EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
EXHIBIT C
PEOPLES HOME SAVINGS BANK
BEAVER FALLS, PENNSYLVANIA
PLAN OF MUTUAL HOLDING COMPANY REORGANIZATION
AND STOCK ISSUANCE
Adopted by the Board of Trustees
on
January 10, 1997
and Subsequently Amended
MUTUAL HOLDING COMPANY PLAN OF REORGANIZATION AND STOCK ISSUANCE
PEOPLES HOME SAVINGS BANK
TABLE OF CONTENTS
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PAGE
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1. Introduction........................................................... A-1
2. Definitions............................................................ A-2
3. Certain Effects of Reorganization...................................... A-6
4. Ratification by Depositors............................................. A-8
5. Conditions to Implementation of Reorganization......................... A-9
6. Stock Offering Documents............................................... A-9
7. Stock Offering......................................................... A-10
8. Subscription Rights of Eligible Account Holders (First Priority)....... A-11
9. Subscription Rights of Employee Plans (Second Priority)................ A-12
10. Supplemental Eligible Account Holders (Third Priority)................. A-12
11. Subscription Rights of Current Depositors (Fourth Priority)............ A-13
12. Community Offering..................................................... A-13
13. Public Offering and Syndicated Public Offering......................... A-14
14. Limitation on Purchases................................................ A-15
15. Payment for Common Stock............................................... A-16
16. Manner of Exercising Subscription Rights Through Order Forms........... A-17
17. Undelivered, Defective or Late Order Forms: Insufficient Payment....... A-18
18. Restrictions on Resale or Subsequent Disposition....................... A-19
19. Articles of Incorporation and Bylaws of the Stock Bank................. A-19
20. Articles of Incorporation and Bylaws of the Holding Company............ A-20
21. Formation of a Middle-Tier Stock Holding Company....................... A-20
22. Conversion of Holding Company to Stock Form............................ A-20
23. Continuity of the Bank and Status of Deposit Accounts and Loans
Subsequent to Reorganization........................................... A-21
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24. Rights of Depositors of MHC............................................ A-21
25. Trustees of the MHC.................................................... A-22
26. Residents of Foreign Countries and Certain States...................... A-22
27. Expenses of Reorganization............................................. A-22
28. Amendment or Termination of the Plan................................... A-22
29. Miscellaneous.......................................................... A-23
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1. INTRODUCTION
On January 10, 1997, the Board of Trustees of Peoples Home Savings Bank
(the "Bank") by at least a two-thirds vote adopted, and at a second meeting at
least ten days thereafter again adopted, this Mutual Holding Company Plan of
Reorganization and Stock Issuance (the "Plan"), which was subsequently amended,
pursuant to which the Bank proposes to reorganize from a Pennsylvania chartered
mutual savings bank into a Pennsylvania chartered mutual holding company (the
"Holding Company") pursuant to the laws of the United States of America and the
Commonwealth of Pennsylvania and the regulations and policies of the
Pennsylvania Department of Banking ("Department"). A principal part of the
reorganization into the Holding Company (the "Reorganization") is the
incorporation of a capital stock savings bank (the "Stock Bank"), a majority of
the voting stock of which will be owned by the Holding Company at all times so
long as the Holding Company remains in the mutual form of organization.
One or more stock offerings of up to but less than 50% in the aggregate
of the total voting stock of the Stock Bank may be made simultaneously, or
following the Reorganization, subject to the approval of the Department, as may
be necessary. As long as the Bank is chartered under the laws of the
Commonwealth of Pennsylvania, any offer and sale of any equity securities,
regardless of when it occurs, will be conducted in accordance with the laws of
the United States and Pennsylvania and the rules, regulations and policies of
the Department.
In adopting the Plan, the Board of Trustees has determined that the
Reorganization is advisable and in the best interests of the Bank and its
depositors. The Reorganization will enable the Bank to increase its capital
through the issuance of capital stock without undertaking a full conversion from
the mutual to stock form of organization. The Reorganization will not foreclose
the opportunity to effect a conversion of the Holding Company from the
mutual-to-stock form of organization following the Reorganization. The
Reorganization may facilitate the possible acquisition of other financial
institutions, possible diversification into other related financial service
activities and other purposes and will further enhance the Bank's ability to
render services to the public. The Reorganization will afford the Bank as a
capital stock savings bank subsidiary of the Holding Company access to capital
sources not legally available to a mutual savings bank, while at the same time
preserving the mutual form of ownership in the holding company structure. The
mutual holding company structure also will allow the Bank to minimize
over-capitalization by providing the flexibility to raise capital through the
issuance of stock in a manner designed to meet the Bank's growth needs, rather
than in a single stock offering as required in a standard mutual-to-stock
conversion. This access to the capital markets will make it possible for the
Bank to be more responsive to possible future charges in bank regulatory
agencies' regulations mandating higher capital reserves and/or capital ratios.
The Reorganization is subject to the approval of the Department and the
non-objection of the Federal Deposit Insurance of the Corporation ("FDIC") and
must be adopted by the affirmative vote of two-thirds of the Board of Trustees
of the Savings Bank. In addition, the Reorganization is subject to ratification
by the depositors of the Savings Bank.
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2. DEFINITIONS
As used in this Plan, the terms set forth below have the following meanings:
Account Holder: The term Account Holder means any Person holding a Savings
Account in the Bank.
Acting in Concert: The Term "Acting in Concert" means (i) knowing participation
in a joint activity or interdependent conscious parallel action towards a common
goal whether or not pursuant to an express agreement; (ii) a combination or
pooling of voting or other interests in the securities of an issuer for a common
purpose pursuant to any contract, understanding, relationship, agreement or
other arrangement, whether written or otherwise; or (iii) a person or company
which acts in concert with another person or company ("other party") shall also
be deemed to be acting in concert with any person or company who is also acting
in concert with that other party, except that any tax-qualified employee stock
benefit plan will not be deemed to be acting in concert with its trustee or a
person who serves in a similar capacity solely for the purpose of determining
whether stock held by the trustee and stock held by the plan will be aggregated.
In addition, two or more Persons who have a joint account will be deemed to be
acting in concert.
Associate: The term Associate when used to indicate a relationship with any
person, means (i) any corporation or organization (other than the Bank or a
majority-owned subsidiary of the Bank) of which such person is an officer or
partner or is, directly or indirectly, the beneficial owner of 10 percent or
more of any class of equity securities, (ii) any trust or other estate in which
such person has a substantial beneficial interest or as to which such person
serves as trustee or in a similar fiduciary capacity except that for the
purposes of Sections 9 and 14 hereof, the term "Associate" does not include any
Tax-Qualified Employee Stock Benefit Plan or any Tax- Qualified Employee Stock
Benefit Plan in which a person has a substantial beneficial interest or serves
as a trustee or in a similar fiduciary capacity, and except that, for purposes
of aggregating total shares that may be held by Officers and Directors the term
"Associate" does not include any Tax-Qualified Employee Stock Benefit Plan, and
(iii) any relative or spouse of such person, or any relative of such spouse, who
has the same home as such person or who is a Director or Officer of the Bank or
the Holding Company, or any of its parents or subsidiaries.
Bank: Peoples Home Savings Bank in its current mutual form or
post-Reorganization stock form, as indicated by the context.
Capital Stock: Any and all authorized stock of the Stock Bank.
Commissioner: The Senior Representative of the Commissioner of Banking of the
Commonwealth of Pennsylvania or his delegate.
Common Stock: Common stock issued by the Stock Bank simultaneously with or after
the Reorganization, including securities convertible into common stock, pursuant
to its stock organization certificate.
Community Offering: The term Community Offering, if applicable, means the
offering for sale to certain members of the general public directly by the Stock
Bank, of any shares not subscribed
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for in the Subscription Offering.
Current Depositors: Persons who have a savings or deposit account of at least
$50 at the Savings Bank as of the Date of Record.
Date of Record: Date upon which depositors given the opportunity to vote upon
ratification of the Plan at the Special Meeting is determined.
Department: The Department of Banking of the Commonwealth of Pennsylvania.
Effective Date: The effective date of the Reorganization which shall be the date
of consummation of the Reorganization and Offering in accordance with this Plan
and the applicable rules and regulations.
Eligible Account Holder: The term Eligible Account Holder means any Person
holding a Qualifying Deposit in a Savings Account at the Bank on the Eligibility
Record Date.
Eligibility Record Date: The term Eligibility Record Date means the date for
determining Eligible Account Holders in the Bank and is the close of business on
December 31, 1995.
Employee: A person who is an Employee of the Bank at the date of the
Reorganization.
Employee Plans: The term Employee Plans means the Tax-Qualified Employee Stock
Benefit Plans, including the Employee Stock Ownership Plan, approved by the
Board of Trustees of the Bank.
Estimated Valuation Range: The term Estimated Valuation Range means the range of
the estimated pro forma market value of the Common Stock as determined by the
Independent Appraiser prior to the Subscription Offering and as it may be
amended from time to time thereafter.
ESOP: An employees' stock ownership plan with its related trust, that meets the
requirements to be "qualified" under Section 401 of the Internal Revenue Code of
1986, as amended.
FDIC: Federal Deposit Insurance Corporation, as established by the Federal
Deposit Insurance Act.
FRB: Board of Governors of the Federal Reserve System.
Holding Company: The mutual holding company established by the Bank incident to
the Reorganization.
Independent Appraiser: The term Independent Appraiser means an appraiser
retained by the Bank to prepare an appraisal of the pro forma market value of
the Common Stock.
Local Community: The term local community means the incorporated cities and the
counties in which the Bank has offices.
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Majority Interest: Greater than fifty percent (50%) of the combined voting power
or value of all classes of stock of the Stock Bank.
Minority Stock Offering: Any offering of Capital Stock of the Stock Bank to
persons other than the Holding Company of up to but less than 50% in the
aggregate of the total common stock of the Stock Bank.
Mutual Bank: Peoples Home Savings Bank in the mutual form of organization.
Notice of Reorganization: The Notice of Mutual Holding Company Reorganization,
to be submitted by the Bank to the Department to notify the Department of the
Reorganization.
Officer: An executive officer of the Bank which includes the Chairman,
President, Chief Executive Officer, Senior Vice President and Vice Presidents in
charge of principal business functions, and any other person participating in
major policy making functions of the Bank.
Order Form: The term Order Form means any form together with attached cover
letter, sent by the Bank to any Person containing among other things a
description of the alternatives available to such Person under the Plan and by
which any such Person may make elections regarding subscriptions for Common
Stock in the Subscription and Community Offerings.
Participants: The term Participants means the Eligible Account Holders, Employee
Plans, Supplemental Eligible Account Holders and Current Depositors.
Person: An individual, a corporation, a partnership, an association, a
joint-stock company, a trust (including Individual Retirement Accounts and XXXXX
Accounts), any unincorporated organization, a government or political
subdivision thereof or any other entity.
Plan: This Plan of Reorganization and Stock Issuance of the Bank as it exists on
the date hereof and as it may hereafter be amended in accordance with its terms.
Preferred Stock: Preferred Stock authorized pursuant to the Stock Bank's
articles of incorporation.
Public Offering: The term Public Offering means the offering for sale through
the Underwriter to the general public of any shares of Common Stock not
subscribed for in the Subscription Offering.
Purchase and Assumption Transaction: The method of effecting the transfer of
assets and liabilities of the Bank to the Stock Bank as described more
particularly in the Plan.
Purchase Price: The term Purchase Price means the per share price at which the
Common Stock will be sold in accordance with the terms hereof.
Qualifying Deposit: The term Qualifying Deposit means the balance of each
Savings Account of $50 or more in the Bank at the close of business on the
Eligibility Record Date or Supplemental Eligibility Record Date. Savings
Accounts with total deposit balances of less than $50 shall not constitute a
Qualifying Deposit.
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Reorganization: Collectively, all steps necessary for the Bank to reorganize
into the mutual holding company form of organization in accordance with the laws
of the United States of America and the Commonwealth of Pennsylvania and the
Rules and Regulations of the Department and FDIC.
SAIF: The Savings Association Insurance Fund, which is administered by the FDIC.
Savings Account(s): Withdrawable deposits in the Bank including certificates of
deposit.
SEC: The Securities and Exchange Commission.
Special Meeting: The Special Meeting of depositors of the Bank and any
adjournments thereof, which may be called to ratify the Plan.
Stock Bank: The newly organized Pennsylvania chartered stock savings bank
established by the Bank as part of the Reorganization.
Subscription Offering: The term Subscription Offering means the offering of
Common Stock of the Stock Bank for purchase through Order Forms to Participants.
Supplemental Eligibility Record Date: The term Supplemental Eligibility Record
Date means the close of business on the last day of the calendar quarter
preceding the approval of the Plan by the Department.
Supplemental Eligible Account Holder: The term Supplemental Eligible Account
Holder means a holder of a Qualifying Deposit in the Bank (other than an officer
or trustee or their Associates) at the close of business on the Supplemental
Eligibility Record Date.
Syndicated Community Offering: The term Syndicated Community Offering means the
offering of Conversion Stock following the Subscription and Community Offerings
through a syndicate of broker-dealers.
Tax-Qualified Employee Stock Benefit Plan: The term Tax-Qualified Employee Stock
Benefit Plan means any defined benefit plan or defined contribution plan, such
as an employee stock ownership plan, stock bonus plan, profit-sharing plan or
other plan, which, with its related trust, meets the requirements to be
"qualified" under Section 401 of the Internal Revenue Code.
Trustees: A member of the Board of Trustees of the Bank.
Underwriter: The term Underwriter means the investment banking firm or firms
through which the Common Stock will be offered and sold in the Public Offering.
Voting Stock: Common or preferred stock, or any other type of equity security,
including (without limitation) other securities that are convertible into common
or preferred stock, having voting power for the election of trustees or
management of the Stock Bank.
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3. CERTAIN EFFECTS OF REORGANIZATION
A. Organization of a Mutual Holding Company and Stock Bank
A principal part of the Reorganization will be the
organization of a Pennsylvania chartered capital stock savings bank
subsidiary, of which the Holding Company will own a Majority Interest
as long as the Holding Company remains in existence.
The Reorganization will be effected in either of the following
ways, or in any manner approved by the Department that is consistent
with the purposes of this Plan and applicable laws and regulations. The
Bank's intention is to complete the Reorganization using the Merger
Alternative, although it may elect to use any method at the discretion
of the Department consistent with applicable Regulations and subject to
Department approval.
"Merger Alternative" Under the Merger Alternative: (i) the
Bank will organize an interim stock savings bank as a wholly-owned
subsidiary ("Interim One"); (ii) Interim One will organize an interim
stock savings bank as a wholly-owned subsidiary ("Interim Two"); (iii)
the Bank will exchange its articles of incorporation for a stock
savings bank articles of incorporation to become the Stock Bank and
Interim One will exchange its articles of incorporation for a mutual
holding company articles of incorporation to become the MHC; (iv)
simultaneously with step (iii), Interim Two will merge with and into
Stock Bank with Stock Bank as the resulting institution; and (v) a
majority of the initially issued stock of Stock Bank will be
transferred to MHC in exchange for membership interests in the MHC.
Upon consummation of the Reorganization, the legal existence of the
Bank will not terminate, but the converted Stock Bank will be a
continuation of the Bank and all property of the Bank, including its
right, title, and interest in and to all property of whatsoever kind
and nature, interest and asset of every conceivable value or benefit
then existing or pertaining to the Bank, or which would inure to the
Bank immediately by operation of law and without the necessity of any
conveyance or transfer and without any further act or deed, will vest
in the Stock Bank. The Stock Bank will have, hold, and enjoy the same
in its right and fully and to the same extent as the same was
possessed, held, and enjoyed by the Bank. The Stock Bank will continue
to have, succeed to, and be responsible for all the rights,
liabilities, and obligations of the Bank and will maintain its
headquarters operations at the Bank's present locations.
"Purchase and Assumption Alternative" Under the Purchase and
Assumption Alternative the Bank will: (i) incorporate the Stock Bank;
(ii) transfer substantially all of its assets (all except up to
$1,000,000, subject to Department approval) and all of its liabilities,
including all of its deposit liabilities, to the Stock Bank in exchange
for at least a majority of the initially issued and outstanding shares
of Common Stock of the Stock Bank; and (iii) adopt new articles of
incorporation changing its form to that of a mutual holding company.
The MHC will not retain any assets of the Bank which are
required by the Stock Bank in order to satisfy capital and reserve
requirements of law. All assets, rights, obligations and liabilities of
whatever nature of the Bank that are not expressly retained by the MHC
shall be deemed transferred to the Stock Bank. The Bank will apply to
the Department to retain up to $1,000,000 at the MHC level in
connection with the Reorganization. The Bank may distribute additional
capital to the MHC following the Reorganization, subject to Department
regulations governing capital distributions.
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The Mutual Bank shall submit a Notice of Reorganization to the
Department. Upon filing the Notice, the Mutual Bank shall publish a
"Notice of Filing Application for Mutual Holding Company
Reorganization" in a newspaper of general circulation in each community
in which the Bank has an office. The Bank shall prominently display a
copy of the Notice in each of its offices. Copies of the Plan as
adopted by the Board of Trustees shall be made available for inspection
at each office of the Bank.
B. Operation of the Stock Bank
Upon the transfer of assets and liabilities of the Mutual Bank
to the Stock Bank, those persons who as of the Effective Date held
depository rights with respect to, or other rights as creditors of, the
Mutual Bank shall thereafter have such rights solely with respect to
the Stock Bank. Each deposit account in the Mutual Bank at the
Effective Date will become a deposit account in the Stock Bank in the
same amount and upon the same terms and conditions, except that the
holder of each such deposit account will no longer have any ownership
interest in the Stock Bank. Such depositors will have liquidation
rights with respect to the Holding Company in accordance with federal
law. Members will not have any voting rights in the Stock Bank, but
will possess such rights in the Holding Company. All insured deposit
accounts of the Mutual Bank which are transferred to the Stock Bank
will continue to be insured up to the legal maximum by the SAIF in the
same manner as deposit accounts existing in the Mutual Bank immediately
prior to the Reorganization.
All loans and other borrowings from the Mutual Bank shall
retain the same status with the Stock Bank after the Reorganization as
they had with the Mutual Bank prior to the Reorganization. The Stock
Bank may exercise any and all powers, rights, and privileges of, and
shall be subject to all limitations applicable to, capital stock
savings banks under applicable law.
The initial Board of Trustees of the Stock Bank will be the
existing Board of Trustees of the Mutual Bank. The Board of Trustees
will be divided into three classes as nearly equal in number as
possible and the members of each class shall be elected for a term of
three years and until their successors are elected and qualified. One
class shall be elected by ballot annually by the stockholders of the
Stock Bank's Common Stock. Present management of the Mutual Bank will
continue as the management of the Stock Bank following the
Reorganization.
Following the Reorganization, the Stock Bank will have the
power to issue shares of Capital Stock to persons other than the
Holding Company. Pursuant to applicable law and regulations, unless
other revised or amended, so long as the Holding Company is in
existence, the Holding Company will be required to own a Majority
Interest in the Stock Bank. One or more offerings of up to but less
than 50% in the aggregate of the total Common Stock of the Stock Bank
may be made following the Reorganization, subject to the approval of
the Department.
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C. Operation of the Holding Company
Upon the Effective Date, the Stock Bank will be a majority
owned subsidiary of the Holding Company. So long as they remain
depositors of the Stock Bank, persons who had deposit accounts in the
Bank at the time of the Reorganization and persons who establish such
deposit accounts subsequent to the Reorganization shall, as provided
for under applicable law, have liquidation rights in the Holding
Company after the Reorganization. The MHC will not retain assets of the
Savings Bank which are required to be transferred to the Stock Bank in
order to satisfy capital or reserve requirements of applicable law. All
assets, rights, obligations and liabilities of whatever nature of the
Bank that are not expressly retained or obtained by the MHC shall be
deemed to be held by the Bank. The rights and powers of the MHC will be
defined by the MHC's articles of incorporation and bylaws and by the
statutory and regulatory provisions applicable to savings and loan or
bank holding companies and mutual savings bank holding companies. In
particular, if the MHC elects to be a savings and loan holding company,
it shall be subject to the limitations and restrictions imposed on
savings and loan holding companies by Section 10(o)(5) of the Home
Owners' Loan Act of 1933, as amended ("HOLA"). If the MHC elects to be
a bank holding company, it shall be subject to the limitations imposed
by the Bank Holding Company Act, as amended ("BHCA").
Following the Reorganization, all of the members of the Board
of Trustees of the Mutual Bank will become Trustees of the Holding
Company. Except as may be otherwise specifically provided in the
Holding Company's articles of incorporation, each Trustee shall hold
office until he resigns, is removed or becomes disqualified. Service as
a Trustee of the Holding Company is separate and distinct from service
as a trustee of the Stock Bank and in no event shall a Trustee of the
Holding Company who also serves as a trustee of the Stock Bank be
disqualified from receiving any rights or privileges as a trustee of
the Stock Bank because he serves in such dual capacities. Certain
senior management persons of the Mutual Bank will assume similar
positions with the Holding Company.
Upon completion of the Reorganization, except for assets
retained by the Holding Company, the Reorganization of the Mutual Bank
into a mutual holding company will not result in any reduction in the
amount of the reserves, capital and surplus that the Bank had prior to
the Reorganization. Such reserves, capital and surplus will be
accounted for by the Holding Company and the Stock Bank on a
consolidated basis in accordance with generally accepted accounting
principles.
4. RATIFICATION BY DEPOSITORS
Pursuant to the laws of the Commonwealth of Pennsylvania, the
voting rights of the Bank are held exclusively by the Board of Trustees, which
is required to adopt the Plan by a vote of not less than two-thirds of its
entire membership. The FDIC has issued Regulations, under which all state
savings banks are generally required to have plans to reorganize from mutual to
stock form approved by depositors. Accordingly, the Bank is expected to seek
special proxies from depositors to ratify the Plan. Subsequent to the approval
of the Plan by the Department, a Special Meeting of depositors may be scheduled.
At least twenty days but not more than sixty days prior to the Special Meeting,
the Savings Bank may distribute proxy solicitation materials to all depositors
as of a Date of Record twenty to sixty days prior to the Special Meeting. The
proxy solicitation materials may incorporate by reference any or all of the
information contained in the Minority Stock Offering Circular.
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Each depositor as of the Date of Record shall receive one vote for
every $100 of deposits at the Bank. The Bank shall seek ratification of the Plan
by an affirmative vote of not less than a majority of the votes outstanding.
5. CONDITIONS TO IMPLEMENTATION OF REORGANIZATION
Consummation of the Reorganization is expressly conditioned upon the
following:
A. The Plan is approved by at least a two-thirds majority of the
Board of Trustees at two meetings with at least 10 days notice
between each meeting;
B. A Reorganization Notice is filed with the Department and FDIC,
and the Department has given written notice of its approval of
the proposed Reorganization;
C. The FDIC has given a written notice of non-objection, or 60 days
has passed since filing a complete Reorganization Notice with the
FDIC or 20 days has passed since the receipt of Department
approval without receiving an objection from the FDIC.
D. All necessary approvals have been obtained from the Department
and FDIC and, in connection with the articles of incorporation
and bylaws of the mutual savings bank holding company, the Stock
Bank, the insurance of accounts of the New Savings Bank, the
transfer of assets and liabilities of the Bank to the Stock Bank,
the Holding Company Application and all conditions specified or
otherwise imposed by the Department or FDIC in connection with
the approvals or issuance of a notice of intent not to disapprove
have been satisfied;
E. Receipt by the Bank of a favorable ruling of the Internal Revenue
Service ("IRS") or an opinion of the Bank's tax counsel with
respect to federal taxation to the effect that consummation of
the Reorganization will not be a taxable event to the MHC, the
Stock Bank or the Bank's depositors;
F. Receipt by the Bank of either a private letter ruling of the
State Department of Revenue or an opinion of the Bank's tax
counsel with respect to State taxation to the effect that
consummation of the Reorganization will not be a taxable event to
the MHC, the Stock Bank or to the Bank's depositors;
G. Ratification of the Plan by Current Depositors.
6. STOCK OFFERING DOCUMENTS
The Bank intends to commence a Minority Stock Offering concurrent with
the formation of the Holding Company. The Bank may also commence one or more
stock offerings following the Reorganization. The Bank may close the Minority
Stock Offering before the Effective Date, provided that the offer and sale of
the Stock shall be conditioned upon the receipt of all required regulatory
approvals and depositor ratification. The Savings Bank may send Participants a
Summary of the Reorganization and require Participants, to return to the Bank by
a reasonable date certain a postage prepaid card or other written communication
requesting receipt of the Stock Offering Circular. The Bank shall not distribute
the final Minority Stock Offering Circular until such Offering Circular has been
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approved for use by the Department.
Any shares of Common Stock sold in the Minority Stock Offering that are
not subscribed for in the Subscription Offering may be offered for sale in the
Community Offering, if any, as provided in this Plan and may be offered in a
Public Offering or Syndicated Public Offering, as provided herein, if necessary
and feasible. The Subscription Offering may be commenced prior to the Special
Meeting of Depositors and, in that event, the Community Offering, if any, or
Public Offering may also be commenced prior to the Special Meeting of
Depositors.
The Bank may elect to pay fees on either a fixed fee or commission
basis or combination thereof to an investment banking firm which assists it in
the sale of the Common Stock in the Minority Stock Offering.
The Bank may also elect to offer to pay fees on a per share basis to
brokers who assist Persons in determining to purchase shares in the Syndicated
Public Offering and whose name appears on the purchaser's order form.
7. STOCK OFFERING
A. Number of Shares. The number of shares and price per share of Common
Stock to be offered pursuant to the Plan shall be initially determined by the
Board of Trustees of the Bank in conjunction with the determination of the
Independent Appraiser. The number of shares to be offered will be on a
minimum-maximum basis within a range determined by the Board of Trustees (the
"Offering Range") and may be adjusted at or immediately subsequent to the
completion of the Minority Stock Offering without notifying Participants and
without a resolicitation of subscriptions. The number of shares to be offered or
Offering Range may be subsequently adjusted at or immediately subsequent to the
completion of the Minority Stock Offering for any reason, including a change in
the appraisal. The total number of shares of Common Stock that may be issued to
persons other than the Holding Company at the close of the Minority Stock
Offering must be less than 50% of the issued and outstanding shares of the Stock
Bank.
B. Independent Evaluation and Purchase Price of Shares. All shares of
Common Stock sold in the Minority Stock Offering shall be sold at a uniform
price per share, referred to in this Plan as the "Purchase Price". The Purchase
Price and number of shares shall be determined by the Board of Trustees of the
Bank immediately prior to the simultaneous completion of all such sales
contemplated by this Plan on the basis of the estimated pro forma market value
of the Bank and the fact that the shares offered represent a minority interest
in the Stock Bank (the "Independent Evaluation"). Therefore, the Independent
Evaluation and the resulting Purchase Price may reflect a discount to the
valuation applied to a standard mutual-to-stock conversion. The aggregate
purchase price for the Common Stock will not be inconsistent with such market
value of the Bank. The Independent Evaluation of the Bank shall be determined
for such purpose by an Independent Appraiser on the basis of such appropriate
factors as are not inconsistent with Department regulations. The total amount of
Common Stock that may be issued to persons other than the Holding Company must
be less than 50% of the Independent Evaluation. The Common Stock to be issued in
the Minority Stock Offering shall be fully paid and nonassessable.
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C. Minority Ownership Percentage. Based upon the Independent
Appraiser's valuation of the Bank as updated prior to the commencement of the
Minority Stock Offering, the Board of Trustees will establish the minimum and
maximum ownership percentage applicable to the Minority Stock Offering
("Ownership Range"). The final minority ownership percentages or interest will
be determined by the Bank as follows: (a) the product of (x) the total number of
shares of Common Stock to be issued and sold and (y) the Purchase Price shall be
by divided by (b) the estimated aggregate pro forma market value of the Bank
immediately after the Minority Stock Offering as determined by the Independent
Appraiser, expressed in terms of a specific aggregate dollar amount upon the
closing of the Minority Stock Offering or sale of all the Common Stock.
D. Method of Offering Shares. Subject to the discretion of the Bank and
the limitations set forth in Section 14, the opportunity to purchase Common
Stock will be given at no cost to: (i) Eligible Account Holders, (ii)
Tax-Qualified Employee Plans, (iii) Supplemental Eligible Account Holders, and
(iv) Current Depositors pursuant to priorities established by the Board of
Trustees. The Minority Stock Offering shall be conducted on a minimum-maximum
basis, setting forth the minimum and maximum amount of stock that must be
offered and sold before closing. The Bank, in its absolute discretion, has the
right to refuse in part or in whole any order for stock sold in the Minority
Stock Offering either at the time of receipt or as soon as practicable following
the termination of the Minority Stock Offering in accordance with the Plan of
Reorganization. No person shall be allowed to purchase the lesser of 100 shares
or $1,000 of Common Stock. The Bank shall be entitled to retain an adviser and
pay fees to assisting brokers in connection with the Minority Stock Offering.
The shares of Common Stock may be offered on a minimum - maximum basis. The
priorities for the purchase of Common Stock are as set forth below:
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)
A. Each Eligible Account Holder shall receive, without payment,
nontransferable subscription rights to subscribe for shares of Common Stock
equal to the greater of: (i) the maximum established for the Community Offering;
(ii) one-tenth of one percent of the Conversion Stock offered; or (iii) 15 times
the product (rounded down to the next whole number) obtained by multiplying the
total number of shares of Common Stock offered by a fraction of which the
numerator is the amount of the Qualifying Deposit of such Eligible Account
Holder and the denominator is the total amount of Qualifying Deposits of all
Eligible Account Holders but in no event greater than the maximum purchase
limitation specified in Section 14 hereof. All such purchases are subject to the
maximum and minimum purchase limitations specified in Section 14 and are
exclusive of an increase in the total number of shares issued due to an increase
in the maximum of the Estimated Valuation Range of up to 15%.
B. In the event that Eligible Account Holders exercise Subscription
Rights for a number of shares of Common Stock in excess of the total number of
such shares eligible for subscription, the shares of Common Stock shall be
allocated among the subscribing Eligible Account Holders so as to permit each
subscribing Eligible Account Holder, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation of Common Stock
equal to the lesser of 100 shares or the number of shares subscribed for by the
Eligible Account Holder. Any shares remaining after that allocation will be
allocated among the subscribing Eligible Account Holders whose subscriptions
remain unsatisfied in the proportion that the amount of the Qualifying Deposit
of each Eligible Account Holder whose subscription remains unsatisfied bears to
the total amount of the Qualifying Deposits of all Eligible Account Holders
whose subscriptions remain unsatisfied. If the amount so allocated exceeds the
amount subscribed for by any one or more Eligible Account Holders, the excess
shall be reallocated (one or more
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times as necessary) among those Eligible Account Holders whose subscriptions are
still not fully satisfied on the same principle until all available shares have
been allocated or all subscriptions satisfied.
C. Subscription rights as Eligible Account Holders received by
Directors and Officers and their Associates which are based on deposits made by
such persons during the twelve (12) months preceding the Eligibility Record Date
shall be subordinated to the Subscription Rights of all other Eligible Account
Holders.
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)
Subject to the availability of sufficient shares after filling
subscription orders of Eligible Account Holders under Section 8, the Employee
Plans shall receive without payment nontransferable subscription rights to
purchase in the Subscription Offering the number of shares of Common Stock
requested by such Plans, subject to the purchase limitations set forth in
Section 14.
The Employee Plans shall not be deemed to be associates or affiliates
of or Persons Acting in Concert with any Director or Officer of the Holding
Company or the Bank.
10. SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY)
A. In the event that the Eligibility Record Date is more than 15 months
prior to the date of the latest amendment to the application filed prior to
Department approval, then, and only in that event, each Supplemental Eligible
Account Holder shall receive, without payment, nontransferable subscription
rights entitling such Supplemental Eligible Account Holder to purchase that
number of shares of Common Stock which is equal to the greater of: (i) the
maximum purchase limitation established for the Community Offering; (ii)
one-tenth of 1% of the Common Stock Offered; and (iii) or 15 times the product
(rounded down to the next whole number) obtained by multiplying the total number
of shares of Common Stock to be issued by a fraction of which the numerator is
the amount of the Qualifying Deposit of the Supplemental Eligible Account Holder
and the denominator is the total amount of the Qualifying Deposits of all
Supplemental Eligible Account Holders. All such purchases are subject to the
maximum and minimum purchase limitations in Section 14 and are exclusive of an
increase in the total number of shares issued due to an increase in the maximum
of the Estimated Valuation Range of up to 15%.
B. Subscription rights received pursuant to this Category shall be
subordinated to the subscription rights received by Eligible Account Holders and
by the Employee Plans.
C. Any subscription rights to purchase shares of Common Stock received
by an Eligible Account Holder in accordance with Section 8 shall reduce to the
extent thereof the subscription rights to be distributed pursuant to this
Section.
D. In the event of an oversubscription for shares of Common Stock
pursuant to this Section, shares of Common Stock shall be allocated among the
subscribing Supplemental Eligible Account Holders as follows:
(1) Shares of Common Stock shall be allocated so as to permit each
such Supplemental Eligible Account Holder, to the extent possible, to
purchase a number of shares of Common Stock sufficient to make his
total allocation (including the number of shares of Common Stock, if
any, allocated in
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accordance with Section 8) equal to 100 shares of Common Stock or the
total amount of his subscription, whichever is less.
(2) Any shares of Common Stock not allocated in accordance with
subparagraph (1) above shall be allocated among the subscribing
Supplemental Eligible Account Holders on an equitable basis, related
to the amounts of their respective Qualifying Deposits as compared to
the total Qualifying Deposits of all subscribing Supplemental Eligible
Account Holders.
11. SUBSCRIPTION RIGHTS OF CURRENT DEPOSITORS (FOURTH PRIORITY)
A. Each Current Depositor shall receive, without payment,
nontransferable subscription rights to subscribe for shares of Common Stock in
an amount equal to the greater of the maximum purchase limitation established
for the Community Offering or one-tenth of one percent of the Common Stock
offered, subject to the maximum and minimum purchase limitations specified in
Section 14 and exclusive of an increase in the total number of shares issued due
to an increase in the maximum of the Estimated Valuation Range of up to 15%,
which will be allocated only after first allocating to Eligible Account Holders,
the Employee Plans and Supplemental Eligible Account Holders all shares of
Common Stock subscribed for pursuant to Sections 8, 9 and 10 above.
B. In the event that such Current Depositors subscribe for a number of
shares of Common Stock which, when added to the shares of Common Stock
subscribed for by the Eligible Account Holders, the Employee Plans and the
Supplemental Eligible Account Holders is in excess of the total number of shares
of Common Stock being issued, the subscriptions of such Current Depositors will
be allocated among the subscribing Current Depositors so as to permit each
subscribing Current Depositor, to the extent possible, to purchase a number of
shares sufficient to make his total allocation of Common Stock equal to the
lesser of 100 shares or the number of shares subscribed for by the Current
Depositor. Any shares remaining will be allocated among the subscribing Current
Depositors whose subscriptions remain unsatisfied on a 100 shares (or whatever
lesser amount is available) per order basis until all orders have been filled or
the remaining shares have been allocated.
12. COMMUNITY OFFERING
If less than the total number of shares of Common Stock to be
subscribed for in the Minority Offering are sold in the Subscription Offering,
it is expected that shares remaining unsubscribed may be made available for
purchase in the Community Offering to certain members of the general public,
which may subscribe together with any Associate or group of persons Acting in
Concert for up to that number of shares of Common Stock as shall equal $100,000
divided by the Purchase Price per share, subject to the maximum and minimum
purchase limitations specified in Section 14 and exclusive of an increase in the
total number of shares issued due to an increase in the maximum of the Estimated
Valuation Range of up to 15%. The shares may be made available in the Community
Offering through a direct community marketing program which may provide for
utilization of a broker, dealer, consultant or investment banking firm,
experienced and expert in the sale of savings institution securities. In the
Community Offering, if any, shares will be available for purchase by the general
public with preference given first to natural persons residing in the Local
Community and second, to natural person residing in the Commonwealth of
Pennsylvania ("Community Purchasers"). The Bank shall make distribution of the
Common Stock to be sold in the Community Offering in such a manner as to promote
a wide distribution of Common Stock.
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If the Community Purchasers in the Community Offering (if any), whose
orders would otherwise be accepted, subscribe for more shares than are available
for purchase, the shares available to them will be allocated among persons
submitting orders in the Community Offering in an equitable manner as determined
by the Board of Trustees. The Bank may establish all terms and conditions of
such offer.
The Community Offering, if any, may commence simultaneously with,
during or subsequent to the completion of the Subscription Offering and if
commenced simultaneously with or during the Subscription Offering the Community
Offering may be limited to Community Purchases. The Community Offering, if any,
must be completed within 45 days after the completion of the Subscription
Offering unless otherwise extended by the Department.
The Bank, in its absolute discretion, reserves the right to reject any
or all orders in whole or in part which are received in the Community Offering,
at the time of receipt or as soon as practicable following the completion of the
Community Offering.
13. PUBLIC OFFERING AND SYNDICATED PUBLIC OFFERING
Any shares of Common Stock not sold in the Subscription Offering or in
the Community Offering, if any, may then be sold through the Underwriter to the
general public at the Purchase Price in the Public Offering, subject to such
terms, conditions and procedures as may be determined by the Boards of Trustees
of the Bank, in a manner that will achieve the widest distribution of the Common
Stock and subject to the right of the Bank, in its absolute discretion, to
accept or reject in whole or in part all subscriptions in the Public Offering.
In the Public Offering, if any, any person together with any Associate or group
of persons Acting in Concert may purchase up to the maximum purchase limitation
established for the Community Offering, subject to the maximum and minimum
purchase limitations specified in Section 14 and exclusive of an increase in the
total number of shares issued due to an increase in the maximum of the Estimated
Valuation Range of up to 15%. Shares purchased by any Person together with any
Associate or group of persons Acting in Concert pursuant to Section 12 shall be
counted toward meeting the maximum purchase limitation specified for this
Section. Provided that the Subscription Offering has commenced, the Bank may
commence the Public Offering at any time after the mailing to the Current
Depositors of the Proxy Statement to be used in connection with the Special
Meeting of Depositors, provided that the completion of the offer and sale of the
Common Stock shall be conditioned upon the ratification of this Plan by the
Current Depositors. It is expected that the Public Offering, if any, will
commence just prior to, or as soon as practicable after, the termination of the
Subscription Offering. The Public Offering shall be completed within 45 days
after the termination of the Subscription Offering, unless such period is
extended as provided above.
Shares of Common Stock not subscribed for in the Subscription Offering,
Community Offering, if any, and Public Offering may be sold in a Syndicated
Public Offering, subject to such terms, conditions and procedures as may be
determined by the Boards of Trustees of the Bank, in a manner that will achieve
the widest distribution of the Common Stock subject to the right of the Bank and
the Underwriter, in their absolute discretion, to accept or reject in whole or
in part all subscriptions in the Syndicated Public Offering. In the Syndicated
Public Offering, any person together with any Associate or group of persons
Acting in Concert may purchase up to the maximum purchase limitation established
for the Public Offering, subject to the maximum and minimum purchase limitations
specified in Section 14 and exclusive of an increase in the total number of
shares issued due to an increase in the maximum of the Estimated Valuation Range
of up to 15%. Shares purchased by any Person together with any Associate or
group of persons Acting in Concert pursuant to Section 12 shall be counted
toward meeting the maximum
C - 14
purchase limitation specified for this Section. Provided that the Subscription
Offering has commenced, the Bank may commence the Syndicated Public Offering at
any time after the mailing to the Current Depositors of the Proxy Statement to
be used in connection with the Special Meeting of Depositors, provided that the
completion of the offer and sale of the Common Stock shall be conditioned upon
the ratification of this Plan by the Current Depositors. If the Syndicated
Public Offering is not sooner commenced pursuant to the provisions of the
preceding sentence, the Syndicated Public Offering will be commenced as soon as
practicable following the date upon which the Subscription Offering and
Community Offering, if any, terminate.
If for any reason a Public Offering or Syndicated Public Offering of
shares of Common Stock not sold in the Subscription and Community Offerings can
not be effected, other purchase arrangements will be made for the sale of
unsubscribed shares by the Bank, if possible. Such other purchase arrangements
will be subject to the approval of the Department.
14. LIMITATION ON PURCHASES
The following limitations shall apply to all purchases of shares of
Common Stock in the Minority Stock Offering:
A. The maximum number of shares of Common Stock which may be purchased
in the Subscription Offering by any person in the First Priority, Third Priority
and Fourth Priority shall not exceed such number of shares as shall equal
$100,000 divided by the Purchase Price.
B. The maximum number of shares of Common Stock which may be subscribed
for or purchased in all categories in the Minority Stock Offering by any Person
(or persons through a single account) or Participant together with any Associate
or group of persons Acting in Concert shall not exceed such number of shares as
shall equal $150,000 divided by the Purchase Price per share, except for
Employee Plans, which in the aggregate may subscribe for up to 10% of the Common
Stock issued in the Minority Stock Offering.
C. The maximum number of shares of Common Stock which may be purchased
in all categories in the conversion by Officers and Directors of the Bank and
their Associates in the aggregate shall not exceed 31% of the total number of
shares of Common Stock issued in the Minority Stock Offering.
D. A minimum of 100 shares of Common Stock must be purchased by each
Person purchasing shares in the conversion to the extent those shares are
available; provided, however, that the minimum number of shares requirement will
not apply if the number of shares of Common Stock purchased times the price per
share exceeds $1,000.
E. If the number of shares of Common Stock otherwise allocable pursuant
to Sections 8 through 13, inclusive, to any Person or that Person's Associates
would be in excess of the maximum number of shares permitted as set forth above,
the number of shares of Common Stock allocated to each such person shall be
reduced to the lowest limitation applicable to that Person, and then the number
of shares allocated to each group consisting of a Person and that Person's
Associates shall be reduced so that the aggregate allocation to that Person and
his Associates complies with the above maximums, and such
C - 15
maximum number of shares shall be reallocated among that Person and his
Associates as they may agree, or in the absence of an agreement, in proportion
to the shares subscribed by each (after first applying the maximums applicable
to each Person, separately).
F. Depending upon market or financial conditions, the Board of Trustees
of the Bank, without further approval of the Members, may decrease or increase
the purchase limitations in this Plan, provided that the maximum purchase
limitations may not be increased to a percentage in excess of 5% of the Minority
Stock Offering. If the Bank increases the maximum purchase limitations, the Bank
is only required to resolicit Persons who subscribed for the maximum purchase
amount and may, in the sole discretion of the Bank, resolicit certain other
large subscribers. For purposes of this Section 14, the Trustees of the Bank
shall not be deemed to be Associates or a group affiliated with each other or
otherwise Acting in Concert solely as a result of their being Trustees of the
Bank.
G. In the event of an increase in the total number of shares offered in
the Minority Stock Offering due to an increase in the maximum of the Estimated
Valuation Range of up to 15% (the "Adjusted Maximum") the additional shares will
be used in the following order of priority: (i) in the event that there is an
oversubscription at the Eligible Account Holder level, to fill unfilled
subscriptions of Eligible Account Holders exclusive of the Adjusted Maximum
according to Section 8; (ii) in the event that there is an oversubscription at
the Employee Plan level, fill the Employees Plan's subscription up to 10% of the
Adjusted Maximum; (iii) in the event that there is an oversubscription at the
Supplemental Eligible Account Holder level, to fill unfilled subscriptions of
Supplemental Eligible Account Holders exclusive of the Adjusted Maximum
according to Section 10; (iv) in the event that there is an oversubscription at
the Current Depositor level, to fill unfilled subscriptions of Current
Depositors exclusive of the Adjusted Maximum in accordance with Section 11; and
(v) to fill unfilled Subscriptions in the Community Offering exclusive of the
Adjusted Maximum, with preference given to Persons residing in the Local
Community.
H. Each Person purchasing Common Stock in the Minority Stock Offering
shall be deemed to confirm that such purchase does not conflict with the above
purchase limitations contained in this Plan.
I. For a period of three years following the Reorganization, no
Officer, Trustee or their Associates shall purchase, without the prior written
approval of the Department, any outstanding shares of common stock of the Bank,
except from a registered broker-dealer. This provision shall not apply to
negotiated transactions involving more than one percent of the outstanding
shares of common stock of the Bank, the exercise of any options pursuant to a
stock option plan or purchases of common stock of the Bank, made by or held by
any Tax-Qualified Employee Stock Benefit Plan or Non-Tax Qualified Employee
Stock Benefit Plan of the Bank (including the Employee Plans) which may be
attributable to any Officer or Trustee. As used herein, the term "negotiated
transaction" means a transaction in which the securities are offered and the
terms and arrangements relating to any sale are arrived at through direct
communications between the seller or any person acting on its behalf and the
purchaser or his investment representative. The term "investment representative"
shall mean a professional investment advisor acting as agent for the purchaser
and independent of the seller and not acting on behalf of the seller in
connection with the transaction.
15. PAYMENT FOR COMMON STOCK
All payments for Common Stock subscribed for in the Subscription,
Community (if any), Public and Syndicated Public Offerings (if applicable) must
be delivered in full to the Bank, together with a
C - 16
properly completed and executed original Order Form, or purchase order in the
case of the Syndicated Public Offering, on or prior to the expiration date
specified on the Order Form or purchase order, as the case may be, unless such
date is extended by the Bank; provided, however, that if the Employee Plans
subscribes for shares during the Subscription Offering, the Employee Plan will
not be required to pay for the shares at the time they subscribe but rather may
pay for such shares of Common Stock upon consummation of the Reorganization. The
Bank may make scheduled discretionary contributions to an Employee Plan provided
such contributions do not cause the Bank to fail to meet its regulatory capital
requirement.
Notwithstanding the foregoing, the Bank shall have the right, in its
sole discretion, to permit institutional investors to submit contractually
irrevocable orders in the Community (if any), Public or Syndicated Public
Offering and to thereafter submit payment for the Common Stock for which they
are subscribing in the Community (if any), Public or Syndicated Public Offering
at any time prior to the completion of the Reorganization.
Payment for Common Stock subscribed for shall be made either in cash
(if delivered in person), check or money order. Alternatively, subscribers in
the Subscription, Community (if any) and Public Offerings may pay for the shares
subscribed for by authorizing the Bank on the Order Form to make a withdrawal
from the subscriber's Savings Account at the Bank in an amount equal to the
purchase price of such shares. Such authorized withdrawal, whether from a
savings passbook or certificate account, shall be without penalty as to
premature withdrawal. If the authorized withdrawal is from a certificate
account, and the remaining balance does not meet the applicable minimum balance
requirement, the certificate shall be canceled at the time of withdrawal,
without penalty, and the remaining balance will earn interest at the passbook
rate. Funds for which a withdrawal is authorized will remain in the subscriber's
Savings Account but may not be used by the subscriber until the Common Stock has
been sold or the 45-day period (or such longer period as may be approved by the
Department) following the Subscription Offering has expired, whichever occurs
first. Thereafter, the withdrawal will be given effect only to the extent
necessary to satisfy the subscription (to the extent it can be filled) at the
Purchase Price per share. Interest will continue to be earned on any amounts
authorized for withdrawal until such withdrawal is given effect. Interest will
be paid by the Bank at not less than the passbook annual rate on payments for
Common Stock received in cash or by money order or check. Such interest will be
paid from the date payment is received by the Bank until consummation or
termination of the conversion. If for any reason the conversion is not
consummated, all payments made by subscribers in the Subscription, Community (if
any), Public and Syndicated Public Offerings will be refunded to them with
interest. In case of amounts authorized for withdrawal from Savings Accounts,
refunds will be made by canceling the authorization for withdrawal.
The Bank is prohibited by regulation from knowingly making any loans or
granting any lines of credit for the purchase of stock in the Reorganization,
and therefore, will not do so.
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the Offering Circular prepared by the Bank
has been authorized for use by the Department, Order Forms will be distributed
to the Participants at their last known addresses appearing on the records of
the Bank for the purpose of subscribing to shares of Common Stock in the
Subscription Offering and will be made available for use in the Community
Offering. Notwithstanding the foregoing, the Bank may elect to send Order Forms
only to those Persons who request them after such notice as is approved by the
Department and is adequate to apprise the Participants of the pendency
C - 17
of the Subscription Offering has been given. Such notice may be included with
the proxy statement for the Special Meeting and may also be included in a notice
of the pendency of the Reorganization and the Special Meeting sent to all
Eligible Account Holders in accordance with regulations of the Department.
Each Order Form will be preceded or accompanied by the Offering
Circular describing the Bank, the Common Stock and the Subscription, Community
and Syndicated Community Offerings. Each Order Form will contain, among other
things, the following:
A. A specified date by which all Order Forms must be received by the
Bank, which date shall be not less than twenty (20), nor more than forty-five
(45) days, following the date on which the Order Forms are mailed by the Bank,
and which date will constitute the termination of the Subscription Offering;
B. The purchase price per share for shares of Common Stock to be sold
in the Subscription, Community (if any), Public and Syndicated Public Offerings;
C. A description of the minimum and maximum number of shares of Common
Stock which may be subscribed for pursuant to the exercise of Subscription
Rights or otherwise purchased in the Community (if any), Public or Syndicated
Public Offerings;
D. Instructions as to how the recipient of the Order Form is to
indicate thereon the number of shares of Common Stock for which such person
elects to subscribe and the available alternative methods of payment therefor;
E. An acknowledgment that the recipient of the Order Form has received
a final copy of the Offering Circular, as the case may be, prior to execution of
the Order Form.
F. A statement to the effect that all subscription rights are
nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering within the subscription period such properly
completed and executed Order Form, together with cash (if delivered in person),
check or money order in the full amount of the purchase price as specified in
the Order Form for the shares of Common Stock for which the recipient elects to
subscribe in the Subscription Offering (or by authorizing on the Order Form that
the Bank withdraw said amount from the subscriber's Savings Account at the Bank)
to the Bank; and
G. A statement to the effect that the executed Order Form, once
received by the Bank, may not be modified or amended by the subscriber without
the consent of the Bank.
Notwithstanding the above, the Bank reserves the right in its sole
discretion to accept or reject orders received on photocopied or facsimiled
order forms or whose payment is to be made by wire transfer.
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORMS: INSUFFICIENT PAYMENT
In the event Order Forms (a) are not delivered and are returned to the
Bank by the United States Postal Service or the Bank is unable to locate the
addressee, (b) are not received back by the Bank or are received by the Bank
after the expiration date specified thereon, (c) are defectively filled out or
executed, (d) are not accompanied by the full required payment, or, in the case
of institutional investors in the
C - 18
Community (if any), Public or Syndicated Public Offering, by delivering
irrevocable orders together with a legally binding commitment to pay in cash,
check, money order or wire transfer the full amount of the purchase price prior
to 48 hours before the completion of the conversion for the shares of Common
Stock subscribed for (including cases in which savings accounts from which
withdrawals are authorized are insufficient to cover the amount of the required
payment), or (e) are not mailed pursuant to a "no mail" order placed in effect
by the account holder, the subscription rights of the person to whom such rights
have been granted will lapse as though such person failed to return the
completed Order Form within the time period specified thereon; provided,
however, that the Bank may, but will not be required to, waive any immaterial
irregularity on any Order Form or require the submission of corrected Order
Forms or the remittance of full payment for subscribed shares by such date as
the Bank may specify. The interpretation of the Bank of terms and conditions of
the Plan and of the Order Forms will be final, subject to the authority of the
Department.
18. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
A. All shares of Common Stock purchased by Trustees or Officers of the
Bank in the Minority Stock Offering shall be subject to the restriction that,
except as provided in Section 18B, below, or as may be approved by the
Department, no interest in such shares may be sold or otherwise disposed of for
value for a period of one (1) year following the date of purchase.
B. The restriction on disposition of shares of Common Stock set forth
in Section 18A above shall not apply to the following:
(i) Any exchange of such shares in connection with a merger or
acquisition involving the Bank or the Holding Company, which has been approved
by the Department; and
(ii) Any disposition of such shares following the death of the
person to whom such shares were initially sold under the terms of the Plan.
C. With respect to all shares of Common Stock subject to restrictions
on resale or subsequent disposition, each of the following provisions shall
apply;
(i) Each certificate representing shares restricted within the
meaning of Section 18A, above, shall bear a legend prominently stamped on its
face giving notice of the restriction;
(ii) Instructions shall be issued to the stock transfer agent
for the Bank not to recognize or effect any transfer of any certificate or
record of ownership of any such shares in violation of the restriction on
transfer; and
(iii) Any shares of capital stock of the Bank issued with
respect to a stock dividend, stock split, or otherwise with respect to ownership
of outstanding shares of Common Stock subject to the restriction on transfer
hereunder shall be subject to the same restriction as is applicable to such
Common Stock.
19. ARTICLES OF INCORPORATION AND BYLAWS OF THE STOCK BANK
As part of the Reorganization, articles of incorporation and bylaws of
the Stock Bank shall be adopted to authorize the Stock Bank to operate as a
Pennsylvania chartered stock savings bank. The
C - 19
Stock Bank's charter may authorize a number of shares of Common Stock greater
than the number of shares that shall be issued to the Holding Company in the
Reorganization. The articles of incorporation may contain provisions that for a
period of five years from the effective date of the articles of incorporation,
(i) prohibit any person other than the Holding Company from acquiring beneficial
ownership of greater than 10% of the Common Stock of the Stock Bank, unless
approved by a majority of the Directors of the Bank; (ii) prohibit persons
beneficially owning shares in excess of 10% from voting such shares in
connection with any matter submitted to stockholders for a vote; (iii) prohibit
persons other than the Board of Trustees of the Stock Bank from calling special
meetings of the stockholders of the Stock Bank; and (iv) prohibit cumulative
voting by stockholders for directors. The articles of incorporation for the
Stock Bank may also contain provisions which allow for the issuance of Preferred
Stock in accordance with applicable law. Additional anti-takeover provisions may
be adopted subsequent to the Reorganization provided they are permitted under
the laws of Pennsylvania.
20. ARTICLES OF INCORPORATION AND BYLAWS OF THE HOLDING COMPANY
As part of the Reorganization, the Bank will reorganize into a mutual
holding company under Pennsylvania law and will adopt articles of incorporation
and bylaws for the Holding Company. By their approval of the Plan, the Board of
Trustees of the Mutual Bank and its members have approved and adopted the
articles of incorporation and bylaws of the Holding Company. A copy of the
proposed articles of incorporation and Bylaws of the Holding Company and of the
Stock Bank are required to be mailed only to those members requesting them.
Prior to completion of the Minority Stock Offering, the articles of
incorporation and bylaws of the Stock Bank and the Holding Company may be
amended in accordance with the provisions and limitations for amending the Plan.
21. FORMATION OF MIDDLE-TIER STOCKHOLDING COMPANY
In the future, the Bank may consider establishing an intermediate,
State-chartered stock holding company between the Bank and the Holding Company
that would own all of the stock of the Bank ("Stock Holding Company"). Pursuant
to such a restructuring: (i) the Bank would become a wholly-owned subsidiary of
the Stock Holding Company, which would become a majority-owned subsidiary of the
Holding Company, and (ii) each outstanding share of common stock of the Bank
would be converted into one share of common stock of the Stock Holding Company.
Accordingly, after the restructuring, each stockholder of the Bank would have
the same ownership interest in the Stock Holding Company immediately after the
restructuring as such stockholder had in the Bank immediately prior to the
restructuring. The Holding Company would still be owned by the depositors of the
Bank. Such transaction would be subject to appropriate regulatory approvals and
the approval in accordance with applicable regulations of the Bank's
stockholders after the restructuring. No approval or ratification would be
required from depositors.
22. CONVERSION OF HOLDING COMPANY TO STOCK FORM
Once the Reorganization is completed, the Holding Company may, if
approved by the Department and the appropriate federal banking agencies, elect
to convert to the stock form of ownership pursuant to applicable State and
federal law. The terms and conditions of such a conversion cannot be determined
at this time and there is no assurance when, if ever, such a conversion will
occur. If the conversion does not occur, the Holding Company will always own a
majority of the Common Stock of the Stock Bank.
C - 20
If the Holding Company converts to stock form, either on a stand-alone
basis or in the context of a conversion-merger ("Conversion Transaction"), under
federal law, shares of stock issued in connection with the Conversion
Transaction shall be subject to subscription rights granted to eligible account
holders at the time of the transaction. In addition, pursuant to applicable
federal law and regulation and Department regulations or policies, in the
Conversion Transaction, the shares of stock held by the stockholders of the
Stock Bank shall be exchanged for shares of the converted Holding Company in a
proportion established by independent appraisals of the Mutual Holding Company
and the Stock Bank. If, in a Conversion Transaction, the stockholders of the
Stock Bank do not receive, for any reason, shares of the converted Holding
Company (or its successor) on such proportionate basis, the Holding Company (or
its successor) shall be obligated to purchase all shares not owned by its
simultaneously with the closing of such Conversion Transaction at the fair
market value of such shares, determined as if such shares had such exchange
rights, as determined by the independent appraisals. Moreover, in the event that
the Holding Company converts to stock form in a Conversion Transaction, any
options or other convertible securities held by any Officer, Trustee, or
Employee of the Stock Bank, convertible into shares of the Stock Bank shall be
convertible into shares of the converted Holding Company (or its successor),
provided, that any exchange ratio shall provide the holder of such options or
convertible securities with shares at least equal in value to those exchanged;
provided, further however, that if such shares cannot be so converted, the
holders of such options or other convertible securities shall be entitled to
receive cash payment for such options and other convertible securities in an
amount equal to the appraised value of the underlying securities represented by
such options or other convertible securities.
Each certificate representing shares of Common Stock of the Stock Bank
shall bear a legend giving appropriate notice of the provisions applicable to a
Conversion Transaction.
23. CONTINUITY OF THE BANK AND STATUS OF DEPOSIT ACCOUNTS AND LOANS
SUBSEQUENT TO REORGANIZATION
Upon the Effective Date of the Reorganization, except for those assets
expressly retained by the Holding Company, the Stock Bank will succeed to all of
the assets, rights, powers, franchises, debts, liabilities, interests, duties
and obligations of the Mutual Bank before the Reorganization, including but not
limited to, all rights and interests of the Mutual Bank in and to its assets and
properties, whether real, personal or mixed.
All deposit accounts in the Mutual Bank shall retain the same status
after the Reorganization as these accounts had prior to Reorganization, except
that each deposit account holder shall retain, without payment therefor, a
withdrawable deposit account or accounts in the Stock Bank after the
Reorganization, equal in amount to the withdrawable value of such holders'
deposit account or accounts prior to the Reorganization. All deposit accounts
which are transferred to the Stock Association will continue to be insured by
the FDIC up to the applicable limits of insurance coverage.
All loans shall retain the same status after the Reorganization as they
had prior to the Reorganization. The amount, interest rate, maturity, and
security for each loan will remain contractually fixed as they existed prior to
the Reorganization. Following the Reorganization, all of such loans will be held
by the Stock Bank.
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All other assets of the Mutual Bank at the time of Reorganization will
retain the same status as prior to the Reorganization, except that substantially
all of such other assets will become assets of the Stock Bank.
24. RIGHTS OF DEPOSITORS OF MHC
Following the Reorganization, persons who had ownership or liquidation
rights with respect to the Savings Bank as of the date of the Reorganization
will continue to have such rights solely with respect to the MHC. In addition,
all persons who become depositors in the Stock Bank subsequent to the
Reorganization will also have such ownership and liquidation rights with respect
to the MHC. In each case, no person who ceases to be the holder of a deposit
account with the Stock Bank shall have any ownership or liquidation rights with
respect to the MHC.
25. TRUSTEES OF THE MHC
The persons serving as Trustees of the Bank at the time of the
Reorganization will serve as Trustees of the MHC thereafter for the term
specified in the Notice, and until their successors are elected and qualified.
26. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
The Bank will make reasonable efforts to comply with the securities
laws of all States in the United States in which Persons entitled to subscribe
for shares of Common Stock pursuant to the Plan reside. However, no such Person
will be issued subscription rights or be permitted to purchase shares of
Conversion Stock in the Subscription Offering if such Person resides in a
foreign country or in a state of the United States with respect to which any of
the following apply: (i) a small number of Persons otherwise eligible to
subscribe for shares under the Plan reside in such state; (ii) the issuance of
subscription rights or the offer or sale of shares of Common Stock to such
Persons would require the Bank, under the securities laws of such state, to
register as a broker, dealer, salesman or agent or to register or otherwise
qualify its securities for sale in such state; or (iii) such registration or
qualification would be impracticable for reasons of cost or otherwise.
27. EXPENSES OF REORGANIZATION
The Bank shall use its best efforts to assure that expenses incurred by
it in connection with the Reorganization shall be reasonable.
28. AMENDMENT OR TERMINATION OF THE PLAN
This Plan may be substantively amended by the Board of Trustees of the
Bank as a result of comments from the regulatory authorities or otherwise prior
to submission of the Plan and proxy materials to Current Depositors, and at any
time thereafter with the concurrence of the Department. This Plan may be
terminated by the Board of Trustees of the Bank at any time prior to the Special
Meeting of members, and at any time thereafter with the concurrence of the
Department. This Plan shall be terminated if not completed within 24 months from
the date upon which members approve this Plan.
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An increase or decrease in the maximum purchase limitation or number of
shares issued in the Reorganization by the Board of Trustees at any time
pursuant to Section 14 is specifically authorized pursuant to this Plan, is not
an amendment to the Plan and does not require the approval of the Department. In
the event that mandatory new regulations pertaining to mutual holding companies
are adopted by the Department prior to the completion of the Reorganization, the
Plan may be amended to conform to the new mandatory regulations. In the event
that new mutual holding company regulations adopted by the Department prior to
completion of the Reorganization contain optional provisions, the Plan may be
amended to utilize such optional provisions at the discretion of the Board of
Trustees.
By ratification of the Plan, the Current Depositors of the Bank
authorize the Board of Trustees to amend or terminate the Plan under the
circumstances set forth in this Section.
29. MISCELLANEOUS
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Trustees of the Bank
shall be final, subject to the authority of the Department.
If any term, provision, covenant or restriction contained in this Plan
is held by a court or a federal or state regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions contained in this Plan shall remain in
full force and effect, and shall in no way be affected, impaired or invalidated.
This Plan is to be governed by and construed in accordance with the
laws of the United States and of the Commonwealth of Pennsylvania. None of the
cover page, the table of contents, or the section headings are to be considered
a part of this Plan, but are included solely for convenience of reference and
shall in no way define, limit, extend, or describe the scope or intent of any of
the provisions hereof. Words in the singular include the plural, and words in
the plural include the singular. Except for such rights as are set forth herein
for Current Depositors, this Plan shall create no rights in any Person.
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