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AMERICAN SAVINGS, MHC
AMERICAN FINANCIAL GROUP, INC.
AMERICAN SAVINGS BANK OF NJ
Bloomfield, New Jersey
_____________________________________________
PLAN OF STOCK ISSUANCE
_____________________________________________
Adopted by the Board of Directors
on
February 10, 2003
and subsequently amended
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PLAN OF STOCK ISSUANCE
AMERICAN SAVINGS, MHC
AMERICAN FINANCIAL GROUP, INC.
AMERICAN SAVINGS BANK OF NJ
TABLE OF CONTENTS
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PAGE
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1. Introduction................................................... 1
2. Definitions.................................................... 1
3. Conditions to Implementation of Stock Offering................. 4
4. Stock Offering Documents....................................... 5
5. Stock Offering................................................. 5
6. Subscription Rights of Eligible Account Holders
(First Priority)............................................. 6
7. Subscription Rights of Employee Plans (Second Priority)........ 7
8. Supplemental Eligible Account Holders (Third Priority)......... 7
9. Community Offering............................................. 8
10. Syndicated Community Offering.................................. 8
11. Limitation on Purchases........................................ 9
12. Payment for Common Stock....................................... 11
13. Manner of Exercising Subscription Rights Through Order Forms... 11
14. Undelivered, Defective or Late Order Forms:
Insufficient Payment......................................... 12
15. Restrictions on Resale or Subsequent Disposition............... 13
16. Charter and Bylaws of the Mutual Holding Company,
the Stock Holding Company and the Bank....................... 13
17. Conversion of Mutual Holding Company to Stock Form............. 13
18. Payment of Dividends and Repurchase of Stock................... 14
19. Residents of Foreign Countries and Certain States.............. 14
20. Registration and Market Making................................. 15
21. Expenses of Offering........................................... 15
22. Amendment or Termination of the Plan........................... 15
23. Miscellaneous.................................................. 15
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PLAN OF STOCK ISSUANCE
1. INTRODUCTION
Pursuant to a Plan of Reorganization from a Federal Mutual Savings Bank
to a Federal Mutual Holding Company, American Savings Bank of NJ (the "Bank")
converted to the mutual holding company form of organization in 1999 with no
stock offering. Pursuant to the Mutual Holding Company Plan of Reorganization,
the Bank became a federal stock savings bank, which had all of its stock owned
by American Savings, MHC (the "Mutual Holding Company"), a federal mutual
holding company. Pursuant to a plan of reorganization, the Mutual Holding
Company acquired all of the stock American Financial Group, Inc. (the "Stock
Holding Company"), a federal stock holding company, which acquired all of the
stock of the Bank. On February 10, 2003, the Board of Directors of the Bank, the
Stock Holding Company and the Mutual Holding Company, by at least a two-thirds
vote, resolved to adopt this Plan of Stock Issuance (the "Plan"), pursuant to
which the Stock Holding Company proposes, pursuant to the laws of the United
States of America and the Rules and Regulations of the Office of Thrift
Supervision ("OTS"), to conduct a stock offering of up to but less than 50% of
the aggregate of the total voting stock of the Stock Holding Company.
In adopting the Plan, the Board of Directors has determined that the
Stock Offering is advisable and in the best interest of the Bank, the Stock
Holding Company, the Mutual Company and its members. The Stock Offering will
enable the Stock Holding Company and the Bank to increase its capital through
the issuance of capital stock without undertaking a full conversion from the
mutual to the stock form of organization. The Stock Offering will not foreclose
the opportunity to effect a conversion of the Mutual Holding Company from the
mutual to the stock form of organization in the future. The Stock Offering will
significantly increase capital and enable the Bank to further grow through
internal expansion, the possible acquisition of other assets, branch offices,
financial institutions, possible diversification into other related financial
service activities and other purposes and will further enhance the Bank's
ability to render services to the public. The mutual holding company structure
also will allow the Bank to minimize over- capitalization by providing the
flexibility to raise capital through the issuance of stock in a manner designed
to meet the Bank's growth needs, rather than in a single stock offering as
required in a standard mutual-to- stock conversion.
Pursuant to Section 10(o) of the Home Owners' Loan Act, as amended 12
U.S.C. 1467(a)(0), ("HOLA"), the Stock Offering will be accomplished in
accordance with the procedures contained in this Plan, the Rules and Regulations
of the OTS, and as otherwise may be required by the OTS.
2. DEFINITIONS
As used in this Plan, the terms set forth below have the following
meanings:
Account Holder: The term Account Holder means any Person holding a
Savings Account in the Bank.
Acting in Concert: The Term "Acting in Concert" means (i) knowing
participation in a joint activity or interdependent conscious parallel
action towards a common goal whether or not pursuant to an express
agreement; (ii) a combination or pooling of voting or other interests
in the securities of an issuer for a common purpose pursuant to any
contract, understanding, relationship,
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agreement or other arrangement, whether written or otherwise; or (iii)
a person or company which acts in concert with another person or
company ("other party") shall also be deemed to be acting in concert
with any person or company who is also acting in concert with that
other party, except that any tax-qualified employee stock benefit plan
will not be deemed to be acting in concert with its trustee or a person
who serves in a similar capacity solely for the purpose of determining
whether stock held by the trustee and stock held by the plan will be
aggregated.
Associate: The term Associate when used to indicate a relationship with
any person, means (i) any corporation or organization (other than the
Bank or a majority-owned subsidiary or a majority- owning parent
corporation of the Bank) of which such person is an officer or partner
or is, directly or indirectly, the beneficial owner of 10 percent or
more of any class of equity securities, (ii) any trust or other estate
in which such person has a substantial beneficial interest or as to
which such person serves as trustee or in a similar fiduciary capacity
except that for the purposes of Sections 7 and 11 hereof, the term
"Associate" does not include any Tax-Qualified Employee Stock Benefit
Plan or any Tax-Qualified Employee Stock Benefit Plan in which a person
has a substantial beneficial interest or serves as a trustee or in a
similar fiduciary capacity, and except that, for purposes of
aggregating total shares that may be held by Officers and Directors the
term "Associate" does not include any Tax-Qualified Employee Stock
Benefit Plan, and (iii) any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person or who is
a Director or Officer of the Bank or the Stock Holding Company, or any
of its parents or subsidiaries.
Bank: American Savings Bank of NJ, a federal stock savings bank.
Capital Stock: Any and all authorized stock of the Stock Holding
Company.
Common Stock: Common stock, par value $0.10, to be issued by the Stock
Holding Company in the Minority Stock Offering.
Community Offering: The term Community Offering, if applicable, means
the offering for sale to certain members of the general public directly
by the Stock Holding Company, of any shares not subscribed for in the
Subscription Offering.
Director: A member of the Board of Directors of the Stock Holding
Company.
Effective Date: The date of completion of the Offering in accordance
with this Plan and the Rules and Regulations of the OTS.
Eligible Account Holder: The term Eligible Account Holder means any
Person holding a Qualifying Deposit in a Savings Account at the Bank on
the Eligibility Record Date. Only the name(s) of the Person(s) listed
on the account as of the Eligibility Record Date (or a successor entity
or estate) is an Eligible Account Holder. Any Person(s) added to a
Savings Account after the Eligibility Record Date is not an Eligible
Account Holder.
Eligibility Record Date: The term Eligibility Record Date means the
date for determining Eligible Account Holders in the Bank as of the
close of business on January 31, 2002.
Employee: A person who is an Employee of the Bank at the date of the
Offering.
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Employee Plans: The term Employee Plans means the Tax-Qualified
Employee Stock Benefit Plans, including the Employee Stock Ownership
Plan, approved by the Board of Directors of the Bank or Stock Holding
Company.
FDIC: Federal Deposit Insurance Corporation.
Independent Appraiser: The term Independent Appraiser means an
appraiser retained to prepare an appraisal of the pro forma market
value of the Common Stock.
Independent Valuation: The term Independent Valuation means the
estimated pro forma market value of the Common Stock as determined by
the Independent Appraiser prior to the Subscription Offering and as it
may be amended from time to time thereafter.
Local Community: The term Local Community means the counties in which
the Bank has an office.
Majority Interest: Greater than fifty percent (50%) of the combined
voting power or value of all classes of stock of the Stock Holding
Company.
Members: All persons or entities who qualify as members of the Mutual
Holding Company pursuant to its Charter and Bylaws.
Minority Stock Offering or Offering: Any offering of Capital Stock of
the Stock Holding Company to persons other than the Mutual Holding
Company of up to but less than 50% in the aggregate of the total common
stock of the Stock Holding Company.
Mutual Holding Company: American Savings, MHC, a federal mutual holding
company, which currently owns 100% of the stock of the Stock Holding
Company.
Officer: An executive officer of the Mutual Holding Company, Stock
Holding Company or Bank, which includes the President, Chief Executive
Officer, and Senior Vice Presidents in charge of principal business
functions, and any other person participating in major policy making
functions.
Order Form: The term Order Form means any form together with attached
cover letter, sent by the Bank to any Person containing among other
things a description of the alternatives available to such Person under
the Plan and by which any such Person may make elections regarding
subscriptions for Common Stock in the Subscription and Community
Offerings.
OTS: Office of Thrift Supervision or any successor agency.
Participants: The term Participants means the Eligible Account
Holders, Employee Plans and Supplemental Eligible Account Holders.
Person: An individual, a corporation, a partnership, an association, a
joint-stock company, a trust (including Individual Retirement Accounts
and ▇▇▇▇▇ Accounts), any unincorporated organization, a government or
political subdivision thereof or any other entity.
Plan: This Plan of Stock Issuance as it exists on the date hereof and
as it may hereafter be amended in accordance with its terms.
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Preferred Stock: Preferred Stock authorized pursuant to the Stock
Holding Company's stock charter.
Purchase Price: The term Purchase Price means the per share price at
which the Common Stock will be sold in accordance with the terms
hereof.
Qualifying Deposit: The term Qualifying Deposit means the balance of
each Savings Account of $50 or more in the Bank at the close of
business on the Eligibility Record Date or Supplemental Eligibility
Record Date. Savings Accounts with total deposit balances of less than
$50 shall not constitute a Qualifying Deposit.
SAIF: The Savings Association Insurance Fund, which is administered by
the FDIC.
Savings Account: The term Savings Account includes savings accounts as
defined in the Rules and Regulations of the OTS and includes
certificates of deposit and demand accounts.
SEC: The Securities and Exchange Commission.
Stock Holding Company: American Financial Group, Inc., federal capital
stock corporation that owns all of the Bank's common stock and which
will be majority owned by the Mutual Holding Company so long as the
Mutual Holding Company is in existence.
Subscription Offering: The term Subscription Offering means the
offering of Common Stock of the Stock Holding Company for purchase
through Order Forms to Participants.
Supplemental Eligibility Record Date: The term Supplemental Eligibility
Record Date means the close of business on the last day of the calendar
quarter preceding the approval of the Plan by the OTS.
Supplemental Eligible Account Holder: The term Supplemental Eligible
Account Holder means a holder of a Qualifying Deposit in the Bank
(other than an officer or director or their Associates) at the close of
business on the Supplemental Eligibility Record Date.
Tax-Qualified Employee Stock Benefit Plan: The term Tax-Qualified
Employee Stock Benefit Plan means any defined benefit plan or defined
contribution plan, such as an employee stock ownership plan, stock
bonus plan, profit-sharing plan or other plan, which, with its related
trust, meets the requirements to be "qualified" under Section 401 of
the Internal Revenue Code.
Voting Stock: Common or preferred stock, or any other type of equity
security, including (without limitation) other securities that are
convertible into common or preferred stock, having voting power for the
election of directors or management of the Stock Holding Company.
3. CONDITIONS TO COMPLETION OF STOCK OFFERING
Completion of the Stock Offering is expressly conditioned upon the
following:
1. The Plan is approved by at least two-thirds of the Boards of
Directors;
2. A Notice of the Stock Offering is filed with and approved by the
OTS;
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3. Receipt of a favorable ruling of the Internal Revenue Service
("IRS") or an opinion of the Bank's tax advisor with respect to
federal taxation to the effect that the Stock Offering will not
be a taxable event to the Mutual Holding Company, the Stock
Holding Company, the Bank or the Bank's depositors; and
4. Receipt of either a private letter ruling of the New Jersey
Department of Revenue or an opinion of the Bank's tax advisor
with respect to state taxation to the effect that completion of
the Stock Offering will not be a taxable event to the Mutual
Holding Company, the Stock Holding Company, the Bank or to the
Bank's depositors.
5. The stock offering prospectus of the Stock Holding Company is
declared effective by the SEC.
4. STOCK OFFERING DOCUMENTS
The Stock Holding Company and the Bank intend to commence a Minority
Stock Offering within ten (10) days of the satisfaction of all of the conditions
of Section 3 of this Plan. The Stock Holding Company and the Bank shall not
distribute the final prospectus until such prospectus has been approved for use
by the OTS and declared effective by the SEC.
5. STOCK OFFERING
A. Number of Shares. The number of shares and price per share of Common
Stock to be offered pursuant to the Plan shall be initially determined by the
Boards of Directors of the Stock Holding Company and the Bank in conjunction
with the determination of the Independent Appraiser. The number of shares to be
issued will be on a minimum-maximum basis within a range determined by the Board
of Directors (the "Offering Range") and may be adjusted at or immediately
subsequent to the completion of the Minority Stock Offering without notifying
Participants and without a resolicitation of subscriptions. The number of shares
to be offered or Offering Range may be subsequently adjusted at or immediately
subsequent to the completion of the Minority Stock Offering for any reason,
including a change in the appraisal. The total number of shares of Common Stock
that may be issued to persons other than the Mutual Holding Company at the close
of the Minority Stock Offering must be less than 50% of the issued and
outstanding shares of the Stock Holding Company.
B. Independent Evaluation and Purchase Price of Shares. All shares of
Common Stock sold in the Minority Stock Offering shall be sold at a uniform
price per share, referred to in this Plan as the "Purchase Price". The Purchase
Price and number of shares shall be determined by the Board of Directors of the
Stock Holding Company and the Bank immediately prior to the simultaneous
completion of all such sales contemplated by this Plan on the basis of the
estimated pro forma market value of the Stock Holding Company and the Bank and
the fact that the shares offered represent a minority interest in the Stock
Holding Company (the "Independent Evaluation"). Therefore, the Independent
Evaluation and the resulting Purchase Price may reflect a discount to the
valuation applied to a standard mutual-to-stock conversion. The aggregate
Purchase Price for the Common Stock will not be inconsistent with such market
value of the Stock Holding Company and the Bank. The Independent Evaluation of
the Stock Holding Company and the Bank shall be determined for such purpose by
an Independent Appraiser on the basis of such appropriate factors as are not
inconsistent with OTS regulations. The total amount of Common Stock that may be
issued to persons other than the Mutual Holding Company must be less than 50% of
the outstanding stock of the Stock Holding Company. The Common Stock to be
issued in the Minority Stock Offering shall be fully paid and nonassessable.
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C. Minority Ownership Percentage. Based upon the Independent
Appraiser's valuation of the Stock Holding Company and the Bank as updated prior
to the commencement of the Minority Stock Offering, the Board of Directors will
establish the minimum and maximum ownership percentage applicable to the
Minority Stock Offering ("Minority Ownership Range"). The final minority
ownership percentages or interest will be determined by the Stock Holding
Company and the Bank as follows: (a) the product of (x) the total number of
shares of Common Stock to be issued and sold and (y) the Purchase Price shall be
by divided by (b) the estimated aggregate pro forma market value of the Stock
Holding Company and the Bank immediately after the Minority Stock Offering as
determined by the Independent Appraiser, expressed in terms of a specific
aggregate dollar amount upon the closing of the Minority Stock Offering or sale
of all the Common Stock.
D. Method of Offering Shares. Subject to the discretion of the Stock
Holding Company and the Bank and the limitations set forth in Section 11, the
opportunity to purchase Common Stock will be given, at no cost, in accordance
with Sections 6, 7, 8, 9 and 10 of the Plan and pursuant to priorities
established by the Board of Directors in accordance with the Plan. The Minority
Stock Offering shall be conducted on a minimum-maximum basis, setting forth the
minimum and maximum amount of stock that must be offered and sold before
closing. The Stock Holding Company and the Bank may elect to pay fees on either
a fixed fee or commission basis or combination thereof to an investment bank
firm which assists it in the sale of the Common Stock in the Minority Stock
Offering.
The Stock Holding Company and the Bank may also elect to offer to pay
fees on a per share basis to brokers who assist Persons in determining to
purchase shares in the Syndicated Public Offering and whose broker's name
appears on the purchaser's Order Form.
6. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)
A. Each Eligible Account Holder shall receive, without payment,
nontransferable subscription rights to subscribe for shares of Common Stock
equal to the greater of: (i) the maximum established for the Community Offering;
(ii) one-tenth of one percent of the Conversion Stock offered; or (iii) 15 times
the product (rounded down to the next whole number) obtained by multiplying the
total number of shares of Common Stock offered by a fraction of which the
numerator is the amount of the Qualifying Deposit of such Eligible Account
Holder and the denominator is the total amount of Qualifying Deposits of all
Eligible Account Holders but in no event greater than the maximum purchase
limitation specified in Section 11 hereof. All such purchases are subject to the
maximum and minimum purchase limitations specified in Section 11 and are
exclusive of an increase in the total number of shares issued due to an increase
in the maximum of the Offering Range of up to 15%. Only a Person(s) with a
Qualifying Deposit as of the Eligibility Record Date (or a successor entity or
estate) shall receive subscription rights. Any Person(s) added to a Savings
Account after the Eligibility Record Date is not an Eligible Account Holder.
B. In the event that Eligible Account Holders exercise Subscription
Rights for a number of shares of Common Stock in excess of the total number of
such shares eligible for subscription, the shares of Common Stock shall be
allocated among the subscribing Eligible Account Holders so as to permit each
subscribing Eligible Account Holder, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation of Common Stock
equal to the lesser of 100 shares or the number of shares subscribed for by the
Eligible Account Holder. Any shares remaining after that allocation will be
allocated among the subscribing Eligible Account Holders whose subscriptions
remain unsatisfied in the proportion that the amount of the Qualifying Deposit
of each Eligible Account Holder whose subscription remains unsatisfied bears to
the total amount of the Qualifying Deposits of all Eligible Account Holders
whose subscriptions remain unsatisfied. If the amount so allocated exceeds the
amount subscribed for by any one
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or more Eligible Account Holders, the excess shall be reallocated (one or more
times as necessary) among those Eligible Account Holders whose subscriptions are
still not fully satisfied on the same principle until all available shares have
been allocated or all subscriptions satisfied.
C. Subscription rights as Eligible Account Holders received by
Directors and Officers and their Associates which are based on deposits made by
such persons during the twelve (12) months preceding the Eligibility Record Date
shall be subordinated to the Subscription Rights of all other Eligible Account
Holders.
7. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)
Subject to the availability of sufficient shares after filling
subscription orders of Eligible Account Holders under Section 6, the Employee
Plans shall receive without payment nontransferable subscription rights to
purchase in the Subscription Offering the number of shares of Common Stock
requested by such Plans, subject to the purchase limitations set forth in
Section 11.
The Employee Plans shall not be deemed to be associates or affiliates
of or Persons Acting in Concert with any Director or Officer of the Mutual
Holding Company, the Stock Holding Company or the Bank.
8. SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY)
A. In the event that the Eligibility Record Date is more than 15 months
prior to the date of the latest amendment to the application filed prior to OTS
approval, then, and only in that event, each Supplemental Eligible Account
Holder shall receive, without payment, nontransferable subscription rights
entitling such Supplemental Eligible Account Holder to purchase that number of
shares of Common Stock which is equal to the greater of: (i) the maximum
purchase limitation established for the Community Offering; (ii) one-tenth of 1%
of the Common Stock Offered; and (iii) or 15 times the product (rounded down to
the next whole number) obtained by multiplying the total number of shares of
Common Stock to be issued by a fraction of which the numerator is the amount of
the Qualifying Deposit of the Supplemental Eligible Account Holder and the
denominator is the total amount of the Qualifying Deposits of all Supplemental
Eligible Account Holders. All such purchases are subject to the maximum and
minimum purchase limitations in Section 11 and are exclusive of an increase in
the total number of shares issued due to an increase in the maximum of the
Offering Range of up to 15%. Any Person(s) added to a Savings Account after the
Supplemental Eligibility Record Date is not a Supplemental Account Holder.
B. Subscription rights received pursuant to this Category shall be
subordinated to the subscription rights received by Eligible Account Holders and
by the Employee Plans.
C. Any subscription rights to purchase shares of Common Stock received
by an Eligible Account Holder in accordance with Section 6 shall reduce to the
extent thereof the subscription rights to be distributed pursuant to this
Section.
D. In the event of an oversubscription for shares of Common Stock
pursuant to this Section, shares of Common Stock shall be allocated among the
subscribing Supplemental Eligible Account Holders as follows:
(1) Shares of Common Stock shall be allocated so as to permit
each such Supplemental Eligible Account Holder, to the extent possible,
to purchase a number of shares of Common Stock
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sufficient to make his total allocation (including the number of shares
of Common Stock, if any, allocated in accordance with Section 6) equal
to 100 shares of Common Stock or the total amount of his subscription,
whichever is less.
(2) Any shares of Common Stock not allocated in accordance
with subparagraph (1) above shall be allocated among the subscribing
Supplemental Eligible Account Holders on an equitable basis, related to
the amounts of their respective Qualifying Deposits as compared to the
total Qualifying Deposits of all subscribing Supplemental Eligible
Account Holders.
9. COMMUNITY OFFERING
If less than the total number of shares of Common Stock to be
subscribed for in the Minority Offering are sold in the Subscription Offering,
shares remaining may be made available for purchase in the Community Offering to
certain members of the general public.
The maximum amount of Common Stock that any Person may purchase in the
Community Offering, subject to the further limitations of Section 11 hereof (and
exclusive of an increase in the total number of shares issued due to an increase
in the Maximum of the Offering Range of up to 15%), shall not exceed $200,000.
The maximum amount may be decreased or increased to up to 5% of the total
offering of shares in the Minority Offering, subject to any required regulatory
approval but without notice to Participants, subject to the preferences set
forth in Section 11 of this Plan. In the Community Offering, if any, shares will
be available for purchase by the general public, and a preference may be given
to natural persons residing in the Local Community and second, to natural
persons residing in the State of New Jersey ("Community Purchasers").
If the Persons whose orders would otherwise be accepted, subscribe for
more shares than are available for purchase, the shares available to them will
be allocated among those persons submitting orders in the Community Offering up
to a maximum of 2% of the Common Stock offered in the Minority Offering and
thereafter remaining shares shall be allocated on an equal number of shares
basis per order until all orders have been filled. The Stock Holding Company and
the Bank may establish all terms and conditions of such offer in order to
allocate shares in an equitable manner as determined by the Board of Directors.
The Community Offering, if any, may commence simultaneously with,
during or subsequent to the completion of the Subscription Offering and if
commenced simultaneously with or during the Subscription Offering the Community
Offering may be limited to Community Purchasers. The Community Offering must be
completed within 45 days after the completion of the Subscription Offering
unless otherwise extended by the OTS.
The Bank and the Stock Holding Company, in their absolute discretion,
reserve the right to reject any or all orders in whole or in part which are
received in the Community Offering, at the time of receipt or as soon as
practicable following the completion of the Community Offering.
10. SYNDICATED COMMUNITY OFFERING
Any shares of Common Stock not sold in the Subscription Offering or in
the Community Offering, if any, may then be sold through the Underwriter to the
general public at the Purchase Price in a Syndicated Community Offering, subject
to such terms, conditions and procedures as may be determined by the Board of
Directors of the Bank and the Stock Holding Company, in a manner that will
achieve a
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wide distribution of the Common Stock and subject to the right of the Bank and
the Stock Holding Company, in their absolute discretion, to accept or reject in
whole or in part all subscriptions in the Syndicated Community Offering. In the
Syndicated Community Offering, if any, any person together with any Associate or
group of persons Acting in Concert may purchase up to the maximum purchase
limitation established for the Community Offering, subject to the maximum and
minimum purchase limitations specified in Section 11 and exclusive of an
increase in the total number of shares issued due to an increase in the maximum
of the Offering Range of up to 15%. Shares purchased by any Person together with
any Associate or group of persons Acting in Concert pursuant to Section 9 shall
be counted toward meeting the maximum purchase limitation specified for this
Section. The Bank may commence the Syndicated Community Offering at any time
after the commencement of the Subscription Offering. It is expected that the
Syndicated Community Offering, if any, will commence just prior to, or as soon
as practicable after, the termination of the Subscription Offering. The
Syndicated Community Offering shall be completed within 45 days after the
termination of the Subscription Offering, unless such period is extended as
provided above.
11. LIMITATION ON PURCHASES
The following limitations shall apply to all purchases of shares of
Common Stock in the Minority Stock Offering:
A. The maximum number of shares of Common Stock which may be purchased
in the Subscription Offering by any Person, or Persons through a single account,
in the First Priority and Third Priority shall not exceed $200,000 divided by
the Purchase Price.
B. The number of shares of Common Stock which may be purchased by any
Person or group of persons Acting in Concert in the Community and/or Syndicated
Community Offering shall not exceed $200,000 divided by the Purchase Price.
C. The maximum number of shares of Common Stock which may be subscribed
for or purchased in all categories in the Minority Stock Offering by any Person
together with any Associate or group of persons Acting in Concert shall not
exceed the lesser of $400,000 divided by the Purchase Price per share or 5% of
the total shares issued in the Minority Stock Offering, except for Employee
Plans, which in the aggregate may subscribe for up to 5% of the outstanding
shares of Common Stock.
D. The maximum number of shares of Common Stock which may be purchased
in all categories in the Minority Stock Offering by Officers and Directors of
the Mutual Holding Company, the Stock Holding Company and the Bank and their
Associates in the aggregate shall not exceed 28% of the total number of shares
of Common Stock issued in the Minority Stock Offering.
E. A minimum of 25 shares of Common Stock must be purchased by each
Person purchasing shares in the Minority Stock Offering to the extent those
shares are available; provided, however, that the minimum number of shares
requirement will not apply if the number of shares of Common Stock purchased
times the price per share exceeds $500.
F. If the number of shares of Common Stock otherwise allocable pursuant
to Sections 6 through 10, inclusive, to any Person or that Person's Associates
would be in excess of the maximum number of shares permitted as set forth above,
the number of shares of Common Stock allocated to each such Person shall be
reduced to the lowest limitation applicable to that Person, and then the number
of shares allocated to each group consisting of a Person and that Person's
Associates shall be reduced so that
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the aggregate allocation to that Person and his Associates complies with the
above maximums, and such maximum number of shares shall be reallocated among
that Person and his Associates as they may agree, or in the absence of an
agreement, in proportion to the shares subscribed by each (after first applying
the maximums applicable to each Person, separately).
G. Depending upon market or financial conditions, the Board of
Directors of the Mutual Holding Company, the Stock Holding Company and the Bank,
without notification to Participants, may decrease or increase the purchase
limitations in this Plan, provided that the maximum purchase limitations may not
be increased to a percentage in excess of 5% of the Minority Stock Offering. If
the Mutual Holding Company, the Stock Holding Company and the Bank increases the
maximum purchase limitations, the Stock Holding Company is only required to
resolicit Persons who subscribed for the maximum purchase amount and may, in the
sole discretion of the Stock Holding Company, resolicit certain other large
subscribers. For purposes of this Section, the Directors of the Mutual Holding
Company, the Stock Holding Company and the Bank shall not be deemed to be
Associates or a group affiliated with each other or otherwise Acting in Concert
solely as a result of their being Directors of the Mutual Holding Company, the
Stock Holding Company and the Bank.
H. In the event of an increase in the total number of shares offered in
the Minority Stock Offering due to an increase in the maximum of the Offering
Range of up to 15% (the "Adjusted Maximum") the additional shares will be used
in the following order of priority: (i) to fill the Employees Plan's
subscription; (ii) in the event that there is an oversubscription at the
Eligible Account Holder level, to fill unfilled subscriptions of Eligible
Account Holders exclusive of the Adjusted Maximum according to Section 6; (iii)
in the event that there is an oversubscription at the Supplemental Eligible
Account Holder level, to fill unfilled subscriptions of Supplemental Eligible
Account Holders exclusive of the Adjusted Maximum according to Section 8; and
(iv) to fill unfilled Subscriptions in the Community Offering exclusive of the
Adjusted Maximum.
I. Each Person purchasing Common Stock in the Minority Stock Offering
shall be deemed to confirm that such purchase does not conflict with the above
purchase limitations contained in this Plan.
J. For a period of three years following the Offering, no Officer,
Director or their Associates shall purchase, without the prior written approval
of the OTS, any outstanding shares of common stock of the Stock Holding Company,
except from a registered broker-dealer. This provision shall not apply to
negotiated transactions involving more than one percent of the outstanding
shares of common stock of the Stock Holding Company, the exercise of any options
pursuant to a stock option plan or purchases of common stock of the Stock
Holding Company, made by or held by any Tax-Qualified Employee Stock Benefit
Plan or Non-Tax Qualified Employee Stock Benefit Plan of the Stock Bank or Stock
Holding Company (including the Employee Plans) which may be attributable to any
Officer or Director. As used herein, the term "negotiated transaction" means a
transaction in which the securities are offered and the terms and arrangements
relating to any sale are arrived at through direct communications between the
seller or any person acting on its behalf and the purchaser or his investment
representative. The term "investment representative" shall mean a professional
investment advisor acting as agent for the purchaser and independent of the
seller and not acting on behalf of the seller in connection with the
transaction.
12. PAYMENT FOR COMMON STOCK
All payments for Common Stock subscribed for in the Subscription and
Community Offering (if any), must be delivered in full to the Bank, together
with a properly completed and executed Order Form, on or prior to the expiration
date specified on the Order Form or purchase order, as the case may be,
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unless such date is extended by the Bank; provided, however, that if the
Employee Plans subscribe for shares during the Subscription Offering, the
Employee Plans will not be required to pay for the shares at the time they
subscribe but rather may pay for such shares of Common Stock upon consummation
of the Offering. The Bank may make scheduled discretionary contributions to
Employee Plans provided such contributions do not cause the Bank to fail to meet
its regulatory capital requirement.
Notwithstanding the foregoing, the Bank and the Stock Holding Company
shall have the right, in their sole discretion, to permit institutional
investors to submit contractually irrevocable orders in the Community Offering
(if any), and to thereafter submit payment for the Common Stock for which they
are subscribing in the Community Offering (if any), at any time prior to the
completion of the Stock Offering.
Payment for Common Stock subscribed for shall be made either in cash
(if delivered in person), check or money order. Alternatively, subscribers in
the Subscription and Community Offering (if any) may pay for the shares
subscribed for by authorizing the Bank on the Order Form to make a withdrawal
from the subscriber's Savings Account at the Bank in an amount equal to the
purchase price of such shares. Such authorized withdrawal, whether from a
savings passbook or certificate account, shall be without penalty as to
premature withdrawal. If the authorized withdrawal is from a certificate
account, and the remaining balance does not meet the applicable minimum balance
requirement, the certificate shall be canceled at the time of withdrawal,
without penalty, and the remaining balance will earn interest at the passbook
rate. Funds for which a withdrawal is authorized will remain in the subscriber's
Savings Account but may not be used by the subscriber until the Common Stock has
been sold or the 45-day period (or such longer period as may be approved by the
OTS) following the Subscription Offering has expired, whichever occurs first.
Thereafter, the withdrawal will be given effect only to the extent necessary to
satisfy the subscription (to the extent it can be filled) at the Purchase Price
per share. Interest will continue to be earned on any amounts authorized for
withdrawal until such withdrawal is given effect. Interest will be paid by the
Bank at not less than the annual passbook rate on payments for Common Stock
received in cash or by money order or check. Such interest will be paid from the
date payment is received by the Bank until consummation or termination of the
Minority Offering. If for any reason the Minority Offering is not consummated,
all payments made by subscribers in the Minority Offering will be refunded to
them with interest. In case of amounts authorized for withdrawal from Savings
Accounts, refunds will be made by canceling the authorization for withdrawal.
The Bank is prohibited by regulation from knowingly making any loans or
granting any lines of credit for the purchase of stock in the Stock Offering.
13. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the prospectus prepared by the Bank and
the Stock Holding Company has been approved by the OTS and declared effective by
the SEC, Order Forms will be distributed to the Participants at their last known
addresses appearing on the records of the Bank for the purpose of subscribing to
shares of Common Stock in the Subscription Offering and may be made available
for use in the Community Offering. Notwithstanding the foregoing, the Bank may
elect to send Order Forms only to those Persons who request them after such
notice as is approved by the OTS and is adequate to apprise the Participants of
the pendency of the Subscription Offering has been given.
Each Order Form will be preceded or accompanied by the Offering
Circular describing the Stock Holding Company, the Bank, the Common Stock and
the Subscription and Community Offering (if any). Each Order Form will contain,
among other things, the following:
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A. A specified date by which all Order Forms must be received by the
Bank, which date shall be not less than twenty (20), nor more than forty-five
(45) days, following the date on which the Order Forms are mailed by the Bank,
and which date will constitute the termination of the Subscription Offering;
B. The purchase price per share for shares of Common Stock to be sold
in the Subscription and Community Offering (if any);
C. A description of the minimum and maximum number of shares of Common
Stock which may be subscribed for pursuant to the exercise of Subscription
Rights or otherwise purchased in the Community Offering;
D. Instructions as to how the recipient of the Order Form is to
indicate thereon the number of shares of Common Stock for which such person
elects to subscribe and the available alternative methods of payment therefor;
E. An acknowledgment that the recipient of the Order Form has received
a final copy of the prospectus, as the case may be, prior to execution of the
Order Form.
F. A statement to the effect that all subscription rights are
nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering within the subscription period such properly
completed and executed Order Form, together with cash (if delivered in person),
check or money order in the full amount of the purchase price as specified in
the Order Form for the shares of Common Stock for which the recipient elects to
subscribe in the Subscription Offering (or by authorizing on the Order Form that
the Bank withdraw said amount from the subscriber's Savings Account at the Bank)
to the Bank; and
G. A statement to the effect that the executed Order Form, once
received by the Bank, may not be modified or amended by the subscriber without
the consent of the Bank.
Notwithstanding the above, the Bank reserves the right in its sole
discretion to accept or reject orders received on photocopied or facsimilied
order forms or whose payment is to be made by wire transfer.
14. UNDELIVERED, DEFECTIVE OR LATE ORDER FORMS: INSUFFICIENT PAYMENT
In the event Order Forms (a) are not delivered and are returned to the
Bank by the United States Postal Service or the Bank is unable to locate the
addressee, (b) are not received back by the Bank or are received by the Bank
after the expiration date specified thereon, (c) are defectively filled out or
executed, (d) are not accompanied by the full required payment, or, in the case
of institutional investors in the Community Offering, by delivering irrevocable
orders together with a legally binding commitment to pay in cash, check, money
order or wire transfer the full amount of the purchase price prior to 48 hours
before the completion of the conversion for the shares of Common Stock
subscribed for (including cases in which Savings Accounts from which withdrawals
are authorized are insufficient to cover the amount of the required payment), or
(e) are not mailed pursuant to a "no mail" order placed in effect by the account
holder, the subscription rights of the person to whom such rights have been
granted will lapse as though such person failed to return the completed Order
Form within the time period specified thereon; provided, however, that the Bank
may, but will not be required to, waive any immaterial irregularity on any Order
Form or require the submission of corrected Order Forms or the remittance of
full payment for subscribed
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shares by such date as the Bank may specify. The interpretation of the Bank of
terms and conditions of the Plan and of the Order Forms will be final, subject
to the authority of the OTS.
15. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
A. All shares of Common Stock purchased by Directors or Officers of the
Bank, the Stock Holding Company and the Mutual Holding Company in the Minority
Stock Offering shall be subject to the restriction that, except as provided in
Section 15B below, or as may be approved by the OTS, no interest in such shares
may be sold or otherwise disposed of for value for a period of one (1) year
following the date of purchase.
B. The restriction on disposition of shares of Common Stock set forth
in Section 15A above shall not apply to any disposition of such shares following
the death of the person to whom such shares were initially sold under the terms
of the Plan.
C. With respect to all shares of Common Stock subject to restrictions
on resale or subsequent disposition, each of the following provisions shall
apply;
(i) Each certificate representing shares restricted within the
meaning of Section 15A, above, shall bear a legend prominently stamped on its
face giving notice of the restriction;
(ii) Instructions shall be issued to the stock transfer agent
to recognize or effect any transfer of any certificate or record of ownership of
any such shares in violation of the restriction on transfer; and
(iii) Any shares of capital stock of the Stock Holding Company
issued with respect to a stock dividend, stock split, or otherwise with respect
to ownership of outstanding shares of Common Stock subject to the restriction on
transfer hereunder shall be subject to the same restriction as is applicable to
such Common Stock.
16. CHARTER AND BYLAWS OF THE MUTUAL HOLDING COMPANY, THE STOCK
HOLDING COMPANY AND THE BANK
As part of the Offering, the existing Charter and Bylaws of the Mutual
Holding Company, the Stock Holding Company and the Bank shall remain unchanged.
17. CONVERSION OF MUTUAL HOLDING COMPANY TO STOCK FORM
Once the Offering is completed, the Mutual Holding Company may, if
approved by the OTS, elect to convert to the stock form of ownership pursuant to
federal law. As long as required by federal law or regulation, any such
conversion is also subject to the approval of the Members of the Mutual Holding
Company. The terms and conditions of such a conversion cannot be determined at
this time and there is no assurance when, if ever, such a conversion will occur.
If the conversion does not occur, the Mutual Holding Company will always own a
majority of the Common Stock of the Stock Holding Company.
If the Mutual Holding Company converts to stock form, either on a
stand-alone basis or in the context of a conversion-merger ("Conversion
Transaction"), under federal law, shares of stock issued in connection with the
Conversion Transaction shall be subject to subscription rights granted in
accordance with OTS regulations. In addition, pursuant to federal law and OTS
Regulations, in the Conversion
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Transaction, the shares of stock held by the stockholders of the Stock Holding
Company shall be exchanged for shares of the converted Mutual Holding Company in
a proportion established by independent appraisals of the Mutual Holding
Company, the Stock Holding Company and the Bank. If, in a Conversion
Transaction, the stockholders of the Bank or Stock Holding Company do not
receive, for any reason, shares of the converted Mutual Holding Company (or its
successor) on such proportionate basis, the Mutual Holding Company (or its
successor) shall be obligated to purchase all shares not owned by it
simultaneously with the closing of such Conversion Transaction at the fair
market value of such shares, determined as if such shares had such exchange
rights, as determined by the independent appraisals. Moreover, in the event that
the Mutual Holding Company converts to stock form in a Conversion Transaction,
any options or other convertible securities held by any Officer, Director, or
Employee of the Stock Holding Company, convertible into shares of the Stock
Holding Company shall be convertible into shares of the converted Mutual Holding
Company (or its successor), provided, that any exchange ratio shall provide the
holder of such options or convertible securities with shares at least equal in
value to those exchanged; provided, further however, that if such shares cannot
be so converted, the holders of such options or other convertible securities
shall be entitled to receive cash payment for such options and other convertible
securities in an amount equal to the appraised value of the underlying
securities represented by such options or other convertible securities.
In any Conversion Transaction, stockholders of the Stock Holding
Company other than the Mutual Holding Company ("Minority Stockholders"), if any,
will be entitled to maintain the same percentage ownership interest in the Stock
Holding Company after the Conversion Transaction as their ownership interest in
the Stock Holding Company immediately prior to the Conversion Transaction,
subject only to certain adjustments (i.e., the transfer of assets held solely by
the Mutual Holding Company to the resulting stock company) that may be required
by the OTS. These adjustments may result in a decrease of ownership interest of
the Minority Stockholders.
Each certificate representing shares of Common Stock shall bear a
legend giving appropriate notice of the provisions applicable to a Conversion
Transaction.
18. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
The Bank and the Stock Holding Company may declare dividends or make
other capital distributions or repurchase stock in accordance with applicable
laws and regulations. In accordance with applicable law, and the regulations and
policies of the OTS, the Mutual Holding Company may waive its right to receive
dividends declared to it by the Stock Holding Company.
19. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
The Stock Holding Company will make reasonable efforts to comply with
the securities laws of all States in the United States in which Persons entitled
to subscribe for shares of Common Stock pursuant to the Plan reside. However,
Persons may not be issued subscription rights nor be permitted to purchase
shares of Conversion Stock in the Subscription Offering if such Person resides
in a foreign country or in a state of the United States with respect to which
any of the following apply: (i) a small number of Persons otherwise eligible to
subscribe for shares under the Plan reside in such state; (ii) the issuance of
subscription rights or the offer or sale of shares of Common Stock to such
Persons would require the Bank, under the securities laws of such state, to
register as a broker, dealer, salesman or agent or to register or otherwise
qualify its securities for sale in such state; and (iii) such registration or
qualification would be impracticable for reasons of cost or otherwise.
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20. REGISTRATION AND MARKET MAKING
Within the time period required by applicable laws and regulations, the
Stock Holding Company will register the securities issued in connection with the
Offering pursuant to the Securities Exchange Act of 1934 and will not deregister
such securities for a period of at least three years thereafter, except that the
maintenance of registration for three years requirement may be fulfilled by any
successor to the Stock Holding Company. In addition, the Stock Holding Company
will use its best efforts to encourage and assist a market-maker to establish
and maintain a market for the common stock issued in the Stock Offering and to
list those securities on a national or regional securities exchange or the
Nasdaq System.
21. EXPENSES OF OFFERING
The Bank shall use its best efforts to assure that expenses incurred by
it in connection with the Offering shall be reasonable.
22. AMENDMENT OR TERMINATION OF THE PLAN
This Plan may be substantively amended by the Board of Directors of the
Bank as a result of comments from the regulatory authorities or otherwise prior
to the commencement of the Offering, and at any time thereafter with the
concurrence of the OTS. This Plan may be terminated by the Board of Directors of
the Bank at any time prior to the completion of the Offering, and at any time
thereafter with the concurrence of the OTS.
An increase or decrease in the maximum purchase limitation or number of
shares sold in the Minority Stock Offering by the Board of Directors pursuant to
Section 11 subsequent to the subscription offering is specifically authorized by
this Plan, and is not an amendment to the Plan which would require notice to
Participants. In the event that mandatory new regulations pertaining to mutual
holding companies are adopted by the OTS prior to the completion of the Stock
Offering, the Plan may be amended to conform to the new mandatory regulations.
In the event that new mutual holding company regulations adopted by the OTS
prior to completion of the Stock Offering contain optional provisions, the Plan
may be amended to utilize such optional provisions at the discretion of the
Board of Directors.
23. MISCELLANEOUS
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Mutual
Holding Company, the Stock Holding Company and the Bank shall be final, subject
to the authority of the OTS.
If any term, provision, covenant or restriction contained in this Plan
is held by a court or a federal or state regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions contained in this Plan shall remain in
full force and effect, and shall in no way be affected, impaired or invalidated.
This Plan is to be governed by and construed in accordance with the
laws of the United States. 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 eligible account holders,
this Plan shall create no rights in any Person.
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