InvestmentAgreement datedas of ______________, 2009, between RIVERVALLEY BANCORP and ________________________________ TABLEOF CONTENTS

 

 

 

River Valley Bancorp, a corporation organized and existing under the laws of the State of Indiana (the “Corporation”), in accordance with the provisions of Section 23-1-25-2 of the Indiana Business Corporation Law, does hereby certify:

 

The board of directors of the Corporation (the “Board of Directors”) or an applicable committee of the Board of Directors, in accordance with the Articles of Incorporation and Code of By-laws of the Corporation and applicable law, adopted the following resolution on August 18, 2009, creating a series of 8,000 shares of Preferred Stock of the Corporation designated as “Fixed Rate Cumulative Perpetual Preferred Stock, Series A”.

 

RESOLVED, that pursuant to the provisions of the Articles of Incorporation and Code of By-laws of the Corporation and applicable law, a series of Preferred Stock, without par value, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:

 

Section 1. Designation and Number of Shares. There is hereby created out of the authorized and unissued shares of preferred stock of the Corporation a series of preferred stock designated as the “Fixed Rate Cumulative Perpetual Preferred Stock, Series A” (the “Designated Preferred Stock”). The authorized number of shares of Designated Preferred Stock shall be 8,000.

 

Section 2. General Matters. Each share of Designated Preferred Stock shall be identical in all respects to every other share of Designated Preferred Stock. The Designated Preferred Stock shall be perpetual, subject to the provisions of Section 6 hereof. The Designated Preferred Stock shall rank equally with Parity Stock and shall rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any dissolution, liquidation or winding up of the Corporation.

 

Section 3. Definitions. As used herein with respect to Designated Preferred Stock:

 

(a)           “Applicable Dividend Rate” means (i) during the period from the Original Issue Date to, but excluding, the first day of the first Dividend Period commencing on or after the fifth anniversary of the Original Issue Date, 7.25% per annum and (ii) from and after the first day of the first Dividend Period commencing on or after the fifth anniversary of the Original Issue Date, 9% per annum.

 

(b)           “Business Combination” means a merger, consolidation, statutory share exchange or similar transaction that requires the approval of the Corporation’s shareholders.

 

(c)           “Business Day” means any day except Saturday, Sunday and any day on which banking institutions in the State of Indiana generally are authorized or required by law or other governmental actions to close.

 

(d)           “Bylaws” means the bylaws of the Corporation, as they may be amended from time to time.

 

(e)           “Certificate of Designations” means the Certificate of Designations or comparable instrument relating to the Designated Preferred Stock, as it may be amended from time to time.

 

(f)           “Charter” means the Corporation’s articles of incorporation or similar organizational document.

 

(g)           “Common Stock” means the common stock, without par value, of the Corporation.

 

(h)           “Dividend Payment Date” means March 15, June 15, September 15 and December 15 of each year.

 

(i)           “Dividend Period” has the meaning set forth in Section 4(a).

 

(j)           “Dividend Record Date” has the meaning set forth in Section 4(a).

 

(k)           “Junior Stock” means the Common Stock and any other class or series of stock of the Corporation the terms of which expressly provide that it ranks junior to Designated Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Corporation.

 

(l)           “Liquidation Amount” means $1,000 per share of Designated Preferred Stock.

 

(m)           “Liquidation Preference” has the meaning set forth in Section 5(a).

 

(n)           “Original Issue Date” means the date on which shares of Designated Preferred Stock are first issued.

 

(o)           “Parity Stock” means any class or series of stock of the Corporation (other than Designated Preferred Stock) the terms of which do not expressly provide that such class or series will rank senior or junior to Designated Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Corporation (in each case without regard to whether dividends accrue cumulatively or non-cumulatively).

 

(p)           “Preferred Director” has the meaning set forth in Section 8(b).

 

(q)           “Preferred Stock” means any and all series of preferred stock of the Corporation, including the Designated Preferred Stock.

 

(r)           “Share Dilution Amount” has the meaning set forth in Section 4(b).

 

(s)           “Voting Parity Stock” means, with regard to any matter as to which the holders of Designated Preferred Stock are entitled to vote as specified in Sections 8(a) and 8(b), any and all series of Parity Stock upon which like voting rights have been conferred and are exercisable with respect to such matter.

 

 

(a)           Rate. Holders of Designated Preferred Stock shall be entitled to receive, on each share of Designated Preferred Stock if, as and when declared by the Board of Directors or any duly authorized committee of the Board of Directors, but only out of assets legally available therefor, cumulative cash dividends with respect to each Dividend Period (as defined below) at a rate per annum equal to the Applicable Dividend Rate on

 

(i) the Liquidation Amount per share of Designated Preferred Stock and (ii) the amount of accrued and unpaid dividends for any prior Dividend Period on such share of Designated Preferred Stock, if any. Such dividends shall begin to accrue and be cumulative from the Original Issue Date, shall compound on each subsequent Dividend Payment Date (i.e., no dividends shall accrue on other dividends unless and until the first Dividend Payment Date for such other dividends has passed without such other dividends having been paid on such date) and shall be payable quarterly in arrears on each Dividend Payment Date, commencing with the first such Dividend Payment Date to occur at least 20 calendar days after the Original Issue Date. In the event that any Dividend Payment Date would otherwise fall on a day that is not a Business Day, the dividend payment due on that date will be postponed to the next day that is a Business Day and no additional dividends will accrue as a result of that postponement. The period from and including any Dividend Payment Date to, but excluding, the next Dividend Payment Date is a “Dividend Period,” provided that the initial Dividend Period shall be the period from and including the Original Issue Date to, but excluding, the next Dividend Payment Date.

 

Dividends that are payable on Designated Preferred Stock in respect of any Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The amount of dividends payable on Designated Preferred Stock on any date prior to the end of a Dividend Period, and for the initial Dividend Period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months, and actual days elapsed over a 30-day month.

 

Dividends that are payable on Designated Preferred Stock on any Dividend Payment Date will be payable to holders of record of Designated Preferred Stock as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day immediately preceding such Dividend Payment Date or such other record date fixed by the Board of Directors or any duly authorized committee of the Board of Directors that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.

 

Holders of Designated Preferred Stock shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on Designated Preferred Stock as specified in this Section 4 (subject to the other provisions of the Certificate of Designations).

 

(b)           Priority of Dividends. So long as any share of Designated Preferred Stock remains outstanding, no dividend or distribution shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than dividends payable solely in shares of Common Stock) or Parity Stock, subject to the immediately following paragraph in the case of Parity Stock, and no Common Stock, Junior Stock or Parity Stock shall be, directly or indirectly, purchased, redeemed or otherwise acquired for consideration by the Corporation or any of its subsidiaries unless all accrued and unpaid dividends for all past Dividend Periods, including the latest completed Dividend Period (including, if applicable as provided in Section 4(a) above, dividends on such amount), on all outstanding shares of Designated Preferred Stock have been or are contemporaneously declared and paid in full (or have been declared and a sum sufficient for the payment thereof has been set aside for the benefit of the holders of shares of Designated Preferred Stock on the applicable record date). The foregoing limitation shall not apply to (i) redemptions, purchases or other acquisitions of shares of Common Stock or other Junior

 

Stock in connection with the administration of any employee benefit plan in the ordinary course of business (including purchases to offset the Share Dilution Amount (as defined below) pursuant to a publicly announced repurchase plan) and consistent with past practice, provided that any purchases to offset the Share Dilution Amount shall in no event exceed the Share Dilution Amount; (ii) purchases or other acquisitions by a broker-dealer subsidiary of the Corporation solely for the purpose of market-making, stabilization or customer facilitation transactions in Junior Stock or Parity Stock in the ordinary course of its business; (iii) purchases by a broker-dealer subsidiary of the Corporation of capital stock of the Corporation for resale pursuant to an offering by the Corporation of such capital stock underwritten by such broker-dealer subsidiary; (iv) any dividends or distributions of rights or Junior Stock in connection with a shareholders’ rights plan or any redemption or repurchase of rights pursuant to any shareholders’ rights plan; (v) the acquisition by the Corporation or any of its subsidiaries of record ownership in Junior Stock or Parity Stock for the beneficial ownership of any other persons (other than the Corporation or any of its subsidiaries), including as trustees or custodians; and (vi) the exchange or conversion of Junior Stock for or into other Junior Stock or of Parity Stock for or into other Parity Stock (with the same or lesser aggregate liquidation amount) or Junior Stock, in each case, solely to the extent required pursuant to binding contractual agreements entered into prior to the Original Issue Date or any subsequent agreement for the accelerated exercise, settlement or exchange thereof for Common Stock. “Share Dilution Amount” means the increase in the number of diluted shares outstanding (determined in accordance with generally accepted accounting principles in the United States, and as measured from the date of the Corporation’s consolidated financial statements most recently filed with the Securities and Exchange Commission prior to the Original Issue Date) resulting from the grant, vesting or exercise of equity-based compensation to employees and equitably adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction.

 

When dividends are not paid (or declared and a sum sufficient for payment thereof set aside for the benefit of the holders thereof on the applicable record date) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period related to such Dividend Payment Date) in full upon Designated Preferred Stock and any shares of Parity Stock, all dividends declared on Designated Preferred Stock and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends declared shall bear the same ratio to each other as all accrued and unpaid dividends per share on the shares of Designated Preferred Stock (including, if applicable as provided in Section 4(a) above, dividends on such amount) and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) (subject to their having been declared by the Board of Directors or a duly authorized committee of the Board of Directors out of legally available funds and including, in the case of Parity Stock that bears cumulative dividends, all accrued but unpaid dividends) bear to each other. If the Board of Directors or a duly authorized committee of the Board of Directors determines not to pay any dividend or a full

 

dividend on a Dividend Payment Date, the Corporation will provide written notice to the holders of Designated Preferred Stock prior to such Dividend Payment Date.

 

Subject to the foregoing, and not otherwise, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or any duly authorized committee of the Board of Directors may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and holders of Designated Preferred Stock shall not be entitled to participate in any such dividends.

 

 

(a)           Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Designated Preferred Stock shall be entitled to receive for each share of Designated Preferred Stock, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to shareholders of the Corporation, subject to the rights of any creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to Designated Preferred Stock as to such distribution, payment in full in an amount equal to the sum of (i) the Liquidation Amount per share and (ii) the amount of any accrued and unpaid dividends (including, if applicable as provided in Section 4(a) above, dividends on such amount), whether or not declared, to the date of payment (such amounts collectively, the “Liquidation Preference”).

 

(b)           Partial Payment. If in any distribution described in Section 4(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay in full the amounts payable with respect to all outstanding shares of Designated Preferred Stock and the corresponding amounts payable with respect of any other stock of the Corporation ranking equally with Designated Preferred Stock as to such distribution, holders of Designated Preferred Stock and the holders of such other stock shall share ratably in any such distribution in proportion to the full respective distributions to which they are entitled.

 

(c)           Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Designated Preferred Stock and the corresponding amounts payable with respect of any other stock of the Corporation ranking equally with Designated Preferred Stock as to such distribution has been paid in full, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.

 

(d)           Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Designated Preferred Stock receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.

 

Section 6. Redemption.

 

(a)           Optional Redemption. Except as provided below, the Designated Preferred Stock may not be redeemed prior to the first Dividend Payment Date falling on or after the fifth anniversary of the Original Issue Date. On or after the first Dividend Payment Date falling on or after the fifth anniversary of the Original Issue Date, the Corporation, at its option, may redeem, in whole or in part, at any time and from time to time, out of funds legally available therefor, the shares of Designated Preferred Stock at the time outstanding, upon notice given as provided in Section 6(c) below, at a redemption price equal to the sum of (i) the Liquidation Amount per share and (ii) except as otherwise provided below, any accrued and unpaid dividends (including, if applicable as provided in Section 4(a) above, dividends on such amount) (regardless of whether any dividends are actually declared) to, but excluding, the date fixed for redemption.

 

The redemption price for any shares of Designated Preferred Stock shall be payable on the redemption date to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 4 above.

 

(b)           No Sinking Fund. The Designated Preferred Stock will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Designated Preferred Stock will have no right to require redemption or repurchase of any shares of Designated Preferred Stock.

 

(c)           Notice of Redemption. Notice of every redemption of shares of Designated Preferred Stock shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Designated Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Designated Preferred Stock. Notwithstanding the foregoing, if shares of Designated Preferred Stock are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the holders of Designated Preferred Stock at such time and in any manner permitted by such facility. Each notice of redemption given to a holder shall state: (1) the redemption date; (2) the number of shares of Designated Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.

 

(d)           Partial Redemption. In case of any redemption of part of the shares of Designated Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Board of Directors or a duly

 

authorized committee thereof may determine to be fair and equitable. Subject to the provisions hereof, the Board of Directors or a duly authorized committee thereof shall have full power and authority to prescribe the terms and conditions upon which shares of Designated Preferred Stock shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.

 

(e)           Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been deposited by the Corporation, in trust for the pro rata benefit of the holders of the shares called for redemption, with a bank or trust company doing business in the City of Indianapolis, Indiana, and having a capital and surplus of at least $500 million and selected by the Board of Directors, so as to be and continue to be available solely therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption from such bank or trust company, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.

 

(f)           Status of Redeemed Shares. Shares of Designated Preferred Stock that are redeemed, repurchased or otherwise acquired by the Corporation shall revert to authorized but unissued shares of Preferred Stock (provided that any such cancelled shares of Designated Preferred Stock may be reissued only as shares of any series of Preferred Stock other than Designated Preferred Stock).

 

Section 7. Conversion.    Holders of Designated Preferred Stock shares shall have no right to exchange or convert such shares into any other securities.

 

 

(a)           General. The holders of Designated Preferred Stock shall not have any voting rights except as set forth below or as otherwise from time to time required by law. To the extent the Designated Preferred Stock has voting rights as provided in this Section 8, holders of shares of Designated Preferred Stock will be entitled to one vote for each such share on any matter on which holders of Designated Preferred Stock are entitled to vote, including any action by written consent.

 

(b)           Preferred Stock Directors.  Whenever, at any time or times, dividends payable on the shares of Designated Preferred Stock have not been paid for an aggregate of six quarterly Dividend Periods or more, whether or not consecutive, the authorized number of directors of the Corporation shall automatically be increased by two and the holders of the Designated Preferred Stock shall have the right, with holders of shares of any one or more other classes or series of Voting Parity Stock outstanding at the time, voting together as a class, to elect two directors (hereinafter the “Preferred Directors” and each a “Preferred Director”) to fill such newly created directorships at the Corporation’s next annual meeting of shareholders (or at a special meeting called for that purpose prior to such next annual meeting) and at each subsequent annual meeting of

 

shareholders until all accrued and unpaid dividends for all past Dividend Periods, including the latest completed Dividend Period (including, if applicable as provided in Section 4(a) above, dividends on such amount), on all outstanding shares of Designated Preferred Stock have been declared and paid in full at which time such right shall terminate with respect to the Designated Preferred Stock, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of six quarters’ duration of the character above mentioned; provided that it shall be a qualification for election for any Preferred Director that the election of such Preferred Director shall not cause the Corporation to violate any corporate governance requirements of any securities exchange or other trading facility on which securities of the Corporation may then be listed or traded that listed or traded companies must have a majority of independent directors. Upon any termination of the right of the holders of shares of Designated Preferred Stock and Voting Parity Stock as a class to vote for directors as provided above, the Preferred Directors shall cease to be qualified as directors, the term of office of all Preferred Directors then in office shall terminate immediately and the authorized number of directors shall be reduced by the number of Preferred Directors elected pursuant hereto. Any Preferred Director may be removed at any time, with or without cause, and any vacancy created thereby may be filled, only by the affirmative vote of the holders a majority of the shares of Designated Preferred Stock at the time outstanding voting separately as a class together with the holders of shares of Voting Parity Stock, to the extent the voting rights of such holders described above are then exercisable. If the office of any Preferred Director becomes vacant for any reason other than removal from office as aforesaid, the remaining Preferred Director may choose a successor who shall hold office for the unexpired term in respect of which such vacancy occurred.

 

(c)           Class Voting Rights as to Particular Matters. So long as any shares of Designated Preferred Stock are outstanding, in addition to any other vote or consent of shareholders required by law or by the Charter, the vote or consent of the holders of at least 66 2/3% of the shares of Designated Preferred Stock at the time outstanding, voting as a separate class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:

 

(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate of Designations for the Designated Preferred Stock or the Charter to authorize or create or increase the authorized amount of, or any issuance of, any shares of, or any securities convertible into or exchangeable or exercisable for shares of, any class or series of capital stock of the Corporation ranking senior to Designated Preferred Stock with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;

 

(ii) Amendment of Designated Preferred Stock. Any amendment, alteration or repeal of any provision of the Certificate of Designations for the Designated Preferred Stock or the Charter (including, unless no vote on such merger or consolidation is required by Section 8(c)(iii) below, any amendment, alteration or repeal by means of a merger, consolidation or otherwise) so as to adversely affect the rights, preferences, privileges or voting powers of the Designated Preferred Stock; or

 

(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Designated Preferred Stock, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Designated Preferred Stock remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of Designated Preferred Stock immediately prior to such consummation, taken as a whole;

 

provided, however, that for all purposes of this Section 8(c), any increase in the amount of the authorized Preferred Stock, including any increase in the authorized amount of Designated Preferred Stock necessary to satisfy preemptive or similar rights granted by the Corporation to other persons prior to the Original Issue Date, or the creation and issuance, or an increase in the authorized or issued amount, whether pursuant to preemptive or similar rights or otherwise, of any other series of Preferred Stock, or any securities convertible into or exchangeable or exercisable for any other series of Preferred Stock, ranking equally with and/or junior to Designated Preferred Stock with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the rights, preferences, privileges or voting powers, and shall not require the affirmative vote or consent of, the holders of outstanding shares of the Designated Preferred Stock.

 

(d)           Changes after Provision for Redemption. No vote or consent of the holders of Designated Preferred Stock shall be required pursuant to Section 8(c) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of the Designated Preferred Stock shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been deposited in trust for such redemption, in each case pursuant to Section 6 above.

 

(e)           Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Designated Preferred Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules that the Board of Directors or any duly authorized committee of the Board of Directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Charter, the Bylaws, and applicable law and the rules of any national securities exchange or other trading facility on which Designated Preferred Stock is listed or traded at the time.

 

Section 9. Record Holders.    To the fullest extent permitted by applicable law, the Corporation and the transfer agent for Designated Preferred Stock may deem and treat the record holder of any share of Designated Preferred Stock as the true and lawful owner thereof for all

 

purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.

 

Section 10. Notices.    All notices or communications in respect of Designated Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Charter or Bylaws or by applicable law. Notwithstanding the foregoing, if shares of Designated Preferred Stock are issued in book-entry form through The Depository Trust Company or any similar facility, such notices may be given to the holders of Designated Preferred Stock in any manner permitted by such facility.

 

Section 11. No Preemptive Rights.    No share of Designated Preferred Stock shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.

 

Section 12. Replacement Certificates.    The Corporation shall replace any mutilated certificate at the holder’s expense upon surrender of that certificate to the Corporation. The Corporation shall replace certificates that become destroyed, stolen or lost at the holder’s expense upon delivery to the Corporation of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be reasonably required by the Corporation.

 

Section 13. Other Rights.    The shares of Designated Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Charter or as provided by applicable law.

 

IN WITNESS WHEREOF, River Valley Bancorp has caused this Certificate of Designations to be signed by Matthew P. Forrester, its President and Chief Executive Officer, this ____ day of ______________, 2009.

 

 

 

 

Agreement made this _____ day of __________, 2009, by and between River Valley Bancorp, an Indiana corporation (the “Issuer”), and River Valley Financial Bank, a federal savings association based in Madison, Indiana, as escrow agent (the “Escrow Agent”), whose addresses appear on the Information Sheet (Appendix A) attached to this Agreement.

 

WHEREAS, the Issuer proposes to offer the Securities as defined in the Information Sheet (Appendix A) for sale to investors on the terms as set forth on the Information Sheet; and

 

WHEREAS, the Issuer desires to establish an escrow account (the “Escrow Account”), to which subscription monies which are received by the Escrow Agent from the Issuer in connection with such offering are to be credited, and the Escrow Agent is willing to establish the Escrow Account on the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, the parties hereto hereby agree as follows:

 

1.           Information Sheet.  Each capitalized term not otherwise defined in this agreement shall have the meaning set forth for such term on the information sheet which is attached to this agreement and is incorporated by reference herein and made a part hereof (the “Information Sheet”).

 

2.           Establishment of the Escrow Account.

 

2.1           The Issuer has established an interest bearing trust account (the “Escrow Account”) with the Escrow Agent, account number __________.  The purpose of the Escrow Account is for the deposit of all subscription monies (checks or wire transfers) which are received by the Issuer from the prospective purchasers of the Securities and are delivered by the Issuer to the Escrow Agent, for the holding of amounts of subscription monies which are collected through the banking system, and the distribution of collected funds and interest accrued thereon, all as described herein.

 

2.2           The Offering Period, which shall be deemed to commence on August ___, 2009, shall consist of the number of days set forth on the Information Sheet.  The last day of the Offering Period is referred to herein as the “Termination Date.”

 

2.3           This Agreement shall terminate upon the sooner to occur of the date on which (i) the Escrow Agent disburses the full balance, including principal and interest, credited to the Escrow Account to the Issuer pursuant to Section 4.2 hereof (the “Closing Date”), (ii) the Escrow Agent disburses the funds in the Escrow Account pursuant to Section 3.5 hereof, or (iii) the Escrow Agent returns to each subscriber following the Termination Date all amounts payable by the Escrow Agent under Section 4.3 hereof. Upon the termination of this Agreement, the Issuer shall not deposit, and the Escrow Agent shall not accept, any additional amounts representing payments by prospective purchasers.

 

3.           Deposits to the Escrow Account.

 

3.1           The Issuer shall promptly deliver to the Escrow Agent all monies which it receives from prospective purchasers of the Securities, which monies shall be in the form of checks or wire transfers.  Upon the Escrow Agent’s receipt of such monies, they shall be credited to the Escrow Account.  All checks delivered to the Escrow Agent shall be payable to “River Valley Financial Bank, as Escrow Agent for River Valley Bancorp.”  Any check payable other than as required hereby shall be returned to the prospective purchaser, or if the Escrow Agent has insufficient information to do so, then to the Issuer by noon of the next business day following receipt of such check by the Escrow Agent, and such check shall be deemed not to have been delivered to the Escrow Agent pursuant to the terms of this Agreement.

 

3.2           Promptly after receiving subscription monies as described in Section 3.1, the Escrow Agent shall deposit the same into the Escrow Account.  Amounts of monies so deposited are hereinafter referred to as “Escrow Amounts.”  The Escrow Agent shall process all Escrow Amounts for collection.  Simultaneously with each deposit to the Escrow Account, the Issuer shall inform the Escrow Agent in writing of the name and address of the prospective purchaser and the aggregate dollar amount of the Securities subscribed for by such purchaser (collectively, the “Subscription Information”) and shall deposit a copy of the purchaser’s Investment Agreement with the Escrow Agent.

 

3.3           The Escrow Agent shall not be required to accept in the Escrow Account any amounts representing payments by prospective purchasers, whether by check or wire, except during the Escrow Agent’s regular business hours.

 

3.4           Only those Escrow Amounts, which have been deposited in the Escrow Account and which have been cleared and have been collected by the Escrow Agent, are herein referred to as the “Fund.”  The Escrow Agent bears no responsibility for checks returned for insufficient funds and is not to expend its own money to make the Fund whole.

 

3.5           If the proposed offering is terminated before the Termination Date and before a Closing Date has occurred, the Escrow Agent shall disburse the Fund and interest accrued thereon upon instructions in writing signed by the Issuer.

 

4.           Disbursement from the Escrow Account.

 

4.1           Promptly upon deposit of Escrow Amounts into the Escrow Account, the Escrow Agent shall notify the Issuer of such deposit activity in writing, by email or facsimile transmission.  The Escrow Agent shall invest and hold the proceeds as provided in this Agreement until it receives written notification from the Issuer that the offering for the Securities has closed.  The offering shall close no later than the Termination Date.

 

4.2           In the event that purchasers subscribe to a minimum of 5,000 Securities and the Minimum Amount is deposited with the Escrow Agent, the Issuer shall notify the Escrow Agent of the Closing Date, and on such date, upon the written authorization of the Issuer, the Escrow Agent shall promptly pay to the Issuer the full balance, including principal and interest, credited to the Escrow Account as of such date.

 

4.3           In the event that subscriptions are not accepted for a minimum of 5,000 Securities or the Minimum Amount is not on deposit with the Escrow Agent by the Termination Date, the offering will be terminated.  The Issuer shall immediately notify the Escrow Agent in writing of such termination and the Escrow Agent shall promptly thereafter return to each subscriber, as a complete distribution, such subscriber’s subscription amount, together with his pro-rata share of all interest earned on the Fund.  Such subscriber’s pro-rata share of interest earned on the Fund shall be calculated from the date of receipt of cleared funds to the Termination Date or such earlier date of closing as the case may be (based upon an average daily rate of return computed from all interest earned on all proceeds held in escrow for the entire period).

 

4.4           In the event that a subscriber’s subscription is not accepted, or if after a subscription is accepted, it is later determined that it must be returned, the Issuer shall immediately notify the Escrow Agent of this fact and the Escrow Agent shall promptly thereafter return to the subscriber, as a complete distribution, his subscription amount plus his pro-rata share of all interest earned on such amount.

 

4.5           In no event shall the Escrow Agent be required to take any action under this paragraph until it shall have received proper written notification from the Issuer.

 

5.           Rights, Duties and Responsibilities of Escrow Agent.  It is understood and agreed that the duties of the Escrow Agent are purely ministerial in nature and that:

 

5.1           The Escrow Agent shall notify the Issuer of the Escrow Amounts which have been deposited in the Escrow Account and of the amounts, constituting the Fund, which have cleared the banking system and have been collected by the Escrow Agent.

 

5.2           The Escrow Agent shall not be responsible for or be required to enforce any of the terms or conditions of any agreement entered into between the Issuer and any other party in connection with the offering of Securities.

 

5.3           The Escrow Agent shall not be required to accept from the Issuer any Subscription Information pertaining to prospective purchasers unless such Subscription Information is accompanied by checks or wire transfers meeting the requirements of Section 3.1; however, the Escrow Agent shall notify the Issuer within a reasonable time of any discrepancy between the amount set forth in any Subscription Information or Investment Agreement and the amount delivered to the Escrow Agent therewith.  Such amount need not be accepted for deposit in the Escrow Account until such discrepancy has been resolved.

 

5.4           The Escrow Agent shall be under no duty or responsibility to enforce collection of any check delivered to it hereunder.  The Escrow Agent, within a reasonable time, shall return to the Issuer any check received which is dishonored, together with the Subscription Information, and the Investment Agreement if any, which accompanied such check.

 

5.5           The Escrow Agent shall be entitled to rely upon the accuracy, shall be protected in acting in reliance upon the contents, and assume the genuineness of any notice, instruction, certificate, signature, instrument or other document which is given to the Escrow Agent pursuant to this Agreement without the necessity of the Escrow Agent verifying the truth

 

or accuracy thereof.  The Escrow Agent shall not be obligated to make any inquiry as to the authority, capacity, existence or identity of any such person purporting to give any such notice or instructions or to execute any such certificate, instrument or other document.

 

5.6           If the Escrow Agent is uncertain as to its duties or rights hereunder or shall receive instructions with respect to the Escrow Account, the Escrow Agent or the Fund, which in its sole determination, are in conflict either with other instructions received by it or with any provisions of this Agreement, it shall be entitled to hold the Escrow Amounts, the Fund or a portion thereof, in the Escrow Account pending the resolution of such  uncertainty to the Escrow Agent’s sole satisfaction, by final judgment of a court or courts of competent jurisdiction or otherwise; or the Escrow Agent, at its sole option, may deposit the Fund (and any other Escrow Amounts that thereafter become part of the Fund) with the Clerk of a court of competent jurisdiction in a proceeding to which all parties in interest are joined.  By holding the Escrow Amounts, the Fund or any portion thereof, the Escrow Agent shall not become liable to the undersigned or to any other person, due to its failure to comply with any adverse claim, demand or instruction.  Upon the deposit by the Escrow Agent of the Fund and Interest earned thereon with the Clerk of any court, the Escrow Agent shall be relieved of all further obligations and released from all liability hereunder.

 

The Escrow Agent’s duties and responsibilities shall be determined solely by the express provisions of this Agreement.  In no event shall the Escrow Agent be required to notify or obtain the consent, approval, authorization or order of any court or governmental body pursuant to the transactions contemplated by the provisions of this Agreement.

 

In no event will the Escrow Agent be required to release any funds which constitute the proceeds of a check deposited in escrow until at least five business days have elapsed from the date of the deposit.

 

None of the provisions contained in this Agreement shall require the Escrow Agent to use or advance its own funds in the performance of any of its duties or the exercise of any of its rights or powers hereunder.

 

In no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

The Escrow Agent may execute any of its trusts or powers and perform any of its duties under this Agreement by or through attorneys, agents or employees.

 

The Escrow Agent may at any time resign and be discharged from its duties and obligations hereunder by giving notice to the Issuer of such resignation specifying when such resignation shall take effect.  The Issuer shall promptly appoint a successor Escrow Agent by the resignation date.  If the Issuer does not appoint a successor by the resignation date, the resigning Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor Escrow Agent, which court may thereupon, appoint a successor Escrow Agent.  The Escrow Agent shall have the right to withhold an amount equal to the amount due and owing to

 

the Escrow Agent, plus any costs and expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow Agent in connection with the termination of the Escrow Agreement.

 

Any corporation, association or other entity into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or otherwise transfer all or substantially all of its corporate trust assets and business or any corporation, association or other entity resulting from any such conversion, sale, merger, consolidation or other transfer to which it is a party, ipso facto, shall be and become successor Escrow Agent hereunder, vested with all other matters as was its predecessor, without the execution or filing of any instrument or any further act on the part of the parties hereto, notwithstanding anything herein to the contrary.

 

5.7           The Escrow Agent shall not be liable for any action taken or omitted hereunder, or for the misconduct of any employee or agent appointed by it, except in the case of willful misconduct or gross negligence.  The Escrow Agent shall be entitled to consult with counsel of its own choosing and shall not be liable for any action taken, suffered or omitted by it in accordance with the advice of such counsel.

 

6.           Amendment.  This Agreement may be altered or amended only with the written consent of the Issuer and the Escrow Agent.

 

7.           Representations and Warranties.  The Issuer hereby represents and warrants to the Escrow Agent that:

 

7.1           No party other than the parties hereto and the prospective purchasers have, or shall have, any lien, claim or security interest in the Escrow Amounts or the Fund or any part thereof.

 

7.2           The Questionnaire and Investment Agreement submitted with each deposit shall, at the time of submission and at the time of the disbursement of the Fund, be deemed a representation and warranty that such deposit represents a bona fide payment by the purchaser described therein for the amount of Securities subscribed for.

 

7.3           All of the information contained in the Information Sheet is, as of the date hereof, and will be, at the time of any disbursement of the Fund, true and correct.

 

7.4           It has solicited, and continues to solicit the advice of its counsel regarding compliance with all applicable state and federal securities laws in connection with the offer and the sale of the Securities and that they will act in accordance with such advice.  The Escrow Agent shall have no responsibility to ensure compliance with securities laws and such responsibility rests solely with the Issuer.  The Escrow Agent makes no representations and has no responsibilities as to the validity, value or genuineness of the offering or the Securities.

 

8.           Fees and Expenses.  The Escrow Agent shall be entitled to fees as set forth on Appendix B.  In addition, the Issuer agrees to reimburse the Escrow Agent for any reasonable expenses incurred in connection with this Agreement, including, but not limited to, reasonable counsel fees.  Upon receipt of the Minimum Amount, the Escrow Agent shall have a lien upon the Fund to the extent of its fees and expenses for services as Escrow Agent.

 

9.           Indemnification and Contribution.

 

9.1           The Issuer agrees to indemnify the Escrow Agent and its officers, directors, employees, agents and shareholders (collectively referred to as the “Indemnitees”) against, and hold them harmless of and from, any and all loss, liability, cost, damage, penalty, fine and expense, including without limitation, reasonable counsel fees, which the Indemnitees may suffer or incur by reason of any action, claim or proceeding brought against the Indemnitees arising out of or relating in any way to this Agreement or any transaction to which this Agreement relates, unless such action, claim or proceeding is the result of the willful misconduct or gross negligence of the Indemnitees.  In addition to and not in limitation of the immediately preceding sentence, the Issuer also agrees to indemnify and hold Indemnitees harmless from and against any and all Losses that may be imposed on, incurred by, or asserted against, the Indemnitees or any of them for following any instructions or other directions upon which the Escrow Agent is authorized to rely pursuant to the terms of this Agreement.

 

9.2           If the indemnification provided for in Section 9.1 is applicable, but for any reason is held to be unavailable, the Issuer shall contribute such amounts as are just and equitable to pay, or to reimburse the Indemnitees for, the aggregate of any and all losses, liabilities, costs, damages, penalties, fines and expenses, including counsel fees, amount paid in settlement of, any action, claim or proceeding arising out of or relating in any way to any actions or omissions of the Issuer.

 

9.3           The provisions of this Article 9 shall survive any termination of this Agreement, whether by disbursement of the Fund or otherwise.

 

10.           Governing Law and Assignment.  This Agreement shall be construed in accordance with and governed by the laws of the State of Indiana and shall be binding upon the parties hereto and their respective successors and assignments; provided, however, that any assignment or transfer by any party of its rights under this Agreement or with respect to the Escrow Amounts or the Fund shall be void as against the Escrow Agent unless (a) written notice thereof shall be given to the Escrow Agent; and (b) the Escrow Agent shall have the consented writing to such assignment or transfer.

 

11.           Notices.  All notices required to be given in connection with this Agreement shall be sent by registered or certified mail, return receipt requested, or by hand delivery with receipt acknowledged, or by the Express Mail service offered by the United States Post Office or overnight courier and addressed at their respective addresses set forth on the Information Sheet; provided, however, that all information required to disburse funds may be delivered by email or facsimile transmission, followed up with hard copy original.  Faxed or pdf copies of signatures will be considered as valid originals.

 

12.           Severability.  If any provision of this Agreement or the application thereof to any person or circumstance shall be determined to be invalid or unenforceable, the remainder hereof and the application of said provision to any other circumstances or situation shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law.

 

13.           Execution in Several Counterparts.  This Agreement may be executed in several counterparts or by separate instruments, and all such counterparts and instruments shall constitute one agreement, binding on all of the parties hereto.

 

14.           Entire Agreement.  This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings (written or oral) of the parties in connection therewith.

 

(Signatures on following page)

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first written above.

 

			River Valley Bancorp
			By:
				Matthew P. Forrester, President and CEO
River Valley Financial Bank, by its signature hereon, accepts the escrow agency created by this Agreement, and will carry out its duties as Escrow Agent pursuant to the terms and conditions contained in this Agreement.
River Valley Financial Bank, as Escrow Agent
By:

APPENDIX A

ESCROW AGREEMENT INFORMATION SHEET

1.	The Issuer
	Name:	River Valley Bancorp
		430 Clifty Drive
		Madison, IN  47250
		Attention: Matthew P. Forrester
		Fax: (812) 273-4944
2.	The Escrow Agent
	Name:	River Valley Financial Bank
	Address:	430 Clifty Drive
		Madison, IN  47250
		Attention: Matthew P. Forrester
		Fax: (812) 273-4944

The Securities: Fixed Rate Cumulative Perpetual Preferred Stock, Series A, without par value and with a liquidation preference of $1,000 per share.

$5,000,000 (the “Minimum Amount”) required for disbursement of the Escrow Account.

Maximum Amount of Offering:  $8,000,000.

Offering Period:

From the Effective Date until the earlier of the date subscriptions for 8,000 Securities are received or September 30, 2009, unless extended by the Issuer, following written notice to the Escrow Agent, to a date no later than December 31, 2009.

APPENDIX B

SCHEDULE OF FEES FOR SERVICES AS ESCROW AGENT

FOR RIVER VALLEY BANCORP PREFERRED STOCK OFFERING

Escrow Agent Administrative Fee

Flat fee of $_____, plus $___ per Investment Agreement processed by Escrow Agent