PLAN OF CONVERSION
OF
ROME, MHC
AND
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
ROME, MHC
ROME BANCORP, INC.
(A DELAWARE CORPORATION)
[NEW] ROME BANCORP, INC.
(A NEWLY FORMED DELAWARE CORPORATION)
AND
THE ROME SAVINGS BANK
TABLE OF CONTENTS
SECTION
NUMBER PAGE
------ ----
1. INTRODUCTION.............................................................1
2. DEFINITIONS..............................................................3
3. GENERAL PROCEDURE FOR CONVERSION AND REORGANIZATION......................9
4. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK...........13
5. METHOD OF OFFERING SHARES AND RIGHTS TO PURCHASE STOCK..................14
6. ADDITIONAL LIMITATIONS ON PURCHASES OF CONVERSION STOCK.................18
7. TIMING OF SUBSCRIPTION OFFERING, MANNER OF EXERCISING SUBSCRIPTION
RIGHTS AND ORDER FORMS..................................................21
8. PAYMENT FOR CONVERSION STOCK............................................24
9. ACCOUNT HOLDERS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES.............25
10. VOTING RIGHTS OF SHAREHOLDERS...........................................25
11. LIQUIDATION ACCOUNT.....................................................25
12. REQUIREMENTS FOLLOWING CONVERSION FOR REGISTRATION, MARKET MAKING
AND STOCK EXCHANGE LISTING..............................................27
13. DIRECTORS AND OFFICERS..................................................27
14. RESTRICTIONS ON STOCK PURCHASES BY MANAGEMENT...........................27
15. RESTRICTIONS ON TRANSFER OF STOCK.......................................28
16. RESTRICTIONS ON ACQUISITION OF STOCK OF THE HOLDING COMPANY.............28
17. TAX RULINGS OR OPINIONS.................................................29
18. STOCK COMPENSATION PLANS................................................29
19. Dividend and Repurchase Restictions on Stock............................27
20. PAYMENT OF FEES TO BROKERS..............................................29
21. EXPENSES................................................................30
22. EFFECTIVE DATE..........................................................30
23. AMENDMENT OR TERMINATION OF THE PLAN....................................30
24. INTERPRETATION OF THE PLAN..............................................30
25. SEVERABILITY............................................................30
26. MISCELLANEOUS...........................................................31
-i-
1. INTRODUCTION.
For purposes of this section, all capitalized terms have the meanings
ascribed to them in Section 2. On October 6, 1999, The Rome Savings Bank (the
"Bank"), as a New York chartered savings bank, reorganized into the mutual
holding company form of organization as a wholly-owned subsidiary of Rome
Bancorp, Inc. (the "Mid-Tier Holding Company"), a Delaware corporation and the
mid-tier stock holding company that became the majority-owned subsidiary of
Rome, MHC (the "Mutual Holding Company"). Contemporaneously with the
reorganization, the Mid-Tier Holding Company sold 1,598,355 shares of its common
stock to the Bank's eligible depositors and to the Rome Bancorp, Inc. Employee
Stock Ownership Plan (the "ESOP"), and issued 1,734,396 of its shares of common
stock to the Mutual Holding Company. In addition, the Mid-Tier Holding Company
issued 68,015 of it shares of common stock to The Rome Savings Bank Foundation
(the "Foundation"). Then, on April 27, 2004, the Bank converted to a federal
savings bank and the Mutual Holding Company converted to a federal mutual
holding company. As of the date of adoption of this Plan, the Mutual Holding
Company held 2,601,594, or 61.5%, of the 4,229,546 shares of outstanding
Mid-Tier Company common stock.
A. BUSINESS PURPOSES FOR THE CONVERSION AND REORGANIZATION
The Boards of Directors of the Mutual Holding Company, the Mid-Tier
Holding Company and the Bank believe that a conversion of the Mutual Holding
Company to stock form is in the best interests of the Mutual Holding Company,
the Mid-Tier Holding Company and the Bank, as well as the best interests of
their respective Members and Shareholders. The Boards of Directors determined
that this Plan of Conversion equitably provides for the interests of Members
through the granting of subscription rights and the establishment of a
liquidation account. The Conversion and Reorganization will result in the
raising of additional capital for the Bank and the Holding Company and is
expected to result in a more active and liquid market for the Holding Company
Common Stock than currently exists for the Mid-Tier Holding Company Common
Stock. In addition, the Conversion and Reorganization have been structured to
re-unite the accumulated earnings and profits retained by the Mutual Holding
Company with the retained earnings of the Bank through a tax-free
reorganization.
The Conversion and Reorganization are intended to provide an additional
source of capital not now available in order to allow the Bank and Holding
Company to better serve the needs of the community through: increased lending to
support continued growth in the Bank's commercial loan portfolio, opening or
acquiring additional branch offices; forming a commercial bank subsidiary to
accept municipal deposits; financing acquisitions of other financial
institutions or other businesses related to banking, although no mergers or
acquisitions are planned at the present time; and, expanding the financial
products and services currently offered by the Bank. The Conversion and
Reorganization are also intended to provide additional capital to the Holding
Company in order to allow it to: pay dividends to shareholders; repurchase
shares of Conversion Stock; finance acquisitions of other financial institutions
or other businesses related to banking; and, use for other general corporate
purposes. In addition, increased stock ownership by officers and other employees
of the Bank and the Holding Company has proven to be an effective performance
incentive and an effective means of attracting and retaining qualified
personnel.
The Boards of Directors and senior management also believe that the
Conversion and Reorganization will be beneficial to the population within the
Bank's primary market area. The Board and management believe that, through
expanded local stock ownership, current customers and non-customers who purchase
Conversion Stock will seek to enhance the financial success of the Bank through
consolidation of their banking business and increased referrals to the Bank.
If a standard conversion had been conducted in 1999, management of the
Bank believed that it may have been difficult to prudently invest the larger
amount of capital that would have been raised, when compared to the net proceeds
raised in connection with the formation of the Mutual Holding Company. A
standard conversion in 1999 also would have immediately eliminated all aspects
of the mutual form of organization.
The Bank and the Mid-Tier Holding Company have also gained experience
as public companies complying with of the Securities Exchange Act of 1934, as
amended, and in conducting shareholder meetings and addressing other shareholder
matters, such as communications, press releases and dividend payments. In light
of the foregoing, the Boards of Directors of the Mutual Holding Company, the
Mid-Tier Holding Company and the Bank believe that it is in the best interests
of such companies and their respective Members and Shareholders to raise
additional capital at this time.
B. ORGANIZATION OF HOLDING COMPANY AND STEPS FOR CONVERSION AND
REORGANIZATION
The Conversion and Reorganization will be effected as follows, or in
any manner approved by the OTS that is consistent with the purposes of this Plan
and applicable laws and regulations, including a merger of the Mutual Holding
Company into the Mid-Tier Holding Company followed immediately by the Offerings.
The choice of which method to use to effect the Conversion and Reorganization
will be made by the Board of Directors of the Mutual Holding Company immediately
prior to the closing of the Conversion and Reorganization.
In connection with the Conversion and Reorganization:
1. The Mid-Tier Holding Company will convert into or exchange
its charter for that of a federal corporation, which will
immediately exchange its charter for that of an interim
federal stock savings association and then merge with and into
the Bank with the Bank as the surviving entity. ANNEX A hereto
describes this transaction.
2. As described in more detail in Section 3, the Mutual
Holding Company will convert from the mutual form to an
interim federal stock savings association and simultaneously
merge with and into the Bank pursuant to the Plan of Merger
included as ANNEX B hereto, pursuant to which the Mutual
Holding Company will cease to exist and a liquidation account
will be established by the Bank for the benefit of depositor
Members as of specified dates.
3. The Bank will form a new first-tier, wholly-owned
subsidiary known as [NEW ROME BANCORP, INC.], a Delaware
corporation, which will become the Holding Company upon
consummation of the Conversion and Reorganization.
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4. The Holding Company will in turn form an interim federal
stock savings association ("Interim") as a wholly-owned
subsidiary.
5. Immediately following the formation of Interim, Interim
will then merge with and into the Bank pursuant to the Plan of
Merger included as ANNEX C hereto, pursuant to which the Bank
will become a wholly owned subsidiary of the Holding Company.
In connection therewith, each share of Mid-Tier Holding
Company Common Stock outstanding immediately prior to the
effective time thereof shall be automatically converted,
without further action by the holder thereof, into and become
the right to receive shares of Holding Company Common Stock
based on the Exchange Ratio, plus cash in lieu of any
fractional share interest.
6. In connection with the Conversion and Reorganization, the
Holding Company will offer shares of Conversion Stock in the
Offerings as provided herein.
2. DEFINITIONS.
As used in this Plan, the terms set forth below have the following
meaning:
2.1 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 or understanding; or (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. 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 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 and participants or beneficiaries of any such Tax- Qualified Employee
Stock Benefit Plan will not be deemed to be acting in concert solely as a result
of their common interests as participants or beneficiaries. When Persons act
together for such purpose, their group is deemed to have acquired their stock.
The determination of whether a group is Acting in Concert shall be made solely
by the Board of Directors of the Bank or Officers delegated by such Board and
may be based on any evidence upon which the Board or such delegatee chooses to
rely, including, without limitation, joint account relationships or the fact
that such Persons have filed joint Schedules 13D or Schedules 13G with the SEC
with respect to other companies. Directors of the Holding Company, the Bank, and
the Mutual Holding Company shall not be deemed to be Acting in Concert solely as
a result of their membership on any such board or boards.
2.2 ACTUAL PURCHASE PRICE means the price per share at which the
Conversion Stock is ultimately sold by the Holding Company in the Offerings in
accordance with the terms hereof.
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2.3 AFFILIATE means a Person who, directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified.
2.4 ASSOCIATE, when used to indicate a relationship with any Person,
means (i) a corporation or organization (other than the Mutual Holding Company,
the Mid-Tier Holding Company, the Bank, or a majority-owned subsidiary of the
Bank or the Holding Company), if the Person is a senior officer or partner, or
beneficially owns, directly or indirectly, 10% or more of any class of equity
securities of the corporation or organization, (ii) any trust or other estate,
if the Person has a substantial beneficial interest in the trust or estate or is
a trustee or fiduciary of the estate, provided, however, that such term shall
not include any Tax-Qualified Employee Stock Benefit Plan of the Holding Company
or the Bank in which such Person has a substantial beneficial interest or serves
as a trustee or fiduciary, and (iii) any Person who is related by blood or
marriage to such Person and (A) who lives in the same home as the Person; or (B)
who is a director or senior officer of the Holding Company or the Bank or any of
the subsidiaries of the foregoing.
2.5 BANK means The Rome Savings Bank, a federal savings association.
2.6 BANK COMMON STOCK means the common stock of the Bank, par value
$.01 per share.
2.7 BANK MERGER means the merger of Interim with and into the Bank
pursuant to the Plan of Merger included as ANNEX C hereto.
2.8 CODE means the Internal Revenue Code of 1986, as amended.
2.9 COMMUNITY means the counties in which the Bank has a branch office.
2.10 COMMUNITY OFFERING means the offering for sale to certain
residents of the Community, and thereafter members of the general public
directly by the Holding Company of any shares of Conversion Stock not subscribed
for in the Subscription Offering.
2.11 CONTROL (including the terms "controlling," "controlled by," and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
2.12 CONVERSION AND REORGANIZATION means (i) the conversion of the
Mid-Tier Holding Company from a Delaware corporation to a federally chartered
stock corporation and then immediately to an interim federal stock savings
association and the subsequent Mid-Tier Holding Company Merger pursuant to which
the Mid-Tier Holding Company will cease to exist, (ii) the conversion of the
Mutual Holding Company from mutual form to an interim federal stock savings
association and the subsequent Mutual Holding Company Merger, pursuant to which
the Mutual Holding Company will cease to exist, (iii) the Bank Merger, pursuant
to which the Bank will become a wholly owned subsidiary of the Holding Company
and, in connection therewith, each share of Mid-Tier Holding Company Common
Stock outstanding immediately prior to the effective time thereof shall
automatically be converted, without further action by the holder
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thereof, into and become the right to receive shares of Holding Company Common
Stock based on the Exchange Ratio, plus cash in lieu of any fractional share
interest, and (iv) the issuance of Conversion Stock by the Holding Company in
the Offerings as provided herein, which will increase the number of shares of
Holding Company Common Stock outstanding and the capitalization of the Holding
Company.
2.13 CONVERSION STOCK means the Holding Company Common Stock to be
issued and sold in the Offerings pursuant to the Plan of Conversion.
2.14 DEPOSIT ACCOUNT means withdrawable or repurchasable shares,
investment certificates or deposits or other savings accounts, including money
market deposit accounts, negotiable order of withdrawal accounts and demand
accounts, held by an account holder of the Bank.
2.15 DIRECTOR, OFFICER AND EMPLOYEE means the terms as applied
respectively to any person who is a director, officer or employee of the Mutual
Holding Company, the Mid-Tier Holding Company, the Bank or any subsidiary
thereof.
2.16 ELIGIBLE ACCOUNT HOLDER means any Person holding a Qualifying
Deposit on the Eligibility Record Date for purposes of determining Subscription
Rights and establishing subaccount balances in the liquidation account to be
established.
2.17 ELIGIBILITY RECORD DATE means the date for determining Qualifying
Deposits of Eligible Account Holders and is the close of business on September
30, 2003.
2.18 ESOP means the Employee Stock Ownership Plan.
2.19 ESTIMATED PRICE RANGE means the range of the estimated aggregate
PRO FORMA market value of the total number of shares of Conversion Stock to be
issued in the Offerings, as determined by the Independent Appraiser in
accordance with Section 4 hereof.
2.20 EXCHANGE RATIO means the rate at which shares of Holding Company
Common Stock will be exchanged for shares of Mid-Tier Holding Common Stock held
by the Public Shareholders in connection with the Bank Merger. The exact rate
shall be determined by the Mutual Holding Company, the Mid-Tier Holding Company
and the Bank in order to ensure that upon consummation of the Conversion and
Reorganization, the Public Shareholders will own in the aggregate approximately
the same percentage of the Holding Company Common Stock to be outstanding upon
completion of the Conversion and Reorganization as the percentage of Mid-Tier
Holding Company Common Stock owned by them in the aggregate immediately prior to
consummation of the Conversion and Reorganization, before giving effect to (a)
cash paid in lieu of any fractional interests of Holding Company Common Stock
and (b) any shares of Conversion Stock purchased by the Public Shareholders in
the Offerings.
2.21 EXCHANGE SHARES mean the shares of Holding Company Common Stock to
be issued to the Public Shareholders in connection with the Bank Merger.
5
2.22 FDIC means the Federal Deposit Insurance Corporation or any
successor thereto.
2.23 HOLDING COMPANY means [NEW ROME BANCORP, INC.], a newly formed
stock corporation to be organized under the laws of the State of Delaware. Such
corporation will be initially formed as a first-tier, wholly owned subsidiary of
the Bank. Upon completion of the Conversion and Reorganization, the Holding
Company shall hold all of the outstanding capital stock of the Bank and be
renamed Rome Bancorp, Inc.
2.24 HOLDING COMPANY COMMON STOCK means the common stock of the Holding
Company, par value $.01 per share, which stock cannot and will not be insured by
the FDIC or any other governmental authority.
2.25 INDEPENDENT APPRAISER means the independent financial consulting
firm retained by the Holding Company, the Mid-Tier Holding Company and the Bank
to prepare an appraisal of the estimated PRO FORMA market value of the
Conversion Stock.
2.26 INITIAL PURCHASE PRICE means the price per share to be paid
initially by Participants for shares of Conversion Stock subscribed for in the
Subscription Offering and by Persons for shares of Conversion Stock ordered in
the Community Offering and/or Syndicated Community Offering.
2.27 INTERIM means Rome Interim Savings Bank I, which will be formed as
an interim federal stock savings association and a wholly-owned subsidiary of
the Holding Company to facilitate the Bank Merger.
2.28 MEMBER means any Person qualifying as a member of the Mutual
Holding Company in accordance with its mutual charter and bylaws and the laws of
the United States.
2.29 MID-TIER HOLDING COMPANY means Rome Bancorp, Inc., an existing
Delaware corporation.
2.30 MID-TIER HOLDING COMPANY COMMON STOCK means the common stock of
the Mid-Tier Holding Company, par value $.0067 per share.
2.31 MID-TIER HOLDING COMPANY MERGER means the Merger of the Mid-Tier
Holding Company (following its conversion to a federal corporation and then to
an interim federal stock savings association) with and into the Bank pursuant to
the Plan of Merger included as ANNEX A hereto.
2.32 MUTUAL HOLDING COMPANY means Rome, MHC, a federal mutual holding
company.
2.33. MUTUAL HOLDING COMPANY MERGER means the merger of the Mutual
Holding Company (following its conversion into an interim federal stock savings
association) with and into the Bank pursuant to the Plan of Merger included as
ANNEX B hereto.
2.34. OFFERINGS mean the Subscription Offering, the Community Offering,
the Syndicated Community Offering and the Public Offering.
6
2.35. OFFICER means the chairman of the board of directors, president,
chief executive officer, vice-president, secretary, treasurer or principal
financial officer, comptroller or principal accounting officer and any other
person performing similar functions with respect to any organization whether
incorporated or unincorporated.
2.36. ORDER FORM means the form or forms to be provided by the Holding
Company, containing all such terms and provisions as set forth in Section 7.C
hereof, to a Participant or other Person by which Conversion Stock may be
ordered in the Offerings.
2.37. OTHER MEMBER means a Voting Member who is not an Eligible Account
Holder or a Supplemental Eligible Account Holder.
2.38. OTS means the Office of Thrift Supervision or any successor
thereto.
2.39. PARTICIPANT means any Eligible Account Holder, Tax-Qualified
Employee Stock Benefit Plan, Supplemental Eligible Account Holder and Other
Member.
2.40. PERSON means an individual, a corporation, a limited liability
company, a partnership, a limited liability partnership, an association, a joint
stock company, a trust, an unincorporated organization or a government or any
political subdivision thereof.
2.41. PLAN and PLAN OF CONVERSION mean this Plan of Conversion and
Agreement and Plan of Reorganization as adopted by the Boards of Directors of
the Mutual Holding Company, the Mid-Tier Holding Company and the Bank and any
amendment hereto approved as provided herein. The Board of Directors of the
Holding Company shall adopt this Plan as soon as practicable following its
organization, and the Board of Directors of Interim shall adopt the Plan of
Merger included as ANNEX C hereto as soon as practicable following its
organization.
2.42. PRIMARY PARTIES mean the Mutual Holding Company, the Mid-Tier
Holding Company, the Bank and the Holding Company.
2.43. PROSPECTUS means the one or more documents to be used in offering
the Conversion Stock in the Offerings.
2.44. PUBLIC OFFERING means the public offering of Holding Company
Stock by or through an Underwriter following or concurrently with the
Subscription Offering.
2.45. PUBLIC SHAREHOLDERS mean those Persons who own shares of Mid-Tier
Holding Company Common Stock, excluding the Mutual Holding Company, as of the
Voting Record Date.
2.46. QUALIFYING DEPOSIT means the aggregate balance of all Deposit
Accounts in the Bank of (i) an Eligible Account Holder at the close of business
on the Eligibility Record Date, provided such aggregate balance is not less than
$50, and (ii) a Supplemental Eligible Account Holder at the close of business on
the Supplemental Eligibility Record Date, provided such aggregate balance is not
less than $50.
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2.47. RESIDENT means any person who occupies a dwelling within the
Community, has a present intent to remain within the Community for a period of
time, and manifests the genuineness of that intent by establishing an ongoing
physical presence within the Community together with an indication that such
presence within the Community is something other than merely transitory in
nature. To the extent the person is a corporation or other business entity, the
principal place of business or headquarters shall be in the Community. To the
extent a person is a personal benefit plan, the circumstances of the beneficiary
shall apply with respect to this definition. In the case of all other benefit
plans, circumstances of the trustee shall be examined for purposes of this
definition. The Primary Parties may utilize deposit or loan records or such
other evidence provided to it to make a determination as to whether a person is
a resident. In all cases, however, such a determination shall be in the sole
discretion of the Primary Parties.
2.48. SEC means the U.S. Securities and Exchange Commission.
2.49. SPECIAL MEETING means the Special Meeting of Members of the
Mutual Holding Company called for the purpose of submitting this Plan to the
Members for their approval, including any adjournments of such meeting.
2.50. SHAREHOLDERS mean those Persons who own shares of Mid-Tier
Holding Company Common Stock.
2.51. SHAREHOLDERS' MEETING means the annual or special meeting of
Shareholders of the Mid-Tier Holding Company, called for the purpose of
submitting this Plan to the Shareholders for their approval, including any
adjournments of such meeting.
2.52. SUBSCRIPTION OFFERING means the offering of the Conversion Stock
to Participants.
2.53. SUBSCRIPTION RIGHTS mean nontransferable rights to subscribe for
Conversion Stock granted to Participants pursuant to the terms of this Plan.
2.54. SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER means any Person, except
Directors and Officers of the Bank and their Associates, holding a Qualifying
Deposit at the close of business on the Supplemental Eligibility Record Date.
2.55. SUPPLEMENTAL ELIGIBILITY RECORD DATE, if applicable, means the
date for determining Qualifying Deposits of Supplemental Eligible Account
Holders and shall be required if the Eligibility Record Date is more than 15
months prior to the date of the latest amendment to the Application for
Conversion filed by the Mutual Holding Company prior to approval of such
application by the OTS. If applicable, the Supplemental Eligibility Record Date
shall be the last day of the calendar quarter preceding OTS approval of the
Application for Conversion submitted by the Mutual Holding Company pursuant to
this Plan of Conversion.
2.56. SYNDICATED COMMUNITY OFFERING means the offering for sale by a
syndicate of broker-dealers to the general public of shares of Conversion Stock
not purchased in the Subscription Offering and the Community Offering.
2.57. 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-
8
sharing plan or other plan, which is established for the benefit of the
employees of the Holding Company and/or the Bank and which, with its related
trust, meets the requirements to be "qualified" under Section 401 of the Code as
from time to time in effect. A "Non-Tax-Qualified Employee Stock Benefit Plan"
is any defined benefit plan or defined contribution stock benefit plan which is
not so qualified.
2.58 UNDERWRITER means any investment banking firm or firms purchasing
or distributing the Holding Company Common Stock in a Public Offering, if any.
2.59 UNDERWRITING AGREEMENT means the agreement between the Holding
Company and an Underwriter pursuant to which the Underwriter agrees to purchase
or distribute certain shares of the Holding Company Common Stock for offering in
any Public Offering.
2.60. VOTING MEMBER means a Person who at the close of business on the
Voting Record Date is entitled to vote as a Member of the Mutual Holding Company
in accordance with its mutual charter and bylaws.
2.61. VOTING RECORD DATE means the date or dates for determining the
eligibility of Members to vote at the Special Meeting and of Shareholders to
vote at the Shareholders' Meeting, as applicable.
3. GENERAL PROCEDURE FOR CONVERSION AND REORGANIZATION.
A. STEPS FOR CONVERSION AND REORGANIZATION; REGULATORY FILINGS
1. After the Bank's organization of the Holding Company and
the receipt of all requisite regulatory approvals, the Holding
Company will form Interim as a wholly owned subsidiary of the
Holding Company, and the Board of Directors of Interim shall
adopt the Plan of Merger included as ANNEX C hereto by at
least a two-thirds vote. The Holding Company shall approve
such Plan of Merger in its capacity as the sole shareholder of
Interim and the Mid-Tier Holding Company shall approve the
Plan and the Plan of Merger in its capacity as the sole
shareholder of the Bank.
2. An application for the Conversion and Reorganization,
including the Plan and all other requisite material (the
"Application for Conversion"), shall be submitted to the OTS
for approval. The Mutual Holding Company, the Mid-Tier Holding
Company and the Bank also will cause notice of the adoption of
the Plan by the Boards of Directors of the Mutual Holding
Company, the Mid-Tier Holding Company and the Bank to be given
by publication in a newspaper having general circulation in
each community in which an office of the Bank is located and
will cause copies of the Plan to be made available at each
office of the Mutual Holding Company, the Mid-Tier Holding
Company and the Bank for inspection by Members and
Shareholders. The Mutual Holding Company, the Mid-Tier Holding
Company and the Bank will again cause to be published, in
accordance with the requirements of applicable regulations of
the OTS, a notice of the filing with the OTS of an application
to convert the Mutual Holding Company from
9
mutual to stock form and will post the notice of the filing
for the Application for Conversion in each of their offices.
3. Promptly following receipt of requisite approval of the
OTS, this Plan will be submitted to the Voting Members for
their consideration and approval at the Special Meeting. The
Mutual Holding Company may, at its option, mail to all Members
as of the Voting Record Date, at their last known address
appearing on the records of the Mutual Holding Company and the
Bank, a proxy statement describing the Plan which will be
submitted to a vote of the Members at the Special Meeting. The
Holding Company also shall mail to all such Members (as well
as other Participants) a Prospectus and Order Form for the
purchase of Conversion Stock, subject to the provisions of
Section 7 hereof. In addition, all such Members will receive,
or be given the opportunity to request by returning a
postage-prepaid card which will be distributed with the proxy
statement, letter or other written communication, a copy of
the certificate of incorporation and bylaws of the Holding
Company.
4. Subscription Rights to purchase shares of Conversion Stock
will be issued without payment therefor to Eligible Account
Holders, [THE TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN,]
Supplemental Eligible Account Holders and Other Members, as
set forth in Section 5 hereof. 5. The Mid-Tier Holding Company
shall file preliminary proxy materials with the OTS and the
SEC in order to seek the approval of the Plan by its
Shareholders. Promptly following clearance of such proxy
materials and the receipt of any other requisite approval of
the OTS, the Mid-Tier Holding Company will mail definitive
proxy materials to all Shareholders as of the Voting Record
Date, at their last known address appearing on the records of
the Mid-Tier Holding Company, for their consideration and
approval of this Plan at the Shareholders' Meeting.
6. The Holding Company shall submit or cause to be submitted a
holding company application to the OTS for approval of the
acquisition of the Bank. Such application also shall include
an application to form Interim. In addition, an application to
merge the Mutual Holding Company (following its conversion
into an interim federal stock savings association) and the
Bank, an application to merge the Mid-Tier Holding Company
(following its conversion into a federal corporation and then
into an interim federal stock savings association) and the
Bank and an application to merge Interim and the Bank shall be
filed with the OTS, either as exhibits to the holding company
application or separately. All notices required to be
published in connection with such applications shall be
published at the times required.
7. The Holding Company shall file a Registration Statement
with the SEC to register the Holding Company Common Stock to
be issued in the Conversion and Reorganization under the
Securities Act of 1933, as amended, and shall register such
Holding Company Common Stock under any applicable state
securities
10
laws. Upon registration and after the receipt of all required
regulatory approvals, the Conversion Stock shall be first
offered for sale in a Subscription Offering to Eligible
Account Holders, [THE TAX-QUALIFIED EMPLOYEE STOCK BENEFIT
PLAN,] Supplemental Eligible Account Holders, if any, Other
Members, Directors, Officers and Employees and Public
Shareholders as of the Voting Record Date. It is anticipated
that any shares of Conversion Stock remaining unsold after the
Subscription Offering will be sold through a Community
Offering, a Syndicated Community Offering and/or a Public
Offering. The purchase price per share for the Conversion
Stock shall be a uniform price determined in accordance with
Section 4 hereof. The Holding Company shall contribute to the
Bank an amount of fifty percent (50%) of the net proceeds
received by the Holding Company from the sale of Conversion
Stock.
8. All assets, rights, interests, privileges, powers,
franchises and property (real, personal and mixed) of the
Mid-Tier Holding Company shall be automatically transferred to
and vested in the Holding Company by virtue of the Conversion
and Reorganization without any deed or other document of
transfer. The Holding Company, without any order or action on
the part of any court or otherwise and without any document of
assumption or assignment, shall hold and enjoy all of the
properties, franchises and interests, including appointments,
powers, designations, nominations and all other rights and
interests as the agent or fiduciary in the same manner and to
the same extent as such rights, franchises interests and
powers were held or enjoyed by the Mid-Tier Holding Company.
The Holding Company shall be responsible for all of the
liabilities, restrictions and duties of every kind and
description of the Mid-Tier Holding Company immediately prior
to the Conversion and Reorganization, including liabilities
for all debts, obligations and contracts of the Mid-Tier
Holding Company, matured or unmatured, whether accrued,
absolute, contingent or otherwise and whether or not reflected
or reserved against on balance sheets, book or accounts or
records of the Mid-Tier Holding Company.
9. The Certificate of Incorporation of the Holding Company
shall read in the form of EXHIBIT D.
10. The home office and branch offices of the Bank shall be
unaffected by the Conversion and Reorganization. The executive
offices of the Holding Company shall be located at the current
offices of the Mutual Holding Company and the Mi-Tier Holding
Company.
B. VOTES REQUIRED FOR CONSUMMATION OF CONVERSION AND
REORGANIZATION
This Plan was adopted by the Boards of Directors of the Mutual Holding
Company, the Mid-Tier Holding Company and the Bank on November 11, 2004.
This Plan is subject to the approval of the OTS and must be adopted by
(1) at least a majority of the total number of votes eligible to be cast by
Voting Members of the Mutual Holding Company at the Special Meeting (2) holders
of at least a majority of the outstanding
11
Mid-Tier Holding Company Common Stock, other than the Mutual Holding Company, at
the Shareholders' Meeting and (iii) the Mutual Holding Company must approve the
Plan in its capacity as the majority shareholder of the Mid-Tier Holding
Company.
C. CONSUMMATION OF CONVERSION AND REORGANIZATION
The effective date of the Conversion and Reorganization shall be the
date set forth in Section 23 hereof.
Upon the effective date, the following transactions shall occur:
1. The Mutual Holding Company shall convert from a mutual holding
company to an interim federal stock savings association. The Mid-Tier
Holding Company shall convert into a federal corporation and then
immediately to an interim federal stock savings association and
simultaneously merge with and into the Bank in the Mid-Tier Holding
Company Merger, with the Bank being the surviving institution.
Immediately thereafter, the Mutual Holding Company, as converted, shall
merge with and into the Bank in the Mutual Holding Company Merger, with
the Bank being the surviving institution. As a result of the Mutual
Holding Company Merger and the Mid-Tier Holding Company Merger, (x) the
shares of Mid-Tier Holding Company Common Stock held by the Mutual
Holding Company (following its conversion to an interim federal stock
savings association) shall be extinguished and (y) Members of the
Mutual Holding Company will be granted interests in the liquidation
account to be established by the Bank pursuant to Section 11 hereof.
2. Interim shall merge with and into the Bank pursuant to the Bank
Merger, with the Bank being the surviving institution. As a result of
the Bank Merger, (x) the shares of Holding Company Common Stock held by
the Bank shall be extinguished; (y) the shares of Mid-Tier Holding
Company Common Stock held by the Public Shareholders shall be converted
into the right to receive shares of Holding Company Common Stock based
upon the Exchange Ratio, plus cash in lieu of any fractional share
interest based upon the Actual Purchase Price; and (z) the shares of
common stock of Interim held by the Holding Company shall be converted
into shares of Bank Common Stock on a one-for-one basis, with the
result that the Bank shall become a wholly owned subsidiary of the
Holding Company. In addition, as a result of the Bank Merger, options
to purchase shares of Mid-Tier Holding Company Common Stock which are
outstanding immediately prior to consummation of the Conversion and
Reorganization shall be converted into options to purchase shares of
Holding Company Common Stock, with the number of shares subject to the
option and the exercise price per share to be adjusted based upon the
Exchange Ratio so that the aggregate exercise price remains unchanged,
and with the duration of the option remaining unchanged.
3. The Holding Company shall sell the Conversion Stock in the
Offerings, as provided herein.
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D. RETENTION OF INVESTMENT BANKERS AND FINANCIAL ADVISORS
The Primary Parties may retain and pay for the services of financial
and other advisors and investment bankers to assist in connection with any or
all aspects of the Conversion and Reorganization, including as an Underwriter
and otherwise in connection with the Offerings the payment of fees to brokers
and investment bankers for assisting Persons in completing and/or submitting
Order Forms. All fees, expenses, retainers and similar items shall be
reasonable.
4. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK.
All shares sold in the Conversion will be sold at a uniform price per
share. The aggregate price at which the Conversion Stock shall be sold shall not
be inconsistent with the estimated PRO FORMA market value of such Conversion
Stock, based upon an independent valuation as provided for in this Section 4.
The Mutual Holding Company shall cause the Independent Appraiser to prepare a
PRO FORMA valuation of the aggregate market value of the Common Stock and of the
aggregate market value of the Conversion Stock (which shall be equal to the
aggregate market value of the Common Stock multiplied by the Mutual Holding
Company's percentage ownership interest in the Bank), which shall be submitted
to the OTS as part of the Mutual Holding Company's Application for Conversion.
The valuation shall be prepared in accordance with 12 CFR 563b.7. Prior to the
commencement of the Subscription and Community Offering, the Estimated Price
Range will be established, the maximum of which shall be no more than fifteen
percent (15%) above the average of the minimum and maximum of such price range
and the minimum of which shall be no more than fifteen percent (15%) below such
average. From time to time, as appropriate or as required by the conversion
regulations or the OTS, the Mutual Holding Company shall cause the Independent
Appraiser to review developments subsequent to its valuation to determine
whether the Estimated Price Range should be revised.
Based on the valuation by the Independent Appraiser pursuant to this
Section 4, the Board of Directors of the Bank and the Board of Directors of the
Holding Company shall fix the Initial Purchase Price and the number of shares of
Conversion Stock to be offered. The total number of shares of Conversion Stock
offered and the purchase price per share shall be subject to increase or
decrease at any time prior to any Syndicated Community Offering or Public
Offering or other method of sale to reflect changes in market and financial
conditions. In the event that the aggregate purchase price of the Conversion
Stock is below the minimum of the Estimated Price Range, or materially above the
maximum of the Estimated Price Range, resolicitation of purchasers may be
required; PROVIDED, that up to a fifteen percent (15%) increase above the
maximum of the Estimated Price Range will not be deemed material so as to
require a resolicitation. Up to a fifteen percent (15%) increase in the number
of shares to be issued which is supported by an appropriate change in the
estimated PRO FORMA market value of the Conversion Stock will not be deemed to
be material so as to require a resolicitation of subscriptions. In the event
that the aggregate purchase price of the Conversion Stock is below the minimum
of the Estimated Price Range or in excess of fifteen percent (15%) above the
maximum of the Estimated Price Range, and a resolicitation is required, such
resolicitation shall be effected in such manner and within such time as the
Holding Company or the Bank shall establish, with the approval of the OTS, if
required.
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Notwithstanding the foregoing, shares of Conversion Stock will not be
issued unless, prior to the consummation of the Conversion and Reorganization,
the Independent Appraiser confirms to the Bank, the Mutual Holding Company, the
Holding Company and the OTS that, to the best knowledge of the Independent
Appraiser, nothing of a material nature has occurred which, taking into account
all relevant factors, would cause the Independent Appraiser to conclude that the
number of shares of Conversion Stock issued in the Conversion and Reorganization
multiplied by the Initial Purchase Price is incompatible with the estimate of
the aggregate consolidated PRO FORMA market value of the Holding Company. If
such confirmation is not received, the Holding Company may cancel the Offerings,
extended the Conversion and Reorganization and establish a new Initial Purchase
Price, extend, reopen or hold new Offerings, or take such other action as the
OTS may permit.
The Holding Common Stock to be issued pursuant to this Plan shall upon
issuance be fully paid and nonassessable.
5. METHOD OF OFFERING SHARES AND RIGHTS TO PURCHASE STOCK.
A. SUBSCRIPTION OFFERING
PRIORITY 1: ELIGIBLE ACCOUNT HOLDERS. Each Eligible Account Holder
shall receive, without payment, Subscription Rights to purchase up to the
greater of (i) $_____ of Conversion Stock (or such maximum purchase limitation
as may be established for the Community Offering and/or Syndicated Community
Offering), (ii) one-tenth of 1% of the total offering of shares in the
Subscription Offering or (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of Conversion
Stock offered in the Subscription Offering by a fraction, of which the numerator
is the amount of the Qualifying Deposits of the Eligible Account Holder and the
denominator is the total amount of all Qualifying Deposits of all Eligible
Account Holders, in each case subject to Sections 6 and 9 hereof.
In the event of an oversubscription for shares of Conversion Stock by
Eligible Account Holders, available shares shall be allocated among subscribing
Eligible Account Holders so as to permit each such Eligible Account Holder, to
the extent possible, to purchase a number of shares which will make his or her
total allocation equal to the lesser of the number of shares subscribed for or
100 shares. Any available shares remaining after each subscribing Eligible
Account Holder has been allocated the lesser of the number of shares subscribed
for or 100 shares shall be allocated among the subscribing Eligible Account
Holders in the proportion which the Qualifying Deposit of each such subscribing
Eligible Account Holder bears to the total Qualifying Deposits of all such
subscribing Eligible Account Holders whose orders are unfilled, provided that no
fractional shares shall be issued. Subscription Rights of Eligible Account
Holders who are also Directors or Officers and their Associates shall be
subordinated to those of other Eligible Account Holders to the extent that they
are attributable to increased deposits during the one-year period preceding the
Eligibility Record Date.
PRIORITY 2: TAX-QUALIFIED EMPLOYEE STOCK OWNERSHIP PLAN: The Tax
Qualified Employee Stock Benefit Plan shall receive, without payment,
Subscription Rights to purchase up to ten percent of the total offering of
shares in the Subscription Offering. Subject to the OTS'
14
right to object, the Foundation may be included as a Tax Qualified Employee
Stock benefit Plan for purposes of the Subscription Offering. A Tax-Qualified
Employee Stock Benefit Plan shall not be deemed to be an Associate or Affiliate
of, or a Person Acting in Concert with, any Director or Officer of the Holding
Company or the Bank. Notwithstanding any provision contained herein to the
contrary, the Bank may make scheduled discretionary contributions to a
Tax-Qualified Employee Stock Benefit Plan; PROVIDED, that such contributions do
not cause the Bank to fail to meet its regulatory capital requirements.
PRIORITY 3: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. In the event that
the Eligibility Record Date is more than 15 months prior to the date of the
latest amendment to the Application for Conversion filed prior to OTS approval,
then, and only in that event, a Supplemental Eligibility Record Date shall be
set and each Supplemental Eligible Account Holder shall receive, without
payment, Subscription Rights to purchase up to the greater of (i) $____ of
Conversion Stock in the Subscription Offering (or such maximum purchase
limitation as may be established for the Community Offering and/or Syndicated
Community Offering), (ii) one-tenth of 1% of the total offering of shares in the
Subscription Offering and (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of Conversion
Stock offered in the Subscription Offering by a fraction, of which the numerator
is the amount of the Qualifying Deposits of the Supplemental Eligible Account
Holder and the denominator is the total amount of all Qualifying Deposits of all
Supplemental Eligible Account Holders, in each case subject to Sections 6 and 9
hereof and the availability of shares of Conversion Stock for purchase after
taking into account the shares of Conversion Stock purchased by Eligible Account
Holders through the exercise of Subscription Rights under Sections 5 hereof.
In the event of an oversubscription for shares of Conversion Stock by
Supplemental Eligible Account Holders, available shares shall be allocated among
subscribing Supplemental Eligible Account Holders so as to permit each such
Supplemental Eligible Account Holder, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation (including the
number of shares, if any, allocated to Eligible Account Holders) equal to the
lesser of the number of shares subscribed for or 100 shares. Any remaining
available shares shall be allocated among subscribing Supplemental Eligible
Account Holders in the proportion that the amount of their respective Qualifying
Deposits bears to the total amount of the Qualifying Deposits of all such
subscribing Supplemental Eligible Account Holders whose orders are unfilled,
provided that no fractional shares shall be issued.
PRIORITY 4: OTHER MEMBERS. Each Other Member shall receive, without
payment, Subscription Rights to purchase up to the greater of (i) $____ of
Conversion Stock in the Subscription Offering (or such maximum purchase
limitation as may be established for the Community Offering and/or Syndicated
Community Offering) and (ii) one-tenth of 1% of the total offering of shares in
the Subscription Offering, subject to Sections 6 and 9 hereof and the
availability of shares of Conversion Stock for purchase after taking into
account the shares of Conversion Stock purchased by Eligible Account Holders and
Supplemental Eligible Account Holders, if any, through the exercise of
Subscription Rights under Section 5 hereof.
If Other Members subscribe for a number of shares of Conversion Stock
in excess of the total number of shares of Conversion Stock remaining, available
shares shall be allocated among
15
subscribing Other Members so as to permit each such Other Member, to the extent
possible, to purchase a number of shares which will make his or her total
allocation equal to the lesser of the number of shares subscribed for or 100
shares. Any remaining shares shall be allocated among subscribing Other Members
on a pro rata basis in the same proportion as each such Other Member's
subscription bears to the total subscriptions of all such subscribing Other
Members, provided that no fractional shares shall be issued.
B. COMMUNITY OFFERING
Any shares of Common Stock not subscribed for in the Subscription
Offering may be offered for sale in a Community Offering. This will involve an
offering of all unsubscribed shares directly to the general public with a
preference to those natural persons residing in the Community. Subject to the
requirements set forth herein, the manner in which the Conversion Stock is sold
in the Community Offering shall have as the objective the widest possible
distribution of such stock.
In the event of a Community Offering, all shares of Conversion Stock
which are not subscribed for in the Subscription Offering shall be offered for
sale by means of a direct community marketing program, which may provide for the
use of brokers, dealers or investment banking firms experienced in the sale of
financial institution securities.
Each order for Conversion Stock in the Community Offering shall be
subject to the absolute right of the Primary Parties to accept or reject any
such order in whole or in part either at the time of receipt of an order or as
soon as practicable following completion of the Community Offering. Available
shares will be allocated first to each Person whose order is accepted in an
amount equal to the lesser of 100 shares or the number of shares subscribed for
by each such Person, if possible. Thereafter, unallocated shares shall be
allocated among the Persons whose accepted orders remain unsatisfied in the same
proportion that the unfilled order of each bears to the total unfilled orders of
all Persons whose accepted orders remain unsatisfied, provided that no
fractional shares shall be issued.
The amount of Conversion Stock that any Person may purchase in the
Community Offering shall not exceed the greater of $____ of Conversion Stock or
up to 5% of the total offering, provided, however, that this amount may be
increased to up to 5% of the total offering of shares of Conversion Stock,
subject to any required regulatory approval but without the further approval of
Members of the Mutual Holding Company or the Shareholders of the Mid-Tier
Holding Company; and provided further that, to the extent applicable, and
subject to the preferences set forth and the limitations on purchases of
Conversion Stock set forth in this section and Section 6 of this Plan, orders
for Conversion Stock in the Community Offering shall first be filled to a
maximum of 2% of the total number of shares of Conversion Stock sold in the
Offerings and thereafter any remaining shares shall be allocated on an equal
number of shares basis per order until all orders have been filled. The Primary
Parties may commence the Community Offering concurrently with, at any time
during, or as soon as practicable after the end of, the Subscription Offering,
and the Community Offering must be completed within 45 days after the completion
of the Subscription Offering, unless extended by the Primary Parties with any
required regulatory approval.
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C. SYNDICATED COMMUNITY OFFERING
Subject to such terms, conditions and procedures as may be determined
by the Primary Parties, all shares of Conversion Stock not subscribed for in the
Subscription Offering or ordered in the Community Offering may be sold by a
syndicate of broker-dealers to the general public in a Syndicated Community
Offering. Subject to the requirements set forth herein, the manner in which the
Conversion Stock is sold in the Syndicated Community Offering shall have as the
objective the achievement of the widest possible distribution of such stock.
Each order for Conversion Stock in the Syndicated Community Offering shall be
subject to the absolute right of the Primary Parties to accept or reject any
such order in whole or in part either at the time of receipt of an order or as
soon as practicable after completion of the Syndicated Community Offering. The
amount of Conversion Stock that any Person may purchase in the Syndicated
Community Offering shall not exceed $____ of Conversion Stock, provided,
however, that this amount may be increased to up to 5% of the total offering of
shares of Conversion Stock, subject to any required regulatory approval but
without the further approval of Members of the Mutual Holding Company or the
Shareholders of the Mid-Tier Holding Company; and provided further that, to the
extent applicable, and subject to the limitations on purchases of Conversion
Stock set forth in this section and Section 6 of this Plan, orders for
Conversion Stock in the Syndicated Community Offering shall first be filled to a
maximum of 2% of the total number of shares of Conversion Stock sold in the
Offerings and thereafter any remaining shares shall be allocated on an equal
number of shares basis per order until all orders have been filled. The Primary
Parties may commence the Syndicated Community Offering concurrently with, at any
time during, or as soon as practicable after the end of, the Subscription
Offering and/or Community Offering, and the Syndicated Community Offering must
be completed within 45 days after the completion of the Subscription Offering,
unless extended by the Primary Parties with any required regulatory approval.
D. PUBLIC OFFERING ALTERNATIVE
Subject to such terms, conditions and procedures as may be determined
by the Primary Parties, any shares of Conversion Stock not sold in the
Subscription Offering or the Community Offering may, as an alternative to or
along with a Syndicated Community Offering, be offered for sale by the Holding
Company to or through Underwriters. The limitations on purchases of Conversion
Stock set forth in Section 6 of this Plan shall not be applicable to sales to
Underwriters for purposes of such a Public Offering. Any such Underwriter shall
agree to (a) purchase such shares from the Holding Company with a view to
reoffering them to the general public; (b) use their best efforts, or make a
firm commitment, to sell, for the account of the Holding Company, such shares to
the general public; or (c) a combination of (a) and (b), subject to the
following terms and conditions:
(1) Any Underwriting Agreement shall provide that the
Underwriter shall agree to purchase all shares of the Conversion Stock not sold
in the Subscription Offering or the Community Offering, if any such shares are
purchased.
(2) The price paid to the Holding Company by or through the
Underwriter for the Conversion Stock shall be the aggregate price at which such
shares were offered in the Subscription Offering, less the amount of an
underwriting discount as negotiated between the Bank,
17
the Holding Company, and the Underwriters and approved by the OTS and the
National Association of Securities Dealers, Inc.
(3) The Underwriting Agreement shall be subject to the
following conditions and such other conditions as may be acceptable to the Bank,
the Company and the OTS: (i) purchases in the Public Offering by Persons (other
than Underwriters) shall be subject to the limitations of Section 6 of this
Plan; and the Holding Company and its Underwriters shall use reasonable efforts
to assure that the stock to be offered and sold in the Public Offering shall be
offered and sold in a manner that, to the extent practicable, will achieve the
widest distribution of such stock.
The amount of Conversion Stock that any Person may purchase in the
Public Offering shall not exceed $____ of Conversion Stock, provided, however,
that this amount may be increased to up to 5% of the total offering of shares of
Conversion Stock, subject to any required regulatory approval but without the
further approval of Members of the Mutual Holding Company or the Shareholders of
the Mid-Tier Holding Company; and provided further that, to the extent
applicable, and subject to the limitations on purchases of Conversion Stock set
forth in this section and Section 6 of this Plan, purchases of Conversion Stock
in the Public Offering shall b subject to limitation of a maximum of 2% of the
total number of shares of Conversion Stock sold in the Offerings and thereafter
any remaining shares shall be allocated on an equal number of shares basis per
order until all of the Conversion Stock has been sold. The Primary Parties may
commence the Public Offering concurrently with, at any time during, or as soon
as practicable after the end of, the Subscription Offering and/or Community
Offering and Syndicated Community Offering and the Public Offering must be
completed within 45 days after the completion of the Subscription Offering,
unless extended by the Primary Parties with any required regulatory approval.
If for any reason a Syndicated Community Offering or a Public Offering
of shares of Holding Company Common Stock not sold in the Subscription and
Community Offerings cannot be effected, or if any insignificant residue of
shares of Conversion Stock is not sold in the Subscription and Community
Offerings or in the Syndicated Community or Public Offering, other arrangements
will be made for the disposition of unsubscribed shares by the Bank, if
possible. Such other purchase arrangements will be subject to the approval of
the OTS.
6. ADDITIONAL LIMITATIONS ON PURCHASES OF CONVERSION STOCK.
The following limitations apply to the Offerings, in addition to those
set forth in Section 5:
1. In addition to the other restrictions and limitations set
forth herein, the maximum amount of Holding Company Common
Stock which any Person together with any Associate or group of
Persons Acting in Concert may, directly or indirectly,
subscribe for or purchase in the Conversion and Reorganization
shall not exceed $______.
18
2. The number of shares of Conversion Stock which Directors
and Officers and their Associates may purchase in the
aggregate in the Offerings shall not exceed 30% of the total
number of shares of Conversion Stock sold in the Offerings,
including any shares which may be issued in the event of an
increase in the maximum of the Estimated Price Range to
reflect changes in market, financial and economic conditions
after commencement of the Subscription Offering and prior to
completion of the Offerings.
3. No Person may purchase fewer than 25 shares of Conversion
Stock in the Offerings, to the extent such shares are
available; provided, however, that if the Actual Purchase
Price is greater than $20.00 per share, such minimum number of
shares shall be adjusted so that the aggregate Actual Purchase
Price for such minimum shares will not exceed $500.00.
4. For purposes of the foregoing limitations and the
determination of Subscription Rights, (i) Directors, Officers
and Employees shall not be deemed to be Associates or a group
Acting in Concert solely as a result of their capacities as
such and (ii) Exchange Shares shall be valued at the Actual
Purchase Price.
5. Subject to any required regulatory approval and the
requirements of applicable laws and regulations, but without
further approval of the Members of the Mutual Holding Company
or the Shareholders of the Mid-Tier Holding Company, the
Primary Parties may increase or decrease any of the individual
or aggregate purchase limitations set forth herein to a
percentage which does not exceed 5% of the total offering of
shares of Holding Company Common Stock in the Conversion and
Reorganization whether prior to, during or after the
Subscription Offering, Community Offering, Syndicated
Community Offering and/or Public Offering. In the event that
an individual purchase limitation is increased after
commencement of the Subscription Offering or any other
offering, the Primary Parties shall permit any Person who
subscribed for the maximum number of shares of Conversion
Stock to purchase an additional number of shares, so that such
Person shall be permitted to subscribe for the then maximum
number of shares permitted to be subscribed for by such
Person, subject to the rights and preferences of any Person
who has priority Subscription Rights. In the event that any of
the individual or aggregate purchase limitations are decreased
after commencement of the Subscription Offering or any other
offering, the orders of any Person who subscribed for more
than the new purchase limitation shall be decreased by the
minimum amount necessary so that such Person shall be in
compliance with the then maximum number of shares permitted to
be subscribed for by such Person.
6. The Primary Parties shall have the right to take all such
action as they may, in their sole discretion, deem necessary,
appropriate or advisable in order to monitor and enforce the
terms, conditions, limitations and restrictions contained in
this section and elsewhere in this Plan and the terms,
conditions and representations contained in the Order Form,
including, but not limited to, the absolute right (subject
only to any necessary regulatory approvals or
19
concurrences) to reject, limit or revoke acceptance of any
subscription or order and to delay, terminate or refuse to
consummate any sale of Conversion Stock which they believe
might violate, or is designed to, or is any part of a plan to,
evade or circumvent such terms, conditions, limitations,
restrictions and representations. Any such action shall be
final, conclusive and binding on all persons, and the Primary
Parties and their respective Boards shall be free from any
liability to any Person on account of any such action.
7. Notwithstanding anything to the contrary contained in this
Plan and except as may otherwise be required by the OTS, the
Public Shareholders will not have to sell any Mid-Tier Holding
Company Common Stock or be limited in receiving Exchange
Shares even if their ownership of Mid-Tier Holding Company
Common Stock when converted into Exchange Shares would exceed
an applicable purchase limitation; provided, however, that a
Public Shareholder who would exceed an applicable purchase
limitation may be precluded from purchasing Conversion Stock
in the Offerings.
8. Notwithstanding any other provisions of this Plan, no
person shall be entitled to purchase any Conversion Stock to
the extent such purchase would be illegal under any federal
law or state law or regulation or would violate regulations or
policies of the National Association of Securities Dealers,
Inc., particularly those regarding free riding and
withholding. The Holding Company and/or its agents may ask for
an acceptable legal opinion from any purchaser as to the
legality of such purchase and may refuse to honor any purchase
order if such opinion is not timely furnished.
Prior to the consummation of the Offerings, no Person shall offer to
transfer, or enter into any agreement or understanding to transfer the legal or
beneficial ownership of any subscription rights or shares of Conversion Stock,
except pursuant to this Plan. Each person purchasing Conversion Stock shall be
deemed to confirm that such purchase does not conflict with the above purchase
limitations contained in this Plan.
EACH PERSON PURCHASING CONVERSION STOCK IN THE OFFERINGS WILL BE DEEMED TO
CONFIRM THAT PURCHASE DOES NOT CONFLICT WITH THE PURCHASE LIMITATIONS IN THIS
PLAN. ALL QUESTIONS CONCERNING WHETHER ANY PERSONS ARE ASSOCIATES OR A GROUP
ACTING IN CONCERT OR WHETHER ANY PURCHASE CONFLICTS WITH THE PURCHASE
LIMITATIONS IN THIS PLAN OR OTHERWISE VIOLATES ANY PROVISION OF THIS PLAN SHALL
BE DETERMINED BY THE PRIMARY PARTIES IN THEIR SOLE DISCRETION. SUCH
DETERMINATION SHALL BE CONCLUSIVE, FINAL AND BINDING ON ALL PERSONS AND THE
PRIMARY PARTIES MAY TAKE ANY REMEDIAL ACTION, INCLUDING WITHOUT LIMITATION
REJECTING THE PURCHASE OR REFERRING THE MATTER TO THE OTS FOR ACTION, AS IN
THEIR SOLE DISCRETION THE PRIMARY PARTIES MAY DEEM APPROPRIATE.
20
7. TIMING OF SUBSCRIPTION OFFERING, MANNER OF EXERCISING SUBSCRIPTION
RIGHTS AND ORDER FORMS.
A. TIMING OF SUBSCRIPTION OFFERING.
The Subscription Offering may be commenced concurrently with or at any
time after the mailing to Voting Members of the Mutual Holding Company and
Shareholders of the Mid-Tier Holding Company of the proxy statement(s) to be
used in connection with the Special Meeting and the Shareholders' Meeting. The
Subscription Offering may be closed before the Special Meeting and the
Shareholders' Meeting, provided that the offer and sale of the Conversion Stock
shall be conditioned upon the approval of the Plan by the Voting Members of the
Mutual Holding Company and the Shareholders of the Mid-Tier Holding Company at
the Special Meeting and the Shareholders' Meeting, respectively.
The exact timing of the commencement of the Subscription Offering shall
be determined by the Primary Parties in consultation with the Independent
Appraiser and any financial or advisory or investment banking firm retained by
them in connection with the Conversion. The Primary Parties may consider a
number of factors, including, but not limited to, their current and projected
future earnings, local and national economic conditions, and the prevailing
market for stocks in general and stocks of financial institutions in particular.
The Primary Parties shall have the right to withdraw, terminate, suspend, delay,
revoke or modify any such Subscription Offering, at any time and from time to
time, as they in their sole discretion may determine, without liability to any
Person, subject to compliance with applicable securities laws and any necessary
regulatory approval or concurrence.
The Primary Parties shall, promptly after the SEC has declared the
Registration Statement, which includes the Prospectus, effective and all
required regulatory approvals have been obtained, distribute or make available
the Prospectus, together with Order Forms for the purchase of Conversion Stock,
to all Participants at their last known addresses appearing on the records of
the Bank for the purpose of enabling them to exercise their respective
Subscription Rights, subject to this section, and at the discretion of the Board
of the Holding Company will be made available for use by those persons entitled
to purchase in the Community Offering.
B. ORDER FORMS; RETURN OF ORDER FORMS
A single Order Form for all Deposit Accounts maintained with the Bank
by an Eligible Account Holder and any Supplemental Eligible Account Holder may
be furnished, irrespective of the number of Deposit Accounts maintained with the
Bank on the Eligibility Record Date and Supplemental Eligibility Record Date,
respectively. No person holding a subscription right may exceed any otherwise
applicable purchase limitation by submitting multiple orders for Conversion
Stock. Multiple orders are subject to adjustment, as appropriate, on a pro rata
basis and deposit balances will be divided equally among such orders in
allocating shares in the event of an oversubscription.
The recipient of an Order Form shall have no less than 20 days and no
more than 45 days from the date of mailing of the Order Form (with the exact
termination date to be set forth on the Order Form) to properly complete and
execute the Order Form and deliver it to the Primary
21
Parties. The Primary Parties may extend such period by such amount of time as
they determine is appropriate. Failure of any Participant to deliver a properly
executed Order Form to the Primary Parties, along with payment (or authorization
for payment by withdrawal) for the shares of Conversion Stock subscribed for,
within the time limits prescribed, shall be deemed a waiver and release by such
person of any rights to subscribe for shares of Conversion Stock. Each
Participant shall be required to confirm to the Primary Parties by executing an
Order Form that such Person has fully complied with all of the terms,
conditions, limitations and restrictions in the Plan.
C. REQUIREMENTS FOR ORDER FORM
Each Order Form shall contain:
1. A specified date by which all order forms must be received
by the Holding Company, which date shall be not less than 20,
nor more than 45 days, as stated in subsection (e) above,
following the date on which the order forms are mailed by the
Holding Company, and which date will constitute the
termination of the Subscription Offering;
2. The Initial Purchase Price per share for shares of
Conversion Stock to be sold in the Offerings;
3. An explanation of the rights and privileges granted under
this Plan to each class of persons granted subscription rights
pursuant to this Plan with respect to the purchase of
Conversion Stock;
4. Specifically designated blank spaces for dating and signing
the order form;
5. A description of the minimum and maximum number of shares
of Conversion Stock that may be subscribed for pursuant to the
exercise of subscription rights or otherwise purchased in the
Community Offering;
6. The amount which must be returned with the order form to
subscribe for Conversion Stock. Such amount will be equal to
the purchase price multiplied by the number of shares of
Conversion Stock subscribed for in accordance with the terms
of this Plan;
7. Instructions concerning how to indicate on such order form
the extent to which the recipient elects to exercise
subscription rights under this Plan, the name or names in
which the shares of Conversion Stock subscribed for are to be
registered, the address to which certificates representing
such shares of Conversion Stock are to be sent and the
alternative methods of payment for Conversion Stock which will
be permitted;
8. An acknowledgment that the recipient of the order form has
received a final copy of the Prospectus prior to execution of
the order form;
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9. A statement indicating the consequences of failing to
properly complete and return the order form, including 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 to the
Holding Company within the subscription period such properly
completed and executed order form, together with the full
required payment as specified in the order form for the shares
of Conversion Stock for which the recipient elects to
subscribe in the Subscription Offering (or by authoring on the
order form that the Holding Company withdraw said amount from
the subscriber's Deposit Account at the Bank); the
subscription rights of Eligible Account Holders, Supplemental
Eligible Account Holders, and Other Members are
nontransferable. Certificates representing shares of
Conversion Stock purchased in the Subscription Offering must
be registered in the name of the Eligible Account Holder,
Supplemental Eligible Account Holder or Other Member, as the
case may be. Joint stock registration will be allowed only in
the qualifying deposit account is so registered;
10. Provision for certification to be executed by the
recipient of the order form to the effect that, as to any
shares of Conversion Stock which the recipient elects to
purchase, such recipient is purchasing such shares of
Conversion Stock for his own account only and has no present
agreement or understanding regarding any subsequent sale or
transfer of such shares of Conversion Stock; and
11. A statement to the effect that the executed order form,
once received by the Holding Company, may not be modified or
amended by the subscriber without the consent of the Holding
Company; notwithstanding the above, the Bank and the Holding
Company reserve the right in their sole discretion to accept
or reject orders received on photocopied or facsimilied order
forms.
D. REJECTION OF ORDER FORMS; INTERPRETATION OF ORDER FORMS
The Primary Parties shall have the absolute right, in their sole
discretion and without liability to any Participant or other Person, to reject
any Order Form, including, but not limited to, any Order Form that is (i)
improperly completed or executed; (ii) not timely received; (iii) not
accompanied by the proper payment (or authorization of withdrawal for payment)
or, in the case of institutional investors in the Community Offering, not
accompanied by an irrevocable order together with a legally binding commitment
to pay the full amount of the purchase price prior to 48 hours before the
completion of the Offerings; or (iv) submitted by a Person whose representations
the Primary Parties believe to be false or who they otherwise believe, either
alone, or Acting in Concert with others, is violating, evading or circumventing,
or intends to violate, evade or circumvent, the terms and conditions of the
Plan. Furthermore, in the event Order Forms (i) are not delivered and are
returned to the Bank, the Mid-Tier Holding Company or the Mutual Holding Company
by the Untied States Postal Service or the Bank, the Mid-Tier Holding Company or
the Mutual Holding Company is unable to locate the addressee, or (ii) are not
mailed pursuant to a "no mail" order placed in effect by the account holder, the
subscription rights of the person to which such rights have been granted will
lapse as though such person failed to return the contemplated Order Form within
the time period specified thereon. The Primary Parties may, but will not be
required to, waive any irregularity on any Order Form or
23
may require the submission of corrected Order Forms or the remittance of full
payment for shares of Conversion Stock by such date as they may specify. The
interpretation of the Primary Parties of the terms and conditions of the Order
Forms shall be final and conclusive.
8. PAYMENT FOR CONVERSION STOCK.
All payments for Conversion subscribed for or ordered in the Offerings
must be delivered in full to the Bank along with a properly completed and
executed Order Form, or purchase order in the case of the Syndicated Community
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 Holding
Company. A properly completed original stock Order Form must be used to
subscribe for Conversion Stock. Copies of an order form are not required to be
accepted. The Bank shall not knowingly loan funds or otherwise extend credit to
any Participant or other Person to purchase Conversion Stock. Each share of
Conversion Stock shall be non-assessable upon payment in full of the Actual
Purchase Price.
Payment for Conversion Stock will be permitted to be made in any of the
following manners:
1. By check, bank draft or money order, provided that checks
will only be accepted subject to collection. Interest will be
paid by the Bank at not less than the rate per annum being
paid by the Bank on its passbook accounts at the time the
Offerings commence, on payments for Conversion Stock received
in the Offerings by check, bank draft or money order from the
date payment is received until consummation or termination of
the Conversion and Reorganization. The Bank shall be entitled
to invest all amounts paid for subscriptions in the Offerings
for its own account until completion or termination of the
Conversion and Reorganization.
2. By appropriate authorization of withdrawal from designated
types of deposit accounts in the Bank. The order forms will
contain appropriate means by which authorization of such
withdrawals may be made. For purposes of determining the
withdrawable balance of such accounts, such withdrawals will
be deemed to have been made upon receipt of appropriate
authorization therefor, but interest at the rates applicable
to the accounts from which the withdrawals have been deemed to
have been made will be paid by the Bank on the amounts deemed
to have been withdrawn until the date on which the Conversion
and Reorganization is consummated, at which date the
authorized withdrawal will actually be made. Such withdrawals
may be made upon receipt of order forms authorizing such
withdrawals, but interest will be paid by the Bank on the
amounts withdrawn as if such amounts had remained in the
accounts from which they were withdrawn until the date upon
which the sales of Conversion Stock pursuant to exercise of
subscription rights are actually consummated.
3. Wire transfers as payment for shares ordered for purchase
may be permitted or accepted as proper payment.
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4. Payments for the purchase of Conversion in the Offerings
will be permitted through authorization of withdrawals from
certificate accounts at the Bank without early withdrawal
penalties. If the remaining balances of the certificate
accounts after such withdrawals are less than the minimum
qualifying balances under applicable regulations, the
certificates evidencing the accounts will be canceled upon
consummation of the Conversion and Reorganization, and the
remaining balances will thereafter earn interest at the
passbook rate.
9. ACCOUNT HOLDERS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES.
The Primary Parties shall make reasonable efforts to comply with the
securities laws of all jurisdictions in the United States in which Participants
reside. However, no Participant will be offered or receive any Conversion Stock
under the Plan if such Participant resides in a foreign country or resides in a
jurisdiction of the United States with respect to which all of the following
apply: (a) there are few Participants otherwise eligible to subscribe for shares
under this Plan who reside in such jurisdiction; (b) the granting of
Subscription Rights or the offer or sale of shares of Conversion Stock to such
Participants would require any of the Primary Parties or their respective
Directors and Officers, under the laws of such jurisdiction, to register as a
broker-dealer, salesman or selling agent or to register or otherwise qualify the
Conversion Stock for sale in such jurisdiction, or any of the Primary Parties
would be required to qualify as a foreign corporation or file a consent to
service of process in such jurisdiction; and (c) such registration,
qualification or filing in the judgment of the Primary Parties would be
impracticable or unduly burdensome for reasons of cost or otherwise.
10. VOTING RIGHTS OF SHAREHOLDERS.
Following consummation of the Conversion and Reorganization, voting
rights with respect to the Bank shall be held and exercised exclusively by the
Holding Company as holder of all of the Bank's outstanding voting capital stock,
and voting rights with respect to the Holding Company shall be held and
exercised exclusively by the holders of the Holding Company's voting capital
stock.
11. LIQUIDATION ACCOUNT.
At the time of the Mutual Holding Company Merger, the Bank shall
establish a liquidation account in an amount equal to the greater of (i) the
Bank's net worth as of the date of the latest statement of financial condition
contained in the final prospectus utilized in the initial formation of the
Mutual Holding Company and related minority stock offering, or (ii) the
percentage of the outstanding shares of the common stock of the Mid-Tier Holding
Company owned by the Mutual Holding Company prior to the Mid-Tier Holding
Company Merger, multiplied by the Mid-Tier Holding Company's total shareholders'
equity as reflected in its latest statement of financial condition contained in
the final Prospectus utilized in the Conversion and Reorganization. The function
of the liquidation account will be to preserve the rights of certain holders of
Deposit Accounts in the Bank who maintain such accounts in the Bank following
the Conversion and Reorganization to a priority to distributions in the unlikely
event of a liquidation of the Bank subsequent to the Conversion and
Reorganization.
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The liquidation account shall be maintained for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders, if any, who maintain
their Deposit Accounts in the Bank after the Conversion and Reorganization. Each
such account holder will, with respect to each Deposit Account held, have a
related inchoate interest in a portion of the liquidation account balance, which
interest will be referred to in this Section 11 as the "subaccount balance." All
Deposit Accounts having the same social security number will be aggregated for
purposes of determining the initial subaccount balance with respect to such
Deposit Accounts, except as set forth below.
In the event of a complete liquidation of the Bank subsequent to the
Conversion and Reorganization (and only in such event), each Eligible Account
Holder and Supplemental Eligible Account Holder, if any, shall be entitled to
receive a liquidation distribution from the liquidation account in the amount of
the then current subaccount balances for Deposit Accounts then held (adjusted as
described below) before any liquidation distribution may be made with respect to
the capital stock of the Bank. No merger, consolidation, sale of bulk assets or
similar combination transaction with another FDIC-insured institution in which
the Bank is not the surviving entity shall be considered a complete liquidation
for this purpose. In any such transaction, the liquidation account shall be
assumed by the surviving entity.
The initial subaccount balance for a Deposit Account held by an
Eligible Account Holder and Supplemental Eligible Account Holder, if any, shall
be determined by multiplying the opening balance in the liquidation account by a
fraction, of which the numerator is the amount of the Qualifying Deposits of
such account holder and the denominator is the total amount of Qualifying
Deposits of all Eligible Account Holders and Supplemental Eligible Account
Holders, if any. For Deposit Accounts in existence at both the Eligibility
Record Date and the Supplemental Eligibility Record Date, if any, separate
initial subaccount balances shall be determined on the basis of the Qualifying
Deposits in such Deposit Accounts on each such record date. Initial subaccount
balances shall not be increased, and shall be subject to downward adjustment as
provided below.
If the aggregate deposit balance in the Deposit Account(s) of any
Eligible Account Holder or Supplemental Eligible Account Holder, if any, at the
close of business on any December 31 annual closing date, commencing on or after
the effective date of the Conversion and Reorganization, is less than the lesser
of (a) the aggregate deposit balance in such Deposit Account(s) at the close of
business on any other annual closing date subsequent to such record dates or (b)
the aggregate deposit balance in such Deposit Account(s) as of the Eligibility
Record Date or the Supplemental Eligibility Record Date, if any, the subaccount
balance for such Deposit Account(s) shall be adjusted by reducing such
subaccount balance in an amount proportionate to the reduction in such deposit
balance. In the event of such a downward adjustment, the subaccount balance
shall not be subsequently increased, notwithstanding any subsequent increase in
the deposit balance of the related Deposit Account(s). The subaccount balance of
an Eligible Account Holder or Supplemental Eligible Account Holder, if any, will
be reduced to zero if the Account Holder ceases to maintain a Deposit Account at
the Bank that has the same social security number as appeared on his Deposit
Account(s) at the Eligibility Record Date or, if applicable, the Supplemental
Eligibility Record Date.
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Subsequent to the Conversion and Reorganization, the Bank may not pay
cash dividends generally on deposit accounts and/or capital stock of the Bank,
or repurchase any of the capital stock of the Bank, if such dividend or
repurchase would reduce the Bank's regulatory capital below the aggregate amount
of the then current subaccount balances for Deposit Accounts then held;
otherwise, the existence of the liquidation account shall not operate to
restrict the use or application of any of the net worth accounts of the Bank.
For purposes of this Section 11, a Deposit Account includes a
predecessor or successor account which is held by an Account Holder with the
same social security number.
12. REQUIREMENTS FOLLOWING CONVERSION FOR REGISTRATION, MARKET MAKING AND
STOCK EXCHANGE LISTING.
In connection with the Conversion and Reorganization, the Holding
Company shall register the Holding Company Common Stock pursuant to Section 12
of the Securities Exchange Act of 1934, as amended, and shall undertake not to
deregister such stock for a period of three years thereafter. The Holding
Company also shall use its best efforts to (i) encourage and assist a market
maker to establish and maintain a market for the Holding Company Common Stock
and (ii) list the Holding Company Common Stock on a national or regional
securities exchange or to have quotations for such stock disseminated on the
Nasdaq Stock Market.
13. DIRECTORS AND OFFICERS.
Each person serving as a Director or Officer of the Mid-Tier Holding
Company and the Bank at the time of the Conversion and Reorganization shall
continue to serve as a Director or Officer of the Bank and shall become a
Director or Officer of the Holding Company for the balance of the term for which
the person was elected prior to the Conversion and Reorganization, and until a
successor is elected and qualified. The number, names, business addresses and
terms of the Directors of the Bank are set forth in the Plans of Merger included
as Annexes A, B and C hereto.
14. RESTRICTIONS ON STOCK PURCHASES BY MANAGEMENT.
For a period of three years following the Conversion and
Reorganization, the Directors and Officers of the Holding Company and the Bank
and their Associates may not purchase, without the prior written approval of the
OTS, Holding Company Common Stock except from a broker-dealer registered with
the SEC. This provision shall be enforced by the applicable regulatory authority
provided the applicable regulatory authority agrees in writing to enforce this
OTS requirement. This prohibition shall not apply, however, to (i) a negotiated
transaction arrived at by direct negotiation between buyer and seller and
involving more than 1% of the outstanding Holding Company Common Stock and (ii)
purchases of stock made by and held by any Tax-Qualified Employee Stock Benefit
Plan (and purchases of stock made by and held by any Non-Tax-Qualified Employee
Stock Benefit Plan following the receipt of shareholder approval of such plan)
which may be attributable to individual officers or directors.
The foregoing restriction on purchases of Holding Company Common Stock
shall be in addition to any restrictions that may be imposed by federal and
state securities laws.
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15. RESTRICTIONS ON TRANSFER OF STOCK.
All shares of Conversion Stock which are purchased by Persons other
than Directors and Officers shall be transferable without restriction, except in
connection with a transaction proscribed by Section 16 of this Plan. Shares of
Conversion Stock purchased by Directors and Officers of the Holding Company and
the Bank on original issue from the Holding Company (by subscription or
otherwise) shall be subject to the restriction that such shares shall not be
sold or otherwise disposed of for value for a period of one year following the
date of purchase, except for any disposition of such shares following the death
of the original purchaser or pursuant to any merger or similar transaction
approved by the OTS. The shares of Conversion Stock issued by the Holding
Company to Directors and Officers shall bear the following legend giving
appropriate notice of such one-year restriction:
"The shares of stock evidenced by this Certificate
are restricted as to transfer for a period of one year from
the date of this Certificate pursuant to Part 563b of the
Rules and Regulations of the Office of Thrift Supervision.
These shares may not be transferred during such one-year
period without a legal opinion of counsel for the Company that
said transfer is permissible under the provisions of
applicable law and regulation. This restrictive legend shall
be deemed null and void after one year from the date of this
Certificate."
In addition, the Holding Company shall give appropriate instructions to
the transfer agent for the Holding Company Common Stock with respect to the
applicable restrictions relating to the transfer of restricted stock. Any shares
issued at a later date as a stock dividend, stock split or otherwise with
respect to any such restricted stock shall be subject to the same holding period
restrictions as may then be applicable to such restricted stock.
The foregoing restriction on transfer shall be in addition to any
restrictions on transfer that may be imposed by federal and state securities
laws.
16. RESTRICTIONS ON ACQUISITION OF STOCK OF THE HOLDING COMPANY.
The certificate of incorporation of the Holding Company shall prohibit
any Person together with Associates or group of Persons Acting in Concert from
offering to acquire or acquiring, directly or indirectly, beneficial ownership
of more than 10% of any class of equity securities of the Holding Company, or of
securities convertible into more than 10% of any such class, for a period of
five (5) years following completion of the Conversion and Reorganization. The
certificate of incorporation of the Holding Company also shall provide that all
equity securities beneficially owned by any Person in excess of 10% of any class
of equity securities shall be considered "excess shares," and that excess shares
shall not be counted as shares entitled to vote and shall not be voted by any
Person or counted as voting shares in connection with any matters submitted to
the shareholders for a vote. The foregoing restrictions shall not apply to (i)
any offer with a view toward public resale made exclusively to the Holding
Company by underwriters or a selling group acting on its behalf, (ii) the
purchase of shares by a Tax-Qualified Employee Stock Benefit Plan established
for the benefit of the employees of the Holding Company and its subsidiaries
which is exempt from approval requirements under 12 C.F.R.
28
ss.574.3(c)(1)(vi) or any successor thereto, and (iii) any offer or acquisition
approved in advance by the affirmative vote of two-thirds of the entire Board of
Directors of the Holding Company. Directors, Officers or Employees of the
Holding Company or the Bank or any subsidiary thereof shall not be deemed to be
Associates or a group Acting in Concert with respect to their individual
acquisitions of any class of equity securities of the Holding Company solely as
a result of their capacities as such.
17. TAX RULINGS OR OPINIONS.
Consummation of the Conversion and Reorganization is conditioned upon
prior receipt by the Primary Parties of either a ruling or an opinion of counsel
with respect to federal tax laws, and either a ruling or an opinion with respect
to Delaware tax laws, to the effect that consummation of the transactions
contemplated hereby qualify as a tax-free transaction for federal income tax
purposes and will not result in any adverse tax consequences to the Primary
Parties or to account holders receiving Subscription Rights before or after the
Conversion and Reorganization, except in each case to the extent, if any, that
Subscription Rights are deemed to have fair market value on the date such rights
are issued.
18. STOCK COMPENSATION PLANS.
The Holding Company and the Bank are authorized to adopt stock option
plans, restricted stock grant plans and other Non-Tax-Qualified Employee Stock
Benefit Plans, provided that no stock options shall be granted, and no shares of
Conversion Stock shall be purchased, pursuant to any of such plans prior to the
earlier of (i) the one-year anniversary of the consummation of the Conversion
and Reorganization or (ii) the receipt of shareholder approval of such plans at
either an annual or special meeting of shareholders of the Holding Company held
no earlier than six months following the Conversion and Reorganization.
The Holding Company and the Bank are authorized to enter into
employment or severance agreements with their executive officers.
19. DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK.
Following consummation of the Conversion and Reorganization, any
repurchases of shares of capital stock by the Holding Company will be made in
accordance with then applicable laws and regulations.
The Bank may not declare or pay a cash dividend on, or repurchase any
of, its capital stock if the effect thereof would cause the regulatory capital
of the Bank to be reduced below the amount required for the liquidation account.
Any dividend declared or paid on, or repurchase of, the Bank's capital stock
also shall be in compliance with applicable law and regulations.
20. PAYMENT OF FEES TO BROKERS.
The Primary Parties may elect to offer to pay fees on a per share basis
to securities brokers who assist purchasers of Conversion Stock in the
Offerings.
29
21. EXPENSES.
OTS regulations require that the expenses of the Offerings must be
reasonable. The Bank will use its best efforts to assure that the expenses
incurred by the Bank and the Holding Company in effecting the Conversion and
Reorganization and the Offerings will be reasonable.
22. EFFECTIVE DATE OF CONVERSION AND REORGANIZATION.
The effective date of the Conversion and Reorganization shall be the
date upon which the last of the following actions occurs: (i) the filing of
Articles of Combination with the OTS with respect to the Mid-Tier Holding
Company Merger, (ii) the filing of Articles of Combination with the OTS with
respect to the Mutual Holding Company Merger, (iii) the filing of Articles of
Combination with the OTS with respect to the Bank Merger, (iv) the closing of
the issuance of the shares of Conversion Stock in the Offerings. The filing of
Articles of Combination relating to the Mutual Holding Company Merger, the
Mid-Tier Holding Company Merger and the Bank Merger and the closing of the
issuance of shares of Conversion Stock in the Offerings shall not occur until
all requisite regulatory, Member and Shareholder approvals have been obtained,
all applicable waiting periods have expired and sufficient subscriptions and
orders for the Conversion Stock have been received. It is intended that the
closing of the Mutual Holding Company Merger, the Mid-Tier Holding Company
Merger, the Bank Merger, the sale of shares of Conversion Stock in the Offerings
and shall occur consecutively and substantially simultaneously.
23. AMENDMENT OR TERMINATION OF THE PLAN.
If deemed necessary or desirable by the Boards of Directors of the
Primary Parties, this Plan may be substantively amended, as a result of comments
from regulatory authorities or otherwise, at any time prior to the solicitation
of proxies from Members and Shareholders to vote on the Plan and at any time
thereafter with the concurrence of the OTS. Any amendment to this Plan made
after approval by the Members and Shareholders with the concurrence of the OTS
shall not necessitate further approval by the Members or Shareholders unless
otherwise required by the OTS. This Plan shall terminate if the sale of all
shares of Conversion Stock is not completed within 24 months from the date of
the Special Meeting. Prior to the earlier of the Special Meeting and the
Shareholders' Meeting, this Plan may be terminated by the Boards of Directors of
the Primary Parties without approval of the OTS; after the Special Meeting or
the Shareholders' Meeting, the Boards of Directors may terminate this Plan only
with the approval of the OTS.
24. INTERPRETATION OF THE PLAN.
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of each of the Boards of Directors of the
Primary Parties shall be final, subject to the authority of the OTS.
25. SEVERABILITY.
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
30
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.
26. MISCELLANEOUS.
This Plan is to be governed by and construed in accordance with the
laws of the United States. 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 Members, this Plan shall
create no rights in any Person.
31
