<PAGE>
CHESTERFIELD FEDERAL SAVINGS AND LOAN ASSOCIATION OF CHICAGO
10801 South Western Avenue
Chicago, Illinois 60643
(773) 239-6000
-----------------------------
NOTICE OF SPECIAL MEETING OF MEMBERS
-----------------------------
Notice is hereby given that a Special Meeting of Members (the "Special
Meeting") of Chesterfield Federal Savings and Loan Association of Chicago (the
"Association"), will be held at 10801 South Western Avenue, Chicago, Illinois
60643, on __________, 2001 at :____ .m., Central time. The purpose of this
Special Meeting is to consider and vote upon:
1. A plan to convert the Association from a federally chartered mutual savings
and loan association to a federally chartered stock savings and loan
association, including the adoption of a federal stock savings and loan
association charter and bylaws, with the concurrent sale of all of the
Association's common stock to Chesterfield Financial Corp., a Delaware
corporation (the "Holding Company"), and the sale by the Holding Company of
shares of its common stock; and
such other business as may properly come before this Special Meeting or any
adjournment thereof. Management is not aware of any such other business.
The members who shall be entitled to notice of and to vote at the Special
Meeting and any adjournment thereof are depositors and borrowers of the
Association at the close of business on ______________. In the event there are
not sufficient votes for approval of the Plan of Conversion at the time of the
Special Meeting, the Special Meeting may be adjourned from time to time in order
to permit further solicitation of proxies.
BY ORDER OF THE BOARD OF DIRECTORS
Michael E. DeHaan
President
Chicago, Illinois
[_________], 2001
--------------------------------------------------------------------------------
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR APPROVAL OF THE PLAN OF CONVERSION BY COMPLETING THE
ENCLOSED PROXY CARD AND RETURNING IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE.
YOUR VOTE IS VERY IMPORTANT.
--------------------------------------------------------------------------------
<PAGE>
SUMMARY OF PROPOSED CONVERSION
This summary does not purport to be complete and is qualified in its
entirety by the more detailed information contained in the remainder of this
Proxy Statement and the accompanying Prospectus.
Under its present "mutual" form of organization, the Association has no
stockholders. Its deposit account holders and borrowers are members of the
Association and have voting rights in that capacity. In the unlikely event of
liquidation, the Association's deposit account holders would have the sole right
to receive any assets of the Association remaining after payment of its
liabilities (including the claims of all deposit account holders to the
withdrawal value of their deposits). Under the Plan of Conversion (the "Plan of
Conversion") to be voted on at the Special Meeting, the Association would be
converted into a federally chartered savings and loan association organized in
stock form, and all of the Association's common stock would be sold concurrently
to the Holding Company (the "Conversion"). The Holding Company will offer and
sell its common stock in an offering (1) to depositors with an account balance
of $50 or more on June 30, 1999 ("Eligible Account Holders"), (2) tax-qualified
employee stock benefit plans of the Association or the Holding Company ("Tax-
Qualified Employee Plans"), (3) depositors of the Association with an account
balance of $50 or more as of December 31, 2000 ("Supplemental Eligible Account
Holders"), and (4) depositors and borrowers of the Association as of
_______________, 2001, other then Eligible or Supplemental Eligible Account
Holders, or Tax-Qualified Employee Plans ("Other Members") (the "Subscription
Offering"). Notwithstanding the foregoing, to the extent orders for shares
exceed the maximum of the appraisal range, Tax-Qualified Employee Plans shall be
afforded a first priority to purchase shares sold above the maximum of the
appraisal range. It is anticipated that Tax-Qualified Employee Plans will
purchase 8% of the common stock sold in the Conversion.
Concurrent with or following completion of the Subscription Offering, to
the extent the common stock is not all sold to the persons in the foregoing
categories, the Holding Company may offer common stock to members of the general
public to whom a prospectus (the "Prospectus") has been delivered ("Other
Subscribers"), with first preference to natural persons residing in the Illinois
Counties of Cook and Will (the "Community Offering"). The Subscription Offering
and the Community Offering are referred to collectively as the "Subscription and
Community Offering." Voting and liquidation rights with respect to the
Association would thereafter be held by the Holding Company, except to the
limited extent of the liquidation account (the "Liquidation Account") that will
be established for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders of the Association and voting and liquidation rights in
the Holding Company would be held only by those persons who become stockholders
of the Holding Company through purchase of shares of its common stock. See "The
Conversion - Effects of Conversion to Stock Form on Depositors and Borrowers of
Chesterfield Federal - Liquidation Rights in Proposed Converted Association."
THE CONVERSION WILL NOT AFFECT THE BALANCE, INTEREST RATE OR FEDERAL
INSURANCE PROTECTION OF ANY SAVINGS DEPOSIT, AND NO PERSON WILL BE OBLIGATED TO
PURCHASE ANY STOCK IN THE CONVERSION.
Business Purposes Net Conversion proceeds are expected to increase the
for Conversion capital of the Association, which will support the
expansion of its financial services to the public. The
conversion to stock form and the use of a holding
company structure are also expected to enhance its
ability to expand through possible mergers and
acquisitions (although no such transactions are
contemplated at this time) and will facilitate its
future access to the capital markets. The Association
will continue to be subject to comprehensive regulation
and examination by the Office of Thrift Supervision,
Department of Treasury ("OTS") and the Federal Deposit
Insurance Corporation ("FDIC").
Subscription and As part of the Conversion, common stock is being
Community Offering offered for sale in the Subscription Offering, in the
priorities summarized below, to the Association's (1)
Eligible Account Holders, (2) Tax-Qualified Employee
Plans, (3) Supplemental Eligible Account Holders , and
(4) Other Members. In addition, in the Community
Offering, Other Subscribers may purchase common stock
to the extent shares are available after satisfaction
of subscriptions in the Subscription Offering, with a
preference first to natural persons residing in the
Illinois counties of Cook and Will.
i
<PAGE>
Subscription Rights Each Eligible Account Holder has been given
of Eligible Account non-transferable rights to subscribe for the greater of
Holders $300,000 of common stock, one-tenth of one percent
(.10%) of the total number of shares offered in the
Subscription and Community Offering, or 15 times the
product (rounded down to the whole next number)
obtained by multiplying the total number of shares to
be issued by a fraction, the numerator of which is the
total amount of Qualifying Deposits of such subscriber
and the denominator is the total Qualifying Deposits of
all account holders in this category on the qualifying
date.
Subscription Rights The Association's Tax-Qualified Employee Plans have
of Tax-Qualified been given non-transferable rights to subscribe,
Employee Plans individually and in the aggregate, for up to 10% of the
total number of shares sold in the Conversion after
satisfaction of subscriptions of Eligible Account
Holders. Notwithstanding the foregoing, to the extent
orders for shares exceed the maximum of the appraisal
range, Tax-Qualified Employee Plans shall be afforded a
first priority to purchase shares sold above the
maximum of the appraisal range. It is anticipated that
Tax-Qualified Employee Plans will purchase 8% of the
common stock sold in the Conversion.
Subscription Rights After satisfaction of subscriptions of Eligible Account
of Supplemental Holders and Tax-Qualified Employee Plans, each
Eligible Account Supplemental Eligible Account Holder has been given
Holders non-transferable rights to subscribe for the greater of
$300,000 of common stock, one-tenth of one percent
(.10%) of the total number of shares offered in the
Conversion, or 15 times the product (rounded down to
the whole next number) obtained by multiplying the
total number of shares to be issued by a fraction, the
numerator of which is the amount of Qualifying Deposits
of such subscriber and the denominator is the total
Qualifying Deposits of all account holders in this
category on the qualifying date. The subscription
rights of each Supplemental Eligible Account Holder
shall be reduced to the extent of such person's
subscription rights as an Eligible Account Holder.
Subscription Rights Each Other Member has been given non-transferable
of Other Members rights to subscribe for the greater of $300,000 of
common stock, or one-tenth of one percent (.10%) of the
total number of shares offered in the Conversion after
satisfaction of the subscriptions of the Association's
Eligible Account Holders, Tax-Qualified Employee Plans,
and Supplemental Eligible Account Holders.
Purchase The maximum purchase of common stock in the
Limitations subscription offering by any person or group of persons
through asingle account is $300,000. No person,
together with associates, and persons acting in
concert, may purchase more than $400,000 of common
stock offered in the Conversion. The minimum number of
shares that may be purchased by any person is 25
shares, provided sufficient shares are available. The
aggregate purchases of directors and executive officers
and their associates may not exceed 29.0% of the total
number of shares offered in the Conversion. These
purchase limitations do not apply to the Association's
or the Holding Company's Tax-Qualified Employee Plans.
Expiration Date of All subscriptions for common stock must be received by
Subscription and [____], Central time on [_____________], 2001.
Community Offerings
How to Subscribe For information on how to subscribe for common stock
for Shares being offered in the Conversion, please read the
Prospectus and the stock order form and instructions
accompanying this Proxy Statement. Subscriptions will
not become effective until the Plan of Conversion has
been approved by the Association's members and all of
the common stock offered in the Conversion has been
subscribed for or sold in the Subscription and
Community Offering or through such other means as may
be approved by the OTS.
Price of Common All sales of common stock in the Subscription and
Stock Community Offeringwill be made at the same price per
share which is currently expected to be _____ per share
on the basis of an independent appraisal of the pro
forma market value of the Association and the Holding
Company upon Conversion. On the basis of a preliminary
appraisal by FinPro, Inc., which has been reviewed by
the OTS, a minimum of 2,635,000 and a maximum of
3,565,000 shares will
ii
<PAGE>
be offered in the Conversion. See "The Conversion -
Stock Pricing and Number of Shares to be Issued" in the
Prospectus.
Tax Consequences The Association has received an opinion from its
special counsel, Luse Lehman Gorman Pomerenk & Schick,
P.C., stating that the Conversion is a nontaxable
reorganization under Section 368(a)(1)(F) of the
Internal Revenue Code. The Association has also
received an opinion from Crowe, Chizek and Company, LLP
stating that the Conversion will not be a taxable
transaction for Illinois income tax purposes.
Required Vote Approval of the Plan of Conversion will require the
affirmative vote of a majority of all votes eligible to
be cast at the Special Meeting.
YOUR BOARD OF DIRECTORS URGES YOU TO VOTE FOR
---
THE PLAN OF CONVERSION
iii
<PAGE>
CHESTERFIELD FEDERAL SAVINGS AND LOAN ASSOCIATION OF CHICAGO
PROXY STATEMENT
SPECIAL MEETING OF MEMBERS TO BE HELD ON ____________, 2001
PURPOSE OF MEETING
This Proxy Statement is being furnished to you in connection with the
solicitation on behalf of the Board of Directors of Chesterfield Federal Savings
and Loan Association of Chicago (the "Association") of the proxies to be voted
at the Special Meeting of Members (the "Special Meeting") of the Association to
be held at __________________________________, on April __, 2001 at :___ __.m.
Central time, and at any adjournments thereof. The Special Meeting is being
held for the purpose of considering and voting upon a Plan of Conversion under
which the Association would be converted (the "Conversion") from its present
mutual form of organization into a federally chartered savings and loan
association organized in stock form, the concurrent sale of all the common stock
of the stock savings and loan association to Chesterfield Financial Corp. (the
"Holding Company"), a Delaware corporation, and the sale by the Holding Company
of shares of its common stock (the "common stock") and such other business as
may properly come before the meeting and any adjournment thereof.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE ASSOCIATION RECOMMENDS THAT YOU VOTE TO
APPROVE THE PLAN OF CONVERSION.
The Association is currently organized in "mutual" rather than "stock"
form, meaning that it has no stockholders and no authority under its federal
mutual charter to issue capital stock. The Association's Board of Directors has
adopted the Plan of Conversion providing for the Conversion. The sale of common
stock of the Holding Company, which was recently formed to become the holding
company of the Association, will substantially increase the Association's net
worth. The Holding Company will exchange 50% of the net proceeds from the sale
of the common stock for the common stock of the Association to be issued upon
Conversion. The Holding Company expects to retain the balance of the net
proceeds as its initial capitalization of which the Holding Company intends to
lend funds to the ESOP to fund its purchase of common stock. This increased
capital will support the expansion of the Association's financial services to
the public. The Board of Directors of the Association also believes that the
conversion to stock form and the use of a holding company structure will enhance
the Association's ability to expand through possible mergers and acquisitions
(although no such transactions are contemplated at this time) and will
facilitate its future access to the capital markets.
The Board of Directors of the Association believes that the Conversion will
further benefit the Association by enabling it to attract and retain key
personnel through prudent use of stock-related incentive compensation and
benefit plans. The Board of Directors of the Holding Company intends to adopt a
stock option and incentive plan and a recognition and retention plan, subject to
approval of Holding Company stockholders following completion of the Conversion.
See "Management - Benefit Plans" in the accompanying Prospectus.
Voting in favor of the Plan of Conversion will not obligate any person to
purchase any common stock.
THE OFFICE OF THRIFT SUPERVISION ("OTS") HAS APPROVED THE PLAN OF
CONVERSION SUBJECT TO THE APPROVAL OF THE ASSOCIATION'S MEMBERS AND THE
SATISFACTION OF CERTAIN OTHER CONDITIONS. HOWEVER, SUCH APPROVAL DOES NOT
CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE PLAN OF CONVERSION BY THE OTS.
<PAGE>
DIRECTORS AND OFFICERS OF THE ASSOCIATION
<TABLE>
<CAPTION>
Position(s) Held with Director Director Term
Name Chesterfield Federal Age/(1)/ Since Expires
---- --------------------- -------- ----- -------
<S> <C> <C> <C> <C>
Michael E. DeHaan/(2)/ President, Chief Executive Officer 56 1974 2004
and Director
C.C. DeHaan/(2)/ Director 68 1967 2003
Robert T. Mangan Director 71 1979 2002
David M. Steadman Director 51 1988 2004
Richard E. Urchell Director, Vice President and Secretary 64 1995 2003
Donald D. Walters Director 71 1987 2002
</TABLE>
/(1)/ At October 31, 2000.
/(2)/ Michael E. DeHaan and C.C. DeHaan are second cousins.
The business experience of each director is set forth below. All directors
have held their present position for at least the past five years, except as
otherwise indicated.
Michael E. DeHaan. Mr. DeHaan has been employed by Chesterfield Federal
since 1967, and has served as President and Chief Executive Officer since 1983
and Chairman of the Board since 1991.
C.C. DeHaan. Prior to his retirement in 1993, Mr. DeHaan served as
President of Chesterfield Federal's wholly-owned subsidiary, Chesterfield
Service Corporation (now named Chesterfield Insurance Services, LLC.).
Robert T. Mangan. Mr. Mangan is the Secretary/Treasurer of Mangan Realty,
where he has worked since 1960.
David M. Steadman. Mr. Steadman is a self-employed attorney and real
estate broker, and has owned Steadman Realty Co. since 1981.
Richard E. Urchell. Mr. Urchell has been employed by Chesterfield Federal
since 1977, and has served as Vice President and Secretary since 1992.
Donald D. Walters. Prior to his retirement in 1994, Mr. Walters served as
Vice President and Treasurer of Chesterfield Federal.
INFORMATION RELATING TO VOTING AT THE SPECIAL MEETING
The Board of Directors of the Association has fixed _____________ as the
voting record date ("Voting Record Date") for the determination of members
entitled to notice of the Special Meeting. All Association depositors and
borrowers are members of the Association under its current charter. All
Association members of record as of the close of business on the Voting Record
Date who continue to be members as of the date of the Special Meeting will be
entitled to vote at the Special Meeting or any adjournment thereof.
Each depositor (including IRA and Keogh account beneficiaries) will be
entitled at the Special Meeting to cast one vote for each $100, or fraction
thereof, of the aggregate withdrawal value of all of such depositor's accounts
in the Association as of the Voting Record Date, up to a maximum of 1,000 votes.
In general, accounts held in different ownership capacities will be treated as
separate memberships for purposes of applying the 1,000 vote limitation. For
example, if two persons hold a $100,000 account in their joint names and each of
the persons also holds a separate account for $100,000 in his own name, each
person would be entitled to 1,000 votes for each separate account and they would
together be entitled to cast 1,000 votes on the basis of the joint account.
Where no proxies are received from IRA and Keogh account beneficiaries, after
due notification, the Association, as trustee of these accounts, is entitled to
vote these accounts in favor of the Plan of Conversion.
Each borrower member of the Association as of ______________, 2001 will be
entitled to cast one vote as a borrower member, in addition to any votes he or
she may be entitled to cast as a depositor.
2
<PAGE>
Approval of the Plan of Conversion requires the affirmative vote of a
majority of the total outstanding votes of the Association's members eligible to
be cast at the Special Meeting. As of _____________, the Association had
approximately ______ members who were entitled to cast a total of approximately
________ votes at the Special Meeting.
Association members may vote at the Special Meeting or any adjournment
thereof in person or by proxy. Any member giving a proxy will have the right to
revoke the proxy at any time before it is voted by giving written notice to the
Secretary of the Association, provided that such written notice is received by
the Secretary prior to the Special Meeting or any adjournment thereof, or upon
request if the member is present and chooses to vote in person.
All properly executed proxies received by the Board of Directors of the
Association will be voted in accordance with the instructions indicated thereon
by the members giving such proxies. If no instructions are given, such proxies
will be voted in favor of the Plan of Conversion. If any other matters are
properly presented at the Special Meeting and may properly be voted on, the
proxies solicited hereby will be voted on such matters in accordance with the
best judgment of the proxy holders named thereon. Management is not aware of
any other business to be presented at the Special Meeting.
If a proxy is not executed and is returned or the member does not vote in
person, the Association is prohibited by OTS regulations from using a previously
executed proxy to vote for the Conversion. As a result, failure to vote may
have the same effect as a vote against the Plan of Conversion.
To the extent necessary to permit approval of the Plan of Conversion,
proxies may be solicited by officers, directors, or regular employees of the
Association, in person, by telephone, or through other forms of communication
and, if necessary, the Special Meeting may be adjourned to a later date. Such
persons will be reimbursed by the Association for their expenses incurred in
connection with such solicitation. The Association will bear all costs of this
solicitation. The proxies solicited hereby will be used only at the Special
Meeting and at any adjournment thereof.
3
<PAGE>
DESCRIPTION OF THE PLAN OF CONVERSION
The Plan of Conversion to be presented for approval at the Special Meeting
provides for the Conversion to be accomplished through adoption of amended
charter and bylaws for the Association to authorize the issuance of capital
stock along with the concurrent formation of a holding company. As part of the
Conversion, the Plan of Conversion provides for the subscription offering (the
"Subscription Offering") of the common stock to the Association's (i) Eligible
Account Holders (deposit account holders with an account balance of $50 or more
as of June 30, 1999); (ii) Tax-Qualified Employee Plans, (iii) Supplemental
Eligible Account Holders (deposit account holders with an account balance of $50
or more as of December 31, 2000); and (iv) Other Members (deposit account
holders and borrowers eligible to vote at the Special Meeting who are not
Eligible Account Holders, Supplemental Eligible Account Holders or Tax-Qualified
Employee Plans). Notwithstanding the foregoing, to the extent orders for shares
exceed the maximum of the appraisal range, Tax-Qualified Employee Plans shall be
afforded a first priority to purchase shares sold above the maximum of the
appraisal range. It is anticipated that Tax-Qualified Employee Plans will
purchase 8% of the common stock sold in the Conversion. Concurrently with or
following completion of the Subscription Offering, members of the general
public, with a preference first to natural persons residing in the Illinois
Counties of Cook and Will, will be afforded the opportunity to purchase the
common stock not subscribed for in the Subscription Offering (the "Community
Offering" and when referred to with the Subscription Offering, the "Subscription
and Community Offering").
THE SUBSCRIPTION OFFERING HAS COMMENCED AS OF THE DATE OF MAILING OF THIS
PROXY STATEMENT. A PROSPECTUS EXPLAINING THE TERMS OF THE SUBSCRIPTION AND
COMMUNITY OFFERING, INCLUDING HOW TO ORDER AND PAY FOR SHARES AND DESCRIBING THE
BUSINESS OF THE ASSOCIATION AND THE HOLDING COMPANY, ACCOMPANIES THIS PROXY
STATEMENT AND SHOULD BE READ BY ALL PERSONS WHO WISH TO CONSIDER SUBSCRIBING FOR
COMMON STOCK. THE SUBSCRIPTION AND COMMUNITY OFFERING EXPIRES AT _______,
CENTRAL TIME, ON _____________, 2001 UNLESS EXTENDED BY THE ASSOCIATION AND THE
HOLDING COMPANY.
The federal conversion regulations require that all stock offered in a
conversion must be sold in order for the conversion to become effective. The
conversion regulations require that the offering be completed within 45 days
after completion of the Subscription Offering period unless extended by the
Association and the Holding Company with the approval of the OTS. This 45-day
period expires _____________ unless the Subscription Offering is extended. If
this is not possible, an occurrence that is currently not anticipated, the Board
of Directors of the Association and the Holding Company will consult with the
OTS to determine an appropriate alternative method of selling all unsubscribed
shares offered in the Conversion. The Plan of Conversion provides that the
Conversion must be completed within 24 months after the date of the Special
Meeting.
The Subscription and Community Offering or any other sale of the
unsubscribed shares will be made as soon as practicable after the date of the
Special Meeting. No sales of shares may be completed, either in the
Subscription and Community Offering or otherwise, unless the Plan of Conversion
is approved by the members of the Association.
The commencement and completion of the Subscription and Community Offering,
however, is subject to market conditions and other factors beyond the
Association's control. Due to adverse conditions in the stock market in the
past, a number of converting thrift institutions encountered significant delays
in completing their stock offerings or were not able to complete them at all.
No assurance can be given as to the length of time after approval of the Plan of
Conversion at the Special Meeting that will be required to complete the
Subscription and Community Offering or other sale of the common stock to be
offered in the Conversion. If delays are experienced, significant changes may
occur in the estimated pro forma market value of the Holding Company's common
stock, together with corresponding changes in the offering price and the net
proceeds realized by the Association and the Holding Company from the sale of
the common stock. The Association and the Holding Company may also incur
substantial additional printing, legal, accounting, and other expenses in
completing the Conversion.
The following is a brief summary of the Conversion and is qualified in its
entirety by reference to the Plan of Conversion, a complete copy of which is
attached as Exhibit A. The Association's federal stock charter and bylaws that
will become effective upon completion of the Conversion are attached as Exhibits
B and C, respectively.
4
<PAGE>
Principal Effects of Conversion
Depositors. The Conversion will not change the amount, interest rate,
withdrawal rights or federal insurance protection of deposit accounts, or affect
deposit accounts in any way other than with respect to voting and liquidation
rights as discussed below.
Borrowers. The rights and obligations of borrowers under their loan
agreements with the Association will remain unchanged by the Conversion. The
principal amount, interest rate and maturity date of loans will remain as they
were contractually fixed prior to the Conversion.
Voting Rights of Members. Under the Association's current federal mutual
charter, depositors and borrowers have voting rights as members of the
Association with respect to the election of directors and certain other affairs
of the Association. After the Conversion, exclusive voting rights with respect
to all such matters will be vested in the Holding Company as the sole
stockholder of the Association. Depositors and borrowers will no longer have
any voting rights, except to the extent that they become stockholders of the
Holding Company through the purchase of its common stock. Voting rights in the
Holding Company will be held exclusively by its stockholders.
Liquidation Rights of Depositor Members. Currently, in the unlikely event
of liquidation of the Association, any assets remaining after satisfaction of
all creditors' claims in full (including the claims of all depositors to the
withdrawal value of their accounts) would be distributed pro rata among the
depositors of the Association, with the pro rata share of each being the same
proportion of all such remaining assets as the withdrawal value of each
depositor's account is of the total withdrawal value of all accounts in the
Association at the time of liquidation. After the Conversion, the assets of the
Association would first be applied, in the event of liquidation, against the
claims of all creditors (including the claims of all depositors to the
withdrawal value of their accounts). Any remaining assets would then be
distributed to the persons who qualified as Eligible Account Holders or
Supplemental Eligible Account Holders under the Plan of Conversion to the extent
of their interests in a "Liquidation Account" that will be established at the
time of the completion of the Conversion and then to the Holding Company as the
sole stockholder of the Association's outstanding common stock. The
Association's depositors who did not qualify as Eligible Account Holders or
Supplemental Eligible Account Holders would have no right to share in any
residual net worth of the Association in the event of liquidation after the
Conversion, but would continue to have the right as creditors of the Association
to receive the full withdrawal value of their deposits prior to any distribution
to the Holding Company as the Association's sole stockholder. In addition, the
Association's deposit accounts will continue to be insured by the Federal
Deposit Insurance Corporation ("FDIC") to the maximum extent permitted by law,
currently up to $100,000 per insured account. The Liquidation Account will
initially be established in an amount equal to the net worth of the Association
as of the date of the Association's latest statement of financial condition
contained in the final prospectus used in connection with the Conversion. Each
Eligible Account Holder and/or Supplemental Eligible Account Holder will receive
an initial interest in the Liquidation Account in the same proportion as the
balance in all of his Qualifying Deposit accounts was of the aggregate balance
in all Qualifying Deposit accounts of all Eligible Account Holders and
Supplemental Eligible Account Holders on June 30, 1999, or December 31, 2000,
respectively. For accounts in existence on both dates, separate subaccounts
shall be determined on the basis of the Qualifying Deposits in such accounts on
the record dates. However, if the amount in the Qualifying Deposit account on
any annual closing date of the Association is less than the lowest amount in
such deposit account on the Eligibility Record Date and/or Supplemental
Eligibility Record Date, and any subsequent annual closing date, this interest
in the Liquidation Account will be reduced by an amount proportionate to such
reduction in the related deposit account and will not thereafter be increased
despite any subsequent increase in the related deposit account.
The Association. Under federal law, the stock savings and loan association
resulting from the Conversion will be deemed to be a continuation of the mutual
savings and loan association rather than a new entity and will continue to have
all of the rights, privileges, properties, assets and liabilities of the
Association prior to the Conversion. The Conversion will enable the Association
to issue capital stock, but will not change the general objectives, purposes or
types of business currently conducted by the Association, and no assets of the
Association will be distributed in order to effect the Conversion, other than to
pay the expenses incident thereto. After the Conversion, the Association will
remain subject to examination and regulation by the OTS and will continue to be
a member of the Federal Home Loan Bank System. The Conversion will not cause
any change in the executive officers or directors of the Association.
5
<PAGE>
Tax Consequences. Consummation of the Conversion is expressly conditioned
upon prior receipt of either a ruling of the United States Internal Revenue
Service ("IRS") or an opinion letter of the Association's counsel with respect
to Federal taxation, and either a ruling of the Illinois taxation authorities or
an opinion letter with respect to Illinois taxation, to the effect that the
Conversion will not be a taxable transaction to the Holding Company, the
Association, or the Association's deposit account holders receiving subscription
rights.
The Association has received an opinion of its special counsel, Luse Lehman
Gorman Pomerenk & Schick, P.C., to the effect that (i) the Conversion will
qualify as a reorganization under Section 368(a)(1)(F) of the Internal Revenue
Code of 1986, as amended, and no gain or loss will be recognized to the
Association in either its mutual form or its stock form by reason of the
proposed Conversion, (ii) no gain or loss will be recognized to the Association
upon the receipt of money from the Holding Company for stock of the Association;
and no gain or loss will be recognized to the Holding Company upon the receipt
of money for common stock of the Holding Company; (iii) no gain or loss will be
recognized by eligible account holders and supplemental eligible account holders
of the Association upon the issuance to them of withdrawable deposit accounts in
the Association in its stock form plus an interest in the liquidation account of
the Association in exchange for their deposit accounts in the Association in its
mutual form; (iv) assuming the non-transferable subscription rights to purchase
common stock have no value, the tax basis of an account holder's deposit
accounts in the Association in its stock form will be the same as the basis of
the account holder's deposit accounts in the Association in its mutual form; (v)
assuming the non-transferable subscription rights to purchase common stock have
no value, the tax basis of each eligible account holder's and supplemental
eligible account holder's interest in the liquidation account will be zero; and
(vi) the basis of the Holding Company common stock to its shareholders will be
the purchase price thereof and a shareholder's holding period for the Holding
Company common stock acquired through the exercise of subscription rights shall
begin on the date of consummation of the Conversion;
The opinion from Luse Lehman Gorman Pomerenk & Schick, P.C., is based,
among other things, on certain assumptions, including the assumptions that the
exercise price of the Subscription Rights to purchase Holding Company common
stock will be approximately equal to the fair market value of that stock at the
time of the completion of the proposed Conversion. With respect to the
Subscription Rights, the Association has received an opinion of FinPro, Inc.
(the "Appraiser Opinion") which, based on certain assumptions, concludes that
the Subscription Rights to be received by Eligible Account Holders, Supplemental
Eligible Account Holders and other eligible subscribers do not have any economic
value at the time of distribution or at the time the Subscription Rights are
exercised, whether or not a public offering takes place.
If it is subsequently established that the subscription rights received by
such persons have an ascertainable fair market value, then, in such event, the
subscription rights will be taxable to the recipient in the amount of their fair
market value. In this regard, the subscription rights may be taxed partially or
entirely at ordinary income tax rates.
With respect to Illinois taxation, the Association has received an opinion
from Crowe Chizek and Company, LLP to the effect that, assuming the Conversion
does not result in any federal taxable income, gain or loss to the Association
in its mutual or stock form, the Holding Company, the account holders,
borrowers, officers, directors, and employees and tax-qualified employee plans
of the Association, the Conversion should not result in any Illinois income tax
liability to such entities or persons.
Unlike a private letter ruling, the opinions of Luse Lehman Gorman Pomerenk
& Schick, P.C., and Crowe Chizek and Company, LLP as well as the Appraiser
Opinion, have no binding effect or official status, and no assurance can be
given that the conclusions reached in any of those opinions would be sustained
by a court if contested by the IRS or the Illinois tax authorities.
Approval, Interpretation, Amendment and Termination
Under the Plan of Conversion, the letter from the OTS giving approval
thereto, and applicable regulations, consummation of the Conversion is subject
to the satisfaction of the following conditions: (a) approval of the Plan of
Conversion by members of the Association casting at least a majority of the
votes eligible to be cast at the Special Meeting; (b) sale of all of the common
stock to be offered in the Conversion; and (c) receipt of favorable rulings or
opinions of counsel as to the Federal and Illinois tax consequences of the
Conversion.
6
<PAGE>
The Plan of Conversion may be substantively amended by the Boards of
Directors of the Association and the Holding Company with the concurrence of the
OTS. If the Plan of Conversion is amended, proxies which have been received
prior to such amendment will not be resolicited unless otherwise required by the
OTS. Also, as required by the Federal regulations, the Plan of Conversion
provides that the transactions contemplated thereby may be terminated by the
Board of Directors of the Association alone at any time prior to the Special
Meeting and may be terminated by the Board of Directors of the Association at
any time thereafter with the concurrence of the OTS, notwithstanding approval of
the Plan of Conversion by the members of the Association at the Special Meeting.
All interpretations by the Association and the Holding Company of the Plan of
Conversion and of the Order Forms and related materials for the Subscription and
Community Offering will be final, except as regards or affects the OTS.
Judicial Review
Section 5(i)(2)(B) of the Home Owners' Loan Act, as amended, 12 U.S.C.
(S)1464(i)(2)(B) and Section 563b.8(u) of the Rules and Regulations promulgated
thereunder (12 C.F.R. Section 563b.8(u)) provide: (i) that persons aggrieved by
a final action of the OTS which approves, with or without conditions, or
disapproves a plan of conversion, may obtain review of such final action only by
filing a written petition in the United States Court of Appeals for the circuit
in which the principal office or residence of such person is located, or in the
United States Court of Appeals for the District of Columbia, requesting that the
final action of the OTS be modified, terminated or set aside, and (ii) that such
petition must be filed within 30 days after publication of notice of such final
action in the Federal Register, or 30 days after the date of mailing of the
notice and proxy statement for the meeting of the converting institution's
members at which the conversion is to be voted on, whichever is later. The
notice of the Special Meeting of the Association's members to vote on the Plan
of Conversion described herein is included at the beginning of this Proxy
Statement. The statute and regulation referred to above should be consulted for
further information.
ADDITIONAL INFORMATION
The information contained in the accompanying Prospectus, including a more
detailed description of the Plan of Conversion, financial statements of the
Association and a description of the capitalization and business of the
Association and the Holding Company, including the Association's directors and
executive officers and their compensation, the anticipated use of the net
proceeds from the sale of the common stock and a description of the common
stock, is intended to help you evaluate the Conversion and is incorporated by
this reference.
YOUR VOTE IS VERY IMPORTANT TO US. PLEASE TAKE A MOMENT NOW TO COMPLETE
AND RETURN YOUR PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. YOU MAY STILL
ATTEND THE SPECIAL MEETING AND VOTE IN PERSON EVEN THOUGH YOU HAVE VOTED YOUR
PROXY. FAILURE TO SUBMIT A PROXY WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE
CONVERSION.
If you have any questions, please call our Stock Information Center at
[___________].
IMPORTANT: YOU MAY BE ENTITLED TO VOTE IN MORE THAN ONE CAPACITY. PLEASE
SIGN, DATE, AND PROMPTLY RETURN EACH PROXY CARD YOU RECEIVE.
--------------------------------------
THIS PROXY STATEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY STOCK. THE OFFER WILL BE MADE ONLY BY THE PROSPECTUS.
THIS SECURITY IS NOT A DEPOSIT OR ACCOUNT AND IS NOT FEDERALLY INSURED OR
GUARANTEED.
7
<PAGE>
REVOCABLE PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CHESTERFIELD FEDERAL SAVINGS AND LOAN ASSOCIATION OF CHICAGO
FOR A SPECIAL MEETING OF MEMBERS
TO BE HELD ON [_____________]
The undersigned member of Chesterfield Federal Savings and Loan Association
of Chicago (the "Association"), hereby appoints the full Board of Directors,
with full powers of substitution, as attorneys-in-fact and agents for and in the
name of the undersigned, to vote such votes as the undersigned may be entitled
to vote at the Special Meeting of Members of the Association ("Special
Meeting"), to be held at [_________________________________] on [____________],
2001 at [____] [__].m., Central time, and at any and all adjournments thereof.
They are authorized to cast all votes to which the undersigned is entitled as
follows:
FOR AGAINST
--- -------
1. A plan to convert the Association from a federally [_] [_]
chartered mutual savings and loan association to a
federally chartered stock savings and loan
association, including the adoption of a federal
stock savings and loan association charter and bylaws,
with the concurrent sale of all the Association's
common stock to Chesterfield Financial Corp., a
Delaware corporation (the "Holding Company"), and the
sale by the Holding Company of shares of its common
stock; and
Such other matters as may properly come before the Special
Meeting.
NOTE: The Board of Directors is not aware of any other matter that may come
before the Special Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS
---
PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY A MAJORITY OF THE BOARD OF
DIRECTORS IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
<PAGE>
Votes will be cast in accordance with the Proxy. Should the undersigned be
present and elect to vote at the Special Meeting or at any adjournment thereof
and after notification to the Secretary of the Association at said Meeting of
the member's decision to terminate this Proxy, then the power of said attorney-
in-fact or agents shall be deemed terminated and of no further force and effect.
The undersigned acknowledges receipt of a Notice of Special Meeting of
Members and a Proxy Statement dated [____________], prior to the execution of
this Proxy.
Date
Signature
NOTE: Only one signature is required
in the case of a joint account.
--------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN
THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
