Exhibit 2.1
PLAN OF CONVERSION
OF
IGA FEDERAL SAVINGS
<PAGE 1>
TABLE OF CONTENTS
Section
Number Page
1. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . 4
2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 4
3. GENERAL PROCEDURE FOR CONVERSION. . . . . . . . . . . . . 9
4. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION
STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS . . . . . 11
6. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK
BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . 12
7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT
HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 13
8. SUBSCRIPTION RIGHTS OF OTHER MEMBERS. . . . . . . . . . . 14
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9. COMMUNITY OFFERING, SYNDICATED COMMUNITY OFFERING,
PUBLIC OFFER AND OTHER OFFERINGS. . . . . . . . . . . . . 14
10. LIMITATIONS ON SUBSCRIPTIONS AND PURCHASES OF
CONVERSION STOCK. . . . . . . . . . . . . . . . . . . . . 17
11. TIMING OF SUBSCRIPTION OFFERING, MANNER OF EXERCISING
SUBSCRIPTION RIGHTS AND ORDER FORMS . . . . . . . . . . . 19
12. PAYMENT FOR CONVERSION STOCK. . . . . . . . . . . . . . . 21
13. ACCOUNT HOLDERS IN NONQUALIFIED STATES OR FOREIGN
COUNTRIES . . . . . . . . . . . . . . . . . . . . . . . . 22
14. VOTING RIGHTS OF STOCKHOLDERS . . . . . . . . . . . . . . 23
15. LIQUIDATION ACCOUNT . . . . . . . . . . . . . . . . . . . 23
16. TRANSFER OF DEPOSIT ACCOUNTS. . . . . . . . . . . . . . . 24
17. REQUIREMENTS FOLLOWING CONVERSION FOR REGISTRATION,
MARKET MAKING AND STOCK EXCHANGE LISTING. . . . . . . . . 25
18. DIRECTORS AND OFFICERS OF THE BANK. . . . . . . . . . . . 25
19. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND
OFFICERS FOLLOWING CONVERSION . . . . . . . . . . . . . . 25
<PAGE 2>
20. RESTRICTIONS ON TRANSFER OF STOCK . . . . . . . . . . . . 25
21. RESTRICTIONS ON ACQUISITION OF STOCK OF THE HOLDING
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . 26
22. ADOPTION OF FEDERAL STOCK CHARTER AND BYLAWS. . . . . . . 27
23. TAX RULINGS OR OPINIONS . . . . . . . . . . . . . . . . . 27
24. STOCK COMPENSATION PLANS. . . . . . . . . . . . . . . . . 27
25. DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK . . . . . . 28
26. PAYMENT OF FEES TO BROKERS. . . . . . . . . . . . . . . . 28
27. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION. . . . 28
28. EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . 29
29. AMENDMENT OR TERMINATION OF THE PLAN. . . . . . . . . . . 29
30. INTERPRETATION OF THE PLAN. . . . . . . . . . . . . . . . 30
<PAGE 3>
PLAN OF CONVERSION
OF
IGA FEDERAL SAVINGS
1. INTRODUCTION.
The Board of Directors of the IGA FEDERAL SAVINGS (the
"Bank") believes that a conversion of the Bank to stock form
pursuant to this Plan of Conversion is in the best interests of
the Bank, as well as in the best interests of the Bank's
depositors, employees, customers and the communities historically
served by the Bank. The Conversion will result in the Bank being
wholly owned by a stock holding company. In addition, the
Conversion will result in the raising of additional capital which
will provide the Bank, through the holding company structure,
greater organizational and operational flexibility, including
greater flexibility for effecting mergers and acquisitions of
financial institutions.
The Conversion is intended to provide a larger capital
base to support the Bank's lending and investment activities,
possible diversification into other related financial services
activities and future growth through possible acquisitions of
other financial institutions. In addition the Conversion is
intended to further enhance the Bank's capabilities to serve the
borrowing and other financial needs of the communities it
currently serves. In furtherance of the Bank's commitment to the
communities which it serves, this Plan provides for the
establishment of a charitable foundation in connection with the
Conversion. The charitable foundation is intended to complement
the Bank's existing community reinvestment activities in a manner
that will allow the Bank's local community to share in the growth
and profitability of the Holding Company and the Bank Consistent
with the Bank's goal the funding of the charitable foundation
will be accomplished by the Bank contributing funds thereto prior
to the Conversion or, immediately following the Conversion, the
Holding Company donating a number of shares of its authorized but
unissued Holding Company Common Stock not to exceed 8% of the
number of shares of Conversion Stock issued in the Conversion or
a combination thereof.
The Plan was adopted by the Board of Directors of the
Bank on May 26, 1999.
2. DEFINITIONS.
As used in this Plan, the terms set forth below have
the following meaning:
2.1 Actual Purchase Price means the price per share at
which the Conversion Stock is ultimately sold by the Holding
Company to participants in the Subscription Offering and Persons
in the Community Offering and/or Syndicated Community Offering in
accordance with the terms hereof. <PAGE 4>
2.2 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.
2.3 Application for Conversion shall have the meaning
set forth in Section 3(a) hereof.
2.4 Associate when used to indicate a relationship
with any Person, means (i) a corporation or organization (other
than the Bank, a majority-owned subsidiary of the Bank or the
Holding Company) of which such Person is a director, officer or
partner or is, directly or indirectly, the beneficial owner of
10% 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, provided, however, that such terms
shall not include any Tax-Qualified Employee Stock Benefit Plan
or Non-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 in a similar
fiduciary capacity, and (iii) any relative or spouse of such
Person, or any relative of such spouse of such Person, who has
the same home as such Person or who is a director or officer of
the Bank or the Holding Company or any of the subsidiaries of the
foregoing.
2.5 Bank means IGA Federal Savings, in its mutual or
stock form as the sense of the reference requires.
2.6 Bank Benefit Plans includes, but is not limited
to, Tax-Qualified Employee Stock Benefit Plans and Non-Tax-
Qualified Employee Stock Benefit Plans.
2.7 Code means the Internal Revenue Code of 1986, as
amended.
2.8 Community Offering means the offering for sale by
the Holding Company of any shares of Conversion Stock not
subscribed for in the Subscription Offering to (i) natural
persons residing in counties in Pennsylvania in which the Bank
has a branch office, and (ii) such other Persons within or
without the Commonwealth of Pennsylvania as may be selected by
the Holding Company and the Bank within their sole discretion.
2.9 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.
2.10 Conversion means (i) the adoption of a federal
stock charter by the Bank to authorize the issuance of shares of
capital stock and otherwise to conform to the requirements of a
<PAGE 5> stock savings bank organized under the laws of the
United States, (ii) the issuance of Conversion Stock by the
Holding Company as provided herein, (iii) the purchase by the
Holding Company of all of the capital stock of the Bank to be
issued by the Bank in connection with its conversion from mutual
to stock form, and (iv) the establishment of a private charitable
foundation.
2.11 Conversion Stock means the Holding Company Common
Stock to be issued and sold in the Offering pursuant to the Plan
of Conversion, which stock cannot and will not be insured by the
FDIC, and which shall not include shares issued to the charitable
foundation pursuant to Section 28 hereof.
2.12 Deposit Account means withdrawable or
repurchasable shares, investment certificates or deposits or
other savings accounts, including money market deposit accounts
and negotiable order of withdrawal accounts, held by an account
holder of the Bank.
2.13 Director, Officer and Employee means the terms as
applied respectively to any person who is a director, officer or
employee of the Bank or any subsidiary thereof.
2.14 ESOP means a Tax-Qualified Employee Stock Benefit
Plan adopted by the Company and the Bank in connection with the
Conversion, the purpose of which shall be to acquire capital
stock of the Company, including Conversion Stock.
2.15 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 pursuant to
Section 16 hereof.
2.16 Eligibility Record Date means the date for
determining Qualifying Deposits of Eligible Account Holders and
is the close of business on March 31, 1998.
2.17 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 Conversion, as
determined by the Independent Appraiser in accordance with
Section 4 hereof.
2.18 FDIC means the Federal Deposit Insurance
Corporation or any successor thereto.
2.19 Holding Company means the corporation organized at
the direction of the Board of Directors of the Bank to hold all
of the capital stock of the Bank which shall be incorporated
under the laws of the Commonwealth of Pennsylvania.
2.20 Holding Company Common Stock means the common
stock of the Holding Company. <PAGE 6>
2.21 Independent Appraiser means the independent
investment banking or financial consulting firm retained by the
Bank to prepare an appraisal of the estimated pro forma market
value of the Conversion Stock.
2.22 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.
2.23 Member means any Person qualifying as a member of
the Bank upon its charter conversion from a federal credit union
to a federal mutual charter in accordance with its mutual charter
and bylaws and the laws of the United States.
2.24 Offerings means the Subscription Offering, the
Community Offering and the Syndicated Community Offering or
Public Offering.
2.25 Officer means the chairman, president, executive
vice president, senior vice president, 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.
2.26 Order Form means the form or forms provided by the
Bank, containing all such terms and provisions as set forth in
Section 12 hereof, to a Participant or other Person by which
Conversion Stock may be ordered in the Subscription Offering, the
Community Offering and/or the Syndicated Community Offering.
2.27 Other Member means a Voting Member who is not an
Eligible Account Holder or Supplemental Eligible Account Holder.
2.28 OTS means the Office of Thrift Supervision or any
successor thereto.
2.29 Participant means any Eligible Account Holder,
Tax-Qualified Employee Stock Benefit Plan, Supplemental Eligible
Account Holder, Other Member and Director, Officer and Employee.
2.30 Person means an individual, a corporation, a
partnership, an association, a joint stock company, a trust, an
unincorporated organization or a government or any political
subdivision thereof.
2.31 Plan and Plan of Conversion mean this Plan of
Conversion as adopted by the Board of Directors of the Bank and
any amendment hereto approved as provided herein.
2.32 Prospectus means the one or more documents to be
used in offering the Conversion Stock in the Subscription
Offering and, to the extent applicable, Community Offering and
<PAGE 7> Syndicated Community Offering and for providing
information to Participants and other Persons in connection with
such offerings.
2.33 Public Offering means an underwritten firm
commitment offering to the public through one or more
underwriters.
2.34 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,
and (ii) a Supplemental Eligible Account Holder at the close of
business on the Supplemental Eligibility Record Date.
2.35 SEC means the Securities and Exchange Commission.
2.36 Special Meeting means the special meeting of
Members of the Bank called for the purpose of submitting this
Plan to the Members for their approval, including adoption of a
federal stock charter and new bylaws to authorize the issuance of
capital stock and otherwise to read in a form consistent with a
federally chartered stock form savings bank, and any adjournments
of such meeting.
2.37 Subscription Offering means the offering of the
Conversion Stock to Participants.
2.38 Subscription Rights means non-transferable rights
to subscribe for Conversion Stock granted to Participants
pursuant to the terms of this Plan.
2.39 Supplemental Eligible Account Holder if
applicable, 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.
2.40 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 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 Bank pursuant to this
Plan of Conversion.
2.41 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.
2.42 Tax-Qualified Employee Stock Benefit Plan means
any defined benefit plan or defined contribution plan, including
<PAGE 8> the ESOP established by the Company and the Bank in
connection with the Conversion, a stock bonus plan, profit-
sharing plan or other plan, which is established for the benefit
of the employees of the Holding Company and 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.
2.43 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 Bank in accordance with its federal mutual charter
and bylaws.
2.44 Voting Record Date means the date for determining
the eligibility of Members to vote at the Special Meeting.
3. GENERAL PROCEDURE FOR CONVERSION.
(a) An Application for Conversion, including the
Plan will be submitted, together with all requisite material to
the OTS for approval. The Bank also will cause notice of the
adoption of the Plan by the Board of Directors of 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 Bank for inspection by account holders. The Bank will
post the notice of the filing of its Application for Conversion
in each of its offices and 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 from mutual to stock form.
(b) Promptly following approval of the Bank's
Application for Conversion by the OTS, this Plan will be
submitted to the Members for their consideration and approval at
the Special Meeting. The Bank 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 Bank, a proxy statement in either
long or summary form describing the Plan which will be submitted
to a vote of the Members at the Special Meeting. If the Bank
provides a summary form proxy statement, the Bank shall also mail
to all Eligible Account Holders and Supplemental Eligible Account
Holders who are not Members of the Bank as of the Voting Record
Date a letter informing them of their right to receive a
Prospectus and Order Form for the purchase of Conversion Stock.
Under such circumstances, Participants will be given the
opportunity to request a Prospectus and Order Form and other
materials relating to the Conversion by returning a postage
prepaid card which will be distributed with the proxy statement
or letter. If the Plan is approved by the affirmative vote of a
majority of the total number of votes eligible to be cast by
Voting Members at the Special Meeting, the Bank shall take all
other necessary organizational steps pursuant to applicable laws
<PAGE 9> and regulations to amend its charter and bylaws to
authorize the issuance of its capital stock to the Holding
Company at the time the Conversion of the Bank to stock form is
consummated.
(c) As soon as practicable after the adoption of
the Plan by the Board of Directors of the Bank, the Board of
Directors of the Holding Company shall adopt the Plan by at least
a two-thirds vote. The Holding Company shall submit or cause to
be submitted to the OTS such applications as may be required for
approval of the Holding Company's acquisition of the Bank and a
Registration Statement to the SEC to register the sale of
Conversion Stock under the Securities Act of 1933, as amended.
The Holding Company shall also register the sale of Conversion
Stock under any applicable state securities laws, subject to
Section 14 hereof. 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, Tax-Qualified Employee Stock Benefit Plans,
Supplemental Eligible Account Holders, if applicable, Other
Members and Directors, Officers and Employees. It is anticipated
that any shares of Conversion Stock remaining unsold after the
Subscription Offering will be sold through a Community Offering
and/or a Syndicated Community 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 purchase all of the capital stock of the Bank with
an amount of the net proceeds received by the Holding Company
from the sale of Conversion Stock as shall be determined by the
Boards of Directors of the Holding Company and the Bank and as
shall be approved by the OTS.
(d) The Holding Company and the Bank 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, including in connection with the
Subscription Offering, Community Offering and/or any Syndicated
Community Offering and 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.
(a) The aggregate price at which all shares of
Conversion Stock shall be sold shall be based on a pro forma
valuation of the aggregate market value of the Conversion Stock
prepared by the Independent Appraiser. The valuation shall be
based on financial information relating to the Holding Company
and the Bank, economic and financial conditions, a comparison of
the Holding Company and the Bank with selected publicly-held
financial institutions and holding companies and with comparable
financial institutions and holding companies and such other
factors as the Independent Appraiser may deem to be important,
<PAGE 10> including, but not limited to, the projected operating
results and financial condition of the Holding Company and the
Bank. The valuation shall be stated in terms of an Estimated
Price Range, the maximum of which shall generally be no more than
15% above the average of the minimum and maximum of such price
range and the minimum of which shall generally be no more than
15% below such average. The valuation shall be updated during
the Conversion as market and financial conditions warrant and as
may be required by the OTS.
(b) Based upon the independent valuation, the
Boards of Directors of the Holding Company and the Bank shall fix
the Initial Purchase Price and the number of shares of Conversion
Stock to be offered in the Subscription Offering, Community
Offering and/or Syndicated Community Offering. The Actual
Purchase Price and the total number of shares of Conversion Stock
to be issued in the Offerings shall be determined by the Boards
of Directors of the Holding Company and the Bank upon conclusion
of such offerings in consultation with the Independent Appraiser
and any financial advisor or investment banker retained by the
Bank in connection with such offerings.
(c) Subject to the approval of the OTS, the
Estimated Price Range may be increased or decreased to reflect
market and economic conditions prior to completion of the
Conversion or to fill the order of the Tax-Qualified Employee
Stock Benefit Plans, and under such circumstances the Holding
Company may increase or decrease the total number of shares of
Conversion Stock to be issued in the Conversion to reflect any
such change. Notwithstanding anything to the contrary contained
in this Plan, no resolicitation of subscribers shall be required
and subscribers shall not be permitted to modify or cancel their
subscriptions unless the gross proceeds from the sale of the
Conversion Stock issued in the Conversion are less than the
minimum or more than 15% above the maximum of the Estimated Price
Range set forth in the Prospectus. In the event of an increase
in the total number of shares offered in the Conversion due to an
increase in the Estimated Price Range, the priority of share
allocation shall be as set forth in this Plan.
5. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS.
(a) Each Eligible Account Holder shall receive,
without payment, non-transferable Subscription Rights to purchase
up to the greater of (i) $300,000 of Conversion Stock (or such
maximum purchase limitation as may be established for the
Community Offering and/or Syndicated Community Offering or Public
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 Eligible Account
Holder and the denominator is the total amount of all Qualifying
Deposits of all Eligible Account Holders. <PAGE 11>
(b) In the event of an oversubscription for
shares of Conversion Stock pursuant to Section 5(a), 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 whose subscriptions remain unfilled in the
proportion which the Qualifying Deposit of each such subscribing
Eligible Account Holder whose subscription remains unfilled bears
to the total Qualifying Deposits of all such subscribing Eligible
Account Holders whose subscriptions remains unfilled, provided
that no fractional shares shall be issued. Subscription Rights
of Eligible Account Holders shall be subordinated to the priority
rights of the ESOP to purchase shares in excess of the Maximum
Shares, as defined in Section 6 below, Subscription Rights of
Eligible Account Holders who are also Directors or Officers of
the Bank 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.
6. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT
PLANS.
Tax-Qualified Employee Stock Benefit Plans, including
the ESOP, shall receive, without payment, non-transferable
Subscription Rights to purchase in the aggregate up to 10% of the
Conversion Stock, including shares of Conversion Stock to be
issued in the Conversion as a result of an increase in the
Estimated Price Range after commencement of the Subscription
Offering and prior to completion of the Conversion. The
subscription rights granted to Tax-Qualified Employee Stock
Benefit Plans shall be subject to the availability of shares of
Conversion Stock after taking into account the shares of
Conversion Stock purchased by Eligible Account Holders, provided,
however, that in the event that the total number of shares
offered in the Conversion is increased to an amount greater than
the number of shares representing the maximum of the Estimated
Price Range as set forth in the Prospectus ("Maximum Shares"),
the ESOP shall have a priority right to purchase any such shares
exceeding the Maximum Shares up to an aggregate of 8% of
Conversion Stock. Shares of Conversion Stock purchased by any
individual participant ("Plan Participant") in a Tax-Qualified
Employee Stock Benefit Plan using funds therein pursuant to the
exercise of subscription rights granted to such Participant in
his individual capacity as an Eligible Account Holder and/or
Supplemental Eligible Account Holder and/or purchases by such
Plan Participant in the Community Offering shall not be deemed to
be purchases by a Tax-Qualified Employee Stock Benefit Plan for
purposes of calculating the maximum amount of Conversion Stock
that Tax-Qualified Employee Stock Benefit Plans may purchase
<PAGE 12> pursuant to the first sentence of this Section 6 if the
individual Plan Participant controls or directs the investment
authority with respect to such account or subaccount. Consistent
with applicable laws and regulations and policies and practices
of the OTS, the ESOP may use funds contributed by the Holding
Company or the Bank and/or borrowed from an independent financial
institution to exercise such Subscription Rights, and the Holding
Company and the Bank may make scheduled discretionary
contributions thereto, provided that such contributions do not
cause the Holding Company or the Bank to fail to meet any
applicable capital maintenance requirements.
7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT
HOLDERS.
(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 for Conversion filed prior to OTS approval,
then, and only in that event each Supplemental Eligible Account
Holder shall receive, without payment, non-transferable
Subscription Rights to purchase up to the greater of (i) $300,000
of Conversion Stock (or such maximum purchase limitation as may
be established for the Community Offering and/or Syndicated
Community Offering or Public 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, subject to the
availability of shares of Common Stock for purchase after taking
into account the shares of Conversion Stock purchased by Eligible
Account Holders and the Tax-Qualified Employee Stock Benefit
Plans through the exercise of Subscription Rights under
Sections 5 and 6 hereof.
(b) In the event of an oversubscription for
shares of Conversion Stock pursuant to Section 7(a), 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 in accordance with
Section 5(a)) 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 whose subscriptions remain unfilled in the
proportion that the amount of their respective Qualifying
Deposits bears to the total amount of the Qualifying Deposits of
all subscribing Supplemental Eligible Account Holders whose
subscriptions remain unfilled, provided that no fractional shares
shall be issued.
<PAGE 13>
8. SUBSCRIPTION RIGHTS OF OTHER MEMBERS.
(a) Each Other Member shall receive, without
payment, non-transferable Subscription Rights to purchase up to
the greater of (i) $300,000 of Conversion Stock (or such maximum
purchase limitation as may be established for the Community
Offering and/or Syndicated Community Offering or Public Offering)
and (ii) one-tenth of 1% of the total offering of shares in the
Subscription Offering, in each case if and only to the extent
that shares of Conversion Stock are available for purchase after
taking into account the shares of Conversion Stock purchased by
Eligible Account Holders, Tax-Qualified Employee Stock Benefit
Plans and Supplemental Eligible Account Holders through the
exercise of Subscription Rights under Sections 5, 6 and 7 hereof.
(b) If, pursuant to this Section 8, Other Members
subscribe for a number of shares of Conversion Stock in excess of
the total number of shares of Conversion Stock remaining, shares
shall be allocated 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 shares remaining will
be allocated among the subscribing Other Members whose
subscriptions remain unsatisfied on an equal number of shares
basis per order until all orders have been filled or the
remaining shares have been allocated, provided no fractional
shares shall be issued.
9. COMMUNITY OFFERING, SYNDICATED COMMUNITY OFFERING, PUBLIC
OFFER AND OTHER OFFERINGS.
(a) If less than the total number of shares of
the Conversion Stock are sold in the Subscription Offering, it is
anticipated that all remaining shares of Conversion Stock shall,
if practicable, be sold directly by the Holding Company in a
Community Offering and/or a Syndicated Community Offering.
Subject to the requirements set forth herein, Conversion Stock
sold in the Community Offering and/or the Syndicated Community
Offering shall achieve the widest possible distribution of such
stock.
(b) 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. Any available
shares in excess of those not subscribed for in the Subscription
Offering will be available for purchase by members of the general
public to whom a Prospectus is delivered by the Holding Company
or on its behalf, with preference given to natural persons
residing in counties in Pennsylvania in which the Bank has a
branch office ("Preferred Subscribers").
<PAGE 14>
(c) A Prospectus and Order Form shall be
furnished to such Persons as the Holding Company and the Bank may
select in connection with the Community Offering and each order
for Conversion Stock in the Community Offering shall be subject
to the absolute right of the Holding Company and the Bank 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 Preferred Subscriber whose order is
accepted by the Holding Company, in an amount equal to the lesser
of 100 shares or the number of shares subscribed for by each such
Preferred Subscriber, if possible. Thereafter, any shares
remaining will be allocated among the Preferred Subscribers whose
subscriptions remain unsatisfied on an equal number of shares
basis, per order until all orders have been filled or the
remaining shares have been allocated, provided no fractional
shares shall be issued. If there are any shares remaining after
all subscriptions by Preferred Subscribers have been satisfied,
such remaining shares shall be allocated to other members of the
general public who purchase in the Community Offering applying
the same allocation described above for Preferred Subscribers.
(d) The amount of Conversion Stock that any
Person together with any Associate thereof or group of Persons
acting in concert may purchase in the Community Offering shall
not exceed the greater of (i) $300,000 or (ii) one-tenth of 1% of
the total offering of shares in the Subscription Offering,
provided, however, that this mount may be increased to 5% of the
total offering of shares in the Subscription Offering, subject to
any required regulatory approval but without the further approval
of Members; provided further, that 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
Conversion and thereafter any remaining shares shall be allocated
on an equal number of shares basis per order until all orders
have been filled, provided no fractional shares shall be issued.
The Holding Company and the Bank 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
Holding Company and the Bank with any required regulatory
approval.
(e) Subject to such terms, conditions and
procedures as may be determined by the Holding Company and the
Bank, 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. Each order for Conversion Stock
in the Syndicated Community Offering shall be subject to the
absolute right of the Holding Company and the Bank 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
<PAGE 15> Stock that any Person together with any Associate
thereof or group of Persons acting in concert may purchase in the
Syndicated Community Offering shall not exceed $300,000 provided,
however, that this amount may be increased to 5% of the total
offering of shares in the Subscription Offering, subject to any
required regulatory approval but without the further approval of
Members; provided further that 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 Conversion and thereafter any remaining shares shall be
allocated on an equal number of shares basis per order until all
orders have been filled, provided no fractional shares shall be
issued. The Holding Company and the Bank 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 Holding Company and the Bank with any required
regulatory approval.
(f) The Holding Company and the Bank may sell any
shares of Conversion Stock remaining following the Subscription
Offering, Community Offering and/or the Syndicated Community
Offering in a Public Offering. The provisions of Section 11
hereof shall not be applicable to the sales to underwriters for
purposes of the Public Offering but shall be applicable to sales
by the underwriters to the public. The price to be paid by the
underwriters in such an offering shall be equal to the Actual
Purchase Price less an underwriting discount to be negotiated
among such underwriters and the Bank and the Holding Company,
subject to any required regulatory approval or consent.
(g) If for any reason a Syndicated Community
Offering or Public Offering of shares of Conversion Stock not
sold in the Subscription Offering and the Community Offering
cannot be effected, or in the event that any insignificant
residue of shares of Conversion Stock is not sold in the
Subscription Offering, Community Offering or Syndicated Community
Offering, the Holding Company and the Bank shall use their best
efforts to obtain other purchasers for such shares in such manner
and upon such conditions as may be satisfactory to the OTS.
10. LIMITATIONS ON SUBSCRIPTIONS AND PURCHASES OF CONVERSION
STOCK.
(a) The maximum number of shares of Conversion
Stock which may be purchased in the Conversion by the ESOP shall
not exceed 8% and all Tax-Qualified Employee Stock Benefit Plans
shall not exceed 10% of the total number of shares of Conversion
Stock sold in the Conversion, in each instance, 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
and economic conditions after commencement of the Subscription
Offering and prior to the completion of the Conversion; provided,
<PAGE 16> however, that purchases of Conversion Stock which are
made by Plan Participants pursuant to the exercise of
subscription rights granted to such Plan Participant in his
individual capacity as an Eligible Account Holder or Supplemental
Eligible Account Holder or purchases by a Plan Participant in the
Community Offering using the funds thereof held in Tax-Qualified
Employee Stock Benefit Plans shall not be deemed to be purchases
by a Tax-Qualified Employee Stock Benefit Plan for purposes of
this Section 11(a).
(b) Except in the case of Tax-Qualified Employee
Stock Benefit Plans in the aggregate, as set forth in
Section 11(a) hereof, and certain Eligible Account Holders and
Supplemental Eligible Account Holders, and in addition to the
other restrictions and limitations set forth herein the maximum
amount of Conversion 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
(including without limitation the Subscription Offering,
Community Offering and/or Syndicated Community Offering) shall
not exceed 2.5% of the Conversion Stock. The purchase limitation
set forth herein shall not apply to the Holding Company Common
Stock contributed to the charitable foundation in accordance with
the provisions of Section 28 hereof nor shall such shares be
deemed Conversion Stock.
(c) The number of shares of Conversion Stock
which Directors and Officers and their Associates may purchase in
the aggregate in the Conversion shall not exceed 32% of the total
number of shares of Conversion Stock offered in the Conversion,
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 and economic conditions after commencement of
the Subscription Offering and prior to completion of the
Conversion.
(d) No Person may purchase fewer than 25 shares
of Conversion Stock in the Conversion, 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.
(e) For purposes of the foregoing limitations and
the determination of Subscription Rights, (i) Directors and
Officers shall not be deemed to be Associates or a group acting
in concert solely as a result of their capacities as such,
(a) shares purchased by Tax-Qualified Employee Stock Benefit
Plans shall not be attributable to the individual trustees or
beneficiaries of any such plan for purpose of determining
compliance with the limitations set forth in Section 11(b)
hereof, and (iii) shares purchased by Tax-Qualified Employee
Stock Benefit Plans shall not be attributable to the individual
trustees or beneficiaries of any such plan for purposes of
<PAGE 17> determining compliance with the limitation set forth in
Section 11(c) hereof.
(f) Subject to any required regulatory approval
and the requirements of applicable laws and regulations but
without further approval of the Members of the Bank or
resolicitation of subscribers the Holding Company and the Bank
may increase or decrease any of the individual purchase
limitations set forth herein to a percentage which does not
exceed 5% or fall below .10% of the total offering of shares in
the Subscription Offering and may increase the aggregate purchase
limitation set forth herein to a percentage which does not exceed
5% 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 Holding Company and the Bank shall permit any
Person who subscribed for the maximum number of shares of
Conversion Stock to purchase an additional number of shares such
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 an
individual purchase limitation is decreased after commencement of
the Subscription Offering or any other offering, the orders of
any Person who subscribed for the maximum number of shares of
Conversion Stock 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.
(g) The Holding Company and the Bank 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 11 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
concurrence) 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 Holding Company and the Bank and
their respective Boards shall be free from any liability to any
Person on account of any such action
<PAGE 18>
11. TIMING OF SUBSCRIPTION OFFERING, MANNER OF EXERCISING
SUBSCRIPTION RIGHTS AND ORDER FORMS.
(a) The Subscription Offering may be commenced
concurrently with or at any time after the mailing to Voting
Members of the proxy statement to be used in connection with the
Special Meeting. The Subscription Offering may be closed before
the Special Meeting, provided that the offer and sale of the
Conversion Stock shall be conditioned upon the approval of the
Plan by Voting Members at the Special Meeting.
(b) The exact timing of the commencement of the
Subscription Offering shall be determined by the Holding Company
and the Bank in consultation with the Independent Appraiser and
any financial or advisory or investment banking firm retained by
them in connection with the Conversion. The Holding Company and
the Bank 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 Holding Company and the Bank 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 it in its sole discretion may determine, without
liability to any Person, subject to compliance with applicable
securities laws and any necessary regulatory approval or
concurrence.
(c) The Holding Company and the Bank shall,
promptly after the SEC has declared 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 for the
purpose of enabling them to exercise their respective
Subscription Rights, subject to Section 14 hereof. The Holding
Company and the Bank may elect to mail a Prospectus and Order
Form only to those Participants who request such materials by
returning a postage-paid card to the Holding Company and the Bank
by a date specified in the letter informing them of their
Subscription Rights. Under such circumstances, the Subscription
Offering shall not be closed until the expiration of 30 days
after the mailing by the Holding Company and the Bank of the
postage-paid card to Participants.
(d) A single Order Form for all Deposit Accounts
maintained with the Bank by an Eligible Account Holder and a
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
<PAGE 19> such orders in allocating shares in the event of an
oversubscription
(e) 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 Bank. The Holding Company and
the Bank 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 Bank, 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 Holding Company
and the Bank by executing an Order Form that such Person has
fully complied with all of the terms, conditions, limitations and
restrictions in the Plan.
(f) The Holding Company and the Bank 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 (i) that is
improperly completed or executed, (ii) that is not timely
received; (iii) that is submitted by facsimile or is photocopied;
(iv) that is 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;
(v) submitted by a Person whose representations the Holding
Company and the Bank 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 by the United States Postal Service or
the Bank 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 Holding Company and the Bank may,
but will not be required to, waive any irregularity on any Order
Form or 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 Holding
Company and the Bank of the terms and conditions of the Order
Forms shall be final and conclusive.
<PAGE 20>
12. PAYMENT FOR CONVERSION STOCK.
(a) Payment for shares of Conversion Stock
subscribed for by Participants in the Subscription Offering and
payment for shares of Conversion Stock ordered by Persons in the
Community Offering shall be equal to the Initial Purchase Price
per share multiplied by the number of shares which are being
subscribed for or ordered, respectively. Such payment may be
made in cash, if delivered in person, or by check or money order
at the time the Order Form is delivered to the Bank. The Bank,
in its sole and absolute discretion may also elect to receive
payment for shares of Conversion Stock by wire transfer. In
addition, the Holding Company and the Bank may elect to provide
Participants and/or other Persons who have a Deposit Account with
the Bank the opportunity to pay for shares of Conversion Stock by
authorizing the Bank to withdraw from such Deposit Account an
amount equal to the aggregate Initial Purchase Price of such
shares. Payment may also be made by a Participant using funds
held for such Participant's benefit by a Bank Benefit Plan to the
extent that such plan allows participants or any related trust
established for the benefit of such participants to direct that
some or all of their individual accounts or subaccounts be
invested in Conversion Stock. If the Actual Purchase Price is
less than the Initial Purchase Price, the Bank shall refund the
difference Lo all Participants and other Persons, unless the
Holding Company and the Bank choose to provide Participants and
other Persons the opportunity on the Order Form to elect to have
such difference applied to the purchase of additional whole
shares of Conversion Stock. If the Actual Purchase Price is more
than the Initial Purchase Price, the Bank shall reduce the number
of shares of Conversion Stock ordered by Participants and other
Persons and refund any remaining amount which is attributable to
a fractional share entered unless the Bank chooses to provide
Participants and other Persons the opportunity to increase the
Actual Purchase Price submitted to it.
(b) Consistent with applicable laws and
regulations and policies and practices of the OTS, payment for
shares of Conversion Stock subscribed for by the ESOP may be made
with funds contributed by the Holding Company or the Bank and/or
funds obtained pursuant to a loan from an unrelated financial
institution pursuant to a loan commitment which is in force from
the time that any such plan submits an Order Form until the
closing of the transactions contemplated hereby.
(c) If a Participant or other Person authorizes
the Bank to withdraw the amount of the Initial Purchase Price
from his or her Deposit Account, the Bank shall have the right to
make such withdrawal or to freeze funds equal to the aggregate
Initial Purchase Price upon receipt of the Order Form.
Notwithstanding any regulatory provisions regarding penalties for
early withdrawals from certificate accounts, the Bank may allow
payment by means of withdrawal from certificate accounts without
the assessment of such penalties. In the case of an early
withdrawal of only a portion of such account the certificate
<PAGE 21> evidencing such account shall be cancelled if any
applicable minimum balance requirement ceases to be met. In such
case, the remaining balance will earn interest at the regular
passbook rate. However, where any applicable minimum balance is
maintained in such certificate account, the rate of return on the
balance of the certificate account shall remain the same as prior
to such early withdrawal. This waiver of the early withdrawal
penalty applies only to withdrawals made in connection with the
purchase of Conversion Stock and is entirely within the
discretion of the Holding Company and the Bank.
(d) The Bank shall pay interest at not less than
the passbook rate, for all amounts paid in cash, by check or
money order to purchase shares of Conversion Stock in the
Subscription Offering and the Community Offering from the date
payment is received until the date the Conversion is completed or
terminated.
(e) The Bank shall not knowingly loan funds or
otherwise extend credit to any Participant or other Person to
purchase Conversion Stock.
(f) Each share of Conversion Stock shall be non-
assessable upon payment in full of the Actual Purchase Price.
13. ACCOUNT HOLDERS IN NONQUALIFIED STATES OR FOREIGN
COUNTRIES.
The Holding Company and the Bank 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 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 the Holding Company or the Bank or their respective
Directors and Officers, under the laws of such jurisdiction, to
register as a broker or dealer, salesman or selling agent or to
register or otherwise qualify the Conversion Stock for sale in
such jurisdiction, or the Holding Company or the Bank would be
required to qualify as a foreign corporation or file a consent to
service of process in such jurisdiction; and (c) such
registration or qualification in the judgment of the Holding
Company and the Bank would be impracticable or unduly burdensome
for reasons of cost or otherwise.
14. VOTING RIGHTS OF STOCKHOLDERS.
Following Conversion, voting rights with respect to the
Bank shall be held and exercised exclusively by the Holding
Company as holder of the Bank's voting capital stock and voting
rights with respect to the Holding Company shall be held and
<PAGE 22> exercised exclusively by the holders of the Holding
Company's voting capital stock. No Person shall have any rights
as a stockholder of the Holding Company unless and until the
Conversion Stock has been issued to such Person.
15. LIQUIDATION ACCOUNT.
(a) At the time of Conversion, the Bank shall
establish a liquidation account in an amount equal to the Bank's
net worth as reflected in its latest statement of financial
condition contained in the final prospectus utilized in the
Conversion. 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 Conversion
to a priority to distributions in the unlikely event of a
liquidation of the Bank subsequent to Conversion
(b) 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 Conversion. 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 16 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 provided in Section 16(d) hereof.
(c) In the event of a complete liquidation of the
Bank subsequent to Conversion (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,
(d) 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, if applicable, Supplemental Eligible Account Holders. For
Deposit Accounts in existence at both the Eligibility Record Date
and the Supplemental Eligibility Record Date, if applicable,
separate initial subaccount balances shall be determined on the
basis of the Qualifying Deposits in such Deposit Accounts on each
<PAGE 23> such record date. Initial subaccount balances shall
not be increased, and shall be subject to downward adjustment as
provided below.
(e) If the aggregate deposit balance in any
Deposit Account(s) of any Eligible Account Holder or Supplemental
Eligible Account Holder at the close of business on any
December 31 annual closing date, commencing December 31, 1998, is
less than the lesser of (a) the 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 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 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, shall be reduced to zero if such
holder ceases to maintain a Deposit Account at the Bank that has
the same social security number as appeared on his or her Deposit
Account(s) at the Eligibility Record Date or, if applicable, the
Supplemental Eligibility Record Date.
(f) Subsequent to Conversion, 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 net
worth 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.
(g) For purposes of this Section 16, a Deposit
Account includes a predecessor or successor account which is held
only by an account holder with the same social security number.
16. TRANSFER OF DEPOSIT ACCOUNTS.
Each Deposit Account in the Bank at the time of the
consummation of the Conversion shall become, without further
action by the holder, a Deposit Account in the Bank equivalent in
withdrawable amount to the withdrawal value (as adjusted to give
effect to any withdrawal made for the purchase of Conversion
Stock), and subject to the same terms and conditions (except as
to voting and liquidation rights) as such Deposit Account in the
Bank immediately preceding consummation of the Conversion.
Holders of Deposit Accounts in the Bank shall not, as such
holders, have any voting rights.
<PAGE 24>
17. REQUIREMENTS FOLLOWING CONVERSION FOR REGISTRATION, MARKET
MAKING AND STOCK EXCHANGE LISTING.
In connection with the Conversion, the Holding Company
shall register its common stock pursuant to 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 its common stock; and (ii) list its common stock on
a national or regional securities exchange or to have quotations
for its common stock disseminated on the Nasdaq Stock Market.
18. DIRECTORS AND OFFICERS OF THE BANK.
Each person serving as a Director or Officer of the
Bank at the time of the Conversion shall continue to serve as a
Director or Officer of the Bank for the balance of the term for
which the person was elected prior to the Conversion, and until a
successor is elected and qualified.
19. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS
FOLLOWING CONVERSION.
For a period of three years following the Conversion,
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, the Holding Company Common Stock except from
a broker or dealer registered with the SEC. 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 common stock of the Holding
Company, (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 receipt of stockholder approval of such plan) that
may be attributable to individual Officers or Directors and
(iii) the exercise of any options pursuant to any stock benefit
plan of the Holding Company.
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.
20. RESTRICTIONS ON TRANSFER OF STOCK.
All shares of the 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 22 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
<PAGE 25> 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.
21. RESTRICTIONS ON ACQUISITION OF STOCK OF THE HOLDING COMPANY.
Upon consummation of the Conversion, 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 such period of time
following completion of the Conversion as may be determined by
the Board of Directors of the Holding Company. 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 stockholders 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
<PAGE 26> of the employees of the Holding Company and its
subsidiaries which is exempt from approval requirements under 12
C.F.R. Section 574.3(c)(1)(vi) or any successor thereto, and
(iii) any offer or acquisition approved in advance by a specified
affirmative vote of the entire Board of Directors of the Holding
Company. Directors, Officers and 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.
22. ADOPTION OF FEDERAL STOCK CHARTER AND BYLAWS.
As part of the Conversion, the Bank shall take all
appropriate steps to adopt a federal stock charter and bylaws to
authorize the issuance of capital stock and otherwise to read in
a form consistent with a federally chartered stock form savings
association.
23. TAX RULINGS OR OPINIONS.
Consummation of the Conversion is expressly conditioned
upon prior receipt by the Bank of either a ruling or an opinion
of counsel with respect to federal tax laws, and either a ruling
or an opinion of counsel with respect to Pennsylvania tax laws,
to the effect that consummation of the transactions contemplated
hereby will not result in a taxable reorganization under the
provisions of the applicable codes or otherwise result in any
adverse tax consequences to the Holding Company, the Bank and its
account holders receiving Subscription Rights before or after the
Conversion, 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.
24. STOCK COMPENSATION PLANS.
(a) The Holding Company and the Bank are
authorized to adopt Tax-Qualified Employee Stock Benefit Plans in
connection with the Conversion, including, without limitation the
ESOP. Subsequent to the Conversion, the Holding Company and the
Bank are authorized to adopt Non-Tax Qualified Employee Stock
Benefit Plans, including without limitation, stock option plans
and restricted stock plans, provided however that, with respect
to any such plan implemented during the one-year period
subsequent to the date of consummation of the Conversion, any
such plan (i) shall be disclosed in the proxy solicitation
materials for the Special Meeting of Members and in the
Prospectus; (ii) in the case of stock option plans shall have a
total number of shares of Holding Company Common Stock for which
options may be granted of not more than 10% of the amount of
shares of Conversion Stock issued in the Conversion; (iii) in the
case of management or employee recognition or grant plans, shall
have a total number of shares of Holding Company Common Stock of
not more than 4% of the amount of shares of Conversion Stock
<PAGE 27> issued in the Conversion; (iv) in the case of stock
option plans and employee recognition or grant plans, shall be
submitted for approval by the holders of the Holding Company
Common Stock no earlier than six months following consummation of
the Conversion; and (v) shall comply with all other applicable
requirements of the OTS.
(b) Existing as well as any newly created Tax-
Qualified Employee Stock Benefit Plans may purchase shares of
Conversion Stock in the Offering to the extent permitted by the
terms of such benefit plans and this Plan.
(c) The Holding Company and the Bank are
authorized to enter into employment or severance agreements with
their executive officers.
25. DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK.
(a) Following consummation of the Conversion, any
repurchases of shares of capital stock by the Holding Company
will be made in accordance with then applicable laws and
regulations.
(b) 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 shall be made, in compliance with Section 563.134
of the Regulations Applicable to All Savings Banks, or any
successor thereto.
26. PAYMENT OF FEES TO BROKERS.
The Bank may elect to offer to pay fees on a per share
basis to securities brokers who assist Persons in determining to
purchase shares in the Offerings.
27. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION.
As part of the Conversion, the Holding Company and the
Bank intend to establish a charitable foundation that will
qualify as an exempt organization under Section 501(c)(3) of the
Code (the "Foundation"). To fund the Foundation, the Bank will
contribute funds prior to completion of the Conversion or,
immediately subsequent to the Conversion, the Holding Company
will contribute authorized but unissued shares of Holding Company
Common Stock in an amount not to exceed 8% of the number of
shares of Conversion Stock issued in the Conversion (provided,
however, that such amount may be reduced by the Holding Company
and the Bank), or a combination thereof subject to the receipt of
any required regulatory approval or consent. The Foundation is
being formed in connection with the Conversion in order to
complement the Bank's existing community reinvestment activities
and to share with the Bank's local community a part of the Bank's
<PAGE 28> financial success as a locally headquartered, community
minded financial services institution.
The Foundation will be dedicated to the promotion of
charitable purposes including community development grants, or
donations to support housing assistance and affordable housing
programs, not-for-profit community groups and other similar types
of organizations or civic minded projects. In order to serve the
purposes for which it was formed and maintain its qualification
under Section 501(c)(3) of the Code, the Foundation may sell, on
an annual basis a limited portion of the Holding Company Common
Stock contributed to it by the Holding Company.
The Board of Directors of the Foundation may be
comprised of individuals who are Officers and/or Directors of the
Bank or the Holding Company. The Board of Directors of the
Foundation will be responsible for establishing the policies of
the Foundation with respect to grants or donations, consistent
with the stated purposes of the Foundation
The establishment and funding of the Foundation as part
of the Conversion and Reorganization is subject to the receipt of
any required regulatory approval or consent.
28. EFFECTIVE DATE.
The effective date of the Conversion shall be the date
of the closing of the sale of all shares of Conversion Stock.
The closing of the sale of all shares of Conversion Stock sold in
the Offerings shall occur simultaneously and shall be conditioned
upon the prior receipt of all requisite regulatory and other
approvals.
29. AMENDMENT OR TERMINATION OF THE PLAN.
If deemed necessary or desirable by the Board of
Directors of the Bank 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 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 with the concurrence of the OTS shall not necessitate
further approval by the Members 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 (subject to extension by the OTS). Prior
to the Special Meeting, this Plan may be terminated by the Board
of Directors of the Bank without approval of the OTS; after the
Special Meeting, the Board of Directors may terminate this Plan
only with the approval of the OTS.
<PAGE 29>
30. INTERPRETATION OF THE PLAN.
All interpretations of this Plan and application of its
provisions to particular circumstances by a majority of the Board
of Directors of the Holding Company and the Bank shall be final,
subject to the authority of the OTS. <PAGE 30>