bank's members eligible to be cast at the Special Meeting. As of
the Voting Record Date for the Special Meeting, there were approximately _____
votes eligible to be cast, of which _____ votes constitute a majority.
Members may vote at the Special Meeting or any adjournment thereof in
person or by proxy. All properly executed proxies received by the Bank will be
voted in accordance with the instructions indicated thereon by the members
giving such proxies. If no contrary instructions are given, such proxies will be
voted in favor of the Plan described herein. If any other matters are properly
presented before the Special Meeting and may properly be voted upon, the proxies
solicited hereby will be voted on such matters by the proxy holders named
therein as directed by the Board of Directors of the Bank. Valid, previously
executed general proxies, which typically are obtained from members when they
open their accounts at the Bank, will not be used to vote for approval of the
Plan, even if the respective members do not execute another proxy or attend the
Special Meeting and vote in person. Any member giving a proxy will have the
right to revoke his proxy at any time before it is voted by delivering written
notice or a duly executed proxy bearing a later date to the Secretary of the
Bank, provided that such written notice is received by the Secretary prior to
the Special Meeting or any adjournment thereof, or by attending the Special
Meeting and voting in person.
FAILURE TO RETURN AN EXECUTED PROXY FOR THE SPECIAL MEETING OR TO
ATTEND THE SPECIAL MEETING AND VOTE IN PERSON WOULD HAVE THE SAME EFFECT AS
VOTING AGAINST THE CONVERSION.
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Proxies may be solicited by officers, directors or other employees of
the Bank, in person, by telephone or through other forms of communication. Such
persons will be reimbursed by the Bank only for their expenses incurred in
connection with such solicitation.
The proxies solicited hereby will be used only at the Special Meeting
and at any adjournment thereof; they will not be used at any other meeting.
DESCRIPTION OF PLAN
THE OTS HAS APPROVED THE BANK'S PLAN, SUBJECT TO THE APPROVAL OF THE
PLAN BY THE MEMBERS OF THE BANK ENTITLED TO VOTE ON THE MATTER AND SUBJECT TO
THE SATISFACTION OF CERTAIN OTHER CONDITIONS IMPOSED BY THE OTS IN ITS APPROVAL.
APPROVAL BY THE OTS, HOWEVER, DOES NOT CONSTITUTE A RECOMMENDATION OR
ENDORSEMENT OF THE PLAN.
EFFECT OF CONVERSION TO STOCK FORM ON DEPOSITORS AND BORROWERS OF THE BANK
General. Each depositor in a mutual savings institution such as the
Bank has both a deposit account and a pro rata ownership interest in the equity
of that institution based upon the balance in his or her deposit account.
However, this ownership interest is tied to the depositor's account and has no
tangible market value separate from such deposit account. Any other depositor
who opens a deposit account obtains a pro rata interest in the net worth of the
institution without any additional payment beyond the amount of the deposit. A
depositor who reduces or closes his or her account receives a portion or all of
the balance in the account but nothing for his or her ownership interest, which
is lost to the extent that the balance in the account is reduced.
Consequently, depositors normally do not have a way to realize the
value of their ownership, which has realizable value only in the unlikely event
that the mutual institution is liquidated. In such event, the depositors of
record at that time, as owners, would share pro rata in any residual equity
after other claims are paid.
Upon consummation of the Conversion, permanent nonwithdrawable capital
stock will be created to represent the ownership of the institution. The stock
is separate and apart from deposit accounts and is not and cannot be insured by
the FDIC. Transferable certificates will be issued to evidence ownership of the
stock, which will enable the stock to be sold or traded, if a purchaser is
available, with no effect on any account held in the Bank. Under the Plan, all
of the capital stock of the Bank will be acquired by the Company in exchange for
a portion of the net proceeds from the sale of the Common Stock in the
Conversion. The Common Stock will represent an ownership interest in the Company
and will be issued upon consummation of the Conversion to persons who elect to
participate in the Conversion by purchasing the shares being offered.
Continuity. During the Conversion process, the normal business of the
Bank of accepting deposits and making loans will continue without interruption.
The Bank will continue to be subject to regulation by the OTS and the FDIC, and
its FDIC insurance will continue without interruption. After the Conversion, the
Bank will continue to provide services for depositors and borrowers under
current policies and by its present management and staff.
The Board of Directors serving the Bank at the time of the Conversion
will serve as the Board of Directors of the Bank after the Conversion. The Board
of Directors of the Company consists of the individuals currently serving on the
Board of Directors of the Bank. All officers of the Bank at the time of the
Conversion will retain their positions with the Bank after the Conversion.
Voting Rights. Upon the completion of the Conversion, depositor and
borrower members as such will have no voting rights in the Bank or the Company
and, therefore, will not be able to elect directors of the Bank or the Company
or to control their affairs. Currently these rights are accorded to depositor
and borrower members of the
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Bank. Following the Conversion, voting rights will be vested exclusively in the
stockholders of the Company which, in turn, will own all of the stock of the
Bank. Each holder of Common Stock shall be entitled to vote on any matter to be
considered by the stockholders of the Company, subject to the provisions of the
Company's Certificate of Incorporation.
Deposit Accounts and Loans. THE BANK'S DEPOSIT ACCOUNTS, THE BALANCES
OF INDIVIDUAL ACCOUNTS AND EXISTING FEDERAL DEPOSIT INSURANCE COVERAGE WILL NOT
BE AFFECTED BY THE CONVERSION. Furthermore, the Conversion will not affect the
loan accounts, the balances of these accounts and the obligations of the
borrowers under their individual contractual arrangements with the Bank.
Tax Effects. The Bank has received an opinion from its special counsel,
Housley Kantarian & Bronstein, P.C., Washington, D.C., as to federal income tax
consequences of the Conversion to the Bank, and as to generally applicable
federal income tax consequences of the Conversion to the Bank's account holders
and to persons who purchase Common Stock in the Conversion. The opinion provides
that the Conversion will constitute one or more reorganizations for federal
income tax purposes under Section 368(a)(1)(F) of the Internal Revenue Code of
1986, as amended ("Internal Revenue Code"). Among other things, the opinion also
provides that: (i) no gain or loss will be recognized by the Bank in its mutual
or stock form by reason of the Conversion; (ii) no gain or loss will be
recognized by its account holders upon the issuance to them of accounts in the
Bank in stock form immediately after the Conversion, in the same dollar amounts
and on the same terms and conditions as their accounts at the Bank immediately
prior to the Conversion; (iii) the tax basis of each account holder's interest
in the liquidation account will be equal to the value, if any, of that interest;
(iv) the tax basis of the Common Stock purchased in the Conversion will be equal
to the amount paid therefor increased, in the case of Common Stock acquired
pursuant to the exercise of subscription rights, by the fair market value, if
any, of the subscription rights exercised; (v) the holding period for the Common
Stock purchased in the Conversion will commence upon the exercise of such
holder's subscription rights and otherwise on the day following the date of such
purchase; and (vi) gain or loss will be recognized to account holders upon the
receipt of liquidation rights or the receipt or exercise of subscription rights
in the Conversion, to the extent such liquidation rights and subscription rights
are deemed to have value, as discussed below.
The opinion of Housley Kantarian & Bronstein, P.C. is based in part
upon, and subject to the continuing validity in all material respects through
the date of the Conversion of, various representations of the Bank and upon
certain assumptions and qualifications, including that the Conversion is
consummated in the manner and according to the terms provided in the Plan. Such
opinion is also based upon the Internal Revenue Code, regulations now in effect
or proposed thereunder, current administrative rulings and practice and judicial
authority, all of which are subject to change and such change may be made with
retroactive effect. Unlike private letter rulings received from the Internal
Revenue Service ("IRS"), an opinion is not binding upon the IRS and there can be
no assurance that the IRS will not take a position contrary to the positions
reflected in such opinion, or that such opinion will be upheld by the courts if
challenged by the IRS.
Housley Kantarian & Bronstein, P.C. has advised the Bank that an
interest in a liquidation account has been treated by the IRS, in a series of
private letter rulings which do not constitute formal precedent, as having
nominal, if any, fair market value and therefore it is likely that the interests
in the liquidation account established by the Bank as part of the Conversion
will similarly be treated as having nominal, if any, fair market value.
Accordingly, it is likely that such depositors of the Bank who receive an
interest in such liquidation account established by the Bank pursuant to the
Conversion will not recognize any gain or loss upon such receipt.
Housley Kantarian & Bronstein, P.C. has further advised the Bank that
the federal income tax treatment of the receipt of subscription rights pursuant
to the Conversion is uncertain, and recent private letter rulings issued by the
IRS have been in conflict. For instance, the IRS adopted the position in one
private ruling that subscription rights will be deemed to have been received to
the extent of the minimum pro rata distribution of such rights, together with
the rights actually exercised in excess of such pro rata distribution, and with
gain recognized to the
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extent of the combined fair market value of the pro rata distribution of
subscription rights plus the subscription rights actually exercised. Persons who
do not exercise their subscription rights under this analysis would recognize
gain upon receipt of rights equal to the fair market value of such rights,
regardless of exercise, and would recognize a corresponding loss upon the
expiration of unexercised rights that may be available to offset the previously
recognized gain. Under another IRS private ruling, subscription rights were
deemed to have been received only to the extent actually exercised. This private
ruling required that gain be recognized only if the holder of such rights
exercised such rights, and that no loss be recognized if such rights were
allowed to expire unexercised. There is no authority that clearly resolves this
conflict among these private rulings, which may not be relied upon for
precedential effect. However, based upon express provisions of the Internal
Revenue Code and in the absence of contrary authoritative guidance, Housley
Kantarian & Bronstein, P.C. has provided in its opinion that gain will be
recognized upon the receipt rather than the exercise of subscription rights.
Further, also based upon a published IRS ruling and consistent with recognition
of gain upon receipt rather than exercise of the subscription rights, Housley
Kantarian & Bronstein, P.C. has provided in its opinion that the subsequent
exercise of the subscription rights will not give rise to gain or loss.
Regardless of the position eventually adopted by the IRS, the tax consequences
of the receipt of the subscription rights will depend, in part, upon their
valuation for federal income tax purposes.
If the subscription rights are deemed to have a fair market value, the
receipt of such rights will be taxable to Eligible Account Holders, Supplemental
Eligible Account Holders, Other Members and eligible depositors and borrowers of
Heartland Community Bank, FSB who exercise their subscription rights, even
though such persons would have received no cash from which to pay taxes on such
taxable income. The Bank could also recognize a gain on the distribution of such
subscription rights in an amount equal to their aggregate value. In the opinion
of Ferguson & Co., LLP ("Ferguson & Co.") whose opinion is not binding upon the
IRS, the subscription rights do not have any value, based on the fact that such
rights are acquired by the recipients without cost, are non-transferable and of
short duration and afford the recipients the right only to purchase shares of
the Common Stock at a price equal to its estimated fair market value, which will
be the same price as the price paid by purchasers in the Community Offering for
unsubscribed shares of Common Stock. Eligible Account Holders, Supplemental
Eligible Account Holders, Other Members and eligible depositors and borrowers of
Heartland Community Bank, FSB are encouraged to consult with their own tax
advisors as to the tax consequences in the event that the subscription rights
are deemed to have a fair market value. Because the fair market value, if any,
of the subscription rights issued in the Conversion depends primarily upon the
existence of certain facts rather than the resolution of legal issues, Housley
Kantarian & Bronstein, P.C., has neither adopted the opinion of Ferguson & Co.
as its own nor incorporated such opinion of Ferguson & Co. in its opinion issued
in connection with the Conversion.
The Bank has also received the opinion of Gaunt & Co., LTD, certified
public accountants, Little Rock, Arkansas, to the effect that no gain or loss
will be recognized as a result of the Conversion for purposes of Oklahoma tax
law.
THE FEDERAL AND STATE INCOME TAX DISCUSSION SET FORTH ABOVE DOES NOT
PURPORT TO CONSIDER ALL ASPECTS OF FEDERAL AND STATE INCOME TAXATION WHICH MAY
BE RELEVANT TO EACH ELIGIBLE SUBSCRIBER ENTITLED TO SPECIAL TREATMENT UNDER THE
INTERNAL REVENUE CODE, SUCH AS TRUSTS, INDIVIDUAL RETIREMENT ACCOUNTS, OTHER
EMPLOYEE BENEFIT PLANS, INSURANCE COMPANIES AND ELIGIBLE SUBSCRIBERS WHO ARE NOT
CITIZENS OR RESIDENTS OF THE UNITED STATES. DUE TO THE INDIVIDUAL NATURE OF TAX
CONSEQUENCES, EACH ELIGIBLE SUBSCRIBER IS URGED TO CONSULT HIS OR HER OWN TAX
AND FINANCIAL ADVISOR AS TO THE EFFECT OF SUCH FEDERAL AND STATE INCOME TAX
CONSEQUENCES ON HIS OR HER OWN PARTICULAR FACTS AND CIRCUMSTANCES, INCLUDING THE
RECEIPT AND EXERCISE OF SUBSCRIPTION RIGHTS, AND ALSO AS TO ANY OTHER TAX
CONSEQUENCES ARISING OUT OF THE CONVERSION.
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Liquidation Account. In the unlikely event of a complete liquidation of
the Bank in its present mutual form, each holder of a deposit account in the
Bank would receive his pro rata share of any assets of the Bank remaining after
payment of claims of all creditors (including the claims of all depositors to
the withdrawal value of their accounts). His pro rata share of such remaining
assets would be the same proportion of such assets as the value of his deposit
account was to the total of the value of all deposit accounts in the Bank at the
time of liquidation.
After the Conversion, each deposit account holder on a complete
liquidation would have a claim of the same general priority as the claims of all
other general creditors of the Bank. Therefore, except as described below, his
claim would be solely in the amount of the balance in his deposit account plus
accrued interest. He would have no interest in the value of the Bank above that
amount.
The Plan provides for the establishment, upon the completion of the
Conversion, of a special "liquidation account" for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in an amount equal to
the regulatory capital of the Bank as of the date of its latest statement of
financial condition contained in the final Prospectus to be used in connection
with the Conversion. Each Eligible Account Holder and Supplemental Eligible
Account Holder would be entitled, on a complete liquidation of the Bank after
the Conversion, to an interest in the liquidation account. Each Eligible Account
Holder and Supplemental Eligible Account Holder would have an initial interest
in such liquidation account determined by multiplying the opening balance in the
liquidation account by a fraction of which the numerator is the amount of the
qualifying deposit in the related deposit account and the denominator is the
total amount of the qualifying deposits of all Eligible Account Holders and
Supplemental Eligible Account Holders in the Bank. However, if the amount in the
qualifying deposit account on any annual closing date of the Bank is less than
the amount in such account on the initial applicable date or any subsequent
closing date, then the Eligible Account Holder's or Supplemental Eligible
Account Holder's interest in the liquidation account would be reduced from time
to time by an amount proportionate to any such reduction. If any such qualified
deposit account is closed, the interest in the liquidation account will be
reduced to zero.
Any assets remaining after the above liquidation rights of Eligible
Account Holders and Supplemental Eligible Account Holders were satisfied would
be distributed to the entity or persons holding the Bank's capital stock at that
time.
A merger, consolidation, sale of bulk assets, or similar combination or
transaction with an FDIC-insured institution in which the Bank is not the
surviving insured institution would not be considered to be a "liquidation"
under which distribution of the liquidation account could be made. In such a
transaction, the liquidation account would be assumed by the surviving
institution.
The creation and maintenance of the liquidation account will not
restrict the use or application of any of the capital accounts of the Bank,
except that the Bank may not declare or pay a cash dividend on, or repurchase
any of, its capital stock if the effect of such dividend or repurchase would be
to cause its equity to be reduced below the aggregate amount then required for
the liquidation account.
INTERPRETATION AND AMENDMENT OF THE PLAN
To the extent permitted by law, all interpretations of the Plan by the
Bank will be final. The Plan provides that, if deemed necessary or desirable by
the Board of Directors, the Plan may be substantively amended by the Board of
Directors at any time prior to submission of the Plan and proxy materials to the
Bank's members. After submission of the Plan and proxy materials to the members,
the Plan may be amended by the Board of Directors at any time prior to the
Special Meeting and at any time following the Special Meeting with the
concurrence of the OTS. In its discretion, the Board of Directors may modify or
terminate the Plan upon the order of the regulatory authorities without a
resolicitation of proxies or another Special Meeting.
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The Plan further provides that in the event that mandatory new
regulations pertaining to conversions are adopted by the OTS or any successor
agency prior to completion of the Conversion, the Plan will be amended to
conform to such regulations without a resolicitation of proxies or another
Special Meeting. In the event that such new conversion regulations contain
optional provisions, the Plan may be amended to utilize such optional provisions
at the discretion of the Board of Directors without a resolicitation of proxies
or another Special Meeting. By adoption of the Plan, the Bank's members will be
deemed to have authorized amendment of the Plan under the circumstances
described above.
CONDITIONS AND TERMINATION
Completion of the Conversion requires the approval of the Plan by the
affirmative vote of not less than a majority of the total number of votes of the
members of the Bank eligible to be cast at the Special Meeting and the sale of
all shares of the Common Stock within 24 months following approval of the Plan
by the members. If these conditions are not satisfied, the Plan will be
terminated, and the Bank will continue its business in the mutual form of
organization. The Plan may be terminated by the Board of Directors at any time
prior to the Special Meeting and, with the approval of the OTS, by the Board of
Directors at any time thereafter.
REVIEW BY ADMINISTRATIVE AND JUDICIAL AUTHORITIES
Federal law provides (i) that persons aggrieved by a final action of
the OTS which approves, with or without conditions, a plan of conversion may
obtain review of such final action only by filing a written petition in the
United States Court of Appeals for the circuit in which the principal office or
residence of such person is located, or in the United States Court of Appeals,
for the District of Columbia Circuit, requesting that the final action of the
OTS be modified, terminated or set aside, and (ii) that such petition must be
filed within 30 days after publication of notice of such final action in the
Federal Register, or 30 days after the date of mailing of the notice and proxy
statement for the meeting of the converting institution's members at which the
conversion is to be voted on, whichever is later.
OTHER
All statements made in this Proxy Statement are hereby qualified by the
contents of the Plan which is attached hereto as Exhibit A and should be
consulted for further information. In addition, attention is directed to the
section entitled "The Conversion" in the accompanying Prospectus for a more
detailed discussion of various aspects of the Plan. Adoption of the Plan by the
Bank's members shall be deemed approval of the authority of the Board of
Directors to amend or terminate the Plan in accordance with its terms.
CHARTER AND BYLAWS
The following is a summary of certain provisions of the Charter and
Bylaws which will become effective upon the conversion of the Bank into a
federally chartered stock savings bank. Complete copies of the Charter and
Bylaws of the Converted Bank are attached as Exhibits B and C, respectively, to
this Proxy Statement.
The Converted Bank will be authorized to issue 20,000,000 shares of
common stock with a par value of $0.01 per share. The Converted Bank's common
stock will not be insured by the FDIC. All of the Converted Bank's outstanding
common stock will be owned by the Company. Accordingly, exclusive voting rights
with respect to the affairs of the Bank after the Conversion will be vested in
the Board of Directors of the Company.
The Converted Bank's Charter will provide that the number of Directors
shall be not fewer than five or more than 15, with the exact number to be fixed
in the Converted Bank's Bylaws. The proposed Bylaws provide
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that the number of the Converted Bank's directors shall be seven. Directors
generally will serve for terms of three years, and the terms of Directors will
be staggered so that approximately one-third of the Board is elected each year.
In addition to the common stock, the Converted Bank will be authorized
to issue 5,000,000 shares of serial preferred stock, par value $0.01 per share.
The Board of Directors will be permitted, without further stockholder approval,
to authorize the issuance of preferred stock in series and to fix the voting
powers, designations, preferences and relative, participating, optional,
conversion and other special rights of the shares of each series of the
preferred stock and the qualifications, limitations and restrictions thereof.
Preferred stock may rank prior to common stock in dividend rights, liquidation
preferences, or both, and may have voting rights.
Neither the Charter nor the Bylaws of the Converted Bank provide for
indemnification of officers and directors. However, the Converted Bank will be
required by OTS regulations (as the Bank currently is) to indemnify its
Directors, officers and employees against legal and other expenses incurred in
defending lawsuits brought against them by reasons of the performance of their
official duties. Indemnification may be made to any such person only if final
judgment on the merits is in his favor or, in case of (i) settlement, (ii) final
judgment against him or (iii) final judgment in his favor, other than on the
merits, if a majority of the Directors of the Converted Bank determines that he
was acting in good faith within the scope of his employment or authority as he
could reasonably have perceived it under the circumstances and for a purpose he
could have reasonably believed under the circumstances was in the best interest
of the Converted Bank or its stockholders. If a majority of the Directors of the
Converted Bank concludes that in connection with an action any person ultimately
may become entitled to indemnification, the Directors may authorize payment of
reasonable costs and expenses arising from defense or settlement of such action.
HOW TO ORDER STOCK
The accompanying Prospectus contains information about the business and
financial condition of the Bank and additional information about the Conversion
and the Subscription Offering and the concurrent Community Offering. Enclosed is
a Stock Order Form to be used to subscribe for stock. You are not obligated to
subscribe for stock, and voting to approve the Conversion will not obligate you
to subscribe for stock.
All Subscription Rights are nontransferable and will expire if not
exercised by returning the accompanying Stock Order Form with full payment (or
appropriate instructions authorizing withdrawal from a savings or certificate
account at the Bank) for all shares for which subscription is made to the
Company by __:__ _.m., Central Time, on ________ ___, 1997, unless extended by
the Bank. A postage-paid reply envelope is provided for this purpose. Provided
that not all of the shares are subscribed for in the Subscription Offering by
members of the Bank, the remaining shares may be offered to the general public
in the Community Offering with preference given to natural persons and trusts of
natural persons who reside in the Local Community.
THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS LIMITED IN ITS
SCOPE TO USE IN THE SOLICITATION OF PROXIES FOR THE SPECIAL MEETING TO VOTE ON
THE PLAN. IT IS NOT INTENDED FOR USE IN THE OFFERING OF THE COMMON STOCK. SUCH
OFFERING IS MADE ONLY BY THE PROSPECTUS.
ADDITIONAL INFORMATION
The information contained in the accompanying Prospectus, including a
more detailed description of the Plan, is intended to help you evaluate the
Conversion and is incorporated herein by reference.
All persons eligible to vote at the Special Meeting should review both
this Proxy Statement and the accompanying Prospectus.
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YOUR BOARD OF DIRECTORS URGES YOU TO CONSIDER CAREFULLY THIS PROXY
MATERIAL AND, WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE SPECIAL
MEETING, TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) AS SOON AS
POSSIBLE TO ASSURE THAT YOUR VOTES WILL BE COUNTED. THIS WILL NOT PREVENT YOU
FROM VOTING IN PERSON IF YOU ATTEND THE SPECIAL MEETING. YOU MAY REVOKE YOUR
PROXY BY WRITTEN INSTRUMENT DELIVERED TO THE SECRETARY OF THE BANK AT ANY TIME
PRIOR TO OR AT THE SPECIAL MEETING OR BY ATTENDING THE SPECIAL MEETING AND
VOTING IN PERSON.
THIS PROXY STATEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY THE COMMON STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS.
BY ORDER OF THE BOARD OF DIRECTORS
Paula J. Bergstrom
Secretary
______________, 1997
Camden, Arkansas
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EXHIBIT 99.2
PLAN OF CONVERSION
--------------------------------
Heartland Community Bank
Camden, Arkansas
14
HEARTLAND COMMUNITY BANK
CAMDEN, ARKANSAS
PLAN OF CONVERSION
FROM MUTUAL TO STOCK ORGANIZATION
I. GENERAL.
On November 21, 1996, the Board of Directors of Heartland Community
Bank, Camden, Arkansas (the "Bank"), after careful study and consideration,
adopted by unanimous vote this Plan of Conversion from Mutual to Stock
Organization (the "Plan"), whereby the Bank will convert from a federal mutual
savings bank to a federal capital stock savings bank (the "Converted Bank") as
a wholly owned subsidiary of a Holding Company to be formed at the direction of
the Bank (the "Conversion"). The Plan was amended by unanimous vote of the
Board of Directors on December 19, 1996.
The Conversion is subject to regulations of the Director of the Office
of Thrift Supervision of the United States Department of the Treasury ("OTS")
pursuant to Section 5(i) of the Home Owners' Loan Act and Part 563b of the
Rules and Regulations Applicable to All Savings Associations.
The Plan is subject to the prior written approval of the OTS and must
be adopted by the affirmative vote of at least a majority of the total
outstanding votes of the Members of the Bank. Pursuant to the Plan, shares of
Conversion Stock in the Holding Company will be offered in a Subscription
Offering pursuant to non-transferable Subscription Rights at a predetermined
and uniform price first to the Bank's Eligible Account Holders of record as of
December 31, 1993, second to the Bank's Tax-Qualified Employee Stock Benefit
Plans, third to Supplemental Eligible Account Holders of record as of the last
day of the calendar quarter preceding OTS approval of the Bank's application to
convert to stock form, fourth to Other Members of the Bank and fifth to
depositors and borrowers of the Bank's savings association subsidiary,
Heartland Community Bank, F.S.B. Concurrently with the Subscription Offering,
shares not subscribed for in the Subscription Offering may be offered by the
Bank to the general public in a Community Offering. Shares remaining, if any,
may then be offered to the general public in an underwritten public offering or
otherwise. The aggregate Purchase Price of the Conversion Stock will be based
upon an independent appraisal of the Bank and will reflect the estimated pro
forma market value of the Converted Bank, as a subsidiary of the Holding
Company.
It is the desire of the Board of Directors to attract new capital to
the Converted Bank to increase its net worth, to support future savings growth,
to increase the amount of funds available for other lending and investment, to
provide greater resources for the expansion of customer services and to
facilitate future expansion. In addition, the Board of Directors currently
intends to implement stock option plans and other stock benefit plans
subsequent to the Conversion to better attract and retain qualified directors
and officers. It is the further desire of the Board of Directors to reorganize
the Converted Bank as the wholly owned subsidiary of the Holding Company to
enhance flexibility of operations, diversification of business opportunities
and financial capability for business and regulatory purposes and to enable the
Converted Bank to compete more effectively with other financial service
organizations.
No change will be made in the Board of Directors or management of the
Bank as a result of the Conversion.
II. DEFINITIONS.
Acting in Concert: The term "Acting in Concert" means (i) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement; or (ii)
a combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise.
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A person (as defined by 12 C.F.R. Section 563b.2(a)(26)) who acts in concert
with another person ("other party") shall also be deemed to be acting in
concert with any person who is also acting in concert with that other party,
except that any Tax-Qualified Employee Stock Benefit Plan will not be deemed to
be acting in concert with its trustee or a person who serves in a similar
capacity solely for the purpose of determining whether stock held by the
trustee and stock held by the Tax-Qualified Employee Benefit Plan will be
aggregated.
Associate: The term "Associate," when used to indicate a relationship
with any person, means (i) any corporation or organization (other than the
Bank, the Holding Company or a majority-owned subsidiary of the Bank or the
Holding Company) of which such person is an 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, except that such term shall not include a
"Tax-Qualified Employee Stock Benefit Plan," as defined herein; and (iii) any
relative or spouse of such person, or any relative of such spouse, who has the
same home as such person or who is a director of the Bank or the Holding
Company, or any of their subsidiaries.
Bank: The term "Bank" means Heartland Community Bank, either in its
present form as a federal mutual savings and loan association or in its future
form as a federal mutual savings bank after the amendment of its federal mutual
charter and bylaws to substantially conform with the regulatory model federal
mutual savings bank charter and bylaws expected to become effective after the
adoption of the Plan but before the Conversion, as applicable.
Capital Stock: The term "Capital Stock" means any and all authorized
shares of stock of the Converted Bank.
Community Offering: The term "Community Offering" means the offering
of shares of Conversion Stock to the general public by the Holding Company
concurrently with or after commencement of the Subscription Offering, giving
preference to natural persons and trusts of natural persons (including
individual retirement and Keogh retirement accounts and personal trusts in
which such natural persons have substantial interests) who are permanent
Residents of the Bank's Local Community.
Conversion: The term "Conversion" means (i) the amendment of the
Bank's federal mutual charter and bylaws to authorize issuance of shares of
Capital Stock by the Converted Bank and to conform to the requirements of a
federal capital stock savings bank under the laws of the United States and
applicable regulations; (ii) the issuance and sale of Conversion Stock by the
Holding Company in the Subscription and Community Offerings and/or in an
underwritten public offering or otherwise; and (iii) the purchase by the
Holding Company of all the Capital Stock of the Converted Bank to be issued in
the Conversion immediately following or concurrently with the close of the sale
of the Conversion Stock.
Conversion Stock: The term "Conversion Stock" means the shares of
common stock to be issued and sold by the Holding Company pursuant to the Plan.
Converted Bank: The term "Converted Bank" means Heartland Community
Bank in its form as a federal capital stock savings bank resulting from the
conversion of the Bank to the stock form of organization in accordance with the
terms of the Plan.
Eligibility Record Date: The term "Eligibility Record Date" means the
close of business on December 31, 1993.
Eligible Account Holder: The term "Eligible Account Holder" means
each holder of one or more Qualifying Deposits in the Bank on the Eligibility
Record Date.
Holding Company: The term "Holding Company" means a corporation to be
incorporated by the Bank under state law for the purpose of becoming a holding
company for the Converted Bank through the issuance and
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sale of Conversion Stock under the Plan and the concurrent acquisition of 100%
of the Capital Stock to be issued and sold pursuant to the Plan.
Holding Company Stock: The term "Holding Company Stock" means any and
all authorized shares of stock of the Holding Company.
Independent Appraiser: The term "Independent Appraiser" means a
person independent of the Bank, experienced and expert in the area of corporate
appraisal, and acceptable to the OTS, retained by the Bank to prepare an
appraisal of the pro forma market value of the Converted Bank, as a subsidiary
of the Holding Company.
Local Community: The term "Local Community" means the following
counties, which include all counties in which the Bank's offices are located
and selected counties contiguous to such counties, all of which are in
Arkansas: Calhoun, Cleveland, Dallas, Drew, Grant, Ouachita and Pulaski.
Market Maker: The term "Market Maker" means a dealer (i.e., any
person who engages, either for all or part of such person's time, directly or
indirectly, as agent, broker or principal in the business of offering, buying,
selling or otherwise dealing or trading in securities issued by another person)
who, with respect to a particular security, (i)(a) regularly publishes bona
fide, competitive bid and offer quotations in a recognized interdealer
quotation system or (b) furnishes bona fide competitive bid and offer
quotations on request and (ii) is ready, willing and able to effect
transactions in reasonable quantities at its quoted prices with other brokers
or dealers.
Member: The term "Member" means any person or entity who qualifies as
a member of the Bank under its federal mutual charter and bylaws prior to the
Conversion.
Officer: The term "Officer" means an executive officer of the Holding
Company or the Bank (as applicable), including the Chairman of the Board,
President, Executive Vice Presidents, Senior Vice Presidents in charge of
principal business functions, Secretary and Treasurer.
Order Form: The term "Order Form" means the order form or forms to be
used by Eligible Account Holders, Supplemental Eligible Account Holders and
other persons eligible to purchase Conversion Stock pursuant to the Plan.
Other Member: The term "Other Member" means any person, other than an
Eligible Account Holder or a Supplemental Eligible Account Holder, who is a
Member as of the Voting Record Date.
OTS: The term "OTS" means the Office of Thrift Supervision of the
United States Department of the Treasury or any successor agency having
jurisdiction over the Conversion.
Plan: The term "Plan" means this Plan of Conversion under which the
Bank will convert from a federal mutual savings bank to a federal capital stock
savings bank as a wholly owned subsidiary of the Holding Company, as originally
adopted by the Board of Directors or amended in accordance with the terms
hereof.
Qualifying Deposit: The term "Qualifying Deposit" means each savings
balance in any Savings Account in the Bank as of the close of business on the
Eligibility Record Date or the Supplemental Eligibility Record Date, as
applicable, which is equal to or greater than $50.00.
Registration Statement: The term "Registration Statement" means the
Registration Statement on Form S-1, or such other form as may be appropriate,
and any amendments thereto, filed by the Holding Company with the SEC pursuant
to the Securities Act of 1933, as amended, to register shares of Conversion
Stock.
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Resident: The term "Resident," as used in this Plan in relation to
the preference afforded natural persons and trusts of natural persons in the
Local Community, means any natural person who occupies a dwelling within the
Local Community, has an intention to remain within the Local Community for a
period of time (manifested by establishing a physical, ongoing, non-transitory
presence within the Local Community) and continues to reside therein at the
time of the Subscription and Community Offerings. The Bank may utilize deposit
or loan records or such other evidence provided to it to make the determination
as to whether a person is residing in the Local Community. To the extent the
"person" is a corporation or other business entity, the principal place of
business or headquarters shall be within the Local Community. To the extent
the "person" is a personal benefit plan, the circumstances of the beneficiary
shall apply with respect to this definition. In the case of all other benefit
plans, circumstances of the trustee shall be examined for purposes of this
definition. In all cases, such determination shall be in the sole discretion
of the Bank.
Sale: The terms "sale" and "sell" mean every contract to sell or
otherwise dispose of a security or an interest in a security for value, but
such terms do not include an exchange of securities in connection with a merger
or acquisition approved by the OTS or any other federal agency having
jurisdiction.
Savings Account: The term "Savings Account" means a withdrawable
deposit in the Bank.
SEC: The term "SEC" means the Securities and Exchange Commission or
any successor agency.
Special Meeting: The term "Special Meeting" means the Special Meeting
of Members to be called for the purpose of submitting the Plan to the Members
for their approval.
Subscription Offering: The term "Subscription Offering" means the
offering of shares of Conversion Stock to Eligible Account Holders,
Tax-Qualified Employee Stock Benefit Plans, Supplemental Eligible Account
Holders, Other Members and depositors and borrowers of Heartland Community
Bank, F.S.B. under the Plan, giving preference within each subscription
priority category to natural persons and trusts of natural persons (including
individual retirement and Keogh retirement accounts and personal trusts in
which such natural persons have substantial interests) who are permanent
Residents of the Local Community if such preference is permitted by applicable
law and approved by the Bank's Board of Directors in its sole discretion.
Subscription and Community Prospectus: The term "Subscription and
Community Prospectus" means the final prospectus to be used in connection with
the Subscription and Community Offerings.
Subscription Rights: The term "Subscription Rights" means
non-transferable, non-negotiable, personal rights of Eligible Account Holders,
Tax-Qualified Employee Stock Benefit Plans, Supplemental Eligible Account
Holders, Other Members and depositors and borrowers of Heartland Community
Bank, F.S.B. to purchase Conversion Stock offered under the Plan.
Supplemental Eligibility Record Date: The term "Supplemental
Eligibility Record Date" means the last day of the calendar quarter preceding
the approval of the Plan by the OTS.
Supplemental Eligible Account Holder: The term "Supplemental Eligible
Account Holder" means each holder of one or more Qualifying Deposits in the
Bank (other than Officers and directors of the Bank and their Associates) on
the Supplemental Eligibility Record Date.
Tax-Qualified Employee Stock Benefit Plan: The term "Tax-Qualified
Employee Stock Benefit Plan" means any defined benefit plan or defined
contribution plan of the Bank or the Holding Company, such as an employee stock
ownership plan, stock bonus plan, profit sharing plan or other plan, which,
with its related trust, meets the requirements to be "qualified" under section
401 of the Internal Revenue Code of 1986, as amended. "Non-Tax-Qualified
Employee Stock Benefit Plan" means any defined benefit plan or defined
contribution plan which is not so qualified.
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Voting Record Date: The term "Voting Record Date" means the date
fixed by the Board of Directors of the Bank to determine Members of the Bank
entitled to vote at the Special Meeting.
III. STEPS PRIOR TO SUBMISSION OF THE PLAN TO THE MEMBERS FOR APPROVAL.
Prior to submission of the Plan to its Members for approval, the Bank
must receive approval from the OTS of an Application for Approval of Conversion
on Form AC, which includes the Plan to convert to the stock form of
organization (the "Application"). The following steps must be taken prior to
such regulatory approval:
A. The Board of Directors shall adopt the Plan by not less
than a two-thirds vote.
B. Promptly after adoption of the Plan by the Board of
Directors, the Bank shall notify its Members of the adoption of the
Plan by publishing a statement in a newspaper having a general
circulation in each community in which the Bank maintains an office
and/or by mailing a letter to each of its Members.
C. A press release relating to the proposed Conversion may be
submitted to the local media.
D. Copies of the Plan adopted by the Board of Directors shall
be made available for inspection by Members at each office of the
Bank.
E. The Bank shall cause the Holding Company to be
incorporated under state law, and the Board of Directors of the
Holding Company shall concur in the Plan by at least a two-thirds
vote.
F. The Bank shall submit or cause to be submitted the
Application to the OTS. The Holding Company shall submit or cause to
be submitted an Application H-(e)1 or Application H-(e)1-S to the OTS
and the Registration Statement to the SEC. Upon receipt of advice
from the regulatory authorities that the Application has been received
and is in the prescribed form, the Bank shall publish a "Notice of
Filing of an Application for Conversion to a Stock Savings Bank" in a
newspaper of general circulation, as referred to in Paragraph III.B.
herein. The Bank also shall prominently display a copy of such notice
in each of its offices. The Holding Company shall publish notice of
the filing of the Application H-(e)1 or H-(e)1-S in accordance with
applicable regulations.
G. The Bank shall obtain an opinion of its tax advisors or a
favorable ruling from the United States Internal Revenue Service which
shall state that the Conversion will not result in a taxable
reorganization for federal income tax purposes to the Bank. Receipt
of a favorable opinion or ruling is a condition precedent to
completion of the Conversion.
H. The Plan shall be submitted to a vote of the Members at
the Special Meeting after approval by the OTS.
IV. MEETING OF MEMBERS.
Following receipt of approval of the Plan by the OTS, the Special
Meeting to vote on the Plan shall be scheduled in accordance with the Bank's
bylaws and applicable regulations. Notice of the Special Meeting will be given
by means of a proxy statement authorized for use by the OTS. Promptly after
receipt of approval and at least 20 days but not more than 45 days prior to the
Special Meeting, the Bank will distribute proxy solicitation materials to all
voting Members as of the Voting Record Date established for voting at the
Special Meeting. Proxy materials will also be sent to each beneficial holder
of an Individual Retirement Account where the name of the beneficial holder is
disclosed on the Bank's records. The proxy solicitation materials will include
a copy of the Proxy Statement and other documents authorized for use by the
regulatory authorities and may also include a Subscription and Community
Prospectus as provided in Paragraph VI. below. The Bank will also advise each
Eligible Account Holder and Supplemental Eligible Account Holder not entitled
to vote at the Special Meeting of the proposed
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Conversion and the scheduled Special Meeting and provide a postage paid card on
which to indicate whether he or she wishes to receive the Subscription and
Community Prospectus, if the Subscription and Community Offerings are not held
concurrently with the proxy solicitation.
Pursuant to applicable regulations, an affirmative vote of at least a
majority of the total outstanding votes of the Members will be required for
approval of the Plan. Voting may be in person or by proxy. The OTS shall be
promptly notified of the actions of the Members at the Special Meeting.
V. SUMMARY PROXY STATEMENT.
The Proxy Statement to be furnished to Members may be in summary form,
provided that a statement is made in boldface type that a more detailed
description of the proposed transaction may be obtained by returning an
enclosed postage paid card or other written communication requesting a
supplemental information statement. Without prior approval from the OTS, the
Special Meeting shall not be held fewer than 20 days after the last day on
which the supplemental information statement is mailed to Members requesting
the same. The supplemental information statement may be combined with the
Subscription and Community Prospectus if the Subscription and Community
Offerings are commenced concurrently with the proxy solicitation of Members for
the Special Meeting.
VI. OFFERING DOCUMENTS.
The Holding Company may commence the Subscription Offering and,
provided that the Subscription Offering has commenced, may commence the
Community Offering concurrently with or during the proxy solicitation of
Members and may close the Subscription and Community Offerings before the
Special Meeting, provided that the offer and sale of the Conversion Stock shall
be conditioned upon approval of the Plan by the Members at the Special Meeting.
The Bank's proxy solicitation materials may require Eligible Account
Holders, Supplemental Eligible Account Holders, Other Members and depositors
and borrowers of Heartland Community Bank, F.S.B. to return to the Bank by a
reasonable date certain a postage-paid written communication requesting receipt
of a Subscription and Community Prospectus in order to be entitled to receive a
Subscription and Community Prospectus, provided that the Subscription Offering
shall not be closed until the expiration of 30 days after mailing proxy
solicitation materials to voting Members and a postage-paid written
communication to non-voting Eligible Account Holders and Supplemental Eligible
Account Holders. If the Subscription Offering is commenced within 45 days
after the Special Meeting, the Bank shall transmit, no more than 30 days prior
to the commencement of the Subscription Offering, to each voting Member who had
been furnished with proxy solicitation materials and to each non-voting
Eligible Account Holder and Supplemental Eligible Account Holder, written
notice of the commencement of the Subscription Offering which shall state that
the Bank is not required to furnish a Subscription and Community Prospectus to
them unless they return by a reasonable date certain a postage-paid written
communication requesting the receipt of the Subscription and Community
Prospectus.
Prior to commencement of the Subscription and Community Offerings, the
Holding Company shall file the Registration Statement with the SEC pursuant to
the Securities Act of 1933, as amended. The Holding Company shall not
distribute the Subscription and Community Prospectus until the Registration
Statement containing the same has been declared effective by the SEC and the
aforementioned documents have been approved by the OTS. The Subscription and
Community Prospectus may be combined with the Proxy Statement for the Special
Meeting.
VII. CONSUMMATION OF CONVERSION.
The date of consummation of the Conversion will be the effective date
of the amendment of the Bank's federal mutual charter to read in the form of a
federal stock charter, which shall be the date of the issuance and sale of the
Conversion Stock. After receipt of all orders for Conversion Stock, and
concurrently with the execution thereof, the amendment of the Bank's federal
mutual charter to authorize the issuance of shares of Capital Stock and
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to conform to the requirements of a federal capital stock savings bank will be
declared effective by the OTS, and the amended bylaws approved by the Members
will become effective. At such time, the Conversion Stock will be issued and
sold by the Holding Company, the Capital Stock to be issued in the Conversion
will be issued and sold to the Holding Company, and the Converted Bank will
become a wholly owned subsidiary of the Holding Company. The Converted Bank
will issue to the Holding Company 100,000 shares of its common stock,
representing all of the shares of Capital Stock to be issued by the Converted
Bank in the Conversion, and the Holding Company will make payment to the
Converted Bank of at least 50 percent of the aggregate net proceeds realized by
the Holding Company from the sale of the Conversion Stock under the Plan, or
such other portion of the aggregate net proceeds as may be authorized or
required by the OTS.
VIII. STOCK OFFERING.
A. General.
The aggregate purchase price of all shares of Conversion Stock
which will be offered and sold will be equal to the estimated pro
forma market value of the Converted Bank, as a subsidiary of the
Holding Company, as determined by an independent appraisal. The exact
number of shares of Conversion Stock to be offered will be determined
by the Board of Directors of the Bank and the Board of Directors of
the Holding Company, or their respective designees, in conjunction
with the determination of the Purchase Price (as that term is defined
in Paragraph VIII.B. below). The number of shares to be offered may
be subsequently adjusted prior to completion of the Conversion as
provided below.
B. Independent Evaluation and Purchase Price of Shares.
All shares of Conversion Stock sold in the Conversion will be
sold at a uniform price per share referred to in this Plan as the
"Purchase Price." The Purchase Price and the total number of shares
of Conversion Stock to be offered in the Conversion will be determined
by the Board of Directors of the Bank and the Board of Directors of
the Holding Company, or their respective designees, immediately prior
to the simultaneous completion of all such sales contemplated by this
Plan on the basis of the estimated pro forma market value of the
Converted Bank, as a subsidiary of the Holding Company, at such time.
The estimated pro forma market value of the Converted Bank, as a
subsidiary of the Holding Company, will be determined for such purpose
by an Independent Appraiser on the basis of such appropriate factors
as are not inconsistent with applicable regulations. Immediately
prior to the Subscription and Community Offerings, a subscription
price range of shares for the offerings will be established (the
"Valuation Range"), which will vary from 15% above to 15% below the
midpoint of such range. The number of shares of Conversion Stock
ultimately issued and sold will be determined at the close of the
Subscription and Community Offerings and any other offering. The
subscription price range and the number of shares to be offered may be
changed subsequent to the Subscription and Community Offerings as the
result of any appraisal updates prior to the completion of the
Conversion, without notifying eligible purchasers in the Subscription
and Community Offerings and without a resolicitation of subscriptions,
provided the aggregate Purchase Price is not below the low end or more
than 15 percent above the high end of the Valuation Range previously
approved by the OTS or if, in the opinion of the Boards of Directors
of the Bank and the Holding Company, the new Valuation Range
established by the appraisal update does not result in a materially
different capital position of the Converted Bank.
Notwithstanding the foregoing, no sale of Conversion Stock may
be consummated unless, prior to such consummation, the Independent
Appraiser confirms to the Bank and the Holding Company and to the OTS
that, to the best knowledge of the Independent Appraiser, nothing of a
material nature has occurred which, taking into account all relevant
factors, would cause the Independent Appraiser to conclude that the
aggregate value of the Conversion Stock at the Purchase Price is
incompatible with its estimate of the aggregate consolidated pro forma
market value of the Converted Bank, as a subsidiary of the Holding
Company. If such confirmation is not received, the Bank may cancel
the Subscription and Community
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Offerings and/or any other offering, extend the Conversion, establish
a new Valuation Range, extend, reopen or hold new Subscription and
Community Offerings and/or other offerings or take such other action
as the OTS may permit.
C. Subscription Offering.
Non-transferable Subscription Rights to purchase shares of
Conversion Stock will be issued at no cost to Eligible Account
Holders, Tax-Qualified Employee Stock Benefits Plans, Supplemental
Eligible Account Holders, Other Members and depositors and borrowers
of Heartland Community Bank, F.S.B. pursuant to priorities established
by applicable regulations. All shares must be sold, and, to the
extent that Conversion Stock is available, no subscriber will be
allowed to purchase fewer than 25 shares of Conversion Stock, provided
that this number shall be decreased if the aggregate purchase price
exceeds $500. The priorities established by applicable regulations
for the purchase of shares are as follows:
1. Category No. 1: Eligible Account Holders.
a. Each Eligible Account Holder shall receive,
without payment, with respect to each Qualifying Deposit in
the Bank on the Eligibility Record Date, non-transferable
Subscription Rights to purchase Conversion Stock in an amount
equal to the greater of $200,000, one-tenth of one percent of
the total offering of shares of Conversion Stock or 15 times
the product (rounded down to the next whole number) obtained
by multiplying the total number of shares of Conversion Stock
to be issued by a fraction of which the numerator is the
amount of the Qualifying Deposit of the Eligible Account
Holder and the denominator is the total amount of Qualifying
Deposits of all Eligible Account Holders in the Converted Bank
in each case on the Eligibility Record Date.
b. Non-transferable Subscription Rights to purchase
Conversion Stock received by Officers and directors of the
Bank and their Associates based on their increased deposits in
the Bank in the one year period preceding the Eligibility
Record Date shall be subordinated to all other subscriptions
involving the exercise of non-transferable Subscription Rights
to purchase shares pursuant to this Subscription Category.
c. In the event of an oversubscription for shares of
Conversion Stock pursuant to this Category, shares of
Conversion Stock shall be allocated among subscribing Eligible
Account Holders, giving preference to natural persons and
trusts of natural persons who are permanent Residents of the
Local Community, if such preference is permitted by applicable
law and approved by the Bank's Board of Directors in its sole
discretion, as follows:
(I) Shares of Conversion Stock shall be
allocated among subscribing Eligible Account Holders
so as to permit each such Account Holder, to the
extent possible, to purchase a number of shares of
Conversion Stock sufficient to make its total
allocation equal to 100 shares or the total amount of
its subscription, whichever is less.
(II) Any shares not so allocated shall be
allocated among the subscribing Eligible Account
Holders on an equitable basis, related to the amounts
of their respective aggregate Qualifying Deposits, as
compared to the total aggregate Qualifying Deposits
of all subscribing Eligible Account Holders.
2. Category No. 2: Tax-Qualified Employee Stock Benefit Plans.
a. Tax-Qualified Employee Stock Benefit Plans of the
Converted Bank shall receive, without payment,
non-transferable Subscription Rights to purchase up to 10% of
the shares of Conversion Stock issued in the Conversion.
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b. Subscription rights received in this Category
shall be subordinated to the Subscription Rights received by
Eligible Account Holders pursuant to Category No. 1, provided
that any shares of Conversion Stock sold in excess of the high
end of the Valuation Range may be first sold to Tax-Qualified
Employee Stock Benefit Plans.
3. Category No. 3: 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
of the Application filed prior to OTS approval, then each
Supplemental Eligible Account Holder shall receive, without
payment, with respect to each Qualifying Deposit in the Bank
on the Supplemental Eligibility Record Date, non-transferable
Subscription Rights to purchase Conversion Stock in an amount
equal to the greater of $200,000, one-tenth of one percent of
the total offering of shares of Conversion Stock or 15 times
the product (rounded down to the next whole number) obtained
by multiplying the total number of the shares of Conversion
Stock to be issued by a fraction of which the numerator is the
amount of the Qualifying Deposit of the Supplemental Eligible
Account Holder and the denominator is the total amount of the
Qualifying Deposits of all Supplemental Eligible Account
Holders on the Supplemental Eligibility Record Date.
b. Subscription Rights received pursuant to this
Category shall be subordinated to the Subscription Rights
received by the Eligible Account Holders and by Tax-Qualified
Employee Stock Benefit Plans pursuant to Category Nos. 1 and
2.
c. Any non-transferable Subscription Rights to
purchase shares received by an Eligible Account Holder in
accordance with Category No. 1 shall reduce to the extent
thereof the Subscription Rights to be distributed to such
Eligible Account Holder pursuant to this Category.
d. In the event of an oversubscription for shares of
Conversion Stock pursuant to this Category, shares of
Conversion Stock shall be allocated among the subscribing
Supplemental Eligible Account Holders, giving preference to
natural persons and trusts of natural persons who are
permanent Residents of the Local Community, if such preference
is permitted by applicable law and approved by the Bank's
Board of Directors in its sole discretion, as follows:
(I) Shares of Conversion Stock 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 of
Conversion Stock sufficient to make its total
allocation (including the number of shares of
Conversion Stock, if any, allocated in accordance
with Category No. 1) equal to 100 shares of
Conversion Stock or the total amount of its
subscription, whichever is less.
(II) Any shares of Conversion Stock not
allocated in accordance with subparagraph (I) above
shall be allocated among the subscribing Supplemental
Eligible Account Holders on an equitable basis,
related to the amounts of their respective aggregate
Qualifying Deposits on the Supplemental Eligibility
Record Date as compared to the total aggregate
Qualifying Deposits of all subscribing Supplemental
Eligible Account Holders in each case on the
Supplemental Eligibility Record Date.
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4. Category No. 4: Other Members.
a. Each Other Member, other than those Members who
are Eligible Account Holders or Supplemental Eligible Account
Holders, shall receive, without payment, with respect to each
deposit account in, or loan from, the Bank on the Voting
Record Date, non-transferable Subscription Rights to purchase
Conversion Stock in an amount equal to the greater of $200,000
or one-tenth of one percent of the total offering of shares of
Conversion Stock.
b. Subscription Rights received pursuant to this
Category shall be subordinated to the Subscription Rights
received by Eligible Account Holders, Tax-Qualified Employee
Stock Benefit Plans and Supplemental Eligible Account Holders
pursuant to Category Nos. 1, 2 and 3.
c. In the event of an oversubscription for shares of
Conversion Stock pursuant to this Category, the shares of
Conversion Stock available shall be allocated among
subscribing Other Members, giving preference to natural
persons and trusts of natural persons who are permanent
Residents of the Local Community, if such preference is
permitted by applicable law and approved by the Bank's Board
of Directors in its sole discretion, so as to permit each
subscribing Other Member, to the extent possible, to purchase
a number of shares sufficient to make his or her total
allocation of Conversion Stock equal to the lesser of 100
shares or the number of shares subscribed for by the Other
Member. The shares remaining thereafter will be allocated
among subscribing Other Members whose subscriptions remain
unsatisfied on an equitable basis as determined by the Board
of Directors.
5. Category No. 5: Depositors and Borrowers of Heartland
Community Bank, F.S.B.
a. Each depositor and/or borrower of Heartland
Community Bank, F.S.B. as of the Supplemental Eligibility
Record Date, other than those who are Eligible Account
Holders, Supplemental Eligible Account Holders or Other
Members, shall receive, without payment, with respect to each
deposit account in, or loan from, Heartland Community Bank,
F.S.B. on the Supplemental Eligibility Record Date,
non-transferable Subscription Rights to purchase Conversion
Stock in an amount equal to the greater of $200,000 or
one-tenth of one percent of the total offering of shares of
Conversion Stock.
b. Subscription Rights received pursuant to this
Category shall be subordinated to the Subscription Rights
received by Eligible Account Holders, Tax-Qualified Employee
Stock Benefit Plans, Supplemental Eligible Account Holders and
Other Members pursuant to Category Nos. 1, 2, 3 and 4.
c. In the event of an oversubscription for shares of
Conversion Stock pursuant to this Category, the shares of
Conversion Stock available shall be allocated among such
subscribing depositors and borrowers, giving preference to
natural persons and trusts of natural persons who are
permanent Residents of the Local Community, if such preference
is permitted by applicable law and approved by the Bank's
Board of Directors in its sole discretion, so as to permit
each such subscribing depositor and borrower, to the extent
possible, to purchase a number of shares sufficient to make
his or her total allocation of Conversion Stock equal to the
lesser of 100 shares or the number of shares subscribed for by
the subscribing depositor and/or borrower. The shares
remaining thereafter will be allocated among such subscribing
depositors and borrowers whose subscriptions remain
unsatisfied on an equitable basis as determined by the Board
of Directors.
Order Forms may provide that the maximum purchase
limitation shall be based on the midpoint of the Valuation
Range. In the event the aggregate Purchase Price of the
Conversion
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Stock issued and sold is below the midpoint of the Valuation
Range, that portion of subscriptions in excess of the maximum
purchase limitation will be refunded. In the event the
aggregate Purchase Price of Conversion Stock issued and sold
is above the midpoint of the Valuation Range, persons who have
subscribed for the maximum purchase limitation may be given
the opportunity to increase their subscriptions so as to
purchase the maximum number of shares subject to the
availability of shares. The Bank will not otherwise notify
subscribers of any change in the number of shares of
Conversion Stock offered.
D. Community Offering.
1. Any shares of Conversion Stock not purchased
through the exercise of Subscription Rights in the
Subscription Offering may be sold in a Community Offering,
which may commence concurrently with the Subscription
Offering. Shares of Conversion Stock will be offered in the
Community Offering to the general public, giving preference to
natural persons and the trusts of natural persons (including
individual retirement and Keogh retirement accounts and
personal trusts in which such natural persons have substantial
interests) who are permanent Residents of the Local Community.
The Community Offering may commence concurrently with or as
soon as practicable after the completion of the Subscription
Offering and must be completed within 45 days after the last
day of the Subscription Offering, unless extended by the
Holding Company with the approval of the OTS. The offering
price of the Conversion Stock to the general public in the
Community Offering will be the same price paid for such stock
by Eligible Account Holders and other persons in the
Subscription Offering. If sufficient shares are not available
to satisfy all orders in the Community Offering, the shares
available will be allocated by the Holding Company in its
discretion. The Holding Company shall have the right to
accept or reject orders in the Community Offering in whole or
in part.
2. Orders accepted in the Community Offering shall
be filled up to a maximum of 2% of the Conversion Stock, and
thereafter remaining shares shall be allocated on an equal
number of shares basis per order until all orders have been
filled.
3. The Conversion Stock to be offered in the
Community Offering will be offered and sold in a manner that
will achieve the widest distribution of the Conversion Stock.
E. Other Offering.
In the event a Community Offering does not appear
feasible, the Bank will immediately consult with the OTS to
determine the most viable alternative available to effect the
completion of the Conversion. Should no viable alternative
exist, the Bank may terminate the Conversion with the
concurrence of the OTS.
F. Limitations Upon Purchases of Shares of Conversion Stock.
The following additional limitations and exceptions shall
apply to all purchases of Conversion Stock:
1. No Person may purchase fewer than 25 shares
of Conversion Stock in the Conversion, to the extent such
shares are available.
2. Purchases of Conversion Stock in the
Community Offering by any person, when aggregated with
purchases by an Associate of that person, or a group of
persons Acting in Concert, shall not exceed $250,000 of the
Conversion Stock, except that Tax-Qualified Employee Stock
Benefit Plans may purchase up to 10% of the total shares of
Conversion Stock to be issued in the
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Conversion, and shares to be held by the Tax-Qualified
Employee Stock Benefit Plans and attributable to a participant
thereunder shall not be aggregated with shares of Conversion
Stock purchased by such participant or any other purchaser of
Conversion Stock in the Conversion.
3. Officers and directors of the Bank and the
Holding Company, and Associates thereof, may not purchase in
the aggregate more than 33% of the shares of Conversion Stock
issued in the Conversion, or such greater amount as may be
permitted under applicable legal limits.
4. Directors of the Holding Company and the Bank
shall not be deemed to be Associates or a group Acting in
Concert with other directors solely as a result of membership
on the Board of Directors of the Holding Company or the Bank
or any of their subsidiaries.
5. Purchases of shares of Conversion Stock in
the Conversion by any person, when aggregated with purchases
by an Associate of that person, or a group of persons Acting
in Concert, shall not exceed $250,000 of the Conversion Stock,
except that Tax-Qualified Employee Stock Benefit Plans may
purchase up to 10% of the total shares of Conversion Stock to
be issued in the Conversion, and shares purchased by the
Tax-Qualified Employee Stock Benefit Plans and attributable to
a participant thereunder shall not be aggregated with shares
purchased by such participant or any other purchaser of
Conversion Stock in the Conversion.
Subject to any required regulatory approval and the
requirements of applicable laws and regulations, the Holding Company
and the Bank may increase or decrease any of the purchase limitations
set forth herein at any time. In the event that the individual
purchase limitation is increased after commencement of the
Subscription and Community Offerings, 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 either the individual
purchase limitation or the number of shares of Conversion Stock to be
sold in the Conversion is decreased after commencement of the
Subscription and Community Offerings, 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.
Each person purchasing Conversion Stock in the Conversion
shall be deemed to confirm that such purchase does not conflict with
the purchase limitations under the Plan or otherwise imposed by law,
rule or regulation. In the event that such purchase limitations are
violated by any person (including any Associate or group of persons
affiliated or otherwise Acting in Concert with such person), the
Holding Company shall have the right to purchase from such person at
the actual Purchase Price per share all shares acquired by such person
in excess of such purchase limitations or, if such excess shares have
been sold by such person, to receive the difference between the actual
Purchase Price per share paid for such excess shares and the price at
which such excess shares were sold by such person. This right of the
Holding Company to purchase such excess shares shall be assignable by
the Holding Company.
G. Restrictions on and Other Characteristics of Stock Being Sold.
1. Transferability.
Except as provided in Paragraph XIII. below,
Conversion Stock purchased by persons other than directors and
Officers of the Bank and directors and Officers of the Holding
Company will be transferable without restriction. Conversion
Stock purchased by such directors or Officers shall not be
sold for a period of one year from the date of Conversion
except for any sale of such
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shares (i) following the death of the original purchaser or
(ii) resulting from an exchange of securities in a merger or
acquisition approved by the applicable regulatory authorities.
The Conversion Stock issued by the Holding Company to
such directors and Officers shall bear the following legend
giving appropriate notice of the one-year holding period
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
applicable regulations of the Office of Thrift
Supervision of the United States Department of the
Treasury. Except in the event of the death of the
registered holder, the shares represented by this
Certificate may not be sold prior thereto without a
legal opinion of counsel for the Holding Company that
said sale is permissible under the provisions of
applicable laws and regulations."
In addition, the Holding Company shall give
appropriate instructions to the transfer agent for the Holding
Company Stock with respect to the applicable restrictions
relating to the transfer of restricted stock. Any shares of
Holding Company Stock subsequently issued as a stock dividend,
stock split or otherwise, with respect to any such restricted
stock, shall be subject to the same holding period
restrictions for such directors and Officers as may be then
applicable to such restricted stock.
2. Repurchase and Dividend Rights.
Pursuant to present regulations, except as otherwise
permitted by the OTS, the Holding Company may not, for a
period of three years from the date of Conversion, repurchase
Holding Company Stock from any person, with the exception of
(i) repurchases on a pro rata basis pursuant to offers
approved by the OTS and made to all stockholders, (ii)
repurchases of qualifying shares of directors or, (iii) unless
prohibited by the OTS, repurchases of shares to fund employee
stock benefit plans of the Holding Company or the Bank. Upon
10 days' written notification to the OTS Regional Director for
the Converted Bank and the Chief Counsel of the Corporate and
Securities Division of the OTS, however, the Holding Company
may make open market repurchases of outstanding Holding
Company Stock, provided that (i) such Regional Director and
Chief Counsel do not object based on a determination that (a)
the repurchases would materially adversely affect the
financial condition of the Converted Bank, (b) the information
submitted by the Converted Bank is insufficient upon which to
base a conclusion as to whether the Converted Bank's financial
condition would be materially adversely affected, or (c) the
Converted Bank does not demonstrate a valid purpose for the
repurchases. Except as otherwise permitted by the OTS, (i) no
repurchases may occur in the first year following the
Conversion; (ii) any repurchases in the second and third years
following the Conversion must be part of an open-market stock
repurchase program that allows no more than five percent (5%)
of the outstanding Holding Company Stock to be purchased
during any 12 month period; and (iii) any repurchases within
the first three years following the Conversion must not cause
the Converted Bank to become "undercapitalized," as defined
pursuant to 12 C.F.R. Section 565.4 or a successor regulation.
Present regulations also provide that the Converted
Bank may not declare or pay a cash dividend on or repurchase
any of its Capital Stock if the result thereof would be to
reduce the regulatory capital of the Converted Bank below the
amount required for the Liquidation Account. Further, any
dividend declared or paid on, or repurchase of, the Capital
Stock shall be in compliance with the Rules and Regulations of
the OTS, or other applicable regulations.
The above limitations shall not preclude payment of
dividends on, or repurchases of, Holding Company Stock in the
event applicable federal regulatory limitations are
liberalized subsequent to the Conversion.
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3. Voting Rights.
After Conversion, holders of Savings Accounts and
obligors on loans will not have voting rights in the Converted
Bank. Exclusive voting rights with respect to the Holding
Company shall be vested in the holders of Holding Company
Stock, and the Holding Company will have exclusive voting
rights with respect to the Capital Stock. Each stockholder of
the Holding Company will be entitled to vote on any matters
coming before the stockholders of the Holding Company for
consideration and will be entitled to one vote for each share
of stock owned by said stockholder.
4. Purchases by Officers, Directors and Associates
Following Conversion.
Without the prior approval of the OTS, Officers and
directors of the Converted Bank and Officers and directors of
the Holding Company, and their Associates, shall be prohibited
for a period of three years following completion of the
Conversion from purchasing outstanding shares of Holding
Company Stock, except from a broker or dealer registered with
the SEC. Notwithstanding this restriction, negotiated
transactions involving more than 1% of the total outstanding
shares of Holding Company Stock and purchases made and shares
held by a Tax-Qualified Employee Stock Benefit Plan or
Non-Tax-Qualified Employee Stock Benefit Plan which may be
attributable to Officers or directors may be made without OTS
permission or the use of a broker or dealer.
H. Mailing of Offering Materials and Collation of Subscriptions.
The sale of all shares of Conversion Stock offered pursuant to
the Plan must be completed within 24 months after approval of the Plan
at the Special Meeting. After approval of the Plan by the OTS and the
declaration of the effectiveness of the Subscription and Community
Prospectus by the SEC, the Holding Company shall distribute such
Subscription and Community Prospectus and Order Forms for the purchase
of shares in accordance with the terms of the Plan.
The recipient of an Order Form will be provided neither fewer
than 20 days nor more than 45 days from the date of mailing, unless
extended, to complete, execute and return properly the Order Form to
the Holding Company or the Bank. Self-addressed, postage paid return
envelopes will accompany these forms when mailed. The Bank or Holding
Company will collate the returned executed Order Forms upon completion
of the Subscription Offering. Failure of any eligible subscriber to
return a properly completed and executed Order Form within the
prescribed time limits shall be deemed a waiver and a release by such
person of any rights to purchase shares of Conversion Stock hereunder.
The sale of all shares of Conversion Stock shall be completed
within 45 days after the last day of the Subscription Offering unless
extended by the Holding Company and the Bank with the approval of the
OTS.
I. Method of Payment.
Payment for all shares of Conversion Stock subscribed for in
the Subscription and Community Offerings must be received in full by
the Bank or the Holding Company, together with properly completed and
executed Order Forms, indicating thereon the number of shares being
subscribed for and such other information as may be required thereon,
on or prior to the expiration date specified on the Order Form, unless
such date is extended by the Holding Company and the Bank; provided,
however, that payments by Tax-Qualified Employee Stock Benefit Plans
for Conversion Stock may be made to the Bank concurrently with the
completion of the Conversion.
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Payment for all shares of Conversion Stock may be made in cash
(if delivered in person) or by check or money order, or, if the
subscriber has a Savings Account in the Bank (including a certificate
of deposit), the subscriber may authorize the Bank to charge the
subscriber's Savings Account for the purchase amount. The Bank shall
pay interest at not less than the passbook rate on all amounts paid in
cash or by check or money order to purchase shares of Conversion Stock
in the Subscription and Community Offerings from the date payment is
received until the Conversion is completed or terminated. The Bank
shall not knowingly loan funds or otherwise extend credit to any
person for the purpose of purchasing Conversion Stock.
If a subscriber authorizes the Bank to charge its Savings
Account, the funds will remain in the subscriber's Savings Account and
will continue to earn interest, but may not be used by the subscriber
until all Conversion Stock has been sold or the Conversion is
terminated, whichever is earlier. The withdrawal will be given effect
only concurrently with the sale of all shares of Conversion Stock in
the Conversion and only to the extent necessary to satisfy the
subscription at a price equal to the Purchase Price. The Bank will
allow subscribers to purchase shares of Conversion Stock by
withdrawing funds from certificate accounts without the assessment of
early withdrawal penalties. In the case of early withdrawal of only a
portion of such account, the certificate evidencing such account shall
be cancelled if the remaining balance of the account is less than the
applicable minimum balance requirement. In that event, the remaining
balance will earn interest at the passbook rate. This waiver of the
early withdrawal penalty is applicable only to withdrawals made in
connection with the purchase of Conversion Stock under the Plan.
Tax-Qualified Employee Stock Benefit Plans may subscribe for
shares by submitting an Order From, and in the case of an employee
stock ownership plan, together with evidence of a loan commitment from
the Holding Company or an unrelated financial institution for the
purchase of the shares of Conversion Stock, during the Subscription
Offering and by making payment for the shares of Conversion Stock on
the date of the closing of the Conversion.
J. Undelivered, Defective or Late Order Forms; Insufficient
Payment.
In the event an Order Form (i) is not delivered and is
returned to the Holding Company or the Bank by the United States
Postal Service (or the Holding Company or the Bank is unable to locate
the addressee); (ii) is not received by the Holding Company or the
Bank, or is received by the Holding Company or the Bank after
termination of the date specified thereon; (iii) is defectively
completed or executed; or (iv) is not accompanied by the total
required payment for the shares of Conversion Stock subscribed for
(including cases in which the subscribers' Savings Accounts are
insufficient to cover the authorized withdrawal for the required
payment), the Subscription Rights of the person to whom such rights
have been granted will not be honored and will be treated as though
such person failed to return the completed Order Form within the time
period specified therein. Alternatively, the Holding Company or the
Bank may, but will not be required to, waive any irregularity relating
to any Order Form or require the submission of a corrected Order Form
or the remittance of full payment for subscribed shares of Conversion
Stock by such date as the Holding Company or the Bank may specify.
Subscription orders, once tendered, cannot be revoked. The Holding
Company's and the Bank's interpretation of the terms and conditions of
this Plan and acceptability of the Order Forms will be final and
conclusive.
K. Members in Non-Qualified States or in Foreign Countries.
The Holding Company will make reasonable efforts to comply
with the securities laws of all states in the United States in which
persons entitled to subscribe for Conversion Stock pursuant to the
Plan reside. However, no such person will be offered or receive any
Conversion Stock under this Plan who resides in a foreign country or
who resides in a state of the United States with respect to which any
or all of the following apply: (i) a small number of persons
otherwise eligible to subscribe for shares of Conversion Stock under
this Plan reside in such state or foreign country; (ii) the granting
of Subscription Rights or the
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offer or sale of shares of Conversion Stock to such person would
require the Holding Company or the Bank or their employees to
register, under the securities laws of such state, as a broker,
dealer, salesman or agent or to register or otherwise qualify its
securities for sale in such state or foreign country; and (iii) such
registration qualification would be impracticable for reasons of cost
or otherwise. No payments will be made in lieu of the granting of
Subscription Rights to any such person.
L. Sales Commissions.
Sales commissions may be paid as determined by the Boards of
Directors of the Bank and the Holding Company or their designees to
securities dealers assisting subscribers in making purchases of
Conversion Stock in the Subscription Offering or in the Community
Offering, if the securities dealer is named by the subscriber on the
Order Form. In addition, a sales commission may be paid to a
securities dealer for advising and consulting with respect to, or for
managing the sale of Conversion Stock in, the Subscription Offering,
the Community Offering or any other offering.
IX. CHARTER AND BYLAWS.
As part of the Conversion, a federal stock charter and bylaws will be
adopted to authorize the Converted Bank to operate as a federal capital stock
savings bank. By approving the Plan, the Members of the Bank will thereby
approve amending the Bank's existing federal mutual charter and bylaws to read
in the form of a federal stock charter and bylaws. Prior to completion of the
Conversion, the proposed federal stock charter and bylaws may be amended in
accordance with the provisions and limitations for amending the Plan under
Paragraph XIV. below. The effective date of the amendment of the Bank's
federal mutual charter and bylaws to read in the form of a federal stock
charter and bylaws shall be the date of the issuance of the Conversion Stock,
which shall be the date of consummation of the Conversion.
X. REGISTRATION AND MARKET MAKING.
In connection and concurrently with the Conversion, the Holding
Company shall register the Holding Company Stock with the SEC pursuant to the
Securities Exchange Act of 1934, as amended, and shall undertake not to
deregister the Holding Company Stock for a period of three years thereafter.
The Holding Company shall use its best efforts to encourage and assist
various Market Makers to establish and maintain a market for the Holding
Company Stock. The Holding Company shall also use its best efforts to have the
Holding Company Stock quoted on the National Association of Securities Dealers,
Inc. Automated Quotation System or listed on a national or regional securities
exchange.
XI. STATUS OF SAVINGS ACCOUNTS AND LOANS SUBSEQUENT TO CONVERSION.
All Savings Accounts in the Bank will retain the same status after
Conversion as these accounts had prior to Conversion. Subject to Paragraph
VIII.I. hereof, each holder of a Savings Account in the Bank shall retain,
without payment, a withdrawable Savings Account or Savings Accounts in the
Converted Bank, equal in dollar amount and on the same terms and conditions as
in effect prior to Conversion. All Savings Accounts will continue to be
insured by the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation up to the applicable limits of insurance coverage. All
loans shall retain the same status after Conversion as these loans had prior to
Conversion. After Conversion, holders of Savings Accounts and obligors on
loans of the Bank will not have voting rights in the Converted Bank. Exclusive
voting rights with respect to the Holding Company shall be vested in the
holders of the Conversion Stock issued by the Holding Company, and the Holding
Company will have exclusive voting rights with respect to the Converted Bank's
Capital Stock.
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XII. LIQUIDATION ACCOUNT.
After the Conversion, holders of Savings Accounts will not be entitled
to share in the residual assets after liquidation of the Converted Bank.
However, pursuant to applicable regulations, the Bank shall, at the time of the
Conversion, establish a Liquidation Account in an amount equal to its
regulatory capital as of the date of the latest statement of financial
condition contained in the final prospectus to be used in connection with the
Conversion. The function of the Liquidation Account is to establish a priority
on liquidation, and, except as provided in Paragraph VIII.G.2. above, the
existence of the Liquidation Account shall not operate to restrict the use or
application of any of the net worth accounts of the Converted Bank.
The Liquidation Account shall be maintained by the Converted Bank
subsequent to Conversion for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders who retain their Savings Accounts in the
Converted Bank. Each Eligible Account Holder and Supplemental Eligible Account
Holder shall, with respect to each Savings Account held, have a related
inchoate interest in a portion of the Liquidation Account ("subaccount
balance").
The initial subaccount balance for a Savings Account held by an
Eligible Account Holder and/or a Supplemental Eligible Account Holder shall be
determined by multiplying the opening balance in the Liquidation Account by a
fraction of which the numerator is the amount of the qualifying deposit in the
related Savings Account and the denominator is the total amount of the
qualifying deposits of all Eligible Account Holders and Supplemental Eligible
Account Holders in the Bank. Such initial subaccount balance shall not be
increased but shall be subject to downward adjustment as provided below.
If the deposit balance in any Savings Account of an Eligible Account
Holder or Supplemental Eligible Account Holder to which the subaccount relates
at the close of business on any annual closing date subsequent to the
Eligibility Record Date or Supplemental Eligibility Record Date is less than
the lesser of (i) the deposit balance in such Savings Account at the close of
business on any annual closing date subsequent to the Eligibility Record Date
or the Supplemental Eligibility Record Date, or (ii) the amount of the
Qualifying Deposit in such Savings Account on the Eligibility Record Date or
the Supplemental Eligibility Record Date, then the subaccount balance for such
Savings Account shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of
a downward adjustment, the subaccount balance shall not be subsequently
increased, notwithstanding any increase in the deposit balance of the related
Savings Account. If any such Savings Account is closed, the related subaccount
balance shall be reduced to zero.
In the event of a complete liquidation of the Converted Bank (and only
in such event), each Eligible Account Holder and Supplemental Eligible Account
Holder shall be entitled to receive a liquidation distribution from the
Liquidation Account in the amount of the then-current adjusted subaccount
balances for Savings Accounts then held before any liquidation distribution may
be made to stockholders. No merger, consolidation, sale of bulk assets or
similar combination or transaction with another institution insured by the
Federal Deposit Insurance Corporation shall be considered to be a complete
liquidation for these purposes. In such transactions, the Liquidation Account
shall be assumed by the surviving institution.
XIII. RESTRICTIONS ON ACQUISITION OF HOLDING COMPANY.
A. Present regulations provide that for a period of three
years following completion of the Conversion, no person (i.e., an
individual, a group acting in concert, a corporation, a partnership,
an association, a joint stock company, a trust or any unincorporated
organization or similar company, a syndicate or any other group formed
for the purpose of acquiring, holding or disposing of securities of an
insured institution or its holding company) shall directly, or
indirectly, offer to purchase or actually acquire the beneficial
ownership of more than 10% of any class of Holding Company Stock
without the prior approval of the OTS. However, approval is not
required for purchases directly from the Holding Company
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or underwriters or a selling group acting on its behalf with a view
towards public resale, or for purchases not exceeding 1% per annum of
the shares outstanding, or for the acquisition of securities by one or
more Tax-Qualified Employee Stock Benefit Plans of the Holding Company
or the Converted Bank, provided that the plan or plans do not have
beneficial ownership in the aggregate of more than 25% of any class of
Holding Company Stock. Civil penalties may be imposed by the OTS for
willful violation or assistance of any violation. Where any person,
directly or indirectly, acquires beneficial ownership of more than 10%
of any class of Holding Company Stock within such three-year period,
without the prior approval of the OTS, Holding Company Stock
beneficially owned by such person in excess of 10% 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 matter
submitted to the stockholders for a vote.
B. The Holding Company may provide in its Articles of
Incorporation a provision that, for a period of five years following
the date of the completion of the Conversion, no person shall directly
or indirectly offer to acquire or actually acquire the beneficial
ownership of more than 10% of any class of Holding Company Stock
except with respect to purchases by one or more Tax-Qualified Employee
Stock Benefit Plans of the Holding Company or Converted Bank. The
Holding Company may provide in its Articles of Incorporation for such
other provisions affecting the acquisition of Holding Company Stock as
shall be determined by its Board of Directors.
XIV. INTERPRETATION AND AMENDMENT OR TERMINATION OF THE PLAN.
The Bank's Board of Directors shall have the sole discretion to
interpret and apply the provisions of the Plan to particular facts and
circumstances and to make all determinations necessary or desirable to
implement such provisions, including but not limited to matters with respect to
giving preference to natural persons and trusts of natural persons who are
permanent Residents of the Bank's Local Community, and any and all
interpretations, applications and determinations made by the Board of Directors
in good faith and on the basis of such information and assistance as was then
reasonably available for such purpose shall be conclusive and binding upon the
Bank and its members and subscribers in the Subscription and Community
Offerings, subject to the authority of the OTS.
If deemed necessary or desirable, the Plan may be substantively
amended at any time prior to submission of the Plan and proxy materials to the
Members by a two-thirds vote of the Bank's Board of Directors. After
submission of the Plan and proxy materials to the Members, the Plan may be
amended by a two-thirds vote of the Bank's Board of Directors at any time prior
to the Special Meeting and at any time following such Special Meeting with the
concurrence of the OTS. In its discretion, the Board of Directors may modify
or terminate the Plan upon the order of the regulatory authorities without a
resolicitation of proxies or another Special Meeting.
In the event that mandatory new regulations pertaining to conversions
are adopted by the OTS or any successor agency prior to the completion of the
Conversion, the Plan will be amended to conform to the new mandatory
regulations without a resolicitation of proxies or another Special Meeting. In
the event that new conversion regulations adopted by the OTS or any successor
agency prior to completion of the Conversion contain optional provisions, the
Plan may be amended to utilize such optional provisions at the discretion of
the Board of Directors without a resolicitation of proxies or another Special
Meeting.
By adoption of the Plan, the Bank's Members authorize the Board of
Directors to amend and/or terminate the Plan under the circumstances set forth
above.
XV. EXPENSES OF THE CONVERSION.
The Holding Company and the Bank will use their best efforts to assure
that expenses incurred in connection with the Conversion shall be reasonable.
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XVI. CONTRIBUTIONS TO TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLANS.
The Holding Company and the Converted Bank may make scheduled
discretionary contributions to their Tax-Qualified Employee Stock Benefit
Plans, provided such contributions do not cause the Converted Bank to fail to
meet its then-applicable regulatory capital requirements.
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EXHIBIT B
HEARTLAND COMMUNITY BANK
FEDERAL STOCK CHARTER
SECTION 1. CORPORATE TITLE. The full corporate title of the savings bank is
Heartland Community Bank (the "savings bank").
SECTION 2. OFFICE. The home office shall be located in Camden, Arkansas.
SECTION 3. DURATION. The duration of the savings bank is perpetual.
SECTION 4. PURPOSE AND POWERS. The purpose of the savings bank is to pursue
any or all of the lawful objectives of a Federal savings bank chartered under
section 5 of the Home Owners' Loan Act and to exercise all of the express,
implied, and incidental powers conferred thereby and by all acts amendatory
thereof and supplemental thereto, subject to the Constitution and laws of the
United States as they are now in effect, or as they may hereafter be amended,
and subject to all lawful and applicable rules, regulations, and orders of the
Office of Thrift Supervision ("Office").
SECTION 5. CAPITAL STOCK. The total number of shares of all classes of the
capital stock which the savings bank has authority to issue is 25,000,000 of
which 20,000,000 shares shall be common stock of par value of $0.01 per share
and of which 5,000,000 shares shall be serial preferred stock of par value of
$0.01 per share. The shares may be issued from time to time as authorized by
the board of directors without the approval of its stockholders except as
otherwise provided in this Section 5 or to the extent that such approval is
required by governing law, rule, or regulation. The consideration for the
issuance of the shares shall be paid in full before their issuance and shall
not be less than the par value. Neither promissory notes nor future services
shall constitute payment or part payment for the issuance of shares of the
savings bank. The consideration for the shares shall be cash, tangible or
intangible property (to the extent direct investment in such property would be
permitted to the savings bank), labor or services actually performed for the
savings bank, or any combination of the foregoing. In the absence of actual
fraud in the transaction, the value of such property, labor, or services, as
determined by the board of directors of the savings bank, shall be conclusive.
Upon payment of such consideration, such shares shall be deemed to be fully
paid and nonassessable. In the case of a stock dividend, that part of the
retained earnings of the savings bank that is transferred to common stock or
paid-in capital accounts upon the issuance of shares as a stock dividend shall
be deemed to be the consideration for their issuance.
Except for shares issued in the initial organization of the savings
bank or in connection with the conversion of the savings bank from the mutual
to the stock form of capitalization, no shares of capital stock (including
shares issuable upon conversion, exchange or exercise of other securities)
shall be issued, directly or indirectly, to officers, directors, or controlling
persons of the savings bank other than as part of a general public offering or
as qualifying shares to a director, unless the issuance or the plan under which
they would be issued has been approved by a majority of the total votes
eligible to be cast at a legal meeting.
Nothing contained in this Section 5 (or in any supplementary sections
hereto) shall entitle the holders of any class or series of capital stock to
vote as a separate class or series or to more than one vote per share, except
as to the cumulation of votes for the election of directors, unless the charter
otherwise provides that there shall be no such cumulative voting: Provided,
that this restriction on voting separately by class or series shall not apply:
(i) To any provision which would authorize the holders of preferred
stock, voting as a class or series, to elect some members of the board of
directors, less than a majority thereof, in the event of default in the payment
of dividends on any class or series of preferred stock;
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(ii) To any provision which would require the holders of preferred
stock, voting as a class or series, to approve the merger or consolidation of
the savings bank with another corporation or the sale, lease, or conveyance
(other than by mortgage or pledge) of properties or business in exchange for
securities of a corporation other than the savings bank if the preferred stock
is exchanged for securities of such other corporation: Provided, That no
provision may require such approval for transactions undertaken with the
assistance or pursuant to the direction of the Office, the Federal Deposit
Insurance Corporation;
(iii) To any amendment which would adversely change the specific
terms of any class or series of capital stock as set forth in this Section 5
(or in any supplementary sections hereto), including any amendment which would
create or enlarge any class or series ranking prior thereto in rights and
preferences. An amendment which increases the number of authorized shares of
any class or series of capital stock, or substitutes the surviving savings bank
in a merger or consolidation for the savings bank, shall not be considered to
be such an adverse change.
A description of the different classes and series (if any) of the
savings bank's capital stock and a statement of the designations, and the
relative rights, preferences and limitations of the shares of each class of and
series (if any) of capital stock are as follows:
A. COMMON STOCK. Except as provided in this Section 5 (or in any
supplementary sections thereto), the holders of common stock shall exclusively
possess all voting power. Each holder of shares of common stock shall be
entitled to one vote for each share held by such holder, except as to the
cumulation of votes for the election of directors, unless the charter otherwise
provides that there shall be no such cumulative voting.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of stock having
preference over the common stock as to the payment of dividends, the full
amount of dividends and of sinking fund, retirement fund or other retirement
payments, if any, to which such holders are respectively entitled in preference
to the common stock, then dividends may be paid on the common stock and on any
class or series of stock entitled to participate therewith as to dividends out
of any assets legally available for the payment of dividends.
In the event of any liquidation, dissolution, or winding up of the
savings bank, the holders of the common stock (and the holders of any class or
series of stock entitled to participate with the common stock in the
distribution of assets) shall be entitled to receive, in cash or in kind, the
assets of the savings bank available for distribution remaining after: (i)
payment or provision for payment of the savings bank's debts and liabilities;
(ii) distributions or provision for distributions in settlement of its
liquidation account; and (iii) distributions or provisions for distributions to
holders of any class or series of stock having preference over the common stock
in the liquidation, dissolution, or winding up of the savings bank. Each share
of common stock shall have the same relative rights as and be identical in all
respects with all the other shares of common stock.
B. PREFERRED STOCK. The savings bank may provide in supplementary
sections to its charter for one or more classes of preferred stock, which shall
be separately identified. The shares of any class may be divided into and
issued in series, with each series separately designated so as to distinguish
the shares thereof from the shares of all other series and classes. The terms
of each series shall be set forth in a supplementary section to the charter.
All shares of the same class shall be identical except as to the following
relative rights and preferences, as to which there may be variations between
different series:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if so, from
which date(s) the payment date(s) for dividends, and the participating or other
special rights, if any, with respect to dividends;
B-2
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(c) The voting powers, full or limited, if any, of shares of such
series;
(d) Whether the shares of such series shall be redeemable and, if so,
the price(s) at which, and the terms and conditions on which, such shares may
be redeemed;
(e) The amount(s) payable upon the shares of such series in the event
of voluntary or involuntary liquidation, dissolution, or winding up of the
savings bank;
(f) Whether the shares of such series shall be entitled to the
benefit of a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and if so entitled, the amount of such fund and the
manner of its application, including the price(s) at which such shares may be
redeemed or purchased through the application of such fund;
(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock of the savings
bank and, if so, the conversion price(s) or the rate(s) of exchange, and the
adjustments thereof, if any, at which such conversion or exchange may be made,
and any other terms and conditions of such conversion or exchange;
(h) The price or other consideration for which the shares of such
series shall be issued; and
(i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial preferred
stock and whether such shares may be reissued as shares of the same or any
other series of serial preferred stock.
Each share of each series of serial preferred stock shall have the
same relative rights as and be identical in all respects with all the other
shares of the same series.
The board of directors shall have authority to divide, by the adoption
of supplementary charter sections, any authorized class of preferred stock into
series, and, within the limitations set forth in this section and the remainder
of this charter, fix and determine the relative rights and preferences of the
shares of any series so established.
Prior to the issuance of any preferred shares of a series established
by a supplementary charter section adopted by the board of directors, the
savings bank shall file with the Secretary to the Office a dated copy of that
supplementary section of this charter establishing and designating the series
and fixing and determining the relative rights and preferences thereof.
SECTION 6. PREEMPTIVE RIGHTS. Holders of the capital stock of the savings
bank shall not be entitled to preemptive rights with respect to any shares of
the savings bank which may be issued.
SECTION 7. LIQUIDATION ACCOUNT. Pursuant to the requirements of the Office's
regulations (12 C.F.R. Part 563b), the savings bank shall establish and
maintain a liquidation account for the benefit of its savings account holders
as of December 31, 1993 and December 31, 1996 ("eligible savers"). In the
event of a complete liquidation of the savings bank, it shall comply with such
regulations with respect to the amount and the priorities on liquidation of
each of the savings bank's eligible saver's inchoate interest in the
liquidation account, to the extent it is still in existence; provided, that an
eligible saver's inchoate interest in the liquidation account shall not entitle
such eligible saver to any voting rights at meetings of the savings bank's
stockholders.
SECTION 8. DIRECTORS. The savings bank shall be under the direction of a
board of directors. The authorized number of directors, as stated in the
savings bank's bylaws, shall not be fewer than five or more than fifteen except
when a greater or lesser number is approved by the Director of the Office, or
his or her delegate.
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SECTION 9. AMENDMENT OF CHARTER. Except as provided in Section 5, no
amendment, addition, alteration, change, or repeal of this charter shall be
made, unless such is first proposed by the board of directors of the savings
bank, approved by the stockholders by a majority of the votes eligible to be
cast at a legal meeting, unless a higher vote is otherwise required, and
approved or preapproved by the Office.
HEARTLAND COMMUNITY BANK
Attest: By:
------------------------------------ ------------------------------------------------------
Secretary President and Chief Executive Officer
* * *
OFFICE OF THRIFT SUPERVISION
Attest: By:
------------------------------------ ------------------------------------------------------
Secretary Director
Effective Date: , 1997
--------------------
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EXHIBIT C
HEARTLAND COMMUNITY BANK
BYLAWS
ARTICLE I - HOME OFFICE
The home office of Heartland Community Bank shall be located at 237
Jackson Street, Camden, in the County of Ouachita in the State of Arkansas.
ARTICLE II - STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All annual and special meetings of
stockholders shall be held at the home office of the savings bank or at such
other place in the State of Arkansas as the board of directors may determine.
SECTION 2. ANNUAL MEETING. A meeting of the stockholders of the
savings bank for the election of directors and for the transaction of any other
business of the savings bank shall be held annually within 120 days after the
end of the savings bank's fiscal year.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders
for any purpose or purposes, unless otherwise prescribed by the regulations of
the Office of Thrift Supervision ("Office"), may be called at any time by the
chairman of the board, the president, or a majority of the board of directors,
and shall be called by the chairman of the board, the president, or the
secretary upon the written request of the holders of not less than one-tenth of
all of the outstanding capital stock of the savings bank entitled to vote at
the meeting. Such written request shall state the purpose or purposes of the
meeting and shall be delivered to the home office of the savings bank addressed
to the chairman of the board, the president, or the secretary.
SECTION 4. CONDUCT OF MEETINGS. Annual and special meetings shall be
conducted in accordance with rules and procedures adopted by the board of
directors. The board of directors shall designate, when present, either the
chairman of the board or president to preside at such meetings.
SECTION 5. NOTICE OF MEETINGS. Written notice stating the place,
day, and hour of the meeting and the purpose(s) for which the meeting is called
shall be delivered not fewer than 20 nor more than 50 days before the date of
the meeting, either personally or by mail, by or at the direction of the
chairman of the board, the president, or the secretary, or the directors
calling the meeting, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the mail, addressed to the stockholder at the address as it appears on the
stock transfer books or records of the savings bank as of the record date
prescribed in Section 6 of this Article II with postage prepaid. When any
stockholders' meeting, either annual or special, is adjourned for 30 days or
more, notice of the adjourned meeting shall be given as in the case of an
original meeting. It shall not be necessary to give any notice of the time and
place of any meeting adjourned for less than 30 days or of the business to be
transacted at the meeting, other than an announcement at the meeting at which
such adjournment is taken.
SECTION 6. FIXING OF RECORD DATE. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment, or stockholders entitled to receive payment of any dividend,
or in order to make a determination of stockholders for any other proper
purpose, the board of directors shall fix in advance a date as the record date
for any such determination of stockholders. Such date in any case shall be not
more than 60 days and, in case of a meeting of stockholders, not fewer than 10
days prior to the date on which the particular action, requiring such
determination of stockholders, is to be taken. When a determination of
stockholders entitled to vote at any meeting of stockholders has been made as
provided in this section, such determination shall apply to any adjournment.
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SECTION 7. VOTING LISTS. At least 20 days before each meeting of the
stockholders, the officer or agent having charge of the stock transfer books
for shares of the savings bank shall make a complete list of the stockholders
entitled to vote at such meeting, or any adjournment, arranged in alphabetical
order, with the address and the number of shares held by each. This list of
stockholders shall be kept on file at the home office of the savings bank and
shall be subject to inspection by any stockholder at any time during usual
business hours for a period of 20 days prior to such meeting. Such list shall
also be produced and kept open at the time and place of the meeting and shall
be subject to inspection by any stockholder during the entire time of the
meeting. The original stock transfer book shall constitute prima facie
evidence of the stockholders entitled to examine such list or transfer books or
to vote at any meeting of stockholders.
In lieu of making the stockholder list available for inspection by
stockholders as provided in the preceding paragraph, the board of directors may
perform such acts as required by paragraphs (a) and (b) of Rule 14a-7 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as may
be duly requested in writing, with respect to any matter which may be properly
considered at a meeting of stockholders, by any stockholder who is entitled to
vote on such matter and who shall defray the reasonable expenses to be incurred
by the savings bank in performance of the act or acts required.
SECTION 8. QUORUM. A majority of the outstanding shares of the
savings bank entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of
the outstanding shares is represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally notified. The stockholders present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to constitute less than a quorum.
SECTION 9. PROXIES. At all meetings of stockholders, a stockholder
may vote by proxy executed in writing by the stockholder or by his duly
authorized attorney in fact. Proxies solicited on behalf of the management
shall be voted as directed by the stockholder or, in the absence of such
direction, as determined by a majority of the board of directors. No proxy
shall be valid more than eleven months from the date of its execution except
for a proxy coupled with an interest.
SECTION 10. VOTING OF SHARES IN THE NAME OF TWO OR MORE PERSONS.
When ownership stands in the name of two or more persons, in the absence of
written directions to the savings bank to the contrary, at any meeting of the
stockholders of the savings bank, any one or more of such stockholders may
cast, in person or by proxy, all votes to which such ownership is entitled. In
the event an attempt is made to cast conflicting votes, in person or by proxy,
by the several persons in whose names shares of stock stand, the vote or votes
to which those persons are entitled shall be cast as directed by a majority of
those holding such shares and present in person or by proxy at such meeting,
but no votes shall be cast for such stock if a majority cannot agree.
SECTION 11. VOTING OF SHARES OF CERTAIN HOLDERS. Shares standing in
the name of another corporation may be voted by any officer, agent, or proxy as
the bylaws of such corporation may prescribe, or, in the absence of such
provision, as the board of directors of such corporation may determine. Shares
held by an administrator, executor, guardian, or conservator may be voted by
him or her, either in person or by proxy, without a transfer of such shares
into his or her name. Shares standing in the name of a trustee may be voted by
him or her, either in person or by proxy, but no trustee shall be entitled to
vote shares held by him or her without a transfer of such shares into his or
her name. Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer into his or her name if authority to do so
is contained in an appropriate order of the court or other public authority by
which such receiver was appointed.
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A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the savings bank nor
shares held by another corporation, if a majority of the shares entitled to
vote for the election of directors of such other corporation are held by the
savings bank, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
SECTION 12. CUMULATIVE VOTING. Unless otherwise provided in the
savings bank's charter, every stockholder entitled to vote at an election for
directors shall have the right to vote, in person or by proxy, the number of
shares owned by the stockholder for as many persons as there are directors to
be elected and for whose election the stockholder has a right to vote, or to
cumulate the votes by giving one candidate as many votes as the number of such
directors to be elected multiplied by the number of shares shall equal or by
distributing such votes on the same principle among any number of candidates.
SECTION 13. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the board of directors may appoint any persons other than
nominees for office as inspectors of election to act at such meeting or any
adjournment. The number of inspectors shall be either one or three. Any such
appointment shall not be altered at the meeting. If inspectors of election are
not so appointed, the chairman of the board or the president may, or on the
request of not fewer than 10 percent of the votes represented at the meeting
shall, make such appointment at the meeting. If appointed at the meeting, the
majority of the votes present shall determine whether one or three inspectors
are to be appointed. In case any person appointed as inspector fails to appear
or fails or refuses to act, the vacancy may be filled by appointment by the
board of directors in advance of the meeting or at the meeting by the chairman
of the board or the president.
Unless otherwise prescribed by applicable regulations, the duties of
such inspectors shall include: determining the number of shares and the voting
power of each share, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity and effect of proxies; receiving votes,
ballots, or consents; hearing and determining all challenges and questions in
any way arising in connection with the rights to vote; counting and tabulating
all votes or consents; determining the result; and such acts as may be proper
to conduct the election or vote with fairness to all stockholders.
SECTION 14. NOMINATING COMMITTEE. The board of directors shall act
as a nominating committee for selecting the management nominees for election as
directors. Except in the case of a nominee substituted as a result of the
death or other incapacity of a management nominee, the nominating committee
shall deliver written nominations to the secretary at least 20 days prior to
the date of the annual meeting. Upon delivery, such nominations shall be
posted in a conspicuous place in each office of the savings bank. No
nominations for directors except those made by the nominating committee shall
be voted upon at the annual meeting unless other nominations by stockholders
are made in writing and delivered to the secretary of the savings bank at least
five days prior to the date of the annual meeting. Upon delivery, such
nominations shall be posted in a conspicuous place in each office of the
savings bank. Ballots bearing the names of all persons nominated by the
nominating committee and by stockholders shall be provided for use at the
annual meeting. However, if the nominating committee shall fail or refuse to
act at least 20 days prior to the annual meeting, nominations for directors may
be made at the annual meeting by any stockholder entitled to vote and shall be
voted upon.
SECTION 15. NEW BUSINESS. Any new business to be taken up at the
annual meeting shall be stated in writing and filed with the secretary of the
savings bank at least five days before the date of the annual meeting, and all
other business so stated, proposed, and filed shall be considered at the annual
meeting; but no other proposal shall be acted upon at the annual meeting. Any
stockholder may make any other proposal at the annual meeting and the same may
be discussed and considered, but unless stated in writing and filed with the
secretary at least five days before the meeting, such proposal shall be laid
over for action at an adjourned, special, or annual meeting of the stockholders
taking place 30 days or more thereafter. This provision shall not prevent the
consideration and approval
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or disapproval at the annual meeting of reports of officers, directors, and
committees; but in connection with such reports, no new business shall be acted
upon at such annual meeting unless stated and filed as herein provided.
SECTION 16. INFORMAL ACTION BY STOCKHOLDERS. Any action required to
be taken at a meeting of the stockholders, or any other action which may be
taken at a meeting of stockholders, may be taken without a meeting if consent
in writing, setting forth the action so taken, shall be given by all of the
stockholders entitled to vote with respect to the subject matter.
ARTICLE III - BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the savings
bank shall be under the direction of its board of directors. The board of
directors shall annually elect a chairman of the board and a president from
among its members and shall designate, when present, the chairman of the board
or the president to preside at its meetings.
SECTION 2. NUMBER AND TERM. The board of directors shall consist of
seven members, as determined by resolution of the board of directors, and shall
be divided into three classes as nearly equal in number as possible. The
members of each class shall be elected for a term of three years and until
their successors are elected and qualified. One class shall be elected by
ballot annually.
SECTION 3. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without other notice than this bylaw immediately after,
and at the same place as, the annual meeting of stockholders. The board of
directors may provide, by resolution, the time and place, within the savings
bank's normal lending territory, for the holding of additional regular meetings
without other notice than such resolution.
SECTION 4. QUALIFICATION. Directors need not be the beneficial
owners of capital stock of the savings bank.
SECTION 5. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the request of the chairman of the board, the
president, or one-third of the directors. The persons authorized to call
special meetings of the board of directors may fix any place, within the
savings bank's normal lending territory, as the place for holding any special
meeting of the board of directors called by such persons.
Members of the board of directors may participate in special meetings
by means of conference telephone or similar communications equipment by which
all persons participating in the meeting can hear each other. Such
participation shall constitute presence in person.
SECTION 6. NOTICE OF SPECIAL MEETINGS. Written notice of any special
meeting of the board of directors or of any committee designated thereby shall
be given to each director at least 24 hours prior thereto at the address at
which the director is most likely to be reached. Any director may waive notice
of any meeting by a writing filed with the secretary. The attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose of, any
meeting of the board of directors need be specified in the notice or waiver of
notice of such meeting.
SECTION 7. QUORUM. A majority of the number of directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the board of directors; but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time. Notice of any adjourned meeting shall
be given in the same manner as prescribed by Section 6 of this Article III.
SECTION 8. MANNER OF ACTING. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the board of directors, unless a greater number is prescribed by regulation of
the Office or by these bylaws.
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SECTION 9. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken by the board of directors at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors.
SECTION 10. RESIGNATION. Any director may resign at any time by
sending a written notice of such resignation to the home office of the savings
bank addressed to the chairman of the board or the president. Unless otherwise
specified, such resignation shall take effect upon receipt by the chairman of
the board or the president.
SECTION 11. VACANCIES. Any vacancy occurring on the board of
directors may be filled by the affirmative vote of a majority of the remaining
directors although less than a quorum of the board of directors. A director
elected to fill a vacancy shall be elected to serve until the next election of
directors by the stockholders. Any directorship to be filled by reason of an
increase in the number of directors may be filled by election by the board of
directors for a term of office continuing only until the next election of
directors by the stockholders.
SECTION 12. COMPENSATION. Directors, as such, may receive
compensation for service on the board of directors. Members of either standing
or special committees may be allowed such compensation as the board of
directors may determine.
SECTION 13. PRESUMPTION OF ASSENT. A director of the savings bank
who is present at a meeting of the board of directors at which action on any
savings bank matter is taken shall be presumed to have assented to the action
taken unless his dissent or abstention shall be entered in the minutes of the
meeting or unless he shall file a written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the secretary of the savings
bank within five days after the date a copy of the minutes of the meeting is
received. Such right to dissent shall not apply to a director who voted in
favor of such action.
SECTION 14. REMOVAL OF DIRECTORS. At a meeting of stockholders
called expressly for that purpose, any director may be removed for cause by a
vote of the holders of a majority of the shares then entitled to vote at an
election of directors. If less than the entire board is to be removed, no one
of the directors may be removed if the votes cast against the removal would be
sufficient to elect a director if then cumulatively voted at an election of the
class of directors of which such director is a part. Whenever the holders of
the shares of any class are entitled to elect one or more directors by the
provisions of the charter or supplemental sections thereto, the provisions of
this section shall apply, in respect to the removal of a director or directors
so elected, to the vote of the holders of the outstanding shares of that class
and not to the vote of the outstanding shares as a whole.
ARTICLE IV - EXECUTIVE AND OTHER COMMITTEES
SECTION 1. APPOINTMENT. The board of directors, by resolution
adopted by a majority of the full board, may designate the chief executive
officer and two or more of the other directors to constitute an executive
committee. The designation of any committee pursuant to this Article IV and
the delegation of authority shall not operate to relieve the board of
directors, or any director, of any responsibility imposed by law or regulation.
SECTION 2. AUTHORITY. The executive committee, when the board of
directors is not in session, shall have and may exercise all of the authority
of the board of directors except to the extent, if any, that such authority
shall be limited by the resolution appointing the executive committee; and
except also that the executive committee shall not have the authority of the
board of directors with reference to: the declaration of dividends; the
amendment of
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the charter or bylaws of the savings bank, or recommending to the stockholders
a plan of merger, consolidation, or conversion; the sale, lease, or other
disposition of all or substantially all of the property and assets of the
savings bank otherwise than in the usual and regular course of its business; a
voluntary dissolution of the savings bank; a revocation of any of the
foregoing; or the approval of a transaction in which any member of the
executive committee, directly or indirectly, has any material beneficial
interest.
SECTION 3. TENURE. Subject to the provisions of Section 8 of this
Article IV, each member of the executive committee shall hold office until the
next regular annual meeting of the board of directors following his or her
designation and until a successor is designated as a member of the executive
committee.
SECTION 4. MEETINGS. Regular meetings of the executive committee may
be held without notice at such times and places as the executive committee may
fix from time to time by resolution. Special meetings of the executive
committee may be called by any member thereof upon not less than one day's
notice stating the place, date, and hour of the meeting, which notice may be
written or oral. Any member of the executive committee may waive notice of any
meeting and no notice of any meeting need be given to any member thereof who
attends in person. The notice of a meeting of the executive committee need not
state the business proposed to be transacted at the meeting.
SECTION 5. QUORUM. A majority of the members of the executive
committee shall constitute a quorum for the transaction of business at any
meeting thereof, and action of the executive committee must be authorized by
the affirmative vote of a majority of the members present at a meeting at which
a quorum is present.
SECTION 6. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken by the executive committee at a meeting may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the members of the executive committee.
SECTION 7. VACANCIES. Any vacancy in the executive committee may be
filled by a resolution adopted by a majority of the full board of directors.
SECTION 8. RESIGNATIONS AND REMOVAL. Any member of the executive
committee may be removed at any time with or without cause by resolution
adopted by a majority of the full board of directors. Any member of the
executive committee may resign from the executive committee at any time by
giving written notice to the president or secretary of the savings bank.
Unless otherwise specified, such resignation shall take effect upon its
receipt; the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 9. PROCEDURE. The executive committee shall elect a
presiding officer from its members and may fix its own rules of procedure which
shall not be inconsistent with these bylaws. It shall keep regular minutes of
its proceedings and report the same to the board of directors for its
information at the meeting held next after the proceedings shall have occurred.
SECTION 10. OTHER COMMITTEES. The board of directors may by
resolution establish an audit, loan, or other committee composed of directors
as it may determine to be necessary or appropriate for the conduct of the
business of the savings bank and may prescribe the duties, constitution, and
procedures thereof.
ARTICLE V - OFFICERS
SECTION 1. POSITIONS. The officers of the savings bank shall be a
president, one or more vice presidents, a secretary, and a treasurer, each of
whom shall be elected by the board of directors. The board of directors may
also designate the chairman of the board as an officer. The president shall be
the chief executive officer, unless the board of directors designates the
chairman of the board as chief executive officer. The president shall be a
director of the savings bank. The offices of the secretary and treasurer may
be held by the same person and a vice president may also be either the
secretary, or the treasurer. The board of directors may designate one or more
vice presidents
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as executive vice president or senior vice president. The board of directors
may also elect or authorize the appointment of such other officers as the
business of the savings bank may require. The officers shall have such
authority and perform such duties as the board of directors may from time to
time authorize or determine. In the absence of action by the board of
directors, the officers shall have such powers and duties as generally pertain
to their respective offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the savings
bank shall be elected annually at the first meeting of the board of directors
held after each annual meeting of the stockholders. If the election of
officers is not held at such meeting, such election shall be held as soon
thereafter as possible. Each officer shall hold office until a successor has
been duly elected and qualified or until the officer's death, resignation, or
removal in the manner hereinafter provided. Election or appointment of an
officer, employee, or agent shall not of itself create contractual rights. The
board of directors may authorize the savings bank to enter into an employment
contract with any officer in accordance with regulations of the Office; but no
such contract shall impair the right of the board of directors to remove any
officer at any time in accordance with Section 3 of this Article V.
SECTION 3. REMOVAL. Any officer may be removed by the board of
directors whenever in its judgment the best interests of the savings bank will
be served thereby, but such removal, other than for cause, shall be without
prejudice to any contractual rights of the person so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise may be filled by the board
of directors for the unexpired portion of the term.
SECTION 5. REMUNERATION. The remuneration of the officers shall be
fixed from time to time by the board of directors by employment contracts or
otherwise.
ARTICLE VI - CONTRACTS, LOANS, CHECKS, AND DEPOSITS
SECTION 1. CONTRACTS. To the extent permitted by applicable
regulations, and except as otherwise prescribed by these bylaws with respect to
certificates for shares, the board of directors may authorize any officer,
employee, or agent of the savings bank to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the savings bank.
Such authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
savings bank and no evidence of indebtedness shall be issued in its name unless
authorized by the board of directors. Such authority may be general or
confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts, or other orders
for the payment of money, notes, or other evidences of indebtedness issued in
the name of the savings bank shall be signed by one or more officers,
employees, or agents of the savings bank in such manner as shall from time to
time be determined by the board of directors.
SECTION 4. DEPOSITS. All funds of the savings bank not otherwise
employed shall be deposited from time to time to the credit of the savings bank
in any duly authorized depositories as the board of directors may select.
ARTICLE VII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares
of capital stock of the savings bank shall be in such form as shall be
determined by the board of directors and approved by the Office. Such
certificates shall be signed by the chief executive officer or by any other
officer of the savings bank authorized by the board of directors, attested by
the secretary or an assistant secretary, and sealed with the corporate seal or
a facsimile thereof. The signatures of such officers upon a certificate may be
facsimiles if the certificate is manually signed on behalf of a transfer agent
or a registrar other than the savings bank itself or one of its employees.
Each certificate
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for shares of capital stock shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares are issued,
with the number of shares and date of issue, shall be entered on the stock
transfer books of the savings bank. All certificates surrendered to the
savings bank for transfer shall be cancelled and no new certificate shall be
issued until the former certificate for a like number of shares has been
surrendered and cancelled, except that in the case of a lost or destroyed
certificate, a new certificate may be issued upon such terms and indemnity to
the savings bank as the board of directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of capital stock
of the savings bank shall be made only on its stock transfer books. Authority
for such transfer shall be given only by the holder of record or by his legal
representative, who shall furnish proper evidence of such authority, or by his
attorney authorized by a duly executed power of attorney and filed with the
savings bank. Such transfer shall be made only on surrender for cancellation
of the certificate for such shares. The person in whose name shares of capital
stock stand on the books of the savings bank shall be deemed by the savings
bank to be the owner for all purposes.
ARTICLE VIII - FISCAL YEAR
The fiscal year of the savings bank shall end on the 30th day of June
of each year.
ARTICLE IX - DIVIDENDS
Subject to the terms of the savings bank's charter and the regulations
and orders of the Office, the board of directors may, from time to time,
declare, and the savings bank may pay, dividends on its outstanding classes of
capital stock.
ARTICLE X - CORPORATE SEAL
The board of directors shall provide a savings bank seal which shall
be two concentric circles between which shall be the name of the savings bank.
The year of incorporation or an emblem may appear in the center.
ARTICLE XI - AMENDMENTS
These bylaws may be amended in a manner consistent with applicable
regulations at any time by a majority vote of the full board of directors or by
a majority vote of the votes eligible to be cast by the stockholders of the
savings bank at any legal meeting.
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REVOCABLE PROXY
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HEARTLAND COMMUNITY BANK
FOR A SPECIAL MEETING OF MEMBERS
TO BE HELD ON ____________, 1997)
The undersigned member of Heartland Community Bank (the "Bank") hereby
appoints Vida H. Lampkin and Cameron D. McKeel, or any one of them, with full
powers of substitution, as attorneys-in-fact and agents for and in the name of
the undersigned, to vote such votes as the undersigned may be entitled to cast
at the Special Meeting of Members of the Bank to be held at __________________,
____________________, Camden, Arkansas, on ________________, _____________,
1997, at __:__ _.m., Central Time, and at any adjournments thereof. They are
authorized to cast all votes to which the undersigned is entitled, as follows:
FOR AGAINST
--- -------
Approval of the Plan providing for the conversion of the
Bank from a federally chartered mutual savings bank to a
federally chartered stock savings bank as a wholly owned
subsidiary of HCB Bancshares, Inc., including the
amendment of the Bank's Federal Mutual Charter and
Bylaws to read in the form of a Federal Stock Charter and
Bylaws for the Bank.
[ ] [ ]
In their discretion, on any other matters that may lawfully
come before the meeting.
NOTE: The Board of Directors is not aware of any other matter that may come
before the Meeting.
46
THIS PROXY WILL BE VOTED FOR THE PLAN IF
NO CHOICE IS MADE HEREON
Should the undersigned be present and elect to vote at said Meeting or
at any adjournment thereof and, after notification to the Secretary of Heartland
Community Bank at said Meeting of the member's decision to terminate this Proxy,
then the power of said attorneys-in-fact or agents shall be deemed terminated
and of no further force and effect. The undersigned hereby revokes any and all
proxies heretofore given.
The undersigned acknowledges receipt of a Notice of Special Meeting of
the Members of Heartland Community Bank to be held on ___________, 1997 and a
Proxy Statement dated ______________, 1997 and a Prospectus dated
______________, 1997 prior to the execution of this Proxy.
_________________________
Date
_________________________
Signature
Note: Only one signature is required in
the case of a joint account.