PROSPECTUS SUPPLEMENT Rule 424(b)(3)
Registration No. 333-2488
WAYNE BANCORP, INC.
WAYNE SAVINGS BANK, F.S.B.
401(K) PROFIT SHARING RETIREMENT PLAN
This Prospectus Supplement relates to the offer and sale to participants
(the "Participants") in the Wayne Savings Bank, F.S.B. 401(k) Profit Sharing
Retirement Plan ("Plan" or the "401(k) Plan") of participation interests and
shares of Wayne Bancorp, Inc. common stock, par value $.01 per share (the
"Common Stock"), as set forth herein.
In connection with the proposed conversion of Wayne Savings Bank, F.S.B.
(the "Bank" or "Employer") from a mutual savings bank to a stock savings bank, a
holding company, Wayne Bancorp, Inc. (the "Company"), has been formed. The
simultaneous conversion of the Bank to the stock form, the issuance of the
Bank's common stock to the Company and the offer and sale of the Company's
Common Stock to the public are herein referred to as the "Conversion." The Board
of Directors of the Bank has amended the Plan to permit the investment of Plan
assets in Common Stock. The Plan will permit Participants to direct the trustee
of the Plan to purchase Common Stock with amounts in the Plan attributable to
such Participants. This Prospectus Supplement relates to the initial election of
a Participant to direct the purchase of Common Stock in connection with the
Conversion and also to elections to purchase Common Stock after the Conversion.
The Prospectus dated May 13, 1996 of the Company (the "Prospectus") which
is attached to this Prospectus Supplement, includes detailed information with
respect to the Conversion, the Common Stock and the financial condition, results
of operations and business of the Bank and the Company. This Prospectus
Supplement, which provides detailed information with respect to the Plan, should
be read only in conjunction with the Prospectus. Terms not otherwise defined in
this Prospectus Supplement are defined in the Plan or the Prospectus.
A PARTICIPANT'S ELIGIBILITY TO PURCHASE COMMON STOCK IN THE CONVERSION
THROUGH THE PLAN IS SUBJECT TO THE PARTICIPANT'S GENERAL ELIGIBILITY TO PURCHASE
SHARES OF COMMON STOCK IN THE CONVERSION AND THE MAXIMUM AND MINIMUM PURCHASE
LIMITATIONS SET FORTH IN THE PLAN OF CONVERSION. SEE "THE CONVERSION" AND
"LIMITATIONS ON COMMON STOCK PURCHASES" IN THE PROSPECTUS.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY EACH
PARTICIPANT, SEE "RISK FACTORS" IN THE PROSPECTUS BEGINNING ON PAGE 15 OF THE
PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT SUPERVISION, THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY STATE SECURITIES COMMISSION, OR ANY OTHER AGENCY,
NOR HAS SUCH COMMISSION, DEPARTMENT, CORPORATION OR ANY STATE SECURITIES
COMMISSION OR OTHER AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MAY 13, 1996.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE PROSPECTUS OR THIS PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, BANK OR THE PLAN. THIS PROSPECTUS SUPPLEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE BANK OR THE PLAN SINCE THE DATE HEREOF, OR THAT THE INFORMATION
HEREIN CONTAINED OR INCORPORATED BY REFERENCE IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT SHOULD BE READ ONLY IN
CONJUNCTION WITH THE PROSPECTUS THAT IS ATTACHED HERETO AND SHOULD BE RETAINED
FOR FUTURE REFERENCE.
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TABLE OF CONTENTS
PAGE
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The Offering ............................................................. 4
Securities Offered ................................................. 4
Election to Purchase Common Stock in the Conversion ................ 4
Value of Participation Interests ................................... 4
Method of Directing Transfer ....................................... 4
Time for Directing Transfer ........................................ 4
Irrevocability of Transfer Direction ............................... 4
Direction to Purchase Common Stock After the Conversion ............ 4
Purchase Price of Common Stock ..................................... 5
Nature of a Participant's Interest in the Common Stock ............. 5
Voting and Tender Rights of Common Stock ........................... 5
Description of the Plan .................................................. 5
Introduction ....................................................... 5
Eligibility and Participation ...................................... 6
Contributions Under the Plan ....................................... 6
Limitations on Contributions ....................................... 7
Investment of Contributions ........................................ 8
Benefits Under the Plan ............................................ 10
Withdrawals and Distributions From the Plan ........................ 11
Administration of the Plan ......................................... 11
Reports to Plan Participants ....................................... 12
Plan Administrator ................................................. 12
Amendment and Termination .......................................... 12
Merger, Consolidation or Transfer .................................. 12
Federal Income Tax Consequences .................................... 12
ERISA and Other Qualifications ..................................... 14
Restrictions on Resale ............................................. 14
SEC Reporting and Short-Swing Profit Liability ..................... 15
Legal Opinions ........................................................... 15
Investment Form .......................................................... 16
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THE OFFERING
SECURITIES OFFERED
The securities offered hereby are participation interests in the Plan and
up to 33,180 shares, at the actual purchase price of $10.00 per share, of Common
Stock which may be acquired by the Plan for the accounts of employees
participating in the Plan. The Company is the issuer of the Common Stock. Only
employees of the Bank may participate in the Plan. Information with regard to
the Plan is contained in this Prospectus Supplement and information with regard
to the Conversion and the financial condition, results of operations and
business of the Bank and the Company is contained in the attached Prospectus.
The address of the principal executive office of the Bank is 1195 Hamburg
Turnpike, Wayne, New Jersey 07474. The Bank's telephone number is (201)
305-5500.
ELECTION TO PURCHASE COMMON STOCK IN THE CONVERSION
In connection with the Bank's Conversion, the Bank has amended the Plan to
permit each Participant to direct the trustee of the Plan ("Trustee") to
transfer all or part of the funds which represent his or her beneficial interest
in the assets of the Plan to an employer stock fund ("Employer Stock Fund") and
to use such funds to purchase Common Stock issued in connection with the
Conversion. Amounts transferred will include salary reduction contributions,
Bank matching contributions, Bank discretionary contributions and rollover
contributions, if any. The Employer Stock Fund will consist of investments in
the Common Stock made on or after the effective date of the Conversion. Funds
not transferred to the Employer Stock Fund will remain in the other investment
funds of the Plan as directed by the Participant. A PARTICIPANT'S ABILITY TO
TRANSFER FUNDS TO THE EMPLOYER STOCK FUND IN THE CONVERSION IS SUBJECT TO THE
PARTICIPANT'S GENERAL ELIGIBILITY TO PURCHASE SHARES OF COMMON STOCK IN THE
CONVERSION. FOR GENERAL INFORMATION AS TO THE ABILITY OF PARTICIPANTS TO
PURCHASE SHARES IN THE CONVERSION, SEE "THE CONVERSION SUBSCRIPTION OFFERING AND
SUBSCRIPTION RIGHTS" IN THE ATTACHED PROSPECTUS.
VALUE OF PARTICIPATION INTERESTS
The assets of the Plan are valued on an ongoing basis and each Participant
is informed of the value of his or her beneficial interest in the Plan on a
quarterly basis. This value represents the market value of past contributions to
the Plan by the Bank and by the Participants and earnings thereon, less previous
withdrawals.
METHOD OF DIRECTING TRANSFER
The last page of this Prospectus Supplement is an investment form to direct
a transfer to the Employer Stock Fund (the "Investment Form"). If a Participant
wishes to transfer all or part of his or her beneficial interest in the assets
of the Plan to the Employer Stock Fund to purchase Common Stock issued in
connection with the Conversion, he or she should indicate that decision in Part
2 of the Investment Form. If a Participant does not wish to make such an
election, he or she does not need to take any action.
TIME FOR DIRECTING TRANSFER
The deadline for submitting a direction to transfer amounts to the Employer
Stock Fund in order to purchase Common Stock issued in connection with the
Conversion is June 21, 1996. The Investment Form should be returned to the
Bank's Human Resources Department by 12:00 noon, Eastern Time, on such date.
IRREVOCABILITY OF TRANSFER DIRECTION
A Participant's direction to transfer amounts credited to such
Participant's account in the Plan to the Employer Stock Fund in order to
purchase shares of Common Stock in connection with the Conversion shall be
irrevocable. Participants, however, will be able to direct the reinvestment of
their accounts ("Accounts") under the Plan after the Conversion as explained
below.
DIRECTION TO PURCHASE COMMON STOCK AFTER THE CONVERSION
After the Conversion, a Participant will be able to direct that a certain
percentage of such Participant's interests in the trust assets ("Trust") be
transferred to the Employer Stock Fund and invested in Common Stock, or to the
other investment funds available under the Plan. Alternatively, a Participant
may direct that a certain percentage of such
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Participant's interest in the Employer Stock Fund be transferred from the
Employer Stock Fund to the other investment funds available under the Plan.
Participants will be permitted to direct that future contributions made to the
Plan by or on their behalf be invested in Common Stock. Following the initial
election, the allocation of a Participant's interest in the Employer Stock Fund
may be changed by the Participant, with each change generally becoming effective
on the first day of the calendar quarter commencing at least thirty days after
the Plan Administrator receives a written notice for such change. Special
restrictions apply to transfers directed by those Participants who are executive
officers, directors and principal stockholders of the Company who are subject to
the provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
PURCHASE PRICE OF COMMON STOCK
The funds transferred to the Employer Stock Fund for the purchase of Common
Stock in connection with the Conversion will be used by the Trustee to purchase
shares of Common Stock. The price paid for such shares of Common Stock will be
the same price as is paid by all other persons who purchase shares of Common
Stock in the Conversion.
Any shares of Common Stock purchased by the Trustee after the Conversion
will be acquired in open market transactions. The prices paid by the Trustee for
shares of Common Stock will not exceed "adequate consideration" as defined in
Section 3(18) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
NATURE OF A PARTICIPANT'S INTEREST IN THE COMMON STOCK
The Common Stock will be held in the name of the Trustee for the Plan, as
trustee. Each Participant has an allocable interest in the investment funds of
the Plan but not in any particular assets of the Plan. Accordingly, a specific
number of shares of Common Stock will not be directly attributable to the
account of any Participant. Net earnings, e.g., gains and losses, are allocated
to the Account of a Participant based on the particular investment designations
of the Participants. Therefore, earnings with respect to a Participant's Account
should not be affected by the investment designations (including investments in
Common Stock) of other Participants.
VOTING AND TENDER RIGHTS OF COMMON STOCK
The Trustee generally will exercise voting and tender rights attributable
to all Common Stock held by the Trust as directed by Participants with interests
in the Employer Stock Fund. With respect to each matter as to which holders of
Common Stock have a right to vote, each Participant will be allocated a number
of voting instruction rights reflecting such Participant's proportionate
interest in the Employer Stock Fund. The percentage of shares of Common Stock
held in the Employer Stock Fund that are voted in the affirmative or negative on
each matter shall be the same percentage of the total number of voting
instruction rights that are exercised in either the affirmative or negative,
respectively. In the event of a tender offer for the Common Stock, the Plan
provides that each Participant will be allotted a number of tender instruction
rights reflecting such Participant's proportionate interest in the Employer
Stock Fund. The percentage of shares of Common Stock held in the Employer Stock
Fund that will be tendered will be the same as the percentage of the total
number of tender instruction rights that are exercised in favor of tendering.
The remaining shares of Common Stock held in the Employer Stock Fund will not be
tendered. The Plan makes provision for Participants to exercise their voting
instruction rights and tender instruction rights on a confidential basis.
DESCRIPTION OF THE PLAN
INTRODUCTION
Effective as of January 1, 1991, the Bank adopted the Plan. The Plan was
restated effective January 1, 1996. The Plan is a substitution and amendment of
an existing retirement plan originally established June 1, 1988. The Plan is
sponsored by Kingsbridge Pension Services Inc. The Plan is a profit sharing plan
with a cash or deferred arrangement established in accordance with the
requirements under Section 401(a) and Section 401(k) of the Internal Revenue
Code of 1986, as amended (the "Code").
The Bank intends that the Plan, in operation, will comply with the
requirements under Section 401(a) and Section 401(k) of the Code. The Bank will
adopt any amendments to the Plan that may be necessary to ensure the qualified
status of the Plan under the Code and applicable Treasury Regulations. The Bank
will submit the Plan to the
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IRS for a determination that the Plan, as amended, is qualified under Section
401(a) of the Code and that it satisfies the requirements for a qualified cash
or deferred arrangement under Section 401(k) of the Code.
Employee Retirement Income Security Act. The Plan is an "individual account
plan" other than a "money purchase pension plan" within the meaning of ERISA. As
such, the Plan is subject to all of the provisions of Title I (Protection of
Employee Benefit Rights) and Title II (Amendments to the Internal Revenue Code
Relating to Retirement Plans) of ERISA, except the funding requirements
contained in Part 3 of Title I of ERISA which by their terms do not apply to an
individual account plan (other than a money purchase pension plan). The Plan is
not subject to Title IV (Plan Termination Insurance) of ERISA. Neither the
funding requirements contained in Part 3 of Title I of ERISA nor the plan
termination insurance provisions contained in Title IV of ERISA will be extended
to Participants or beneficiaries under the Plan.
APPLICABLE FEDERAL LAW REQUIRES THE PLAN TO IMPOSE SUBSTANTIAL RESTRICTIONS
ON THE RIGHT OF A PLAN PARTICIPANT TO WITHDRAW AMOUNTS HELD FOR HIS BENEFIT
UNDER THE PLAN PRIOR TO THE PARTICIPANT'S TERMINATION OF EMPLOYMENT WITH THE
BANK. A SUBSTANTIAL FEDERAL TAX PENALTY MAY ALSO BE IMPOSED ON WITHDRAWALS MADE
PRIOR TO THE PARTICIPANT'S ATTAINMENT OF AGE 59 1/2, UNLESS A PARTICIPANT
RETIRES AS PERMITTED UNDER THE PLAN REGARDLESS OF WHETHER SUCH A WITHDRAWAL
OCCURS DURING HIS EMPLOYMENT WITH THE BANK OR AFTER TERMINATION OF EMPLOYMENT.
Reference to Full Text of Plan. The following statements are summaries of
certain provisions of the Plan. They are not complete and are qualified in their
entirety by the full text of the Plan, which is filed as an exhibit to the
registration statement filed with the Securities and Exchange Commission
("SEC"). Copies of the Plan are available to all employees by filing a request
with the Plan Administrator. Each employee is urged to read carefully the full
text of the Plan.
ELIGIBILITY AND PARTICIPATION
Any employee of the Bank is eligible to participate and will become a
Participant in the Plan on the first day of July and January immediately
following the later to occur of: (i) completion of six consecutive months of
service with the Bank and (ii) attainment of age 21. The Plan fiscal year is the
twelve consecutive month period ending December 31 ("Plan Year"). Employees who
are covered by a collective bargaining agreement under which retirement benefits
were the subject of good faith bargaining and leased employees are not eligible
to participate in the Plan. Directors who are not employees of the Bank are not
eligible to participate in the Plan.
As of May 13, 1996, there were approximately 40 employees eligible to
participate in the Plan, and approximately 31 employees had elected to
contribute to the Plan.
CONTRIBUTIONS UNDER THE PLAN
Participant Contributions. Each Participant in the Plan is permitted to
elect to reduce such Participant's Compensation (as defined below) pursuant to a
salary reduction agreement and have that amount contributed to the Plan on such
Participant's behalf. Such amounts are credited to the Participant's "401(k)
Account." The amount of each Participant's Compensation that may be contributed
to the Plan under the Participant's salary reduction agreement is limited by the
factors set forth below in the section entitled "Limitations on Contributions."
For purposes of the Plan, "Compensation" means a Participant's regular basic
salary, excluding bonuses and overtime ("Basic Salary"). Due to a statutory
change, effective January 1, 1994, the annual Compensation of each Participant
taken into account under the Plan is limited to $150,000 (adjusted for cost of
living as permitted by the Code). A Participant may elect to modify the amount
contributed to the Plan under such Participant's salary reduction agreement,
which changes generally become effective the first business day of the month
following receipt by the Plan Administrator of such change. Deferred
contributions are generally transferred by the Bank to the Trustee of the Plan
monthly.
Employer Contributions. The Bank currently makes an annual contribution to
the Plan of an amount equal to 50% of each Participant's annual contributions to
his or her 401(k) Account, provided that such contribution shall not exceed 3%
of the Participant's Basic Compensation. Such amounts are credited to the
Participants' "Regular Account." In addition, the Bank may make discretionary
profit sharing contributions to the Plan, which
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contributions, if any, will be allocated to each Participants' Regular Account
on the basis of proportionate compensation.
Rollover Amount from Other Plans. An employee eligible to participate in
the Plan, who has satisfied the service requirements, who, as a result of a plan
termination, termination of employment, disability, or attainment of age
59 1/2, has had distributed to such employee the entire interest in another
plan which meets the requirements of Section 401(a) of the Code (the "Other
Plan") may, in accordance with Section 402(a)(5) of the Code and procedures
approved at the discretion of the Trustee, transfer the distribution received
from the Other Plan to the Trustee. Any amounts rolled over from an Other Plan
will be contributed to the employee's "Rollover Account."
LIMITATIONS ON CONTRIBUTIONS
Limitations on Annual Additions and Benefits. Pursuant to the requirements
of the Code, the Plan provides that the amount of annual additions allocated to
each Participant's 401(k) Account during any Plan Year may not exceed the lesser
of 25% of the Participant's "Section 415 Compensation" for the Plan Year or
$30,000 (adjusted for increases in the cost of living as permitted by the Code).
Annual additions are the employer contributions, employee contributions and
forfeitures credited to the account of the employee for the Plan Year. A
Participant's "Section 415 Compensation" is a Participant's compensation from
the Bank, excluding any amount contributed to the Plan under a compensation
reduction agreement or any employer contribution to the Plan or to any other
plan of deferred compensation or any distributions from a plan of deferred
compensation. In addition, annual additions shall be limited to the extent
necessary to prevent the limitations for the combined plans of the Bank from
being exceeded. To the extent that these limitations would be exceeded by reason
of excess annual additions to the Plan with respect to a Participant, such
excess will be disposed of as follows:
(i) Any excess amount in the Participant's Account will be used to
reduce the Bank's contributions for such Participant in the next
Limitation Year, which is the same as the Plan Year, and each
succeeding Limitation Year if necessary;
(ii) If an excess amount still exists, and the Participant is NOT
covered by the Plan at the end of the Limitation Year, the excess
amount will be held unallocated in a suspense account which will
then be applied to reduce future Bank contributions for all
remaining Participants in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(iii)If a suspense account is in existence at any time during the
Limitation Year, it will not participate in the allocation of
investment gains and losses.
However, if the annual addition limitations are exceeded with respect to a
Participant in both the Plan and the defined benefit pension plan maintained by
the Bank, the Participant's annual additions under the Plan will be reduced.
$7,000 Limitation on 401(k) Plan Contributions. The annual amount of
deferred compensation of a Participant (when aggregated with any elective
deferrals of the Participant under any other employer plan, a simplified
employee pension plan or a tax-deferred annuity) may not exceed $7,000, adjusted
for increases in the cost of living as permitted by the Code (the limitation for
1996 is $9,500). Contributions in excess of this limitation ("excess deferrals")
will be included in the Participant's gross income for federal income tax
purposes in the year they are made. In addition, any such excess deferral will
again be subject to federal income tax when distributed by the Plan to the
Participant, unless the excess deferral (together with any income allocable
thereto) is distributed to the Participant not later than the first April 15th
following the close of the taxable year in which the excess deferral is made.
Any income on the excess deferral that is distributed not later than such date
shall be treated, for federal income tax purposes, as earned and received by the
Participant in the taxable year in which the excess deferral is made.
Limitation on Plan Contributions for Highly Compensated Employees. Sections
401(k) and 401(m) of the Code limit the amount of deferred compensation
contributed to the Plan in any Plan Year on behalf of Highly Compensated
Employees (defined below) in relation to the amount of deferred compensation
contributed by or on behalf of all other employees eligible to participate in
the Plan. Specifically, the actual deferral percentage for a plan year (i.e.,
the average of the ratios, calculated separately for each eligible employee in
each group, by dividing the amount of Deferred Compensation credited to the
401(k) Account of such eligible employee by such eligible employee's
compensation for the Plan Year) of the Highly Compensated Employees may not
exceed the greater of
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(a) 125% of the actual deferral percentage of all other eligible employees, or
(b) the lesser of (i) 200% of the actual deferral percentage of all other
eligible employees, or (ii) the actual deferral percentage of all other eligible
employees plus two percentage points. In addition, the actual contribution
percentage for a Plan Year (i.e., the average of the ratios calculated
separately for each eligible employee in each group, by dividing the amount of
employer contributions credited to the Regular Account of such eligible employee
by such eligible employee's compensation for the Plan Year) of the Highly
Compensated Employees may not exceed the greater of (a) 125% of the actual
contribution percentage of all other eligible employees, or (b) the lesser of
(i) 200% of the actual contribution percentage of all other eligible employees,
or (ii) the actual contribution percentage of all other eligible employees plus
two percentage points.
In general, a Highly Compensated Employee includes any employee who, during
the Plan Year or the preceding Plan Year, (1) was at any time a 5% owner (i.e.,
owns directly or indirectly more than 5% of the stock of the Employer, or stock
possessing more than 5% of the total combined voting power of all stock of the
Employer), (2) received compensation from the Employer in excess of $100,000
(3) received compensation from the Employer in excess of $66,000 and was in the
group consisting of the top 20% of employees when ranked on the basis of
compensation paid during the Plan Year, or (4) was at any time an officer of the
Employer and received compensation in excess of $60,000 (a "Highly Compensated
Employee"). The dollar amounts in the foregoing sentence are for 1995. Such
amounts are adjusted annually to reflect increases in the cost of living. If the
Employer does not have at least one officer whose annual compensation is in
excess of $60,000, then the highest paid officer of the Employer will be treated
as a Highly Compensated Employee.
In order to prevent the disqualification of the Plan, any amounts
contributed by Highly Compensated Employees that exceed the average deferral
limitation in any Plan Year ("excess contributions"), together with any income
allocable thereto, must be distributed to such Highly Compensated Employees
before the close of the following Plan Year. However, the Bank will be subject
to a 10% excise tax on any excess contributions unless such excess
contributions, together with any income allocable thereto, either are
recharacterized or are distributed before the close of the first 21 1/2 months
following the Plan Year to which such excess contributions relate. In addition,
in order to avoid disqualification of the Plan, any contributions by Highly
Compensated Employees that exceed the average contribution limitation in any
Plan Year ("excess aggregate contributions") together with any income allocable
thereto, must be distributed to such Highly Compensated Employees before the
close of the following Plan Year. However, the 10% excise tax will be imposed on
the Bank with respect to any excess aggregate contributions, unless such
amounts, plus any income allocable thereto, are distributed within 21 1/2 months
following the close of the Plan Year in which they arose.
Top-Heavy Plan Requirements. If for any Plan Year the Plan is a Top-Heavy
Plan (as defined below), then (i) the Bank may be required to make certain
minimum contributions to the Plan on behalf of non-key employees (as defined
below), and (ii) certain additional restrictions would apply with respect to the
combination of annual additions to the Plan and projected annual benefits under
any defined benefit plan maintained by the Bank.
In general, the Plan will be regarded as a "Top-Heavy Plan" for any Plan
Year if, as of the last day of the preceding Plan Year, the aggregate balance of
the Accounts of Participants who are Key Employees exceeds 60% of the aggregate
balance of the Accounts of all Participants. "Key Employees" generally include
any employee who, at any time during the Plan Year or any of the four preceding
Plan Years, is (1) an officer of the Bank having annual compensation in excess
of $60,000 who is in an administrative or policy-making capacity, (2) one of the
ten employees having annual compensation in excess of $30,000 and owning,
directly or indirectly, the largest interests in the employer, (3) a 5% owner of
the employer, (i.e., owns directly or indirectly more than 5% of the stock of
the employer, or stock possessing more than 5% of the total combined voting
power of all stock of the employer) or (4) a 1% owner of the employer having
annual compensation in excess of $150,000.
INVESTMENT OF CONTRIBUTIONS
All amounts credited to Participants' Accounts under the Plan are held in
the Trust which is administered by the Trustee. The Trustee is appointed by the
Bank's Board of Directors. The Plan provides that a Participant may direct the
Trustee to invest all or a portion of his Accounts in various managed investment
portfolios, described below. A Participant may elect to change his investment
directions with respect to both past contributions and for more additions to the
Participant's accounts invested in these investment alternatives. These
elections generally become effective on the first business day of the January,
April, July and October commencing at least thirty days following
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the day the Plan Administrator receives the Participant's written notice of the
elections. Any amounts credited to a Participant's Accounts for which investment
directions are not given will be invested by the Trustee in a passbook savings
account at the Bank.
Prior to the amendment of the Plan to permit Participant directed
investments including investment in the Employer Stock Fund, described below,
the accounts of Participants were invested by the Trustee in the following
choices:
A. A passbook savings account at the Bank, which account is credited
with interest at the highest annual rate paid by the Bank. The
rate of interest on the passbook account is subject to adjustment
at the discretion of the Bank. The Bank currently reviews
interest rates twice annually for adjustment.
B. Aetna Growth and Income Fund. This fund is invested in a
diversity of common stocks and securities convertible into common
stock with the intent to maximize total return through
appreciation and dividends. In addition to common stocks and
convertible securities, this fund may be invested in non
convertible preferred stocks, bonds, rights and warrants. It may
also maintain moderate reserves of cash and high grade,
short-term debt securities.
C. Aetna Bond Fund. This fund is invested primarily in long-term
bonds which have a rating within the four highest grades assigned
by Moodys Investors Service, Inc. or Standard & Poor's
Corporation. The Fund may also invest a portion of its assets in
commercial paper and other short-term investments, preferred and
common stocks and cash and cash equivalents.
D. Aetna Money Market Fund. This fund is invested primarily in
short-term money market debt securities. The Fund may invest in
instruments such as U.S. Treasury bills. notes and bonds,
negotiable bank certificates of deposit, commercial paper and
corporate bonds. The investments will generally mature within
thirty months, the average maturity is less than one year. The
money market fund is a short term investment and may only be
selected during an accumulation period.
E. The Aetna Managed Fund. This fund invests in a mixture of the
three sectors of the financial market: stocks, bonds and cash
equivalents. The fund may also use options, and convertible
securities to enhance returns and minimize risk on both stocks
and bonds, and financial futures as a temporary means to shift
exposure of the account quickly.
F. The Aetna Growth Fund. This mutual fund is invested in common
stocks, securities convertible into common stocks and other
securities that meet certain fundamental and technical standards
of selection seeking to have a better than average potential for
appreciation. Investment Research Corporation serves as
investment advisor to this fund. This investment fund is only
available during the accumulation period.
G. The Aetna Fixed Account. This fund guarantees to credit an annual
interest rate of at least 4% during the accumulation period.
H. The Aetna Guaranteed Accumulation Account permits the
participants to allocate amounts for specific periods of time and
know in advance the rate of interest that will be earned. During
each deposit period, a guaranteed term will be offered for a long
term (maturity of in excess of three years but no more than ten
years) and a short term classification (maturity of three years
or less).
Effective upon the Conversion, a Participant may invest all or a portion of
his Accounts in the investment alternatives described above and in the Employer
Stock Fund F, described below:
Employer Stock Fund--invests in common stock of the parent holding company,
Wayne Bancorp, Inc.
A Participant may elect (in increments of 5%), to have both past and future
contributions and additions to the Participant's Accounts invested either in the
Employer Stock Fund or in such other managed portfolios listed above. These
elections will generally be effective the first business day of the January,
April, July and December commencing at least thirty days following the plan
administrators' receipt of such investment directions. Any amounts credited to a
Participant's Accounts for which investment directions are not given will be
invested in the Passbook Savings Account Option. Because investment allocations
only are required to be made in increments of 5%, Participants can invest their
Accounts in each of the eight available investment funds. Lack of
diversification with
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<PAGE>
respect to the investment of a Participant's Account is not a significant risk
given the eight investment options available to Participants and the ability of
Participants to make investment designations quarterly.
The net gain (or loss) in the Accounts from investments other than the
Employer Stock Fund (including interest payments, dividends, realized and
unrealized gains and losses on securities, and expenses paid from the Trust) are
determined monthly during the Plan Year. Net gain (or loss) in the Account from
investments (including interest, dividends, realized and unrealized gain and
expenses paid) from the Employer Stock Fund will be determined weekly. For
purposes of such allocations, all assets of the Trust are valued at their fair
market value.
A. Funds under the Plan Prior to the Conversion.
Prior to the Conversion, contributions under the Plan were invested in the
Funds listed below. The annual percentage of returns on these funds, calculated
prior to any fees being charged to the portfolio for 1995 and 1994 was:
1995 1994
---- ----
A. Passbook Savings Account ..................... 5.94% 5.73%
B. Aetna Growth and Income Fund ................. 30.02% 30.96%
C. Aetna Bond Fund .............................. 16.25% 11.07%
D. Aetna Money Market Fund ...................... 4.27% 4.21%
E. The Aetna Managed Fund ....................... 25.09% 24.02%
F. The Aetna Growth Fund ........................ 28.89% 27.99%
G. The Aetna Fixed Account ...................... 5.75% 5.75%
H. The Aetna Guaranteed Accumulation Account
Short term .................................. 6.00% 4.01%
Long term ................................... 7.25% 7.50%
B. The Employer Stock Fund.
The Employer Stock Fund will consist of investments in Common Stock made on
and after the effective date of the Conversion. In connection with the
Conversion, pursuant to the attached Investment Form, Participants will be able
to change their investments at a time other than the normal monthly elective
periods. Any cash dividends paid on Common Stock held in the Employer Stock Fund
will be credited to a cash dividend subaccount for each Participant investing in
the Employer Stock Fund. The Trustee will, to the extent practicable, use all
amounts held by it in the Employer Stock Fund (except the amounts credited to
cash dividend subaccounts) to purchase shares of Common Stock. It is expected
that all purchases will be made at prevailing market prices. Under certain
circumstances, the Trustee may be required to limit the daily volume of shares
purchased. Pending investment in Common Stock, assets held in the Employer Stock
Fund will be placed in bank deposits and other short-term investments.
When Common Stock is purchased or sold, the cost or net proceeds are
charged or credited to the Accounts of Participants affected by the purchase or
sale. A Participant's Account will be adjusted to reflect changes in the value
of shares of Common Stock resulting from stock dividends, stock splits and
similar changes.
To the extent dividends are not paid on Common Stock held in the Employer
Stock Fund, the return on any investment in the Employer Stock Fund will consist
only of the market value appreciation of the Common Stock subsequent to its
purchase. Following the conversion, the Board of the Company may consider a
policy of paying dividends on the Common Stock, however, no decision has been
made by the Board of the Company regarding the amount or timing of dividends, if
any.
As of the date of this Prospectus Supplement, none of the shares of Common
Stock have been issued or are outstanding and there is no established market for
the Common Stock. Accordingly, there is no record of the historical performance
of the Employer Stock Fund.
INVESTMENTS IN THE EMPLOYER STOCK FUND MAY INVOLVE CERTAIN SPECIAL RISKS
ASSOCIATED WITH INVESTMENTS IN COMMON STOCK OF THE COMPANY. FOR A DISCUSSION OF
THESE RISK FACTORS, SEE "RISK FACTORS" IN THE PROSPECTUS.
BENEFITS UNDER THE PLAN
Vesting. A Participant has at all times a fully vested, nonforfeitable
interest in all of his 401(k) Account and Rollover Account and the earnings
thereon under the Plan. Employer matching contributions and employer
discretionary contributions credited to a Participant's Regular Account and the
earnings thereon, are also fully vested.
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WITHDRAWALS AND DISTRIBUTIONS FROM THE PLAN
APPLICABLE FEDERAL LAW REQUIRES THE PLAN TO IMPOSE SUBSTANTIAL RESTRICTIONS
ON THE RIGHT OF A PLAN PARTICIPANT TO WITHDRAW AMOUNTS HELD FOR HIS BENEFIT
UNDER THE PLAN PRIOR TO THE PARTICIPANT'S ATTAINMENT OF AGE 59 1/2 UNLESS A
PARTICIPANT RETIRES AS PERMITTED UNDER THE PLAN REGARDLESS OF WHETHER SUCH A
WITHDRAWAL OCCURS DURING HIS EMPLOYMENT WITH THE BANK.
Withdrawals Prior to Termination of Employment. In certain circumstances, a
Participant may make a withdrawal from his Accounts under the Plan pursuant to
the hardship distribution rules under the Plan. These requirements insure that
Participants have a true financial need before a withdrawal may be made. A
Participant may make a withdrawal from his 401(k) Contribution Account after the
age of 59 1/2.
No more than once each calendar year, a Participant may borrow from the
vested portion of his Regular Account, 401(k) Account and/or Rollover Account
any amount between $1,000 and $50,000, reduced by the Participant's highest
outstanding loan balance from the 401 (k) Plan during the preceding 12 months,
subject to certain limitations. Loans have an interest rate comparable to
current interest rates offered by major banking institutions. Repayments are
made through salary deductions.
Distribution Upon Retirement, Disability or Termination of Employment.
Payment of benefits to a Participant who retires, incurs a disability, or
otherwise terminates employment generally shall be made in a lump sum cash
payment. At the request of the Participant, the distribution may include an in
kind distribution of Common Stock of the Company credited to the Participant's
Account. A Participant whose total vested account balance equals or exceeds
$3,500 at the time of termination, may elect, in lieu of a lump sum payment, to
be paid in monthly, quarterly or annual installments over a fixed period of
time, not exceeding the Participant's life expectancy or the joint life and last
survivor expectancy of the Participant and his beneficiary, with the right to
take a lump sum distribution of the vested balance at any time during such
period. Benefit payments ordinarily shall be made not later than 60 days
following the end of the Plan Year in which occurs the later of the
Participant's: (i) termination of employment; (ii) attainment of age 65; (iii)
10th anniversary of commencement of participation in the Plan; but in no event
later than the April 1 following the calendar year in which the Participant
attains age 70 1/2. However, if the vested portion of the Participant's Account
balances exceeds $3,500, no distribution shall be made from the Plan prior to
the Participant's attaining age 65 unless the Participant consents to an earlier
distribution. Special restrictions apply to the distribution of Common Stock of
the Company to those Participants who are executive officers, directors and
principal shareholders of the Company who are subject to the provisions of
Section 16(b) of the Exchange Act.
Distribution upon Death. A Participant who dies prior to the benefit
commencement date for retirement, disability or termination of employment, and
who has a surviving spouse shall have his benefits paid to the surviving spouse
in a lump sum by the end of the Plan year following the date of his death, or if
the payment of his benefit had commenced before his death, in accordance with
the distribution method in effect at death. With respect to an unmarried
Participant, and in the case of a married Participant with spousal consent to
the designation of another beneficiary, payment of benefits to the beneficiary
of a deceased Participant shall be made in the form of a lump-sum payment in
cash or in Common Stock, or, if the payment of his benefit had commenced before
his death, in accordance with the distribution method in effect at death.
Nonalienation of Benefits. Except with respect to federal income tax
withholding and as provided with respect to a qualified domestic relations order
(as defined in the Code), benefits payable under the Plan shall not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind, either
voluntary or involuntary, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of any rights to
benefits payable under the Plan shall be void.
ADMINISTRATION OF THE PLAN
Trustees. The Trustee with respect to the Plan is the named fiduciary of
the Plan for purposes of Section 402 of ERISA. The current trustee of the Plan
is Chairman of the Board of Directors and the President of the Bank, although an
independent third party trustee will be named prior to the Conversion.
Pursuant to the terms of the Plan, the Trustee receives and holds
contributions to the Plan in trust and has exclusive authority and discretion to
manage and control the assets of the Plan pursuant to the terms of the Plan and
to
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manage, invest and reinvest the Trust and income therefrom. The Trustee has the
authority to invest and reinvest the Trust and may sell or otherwise dispose of
Trust investments at any time and may hold trust funds uninvested. The Trustee
has authority to invest the assets of the Trust in "any type of property,
investment or security" as defined under ERISA.
The Trustee has full power to vote any corporate securities in the Trust in
person or by proxy, provided, however, that the Plan Participants shall direct
the Trustee as to voting and tendering of all Common Stock held in the Employer
Stock Fund.
The Trustee is entitled to reasonable compensation for its services and is
also entitled to reimbursement for expenses properly and actually incurred in
the administration of the Trust. The expenses of the Trustee and the
compensation of the persons so employed is paid out of the Trust except to the
extent such expenses and compensation are paid by the Bank.
The Trustee must render at least annual reports to the Bank and to the
Participants in such form and containing information that the Trustee deems
necessary.
REPORTS TO PLAN PARTICIPANTS
The Administrator will furnish to each Participant a statement at least
quarterly showing (i) the balance in the Participant's Account as of the end of
that period, (ii) the amount of contributions allocated to such Participant's
Account for that period, and (iii) the adjustments to such Participant's Account
to reflect earnings or losses (if any).
PLAN ADMINISTRATOR
Pursuant to the terms of the Plan, the Plan Administrator is Kingsbridge
Pension Services, Inc. The address and telephone number of the Plan
Administrator is 414 Eagle Rock Avenue, West Orange, New Jersey 07052, (201)
864-0880. The Administrator is responsible for the administration of the Plan,
interpretation of the provisions of the Plan, prescribing procedures for filing
applications for benefits, preparation and distribution of information
explaining the Plan, maintenance of plan records, books of account and all other
data necessary for the proper administration of the Plan, and preparation and
filing of all returns and reports relating to the Plan which are required to be
filed with the U.S. Department of Labor and the IRS, and for all disclosures
required to be made to Participants, beneficiaries and others under Sections 104
and 105 of ERISA.
AMENDMENT AND TERMINATION
The Bank may terminate the Plan at any time. If the Plan is terminated in
whole or in part, then regardless of other provisions in the Plan, each employee
who ceases to be a Participant shall have a fully vested interest in his
Account. The Bank reserves the right to make, from time to time, any amendment
or amendments to the Plan which do not cause any part of the Trust to be used
for, or diverted to, any purpose other than the exclusive benefit of the
Participants or their beneficiaries.
MERGER, CONSOLIDATION OR TRANSFER
In the event of the merger or consolidation of the Plan with another plan,
or the transfer of the Trust to another plan, the Plan requires that each
Participant (if either the Plan or the other plan had then terminated) receive a
benefit immediately after the merger, consolidation or transfer which is equal
to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan or the
other plan had then terminated).
FEDERAL INCOME TAX CONSEQUENCES
The following is only a brief summary of certain federal income tax aspects
of the Plan which are of general application under the Code and is not intended
to be a complete or definitive description of the federal income tax
consequences of participating in or receiving distributions from the Plan.
Moreover, statutory provisions are subject to change, as are their
interpretations, and their application may vary in individual circumstances.
Finally, the consequences under applicable state and local income tax laws may
not be the same as under the federal income tax laws.
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<PAGE>
PARTICIPANTS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO ANY
DISTRIBUTION FROM THE PLAN AND TRANSACTIONS INVOLVING THE PLAN.
The Plan shall be submitted to the IRS for a determination that it is
qualified under Section 401(a) and 401(k) of the Code, and that the related
Trust is exempt from tax under Section 501(a) of the Code. A plan that is
"qualified" under these sections of the Code is afforded special tax treatment
which include the following: (1) The sponsoring employer is allowed an immediate
tax deduction for the amount contributed to the Plan each year; (2) Participants
pay no current income tax on amounts contributed by the employer on their
behalf; and (3) Earnings of the plan are tax-exempt thereby permitting the
tax-free accumulation of income and gains on investments. The Plan will be
administered to comply in operation with the requirements of the Code as of the
applicable effective date of any change in the law. The Bank expects to timely
adopt any amendments to the Plan that may be necessary to maintain the qualified
status of the Plan under the Code. Following such an amendment, the Plan will be
submitted to the IRS for a determination that the Plan, as amended, continues to
qualify under Sections 401(a) and 501(a) of the Code and that it continues to
satisfy the requirements for a qualified cash or deferred arrangement under
Section 401(k) of the Code.
Assuming that the Plan is administered in accordance with the requirements
of the Code and that the IRS issues a favorable determination as described in
the preceding paragraph, participation in the Plan under existing federal income
tax laws will have the following effects:
(a) Amounts contributed to a Participant's 401(k) Account and the
investment earnings on this Account are not includable in a Participant's
federal taxable income until such contributions or earnings are actually
distributed or withdrawn from the Plan. Special tax treatment may apply to
the taxable portion of any distribution that includes Common Stock or
qualifies as a Lump Sum Distribution (as described below).
(b) Income earned on assets held by the Trust will not be taxable to
the Trust.
Lump Sum Distribution. A distribution from the Plan to a Participant or the
beneficiary of a Participant will qualify as a "Lump Sum Distribution" if it is
made: (i) within a single taxable year of the Participant or beneficiary; (ii)
on account of the Participant's death or separation from service, or after the
Participant attains age 59 1/2; and (iii) consists of the balance to the credit
of the Participant under the Plan and all other profit sharing plans, if any,
maintained by the Bank. The portion of any Lump Sum Distribution that is
required to be included in the Participant's or beneficiary's taxable income for
federal income tax purposes (the "total taxable amount") consists of the entire
amount of such Lump Sum Distribution less the amount of after-tax contributions,
if any, made by the Participant to any other profit sharing plans maintained by
the Bank which is included in such distribution.
Averaging Rules. The portion of the total taxable amount of a Lump Sum
Distribution (the "ordinary income portion") will be taxable generally as
ordinary income for federal income tax purposes. However, a Participant who has
completed at least five years of participation in the Plan before the taxable
year in which the distribution is made, or a beneficiary who receives a Lump Sum
Distribution on account of the Participant's death (regardless of the period of
the Participant's participation in the Plan or any other profit-sharing plan
maintained by the Employer), may elect to have the ordinary income portion of
such Lump Sum Distribution taxed according to a special averaging rule
("five-year averaging"). The election of the special averaging rules may apply
only to one Lump Sum Distribution received by the Participant or beneficiary,
provided such amount is received on or after the Participant turns 59 1/2 and
the recipient elects to have any other Lump Sum Distribution from a qualified
plan received in the same taxable year taxed under the special averaging rule.
Under a special grandfather rule, individuals who turned 50 by 1986 may elect to
have their Lump Sum Distribution taxed under either the five-year averaging rule
or under the prior law ten-year averaging rule. Such individuals also may elect
to have that portion of the Lump Sum Distribution attributable to the
Participant's pre-1974 participation in the Plan taxed at a flat 20% rate as
gain from the sale of a capital asset.
Common Stock Included in Lump Sum Distribution. If a Lump Sum Distribution
includes Common Stock, the distribution generally will be taxed in the manner
described above, except that the total taxable amount will be reduced by the
amount of any net unrealized appreciation with respect to such Common Stock,
i.e., the excess of the value of such Common Stock at the time of the
distribution over its cost to the Plan. The tax basis of such Common Stock to
the Participant or beneficiary for purposes of computing gain or loss on its
subsequent sale will be the value of the Common Stock at the time of
distribution less the amount of net unrealized appreciation. Any gain on a
subsequent sale or other taxable disposition of such Common Stock, to the extent
of the amount of net unrealized appreciation at the time of distribution, will
be considered long-term capital gain regardless of the holding period of such
Common Stock. Any gain on a subsequent sale or other taxable disposition of the
Common Stock in excess of the amount of net
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unrealized appreciation at the time of distribution will be considered either
short-term capital gain or long-term capital gain depending upon the length of
the holding period of the Common Stock. The recipient of a distribution may
elect to include the amount of any net unrealized appreciation in the total
taxable amount of such distribution to the extent allowed by the regulations to
be issued by the IRS.
Distributions: Rollovers and Direct Transfers to Another Qualified Plan or
to an IRA. Pursuant to a change in the law, effective January 1, 1993, virtually
all distributions from the Plan may be rolled over to another qualified Plan or
to an IRA without regard to whether the distribution is a Lump Sum Distribution
or a Partial Distribution. Effective January 1, 1993, Participants have the
right to elect to have the Trustee transfer all or any portion of an "eligible
rollover distribution" directly to another plan qualified under Section 401(a)
of the Code or to an IRA. If the Participant does not elect to have an "eligible
rollover distribution" transferred directly to another qualified plan or to an
IRA, the distribution will be subject to a mandatory federal withholding tax
equal to 20% of the taxable distribution. An "eligible rollover distribution"
means any amount distributed from the Plan except: (1) a distribution that is
(a) one of a series of substantially equal periodic payments made (not less
frequently than annually) over the Participant's life or the joint life of the
Participant and the Participant's designated beneficiary, or (b) for a specified
period of ten years or more; (2) any amount that is required to be distributed
under the minimum distribution rules; and (3) any other distributions excepted
under applicable federal law. The tax law change described above did not modify
the special tax treatment of Lump Sum Distributions, that are not rolled over or
transferred i.e., forward averaging, capital gains tax treatment and the
nonrecognition of net unrealized appreciation, discussed earlier.
Additional Tax on Early Distributions. A Participant who receives a
distribution from the Plan prior to attaining age 59 1/2 will be subject to an
additional income tax equal to 10% of the taxable amount of the distribution.
The 10% additional income tax will not apply, however, to the extent the
distribution is rolled over into an IRA or another qualified plan or the
distribution is (i) made to a beneficiary (or to the estate of a Participant) on
or after the death of the Participant, (ii) attributable to the Participant's
being disabled within the meaning of Section 72(m)(7) of the Code, (iii) part of
a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Participant or the joint
lives (or joint life expectancies) of the Participant and his beneficiary, (iv)
made to the Participant after separation from service on account of early
retirement under the Plan after attainment of age 55, (v) made to pay medical
expenses to the extent deductible for federal income tax purposes, (vi) pursuant
to a qualified domestic relations order, or (vii) made to effect the
distribution of excess contributions or excess deferrals.
ERISA AND OTHER QUALIFICATIONS
As noted above, the Plan is subject to certain provisions of ERISA and will
be submitted to the IRS for a determination that it is qualified under Section
401(a) of the Code.
THE FOREGOING IS ONLY A BRIEF SUMMARY OF CERTAIN FEDERAL INCOME TAX ASPECTS
OF THE PLAN. EACH PARTICIPANT IS URGED TO CONSULT A TAX ADVISOR CONCERNING THE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF PARTICIPATING IN AND RECEIVING
DISTRIBUTIONS FROM THE PLAN.
RESTRICTIONS ON RESALE
Any person receiving shares of Common Stock under the Plan who is an
"affiliate" of the Company as the term "affiliate" is used in Rules 144 and 405
under the Securities Act of 1933, as amended ("Securities Act") (e.g.,
directors, officers and substantial stockholders of the Company) may reoffer or
resell such shares only pursuant to a registration statement filed under the
Securities Act or, assuming the availability thereof, pursuant to Rule 144 or
some other exemption of the registration requirements of the Securities Act. Any
person who may be an "affiliate" of the Company may wish to consult with counsel
before transferring any Company Stock owned by him. In addition, Participants
are advised to consult with counsel as to the applicability of Section 16 of the
Exchange Act which may restrict the sale of Common Stock where acquired under
the Plan, or other sales of Common Stock.
Persons who are not deemed to be "affiliates" of the Company at the time of
resale will be free to resell any shares of Common Stock distributed to them
under the Plan, either publicly or privately, without regard to the registration
and prospectus delivery requirements of the Securities Act or compliance with
the restrictions and conditions contained in the exemptive rules thereunder. An
"affiliate" of the Company is someone who directly or
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<PAGE>
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control, with the Company. Normally, a director, principal
officer or major shareholder of a corporation may be deemed to be an "affiliate"
of that corporation. A person who may be deemed an "affiliate" of the Company at
the time of a proposed resale will be permitted to make public resales of the
Company's Common Stock only pursuant to a "reoffer" Prospectus or in accordance
with the restrictions and conditions contained in Rule 144 under the Securities
Act or some other exemption from registration, and will not be permitted to use
this Prospectus in connection with any such resale. In general, the amount of
the Company's Common Stock which any such affiliate may publicly resell pursuant
to Rule 144 in any three-month period may not exceed the greater of one percent
of the Company's Common Stock then outstanding or the average weekly trading
volume reported on the National Association of Securities Dealers Automated
Quotation System during the four calendar weeks prior to the sale. Such sales
may be made only through brokers without solicitation and only at a time when
the Company is current in filing the reports required of it under the Exchange
Act.
SEC REPORTING AND SHORT-SWING PROFIT LIABILITY
Section 16 of the Exchange Act imposes reporting and liability requirements
on executive officers, directors and persons beneficially owning more than ten
percent of public companies such as the Company. Section 16(a) of the Exchange
Act requires the filing of reports of beneficial ownership. Within ten days of
becoming a person subject to the reporting requirements of Section 16(a), a Form
3 reporting initial beneficial ownership must be filed with the SEC. Certain
changes in beneficial ownership, such as purchases, sales, gifts and
participation in savings and retirement plans must be reported periodically,
either on a Form 4 within ten days after the end of the month in which a change
occurs, or annually on a Form 5 within 45 days after the close of the Company's
fiscal year. Participation in the Employer Stock Fund of the Plan by executive
officers, directors and persons beneficially owning more than ten percent of
Common Stock of the Company must be reported to the SEC annually on a Form 5 by
such individuals.
In addition to the reporting requirements described above, Section 16(b) of
the Exchange Act provides for the recovery by the Company of profits realized by
any officer, director or any person beneficially owning more than ten percent of
the Company's Common Stock ("Section 16(b) Persons") resulting from the purchase
and sale or sale and purchase of the Company's Common Stock within any six-month
period.
The SEC has adopted rules that provide exemption from the profit recovery
provisions of Section 16(b) for Participant-directed employer security
transactions within an employee benefit plan, such as the Plan, provided certain
requirements are met. These requirements generally involve restrictions upon the
timing of elections to acquire or dispose of employer securities for the
accounts of Section 16(b) Persons.
The Plan, as amended, only permits Section 16(b) Persons to make transfers
to or from the Employer Stock Fund in accordance with the terms of the Plan, and
only during the period beginning on the third business day following the date of
release of the Company's quarterly and annual statements of earnings and ending
on the 12th business day following that date. Section 16(b) Persons also are
prohibited under the Plan from making a transfer into or out of the Employer
Stock Fund within six months of the next preceding transfer into or out of the
Employer Stock Fund.
Except for distributions of Common Stock due to death, disability,
retirement, termination of employment or under a qualified domestic relations
order under the Plan, Section 16(b) Persons are required to hold shares of
Common Stock distributed from the Plan for six months following such
distribution and are prohibited from directing additional purchases of units
within the Employer Stock Fund for six months after receiving such a
distribution. Finally, the Plan provides that Section 16(b) Persons who
terminate their participation in the Plan may not rejoin the Plan for six months
following the date of their termination. These Plan restrictions conform with
the rules issued by the SEC to exempt transactions in the Plan from becoming
subject to the profit-recovery rules of Section 16(b) of the Exchange Act.
LEGAL OPINIONS
The validity of the issuance of the Common Stock will be passed upon by
Muldoon, Murphy & Faucette, Washington, D.C., which firm is acting as special
counsel for the Company in connection with the Bank's Conversion from a mutual
savings bank to a stock savings bank and the concurrent formation of the
Company.
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WAYNE SAVINGS BANK, F.S.B.
401(K) PROFIT SHARING PLAN
INVESTMENT FORM
Name of Plan Participant: ________________________
Social Security Number: __________________________
1. INSTRUCTIONS. In connection with the proposed Conversion of Wayne Savings
Bank, F.S.B. from a mutual savings bank to a stock based organization (the
"Conversion"), the Wayne Savings Bank, F.S.B. Employees' Savings and Profit
Sharing Plan and Trust (the "401(k) Plan") has been amended to permit
Participants to direct their account balances into various investment
alternatives, including the Employer Stock Fund. The percentage of a
Participant's account transferred at the direction of the Participant into
the Employer Stock Fund will be used to purchase shares of common stock of
Wayne Bancorp, Inc. (the "Common Stock").
To direct a transfer of all or a part of the funds credited to your
accounts to the Employer Stock Fund, you must complete and file this form
with the Human Resources Department no later than June 21, 1996. A
representative for the Plan Administrator will retain a copy of this form
and return a copy to you. If you need any assistance in completing this
form, please contact William E. Vanderberg, President and Chief Executive
Officer at (201) 305-5500. If you do not complete and return this form to
the Human Resources Department by June 21, 1996, the funds credited to your
accounts under the 401(k) Plan will continue to be invested in accordance
with your prior investment direction, or in accordance with the terms of
the 401(k) Plan if no investment direction had been provided.
2. TRANSFER DIRECTIONS. I hereby direct the Plan Administrator to invest the
following percentage (in multiples of not less than 5%) of my account
balance in the:
A. PassBook Savings Account ............................ _____%
B. Aetna Growth and Income Fund ........................ _____%
C. Aetna Bond Fund ..................................... _____%
D. Aetna Money Market Fund ............................. _____%
E. The Aetna Managed Fund .............................. _____%
F. The Aetna Growth Fund ............................... _____%
G. The Aetna Fixed Account ............................. _____%
H. The Aetna Guaranteed Accumulation Account
Short term .......................................... _____%
Long term ........................................... _____%
I. Employer Stock Fund ................................ _____%
NOTE: THE TOTAL PERCENTAGE STATED ABOVE MAY NOT EXCEED 100%. YOUR ABILITY TO
TRANSFER FUNDS TO THE EMPLOYER STOCK FUND IN THE CONVERSION IS SUBJECT
TO YOUR GENERAL ELIGIBILITY TO PURCHASE SHARES OF COMMON STOCK IN THE
CONVERSION AND THE MAXIMUM AND MINIMUM PURCHASE LIMITATIONS SET FORTH
IN THE PLAN OF CONVERSION. FOR GENERAL INFORMATION AS TO YOUR
ELIGIBILITY TO PURCHASE SHARES OF COMMON STOCK AND THE MINIMUM AND
MAXIMUM AMOUNTS THAT MAY BE PURCHASED IN THE CONVERSION, SEE "THE
CONVERSION--SUBSCRIPTION OFFERING AND SUBSCRIPTION RIGHTS" AND
"LIMITATION ON COMMON STOCK PURCHASES" IN THE PROSPECTUS.
3. ACKNOWLEDGEMENT OF PARTICIPANT. I understand that this Investment Form
shall be subject to all of the terms and conditions of the 401(k) Plan. I
acknowledge that I have received a copy of the Prospectus and the
Prospectus Supplement.
Signature of Participant:
-------------------------------- --------------------
Date
ACKNOWLEDGMENT OF RECEIPT BY PLAN ADMINISTRATOR. This Investment Form was
received by the Plan Administrator and will become effective on the date noted
below.
Plan Administrator:
------------------------------------- -------------------
Date
16
