UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA HAMMOND DIVISION. Plaintiff, Civil Action No. 2 13CV 261H CLASS ACTION COMPLAINT

Transcription

1 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 1 of 20 PC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA HAMMOND DIVISION JAY ORLANDO, individually and on behalf of all others similarly situated, Plaintiff, Civil Action No. 2 13CV 261H It V. CFS BANCORP, INC., GREGORY W. BLAINE, GENE DIAMOND, JOHN W. PALMER, ROBERT R. ROSS, JOYCE M. SIMON, DARYL D. POMRANKE, and FIRST MERCHANTS CORPORATION, Defendants. CLASS ACTION COMPLAINT Plaintiff Jay Orlando ("Plaintiff"), by his attorneys, alleges upon information and belief, except for his own acts, which are alleged on personal knowledge, as follows: NATURE OF THE CASE 1. This putative class action arises out of the proposed merger (the "Merger") between CFS Bancorp, Inc. ("CFS" or the "Company"), the Munster, Indiana-based parent and holding company of Citizens Financial Bank, and First Merchants Corporation ("First Merchants"), pursuant to which First Merchants plans to acquire all of the outstanding shares of CFS in an all-stock transaction worth approximately $114.7 million. 2. Under the terms of the parties' Agreement of Reorganization and Merger (the "Merger Agreement"), executed on May 13, 2013, CFS shareholders will receive 0.65 shares of First Merchants common stock for each of their shares of Company common stock. Based on the

2 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 2 of 20 closing price of First Merchants' common stock on May 10, 2013 of $16.14, the Merger is worth approximately $10.49 per share to CFS' shareholders. 3. As alleged herein, the members of CFS' board of directors (the "Board" or the "Director Defendants") have violated the federal securities laws and breached their state law fiduciary duties to CFS' shareholders by misrepresenting or omitting material information in proxy solicitation materials filed with the U.S. Securities and Exchange Commission (the "SEC"). 4. On July 3, 2013, First Merchants filed a Form S-4 Registration Statement,which also serves as CFS' preliminary proxy statement (the "Proxy Statement"). Notwithstanding the Board's statutory obligation and fiduciary duty to disclose any and all material information to shareholders concerning the Merger, the Proxy Statement misrepresents and omits material information that CFS' shareholders need in order to make a fully informed decision in voting on the Merger. 5. Specifically, Defendants failed to disclose key information regarding (a) CFS' long-term prospects, (b) the financial analyses supporting the Merger consideration performed by River Branch Capital LLC ("River Branch"), the Board's financial advisor, (c) conflicts of interest affecting both the Board and River Branch, and (d) information concerning the process leading up to the announcement of the proposed Merger. 6. Without this information, CFS shareholders will be unable to make a fully informed decision whether to vote for (or against) the proposed Merger. As a result of an uninformed vote which impinges on the foundational corporate right of shareholder suffrage the Company's shareholders stand to suffer irreparable harm. 2

3 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 3 of 20 7, Accordingly, Plaintiff, on behalf of himself and all other similarly situated CFS shareholders, seeks to enjoin the proposed Merger unless and until Defendants remedy their violations. JURISDICTION AND VENUE 8. This Court has subject matter jurisdiction under 28 U.S.C (federal question jurisdiction) as Plaintiff alleges violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder and Section 20(a) of the Exchange Act. This Court has supplemental jurisdiction over the Indiana state law claims asserted herein pursuant to 28 U.S.C This action is not a collusive one to confer jurisdiction on a court of the United States, which it would not otherwise have. 9. Venue is proper in this district because: (i) the conduct at issue took place and had an effect in this district; (ii) CFS maintains its principal place of business in this District; (iii) one or more of the defendants either resides in or maintains executive offices in this District; (iv) a substantial portion of the transactions and wrongs complained of herein, including the Defendants' primary participation in the wrongful acts detailed herein occurred in this District; and (v) Defendants have received substantial compensation in this District by doing business here and engaging in numerous activities that had an effect in this District. PARTIES 10. Plaintiff is, and has been at all relevant times, the owner of shares of CFS common stock. 11. Defendant CFS (NASDAQ: CITZ) is a savings and loan holding company, incorporated under Indiana law and headquartered at 707 Ridge Road, Munster, Indiana. CFS' wholly-owned bank subsidiary is Citizens Financial Bank, a federal savings bank. Citizens

4 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 4 of 20 S Financial Bank has been operating in Northwest Indiana since 1934 and the far southern suburbs of Chicago, Illinois, since Citizens Financial Bank has 20 full service banking centers located in Lake and Porter counties in Northwest Indiana and Cook and DuPage counties in Illinois. CFS employed 262 full-time equivalent employees at March 31, Citizens Financial Bank has one wholly-owned subsidiary, WHCC, LLC, which holds certain other real estate. 12. Defendant Gregory W. Blame has been a member of the Board since Mr. Blame also serves on the Board's Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee. 13. Defendant Gene Diamond has been a member of the Board since Mr. Diamond also chairs the Board's Compensation Committee and serves on the Corporate Governance and Nominating Committee. 14. Defendant John W. Palmer has been a member of the Board since Mr. Palmer also serves on the Board's Audit Committee. 15. Defendant Robert R. Ross has been a member of the Board since 2004 and currently serves as Chairman of the Board. Mr. Ross also chairs the Board's Audit Committee and serves on the Corporate Governance and Nominating Committee. 16. Defendant Joyce M. Simon has been a member of the Board since Ms. Simon also chairs the Board's Corporate Governance and Nominating Committee and serves on the Compensation Committee. 17. Defendant Daryl D. Pomranke, who is currently the Company's Chief Executive Officer, was first elected to the Board in Mr. Pomranke was named President and Chief

5 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 5 of 20 Operating Officer of the Company and the Bank in April 2008, after joining the Company and the Bank as Executive Vice President and Chief Operating Officer in April Defendant First Merchants (NASDAQ: FRME) is a financial holding company incorporated in Indiana and headquartered at 200 E. Jackson Street, Muncie, Indiana. First Merchants has one full-service bank charter, First Merchants Bank, National Association, which opened for business in Muncie, Indiana, in March First Merchants Bank also operates Lafayette Bank and Trust, Commerce National Bank and First Merchants Trust Company as divisions of First Merchants Bank. First Merchants Bank includes 76 banking locations in 24 Indiana and two Ohio counties. First Merchants Bank's business activities are currently limited to one significant business segment, which is community banking. First Merchants also operates First Merchants Insurance Services, Inc., operating as First Merchants Insurance Group, a fullservice property, casualty, personal lines, and employee benefit insurance agency headquartered in Muncie, Indiana. 19. The persons listed in paragraphs 11 through 18 are collectively referred to as "Defendants." CLASS ACTION ALLEGATIONS 20. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of all owners of CFS common stock, excluding Defendants and their affiliates, immediate families, legal representatives, heirs, successors or assigns and any entity in which Defendants have or had a controlling interest (the "Class"). This action is properly maintainable as a class action under Rule 23(b)(a) and (b)(1) and/or (b)(2) for the reasons set forth herein. 5

6 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 6 of The Class is so numerous that joinder of all members is impracticable. As represented in the parties' Merger Agreement, CFS has 10,934,597 shares of common stock issued and outstanding. 22. Questions of law and fact are common to the Class, including: (a) Whether Defendants have misrepresented or omitted material information concerning the Merger in the Proxy Statement in violation of the federal securities laws and the Director Defendants' state law fiduciary duties; and (b) Whether the Class is entitled to injunctive relief or damages as a result of Defendants' wrongful conduct. 23. Plaintiff's claims are typical of those of the other members of the Class, and Plaintiff is not subject to any atypical defenses. 24. Plaintiff is an adequate representative of the Class he is committed to prosecuting this action, has no interests that are adverse to the Class, and has retained competent counsel experienced in litigation of this nature. 25. The prosecution of separate actions by individual members of the Class would create the risk of inconsistent or varying adjudications that would establish incompatible standards of conduct for Defendants, or adjudications that would, as a practical matter, be dispositive of the interests of individual members of the Class who are not parties to the adjudications or would substantially impair or impede those non-party Class members' ability to protect their interests. 26. Defendants have acted on grounds generally applicable to the Class, making appropriate final injunctive relief with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS The Proposed Merger Between CFS and First Merchants mo

7 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 7 of 20 n 27. In a press release dated May 13, 2013, CFS and First Merchants announced that they had entered into the Merger Agreement, pursuant to which First Merchants has agreed to acquire all of the outstanding shares of CFS in an all-stock transaction worth approximately $114.7 million. In addition, Citizens Financial Bank will merger with and into First Merchants Bank, NA. 28. Under the terms of the parties' Merger Agreement, executed on May 13, 2013, CFS shareholders will receive 0.65 shares of First Merchants stock for each of their shares of Company common stock. 29. Based on the closing price of First Merchants' common stock on May 10, 2013 of $16.14, the transaction value is approximately $114.7 million, with an implied price per share of CFS common stock of $ The Merger is contingent upon, among other things, the approval of a majority of the outstanding shares of CFS' common stock. 31. CFS shareholders do not have "appraisal rights" in connection with the Merger that would allow them to obtain "fair value" for their shares. 32. Daryl D. Pomranke, CFS' Chief Executive Officer and President, and Dale S Clapp, CFS' Executive Vice President - Sales Management, will be executives in First Merchants Banks' newly acquired market, with Mr. Pomranke to serve as Regional President. 33. In connection with the process leading up to the execution of the Merger Agreement, CFS' Board retained River Branch Capital LLC ("River Branch") to act as its financial advisor. 34. Sandler O'Neill + Partners, L.P. ("Sandler O'Neill") served as financial advisor to First Merchants. VA

8 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 8 of The Merger is expected to close in the fourth quarter of The Proxy Statement Misrepresents and Omits Material Information Concerning the Merer 36. On July 3, 2013, First Merchants filed the Form S-4 Registration Statement, which also serves as CFS' preliminary Proxy Statement. 37. Notwithstanding the fiduciary duty to disclose any and all material information concerning the Merger which is necessary for the Company's shareholders to be able to cast an informed vote at the upcoming special meeting Defendants failed to disclose key information regarding (a) CFS' long-term prospects, (b) the financial analyses supporting the Merger consideration performed by River, the Board's financial advisor, (c) conflicts of interest affecting both the Board and River Branch, and (d) information concerning the process leading up to the announcement of the proposed Merger. CFS' Financial Forecasts 38. Financial forecasts (sometimes referred to as projections) are among the most important information to be disclosed to shareholders, particularly where, as here, they are asked to consider whether to share in the continued upside of a company versus foregoing future returns and accepting a miniscule percentage of another company. 39. Moreover, River Branch used CFS' financial forecasts for the years 2013 to 2017 in performing its CFS Discounted Cash Flow Analysis and also considered projected synergies that might result from the Merger in connection with the Pro Forma Financial Impact Analysis. 40. Similarly, River Branch used First Merchants' financial forecasts for the years 2013 to 2017 in performing its First Merchants Discounted Cash Flow Analysis and also considered projected synergies that might result from the Merger in connection with the Pro Forma Financial Impact Analysis.

9 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 9 of Furthermore, among other things, the Board cited CFS' and First Merchants' respective financial prospects as part of why it decided to enter into the Merger Agreement. 42. Notwithstanding the materiality of these financial forecasts, the Proxy Statement fails to disclose any projected financial information for CFS or First Merchants, including projected EBITDA, revenues, profits, expenses, etc. 43. In addition, even though the Director Defendants cited potential operational synergies as a reason for agreeing to and recommending the proposed Merger, the Proxy Statement also fails to disclose these projected synergies. 44. The above-described forward-looking information is clearly material and, as such, should have been disclosed. River Branch's Financial Analyses 45. River Branch, acting as the Board's financial advisor, performed various financial analyses in support of its so-called "fairness opinion" concerning the adequacy of the Merger consideration being offered to CFS shareholders. 46. The Board, in turn, expressly cited River Branch's purported fairness opinion, which was based on its financial calculations, as one of the reasons supporting its decision to enter into the Merger Agreement. 47. Shareholders are entitled a fair summary of the analyses underlying an advisor's fairness opinion. However, the Proxy Statement inadequately discloses the underlying methodologies, key inputs, and multiples relied upon and observed by River Branch, thereby preventing CFS' shareholders from adequately and on an informed basis evaluating and understanding River Branch's financial analyses and, thus, the resulting fairness opinion. 48. With respect to River Branch's "Summary of Proposal," the Proxy Statement is Lei

10 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 10 of 20 deficient and should disclose whether the Price / 2013 EPS is based on management or public estimates of CFS' 2013 earnings per share as well as what such estimates were. 49. With respect to River Branch's "Public Trading Analysis" for CFS and First Merchants, which purport to establish a relative value for CFS and First Merchants, respectively, by considering metrics pertaining to other "comparable" companies, the Proxy Statement is deficient and should disclose the following: (a) The bases for the divergent criteria for selecting the two sets of companies that are purportedly "comparable" to CFS and First Merchants; (b) All of the multiples observed and a fulsome description of each purportedly comparable company, including an assessment of NPAs; (c) The criteria for determining what analyses to perform in connection with the Public Trading Analysis, including why River Branch's analyses did not include any calculations relating to the Merger itself and, instead, included only a series of non-merger related information; (d) (e) The definition of "price" as used in the analysis; and An explanation of why River Branch did not calculate or disclose any implied per share values based on the proposed Merger. 50. With respect to River Branch's "CFS Precedent Transaction Analysis," which purport to establish a relative value for CFS based on previously announced mergers and acquisitions,the Proxy Statement is deficient and should disclose the following: (a) The basis for selecting transactions with NPAs to Assets of 4%, given that CFS' NPAs to Assets is only 4.25% based on Sandler O'Neill's financial analyses; 10

11 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 11 of 20 (b) (c) All of the multiples observed by River Branch; and The definition of "low" and "high" in the analysis (i.e., whether it represents the 20th to 80th percentiles, as in the Public Trading Analysis, or the actual high and low values observed). 51. With respect to River Branch's "Discounted Cash Flow Analyses" for both CFS and First Merchants, which purport to establish a relative value for CFS and First Merchants, respectively, based on those companies' projected financial results, the Proxy Statement is deficient and should disclose the following: (a) The projections and other forward-looking information (discussed above); (b) The basis for various assumptions, including the maintenance of a 7.00% tangible common equity to tangible asset ratio for CFS and First Merchants, and long-term growth rates of 3.0% for both CFS and First Merchants; (c) The basis for using the various discount rates used in this analysis, including the key inputs, especially considering that River Branch used different discount rates ranges when performing the analysis for CFS (14.0% to 16.0%) versus First Merchants (9.0% to 13.0%). 52. With respect to River Branch's "Contribution Analysis," which attempts to measure the relative "contribution" to the combined, post-merger entity by CFS and First Merchants, respectively, the Proxy Statement is deficient and should disclose CFS' and First Merchants' respective contribution to expected earnings, particularly because the companies have touted the Merger because of future benefits. 53. With respect to River Branch's "Pro Forma Financial Impact Analysis," which 11

12 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 12 of 20 attempts to assess the impact of combining the two companies' respective balance sheets and operations, the Proxy Statement is deficient and should disclose the projected synergies expected to be realized from the Merger, including those discussed with both CFS and First Merchants' respective members of management. The Process Leading Up to the Execution of the Merger Agreement 54. The Proxy Statement fails to disclose critical information relating to the process by which CFS' management or the Board decided to pursue a strategic transaction. 55. In particular, the Proxy Statement fails to disclose: (a) The Board's involvement in or awareness of the sales process between the Board meetings, especially given management's and River Branch's dominant role and the Board's minimal number of meetings during this time; (b) The criteria for selecting the 12 Midwestern-based financial institutions to contact in the fall of 2012; (c) The basis for contacting First Merchants in February of 2013; (d) The value of the indications of interest (in terms of exchange ratio and implied per share value) received throughout the process; (e) The members of the Board that were not present or did not participate at any of the Board meetings at which the Merger, or related sales process, was discussed; and (f) The various "ancillary agreements" that were discussed by the Board in May of

13 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 13 of This information is material because it tells the Company's shareholders whether the proposed Merger is, in fact, the result of a process designed to secure the highest price possible for CFS and its shareholders. Conflicts of Interest Affecting River Branch 57. A financial advisor plays a crucial role in mergers and acquisitions, facilitating the mechanics of the sales process, providing expertise considering the suitability of combinations with certain parties, and ultimately rendering an opinion on the fairness of a deal. 58. It is, therefore, important to retain an advisor that is both technically qualified and not subject to any conflicts of interest. It is equally important that any potential conflicts of interest must be disclosed to a company's shareholders so that they can make assess the credibility of the work and analyses performed by the financial advisor. 59. Here, the Proxy Statement omits material information concerning potential conflicts affecting River Branch, which acted as the Board's financial advisor, including: (a) The circumstances surrounding the retention of River Branch and whether any other financial advisors were considered, particularly given River Branch's relative small size and lack of experience serving as a financial advisor on complex mergers and acquisitions; (b) The specific (including temporal) terms by which River Branch will receive its non-refundable cash return of $25,000 per quarter (i.e., how much River Branch has received and how much more it stands to receive); (c) (d) The Board's versus management's role in retaining River Branch; The compensation received by River Branch from CFS over the past two years, not just "customary compensation"; and 13

14 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 14 of 20 (e) Whether the Board was aware of how much money River Branch has received and still stands to receive from First Merchants in connection with any relationship, material or otherwise. Conflicts of Interest Affecting the Company's Board and Members of Management 60. The Proxy Statement states that First Merchants has agreed to provide post- Merger arrangements with various members of CFS' management, including Defendant King. However, the Proxy Statement fails to disclose various items concerning these individuals' potential conflicts of interest, including: (a) When discussions concerning post-merger opportunities first began between CFS executives and First Merchants (including through their respective representatives); (b) Whether, and to what extent, any other potential strategic partners indicated an interest or willingness to retain these individuals following a transaction like the Merger; (c) The financial details of any and all discussions, whether or not such terms have been formalized, agreed upon, or otherwise resolved; and (d) Whether the Board was privy to information concerning the post-merger arrangements prior to voting to enter into the Merger Agreement. 61. It is necessary for CFS shareholders to be provided with this information concerning the financial interests of the Company's fiduciaries in order for shareholders to assess the credibility of the Board's recommendation and to evaluate whether the proposed Merger is, in fact, the result of a sound, arm's-length process. 14

15 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 15 of Accordingly, Plaintiff seeks injunctive and other equitable relief to prevent the irreparable injury that Company shareholders will continue to suffer absent judicial intervention herein. CLAIMS FOR RELIEF COUNT I Against All Defendants for Violations of 14(a) of the Securities Exchange Act of 1934 and the SEC's Rule 14a Plaintiff incorporates each and every allegation set forth above as if fully set forth 64. Defendants have issued the Proxy Statement with the intention of soliciting shareholder support for the Merger. Each of the Defendants reviewed and authorized the dissemination of the Proxy Statement which fails to provide critical information regarding, among other things, the future value of the Company, the key inputs and assumptions of the financial analyses, potential conflicts of interest, and the background leading up to the Merger. 65. In so doing, the Defendants made untrue statements of fact and omitted to state material facts necessary to make the statements made not misleading. Each of the Director Defendants, by virtue of their roles as officers and/or directors, were aware of the omitted information but failed to disclose such information, in violation of Section 14(a). 66. Rule 14a-9, promulgated by the SEC pursuant to Section 14(a) of the Exchange Act, provides that such communications with shareholders shall not contain "any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading." 17 C.F.R a Specifically, the Proxy Statement violates Section 14(a) and Rule 14a-9 because it omits material facts, including those set forth above. Moreover, in the exercise of reasonable 15

16 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 16 of 20 a care, Defendants knew or should have known that the Proxy Statement is materially misleading and omits material facts that are necessary to render it not misleading. 68. The misrepresentations and omissions in the Proxy Statement are material to Plaintiff and the Class, who will be deprived of their entitlement to cast a fully informed vote if such misrepresentations and omissions are not corrected prior to the vote on the Merger. As a direct and proximate result of Defendants' conduct, Plaintiff and other CFS shareholders will be irreparably harmed. 69. Plaintiff has no adequate remedy at law. COUNT II Against the Director Defendants for Violations of 20(a) of the 1934 Act 70. Plaintiff incorporates each and every allegation set forth above as if fully set forth herein. 71. The Director Defendants acted as controlling persons of CFS within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their positions as officers and/or directors of CFS, and participation in and/or awareness of the Company's operations and/or intimate knowledge of the false statements contained in the Proxy Statement filed with the SEC, they had the power to influence and control and did influence and control, directly or indirectly, the decision making of the Company, including the content and dissemination of the various statements which Plaintiff contends are false and misleading. 72. Each of the Director Defendants were provided with or had unlimited access to copies of the Proxy Statement and other statements alleged by Plaintiff to be misleading prior to and/or shortly after these statements were issued and had the ability to prevent the issuance of the statements or cause the statements to be corrected. 16

17 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 17 of In particular, each of the Director Defendants had direct and supervisory involvement in the day-to-day operations of the Company, and, therefore, is presumed to have had the power to control or influence the particular transactions giving rise to the securities violations alleged herein, and exercised the same. Projected financial information was reviewed by the Board periodically at meetings. The Proxy Statement at issue contains the unanimous recommendation of each of the Director Defendants to approve the Merger. They were, thus, directly involved in the making of this document. 74. In addition, as the Proxy Statement sets forth at length, and as described herein, the Director Defendants were each involved in negotiating, reviewing, and approving the Merger Agreement. The Proxy Statement purports to describe the various issues and information that the Director Defendants reviewed and considered. The Director Defendants participated in drafting and/or gave their input on the content of those descriptions. 75. By virtue of the foregoing, the Director Defendants have violated Section 20(a) of the Exchange Act. 76. As set forth above, the Director Defendants had the ability to exercise control over and did control a person or persons who have each violated Section 14(a) and SEC Rule 14a-9, by their acts and omissions as alleged herein. By virtue of their positions as controlling persons, these defendants are liable pursuant to Section 20(a) of the Exchange Act. As a direct and proximate result of Director Defendants' conduct, Plaintiff and the Class will be irreparably harmed. 77. Plaintiff has no adequate remedy at law. 17

18 U case 2:13-cv JD-JEM document 1 filed 07/30/13 page 18 of 20 M COUNT III Against the Director Defendants for Breach of Fiduciary Duty for Inadequate or Misleading Disclosure in Connection with the Merger 78. Plaintiff repeats all previous allegations as if set forth in full herein. 79. The fiduciary duties of the Board members in the circumstances of the proposed Merger require them to disclose to Plaintiff and the Class all information material to the decisions confronting CFS's shareholders. 80. As set forth above, the Board members have breached their fiduciary duty through materially inadequate disclosures and material disclosure omissions. 81. As a result, Plaintiff and the Class members are being harmed irreparably by virtue of being unable to cast a fully informed vote on the Merger. follows: 82. Plaintiff and the Class have no adequate remedy at law. PRAYER FOR RELIEF WHEREFORE, Plaintiff demands judgment against defendants jointly and severally, as (A) declaring this action to be a class action and certifying Plaintiff as the Class representative and his counsel as Class counsel; (B) (C) enjoining, preliminarily and permanently, the Merger; in the event that the transaction is consummated prior to the entry of this Court's final judgment, rescinding it or awarding Plaintiff and the Class rescissory damages; (D) directing that Defendants account to Plaintiff and the other members of the Class for all damages caused by them and account for all profits and any special benefits obtained as a result of their breaches of their fiduciary duties; 18

19 LI case 2:13-cv JD-JEM document 1 filed 07/30/13 page 19 of 20 (E) awarding Plaintiff the costs of this action, including a reasonable allowance for the fees and expenses of Plaintiffs attorneys and experts; and (F) granting Plaintiff and the other members of the Class such further relief as the Court deems just and proper. Dated: July 30, 2013 Respectfully submitted,,96-qa &1P K~ Grego. To e (Attorney ) Spangler, Jennings & Dougherty, P.C Mississippi Street Merrillville, Indiana Tel: (219) Fax: (219) gtonner(iisi dlaw.com Attorney for Plaintiffs OF COUNSEL: LEVI & KORSINSKY LLP Joseph E. Levi W. Scott Holleman 30 Broad Street, 24th Floor New York, NY Tel: (212) Fax: (212)

20 case 2:13-cv JD-JEM document 1 filed 07/30/13 page 20 of 20 0 it CERTIFICATION OF NAMED PLAINTIFF PURSUANT TO FEDERAL SECLIRITTES LAWS I, Jay Orlando, duly certify and say, as to the claims under the federal securities laws, that: I have reviewed the complaint in this action. I did not purchase the security that is the subject of this action at the direction of plaintiff's counsel or in order to participate in this private action. 3. 1am willing to serve as a representative party on behalf of the class, including providing testimony at deposition and trial, if necessary. 4. My transaction(s) in CFS Bancorp, Inc. securities which are the subject of this litigation set foiilh below. ow, Date of Transaction Shares Purchased / Sold Cost CFS Bancorp, Inc. 1 /9~'/? 0 5. Within the last 3 years, I have not sought to serve nor have I served as a class representative in any federal securities fraud case. 6. I will not accept any payment for serving as a representative party on behalf of the class beyond the Plaintiff's pro rata share of any recovery, except as ordered or approved by the Court, including any award for reasonable costs and expenses (including lost wages) directly relating to the representation of the class. I hereby certify, under penalty of perjury, that the foregoing is true and correct. Executed this IS-&day of July 2013.