EXHIBIT 2.1
MUTUAL FEDERAL BANCORP, MHC
STOCK ISSUANCE PLAN
TABLE OF CONTENTS
PAGE
1. Introduction..........................................................1
2. Definitions...........................................................1
3. Number of Shares to Be Offered........................................5
4. Independent Valuation and Purchase Price of Shares....................5
5. Method of Offering Shares and Rights to Purchase Stock................6
6. Additional Limitations on Purchases of Common Stock...................9
7. Payment for Stock....................................................11
8. Manner of Exercising Subscription Rights Through Order Forms.........11
9. Undelivered, Defective or Late Order Form; Insufficient Payment......12
10. Completion of the Stock Offering.....................................13
11. Market for Common Stock..............................................13
12. Stock Purchases by Management Persons After the Stock Offering.......13
13. Resales of Stock by Directors and Officers...........................13
14. Stock Certificates...................................................13
15. Restriction on Financing Stock Purchases.............................13
16. Stock Benefit Plans..................................................14
17. Post-Stock Issuance Filing...........................................14
18. Payment of Dividends and Repurchase of Stock.........................14
19. Stock Offering Expenses..............................................14
20. Employment and Other Severance Agreements............................14
21. Interpretation.......................................................15
22. Amendment or Termination of the Plan.................................15
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1. INTRODUCTION.
The Board of Directors of Mutual Federal Bancorp, MHC (the "MHC"), the
sole stockholder of Mutual Federal Savings and Loan Association of Chicago (the
"Bank"), has adopted this Stock Issuance Plan (the "Plan") pursuant to which (i)
the MHC will establish a subsidiary holding company, Mutual Federal Bancorp,
Inc., a federal corporation (the "Holding Company"), as a direct subsidiary to
hold 100% of the stock of the Bank, and (ii) the Holding Company will offer and
sell up to 49.9% of its Common Stock in the Stock Offering. The Common Stock
will be offered on a priority basis to depositors, the Tax-Qualified Employee
Plans and other Voting Members of the Bank, with any remaining shares offered to
the public in a Community Offering or a Syndicated Community Offering, or a
combination thereof. The Stock Offering will be conducted in accordance with 12
C.F.R. Part 563g, Part 575 and to the extent applicable, Form OC of the
Regulations. Prior to the establishment of the Holding Company by the MHC, any
references in this Plan to any action by the Holding Company, or its board of
directors, shall refer to actions made by the MHC, or its board of directors.
Upon completion of the Stock Offering, the MHC will continue to own at least a
majority of the Common Stock.
2. DEFINITIONS.
As used in this Plan, the terms set forth below have the following
meanings:
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; or (ii) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise. A
Person or company which Acts in Concert with another Person or company ("other
party") shall also be deemed to be Acting in Concert with any Person or company
who is also Acting in Concert with that other party, except that any
Tax-Qualified Employee 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.
ACTUAL PURCHASE PRICE: The price per share, determined as provided in
this Plan, at which the Common Stock will be sold in the Stock Offering.
AFFILIATE: Any Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with
another Person.
ASSOCIATE: The term "Associate," when used to indicate a relationship
with any Person, means: (i) any corporation or organization (other than the
Bank, the Holding Company, the MHC or a majority-owned subsidiary of any
thereof) of which such Person is a senior officer or partner, or beneficially
owns, directly or indirectly, 10% or more of any class of equity securities of
the corporation or organization; (ii) any trust or other estate, if the Person
has a substantial beneficial interest in the trust or estate or is a trustee or
fiduciary of the trust or estate. For purposes of Sections 563b.370, 563b.380,
563b.385, 563b.390, 563b.395 and 563b.505 of the Regulations, a Person who has a
substantial beneficial interest in a Tax-Qualified or Non-Tax-Qualified Employee
Plan, or who is a trustee or a fiduciary of the plan, is not an associate of the
plan. For purposes of Section 563b.370 of the Regulations, a Tax-Qualified
Employee Plan is not an associate of a Person; (iii) any Person who is related
by blood or marriage to such Person and (a) who lives in the same house as the
Person; or (b) who is a director or senior officer of the Bank, the Holding
Company, the MHC or a subsidiary thereof.
BANK: Mutual Federal Savings and Loan Association of Chicago.
CAPITAL STOCK: Any and all authorized stock of the Bank or the Holding
Company.
COMMON STOCK: Common stock, par value $0.10 per share, issuable by the
Holding Company in connection with the Stock Offering, including securities
convertible into Common Stock, pursuant to its stock charter.
COMMUNITY: The Illinois county of Cook.
COMMUNITY OFFERING: The offering to certain members of the general
public of any unsubscribed shares in the Subscription Offering. The Community
Offering may include a Syndicated Community Offering or public offering.
CONTROL: The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the direct or indirect
power to direct or exercise a controlling influence over the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise as described in Part 574 of the Regulations.
DEPOSIT ACCOUNT(S): Any withdrawable account as defined in Section
561.42 of the Regulations, and shall include all demand deposit accounts as
defined in Section 561.16 of the Regulations and certificates of deposit.
ELIGIBLE ACCOUNT HOLDER: Any Person holding a Qualifying Deposit on the
Eligibility Record Date for purposes of determining subscription rights.
ELIGIBILITY RECORD DATE: June 30, 2004, the date for determining who
qualifies as an Eligible Account Holder of the Bank.
EMPLOYEE PLANS: The Tax-Qualified and Non-Tax Qualified Employee Plans
of the Bank and/or the Holding Company.
ESOP: The Bank's employee stock ownership plan and related trust.
ESTIMATED VALUATION RANGE: The range of the estimated pro forma market
value of the total number of shares of Common Stock to be issued by the Holding
Company to the MHC and to Minority Stockholders, as determined by the
Independent Appraiser prior to the Subscription Offering and as it may be
amended from time to time thereafter.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
HOLDING COMPANY: Mutual Federal Bancorp, Inc., the federal corporation
which will be majority-owned by the MHC after the completion of the Stock
Offering and which will own 100% of the common stock of the Bank, and any
successor to such corporation.
INDEPENDENT APPRAISER: The appraiser retained by the Bank to prepare an
appraisal of the pro forma market value of the Bank and the Holding Company.
MANAGEMENT PERSON: Any Officer or director of the Bank or any Affiliate
of the Bank, and any Person Acting in Concert with any such Officer or director.
MARKET MAKER: A dealer (i.e., any Person who engages directly or
indirectly as agent, broker, or principal in the business of offering, buying,
selling or otherwise dealing or trading in securities issued by
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another Person) who, with respect to a particular security, (1) regularly
publishes bona fide competitive bid and offer quotations on request, and (2) is
ready, willing and able to effect transactions in reasonable quantities at the
dealer's quoted prices with other brokers or dealers.
MHC: Mutual Federal Bancorp, MHC, the mutual holding company of the
Holding Company.
MINORITY OWNERSHIP INTEREST: The shares of Common Stock owned by
Persons other than the MHC, expressed as a percentage of the total shares of
Common Stock outstanding.
MINORITY STOCKHOLDER: Any owner of Common Stock, other than the MHC.
OFFERING RANGE: The aggregate purchase price of the Common Stock to be
sold in the Stock Offering based on the independent valuation expressed as a
range, which may vary within 15% above or 15% below the midpoint of such range,
with a possible adjustment by up to 15% above the maximum of such range. The
Offering Range will be based on the Estimated Valuation Range, but will
represent a Minority Ownership Interest equal to up to 49.9% of the Common
Stock.
OFFICER: An executive officer of the Holding Company or the Bank,
including the Chief Executive Officer, President, Senior Vice Presidents in
charge of principal business functions, Secretary, Treasurer and any other
person performing similar functions.
ORDER FORM: Any form (together with any attached cover letter and/or
certifications or acknowledgements) 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
purchases of Common Stock in the Subscription Offering and the Community
Offering.
OTS: The Office of Thrift Supervision, and any successor thereto.
PERSON: An individual, corporation, partnership, association,
joint-stock company, limited liability company, trust, unincorporated
organization, or a government or political subdivision of a government.
PLAN: This Stock Issuance Plan.
QUALIFYING DEPOSIT: The aggregate balance of each Deposit Account of an
Eligible Account Holder as of the close of business on the Eligibility Record
Date, a Supplemental Eligible Account Holder as of the close of business on the
Supplemental Eligibility Record Date, or a Voting Member as of the close of
business on the Voting Member Eligibility Date, as the case may be, provided
such aggregate balance is not less than $50.
REGULATIONS: The rules and regulations of the OTS, including the OTS
rules and regulations regarding mutual holding companies.
RESIDENT: The terms "Resident," "Residence," "Reside," "Resided" or
"Residing" as used herein with respect to any Person shall mean any Person who
occupied a dwelling within the Bank's Community, has an intent to remain with
the Community for a period of time, and manifests the genuineness of that intent
by establishing an ongoing physical presence within the Community together with
an indication that such presence within the Community is something other than
merely transitory in nature. To the extent the Person is a corporation or other
business entity, the principal place of business or headquarters shall be in the
Community. To the extent a Person is a personal benefit plan, the circumstances
of the beneficiary shall apply with respect to this definition. In the case of
all other benefit
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plans, the circumstances of the trustee shall be examined for purposes of this
definition. The Bank may utilize deposit or loan records or such other evidence
provided to it to make a determination as to whether a Person is a Resident. In
all cases, however, such a determination shall be in the sole discretion of the
Bank.
SEC: The Securities and Exchange Commission, or any successor thereto.
STOCK OFFERING: The offering of Common Stock to Persons other than the
MHC, in a Subscription Offering and, to the extent shares remain available, in a
Community Offering or a Syndicated Community Offering.
SUBSCRIPTION OFFERING: The offering of Common Stock for subscription
and purchase pursuant to Section 5A of this Plan.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER: Any Person holding a Qualifying
Deposit on the Supplemental Eligibility Record Date, who is not an Eligible
Account Holder, a Tax-Qualified Employee Plan or an Officer or director of the
Bank.
SUPPLEMENTAL ELIGIBILITY RECORD DATE: The last day of the calendar
quarter preceding approval of the Plan by the OTS.
SYNDICATED COMMUNITY OFFERING: The offering of Common Stock following
or contemporaneously with the Community Offering through a syndicate of
broker-dealers.
TAX-QUALIFIED EMPLOYEE PLAN: Any defined benefit plan or defined
contribution plan (including any employee stock ownership plan, stock bonus
plan, profit-sharing plan, or other plan) of the Bank, the Holding Company, the
MHC or any of their Affiliates, which, with its related trusts, meets the
requirements to be qualified under Section 401 of the Internal Revenue Code. The
term "Non-Tax-Qualified Employee Plan" means any stock benefit plan which is not
so qualified under Section 401 of the Internal Revenue Code.
VOTING MEMBER: A voting member of the MHC who is not an Eligible
Account Holder or a Supplemental Eligible Account Holder, including all
borrowers of the Bank as of November 2, 2001, whose borrowings remain
outstanding.
VOTING MEMBER ELIGIBILITY DATE: The date established by the board of
directors after the Supplemental Eligibility Record Date which shall be for
determining who qualifies as a Voting Member.
VOTING STOCK:
(1) Voting Stock means common stock or preferred
stock, or similar interests if the shares by statute, charter or in any
manner, entitle the holder:
(i) To vote for or to select directors of
the Bank or the Holding Company; and
(ii) To vote on or to direct the conduct of
the operations or other significant policies of the Bank or the
Holding Company.
(2) Notwithstanding anything in paragraph (1) above,
preferred stock is not "Voting Stock" if:
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(i) Voting rights associated with the
preferred stock are limited solely to the type customarily
provided by statute with regard to matters that would
significantly and adversely affect the rights or preferences of
the preferred stock, such as the issuance of additional amounts
or classes of senior securities, the modification of the terms
of the preferred stock, the dissolution of the Bank, or the
payment of dividends by the Bank when preferred dividends are in
arrears;
(ii) The preferred stock represents an
essentially passive investment or financing device and does not
otherwise provide the holder with control over the issuer; and
(iii) The preferred stock does not at the time
entitle the holder, by statute, charter, or otherwise, to
select or to vote for the selection of directors of the Bank or
the Holding Company.
(3) Notwithstanding anything in paragraphs (1) and
(2) above, "Voting Stock" shall be deemed to include preferred stock
and other securities that, upon transfer or otherwise, are convertible
into Voting Stock or exercisable to acquire Voting Stock where the
holder of the stock, convertible security or right to acquire Voting
Stock has the preponderant economic risk in the underlying Voting
Stock. Securities immediately convertible into Voting Stock at the
option of the holder without payment of additional consideration shall
be deemed to constitute the Voting Stock into which they are
convertible; other convertible securities and rights to acquire Voting
Stock shall not be deemed to vest the holder with the preponderant
economic risk in the underlying Voting Stock if the holder has paid
less than 50% of the consideration required to directly acquire the
Voting Stock and has no other economic interest in the underlying
Voting Stock.
3. NUMBER OF SHARES TO BE OFFERED.
The total number of shares (or range thereof) of Common Stock to be
issued and offered for sale pursuant to the Plan shall be determined initially
by the Board of Directors of the Bank and the Holding Company in conjunction
with the determination of the Independent Appraiser. The number of shares to be
offered may be adjusted prior to completion of the Stock Offering. The total
number of shares of Common Stock that may be issued to Persons other than the
MHC at the close of the Stock Offering must be less than 50% of the issued and
outstanding shares of Common Stock.
4. INDEPENDENT VALUATION AND PURCHASE PRICE OF SHARES.
All shares of Common Stock sold in the Stock Offering shall be sold at
a uniform price per share. The purchase price and number of shares to be
outstanding shall be determined by the Board of Directors of the Holding Company
on the basis of the estimated pro forma market value of the Holding Company and
the Bank. The aggregate purchase price for the Common Stock will not be
inconsistent with such market value of the Holding Company and the Bank. The pro
forma market value of the Holding Company and the Bank will be determined for
such purposes by the Independent Appraiser.
Prior to the commencement of the Stock Offering, an Estimated Valuation
Range will be established, which range may vary within 15% above to 15% below
the midpoint of such range, and up to 15% greater than the maximum of such
range, as determined by the Board of Directors at the time of the Stock Offering
and consistent with the Regulations. The Holding Company intends to issue up to
49.9% of its Common Stock in the Stock Offering. The number of shares of Common
Stock to be issued and the ownership interest of the MHC may be increased or
decreased by the Holding Company, taking into
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consideration any change in the independent valuation and other factors, at the
discretion of the Board of Directors of the Bank and the Holding Company.
Based upon the independent valuation as updated prior to the
commencement of the Stock Offering, the Board of Directors may establish the
minimum and maximum percentage of shares of Common Stock that will be offered
for sale in the Stock Offering, or it may fix the percentage of shares that will
be offered for sale in the Stock Offering. In the event the percentage of the
shares offered for sale in the Stock Offering is not fixed in the Stock
Offering, the Minority Ownership Interest resulting from the Stock Offering will
be determined as follows: (a) the product of (x) the total number of shares of
Common Stock sold by the Holding Company and (y) the purchase price per share,
divided by (b) the aggregate pro forma market value of the Bank and the Holding
Company upon the closing of the Stock Offering and sale of all the Common Stock.
The estimated market value of the 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 the Regulations. The Common
Stock to be issued in the Stock Offering shall be fully paid and non-assessable.
If there is a Community Offering or Syndicated Community Offering of
shares of Common Stock not subscribed for in the Subscription Offering, the
price per share at which the Common Stock is sold in such Community Offering or
Syndicated Community Offering shall be the Actual Purchase Price which will be
equal to the purchase price per share at which the Common Stock is sold to
Persons in the Subscription Offering. Shares sold in the Community Offering or
Syndicated Community Offering will be subject to the same limitations as shares
sold in the Subscription Offering.
5. METHOD OF OFFERING SHARES AND RIGHTS TO PURCHASE STOCK.
In descending order of priority, the opportunity to purchase Common
Stock shall be given in the Subscription Offering to: (1) Eligible Account
Holders; (2) Tax-Qualified Employee Plans; (3) Supplemental Eligible Account
Holders; and (4) Voting Members. Any shares of Common Stock that are not
subscribed for in the Subscription Offering may at the discretion of the Bank
and the Holding Company be offered for sale in a Community Offering or a
Syndicated Community Offering. The minimum purchase by any Person shall be 25
shares. The Holding Company shall determine in its sole discretion whether each
prospective purchaser is a "Resident," "Associate," or "Acting in Concert" as
defined in the Plan, and shall interpret all other provisions of the Plan in its
sole discretion. All such determinations are in the sole discretion of the
Holding Company, and may be based on whatever evidence the Holding Company
chooses to use in making any such determination.
In addition to the priorities set forth below, the Board of Directors
may establish other priorities for the purchase of Common Stock, subject to the
approval of the OTS. The priorities for the purchase of shares in the Stock
Offering are as follows:
A. Subscription Offering.
PRIORITY 1: ELIGIBLE ACCOUNT HOLDERS. Each Eligible Account
Holder shall receive non-transferable subscription rights to subscribe for
shares of Common Stock offered in the Stock Offering in an amount equal to the
greater of $150,000, one-tenth of one percent (0.1%) of the total shares offered
in the Stock Offering, or 15 times the product (rounded down to the nearest
whole number) obtained by multiplying the total number of shares of Common Stock
to be issued in the Stock Offering by a fraction, of which the numerator is the
Qualifying Deposit of the Eligible Account Holder and the denominator is the
total amount of Qualifying Deposits of all Eligible Account Holders, in each
case on the Eligibility
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Record Date and subject to the provisions of Section 6; PROVIDED that the
Holding Company may, in its sole discretion and without further notice to or
solicitation of subscribers or other prospective purchasers, increase such
maximum purchase limitation to 5% of the maximum number of shares offered in the
Stock Offering or decrease such maximum purchase limitation to 0.1% of the
maximum number of shares offered in the Stock Offering, subject to the overall
purchase limitations set forth in Section 6. If there are insufficient shares
available to satisfy all subscriptions of Eligible Account Holders, shares will
be allocated to Eligible Account Holders so as to permit each such subscribing
Eligible Account Holder to purchase a number of shares sufficient to make his
total allocation equal to the lesser of 100 shares or the number of shares
subscribed for. Thereafter, unallocated shares will be allocated pro rata to
remaining subscribing Eligible Account Holders whose subscriptions remain
unfilled in the same proportion that each such subscriber's Qualifying Deposit
bears to the total amount of Qualifying Deposits of all subscribing Eligible
Account Holders whose subscriptions remain unfilled. To ensure proper allocation
of stock, each Eligible Account Holder must list on his Order Form all accounts
in which he had an ownership interest as of the Eligibility Record Date.
Officers, directors, and their Associates may be Eligible Account Holders.
However, if an officer, director, or his or her Associate receives subscription
rights based on increased deposits in the year before the Eligibility Record
Date, subscription rights based upon these deposits are subordinate to the
subscription rights of other Eligible Account Holders.
PRIORITY 2: TAX-QUALIFIED EMPLOYEE PLANS. The Tax-Qualified
Employee Plans shall be given the opportunity to purchase in the aggregate up to
10% of the shares offered in the Stock Offering. In the event of an
oversubscription in the Stock Offering, subscriptions for shares by the
Tax-Qualified Employee Plans may be satisfied, in whole or in part, out of
authorized but unissued shares of the Holding Company subject to the maximum
purchase limitations applicable to such plans as set forth in Section 6, or may
be satisfied, in whole or in part, through open market purchases by the
Tax-Qualified Employee Plans subsequent to the closing of the Stock Offering. If
the final valuation exceeds the maximum of the Offering Range, up to 10% of the
Common Stock issued in the Stock Offering may be sold to the Tax-Qualified
Employee Plans notwithstanding any oversubscription by Eligible Account Holders.
PRIORITY 3: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. To the
extent there are sufficient shares remaining after satisfaction of subscriptions
by Eligible Account Holders and the Tax-Qualified Employee Plans, each
Supplemental Eligible Account Holder shall receive non-transferable subscription
rights to subscribe for shares of Common Stock offered in the Stock Offering in
an amount equal to the greater of $150,000, one-tenth of one percent (0.1%) of
the total shares offered in the Stock Offering, or 15 times the product (rounded
down to the nearest whole number) obtained by multiplying the total number of
shares of Common Stock to be issued in the Stock Offering by a fraction, of
which the numerator is the Qualifying Deposit of the Supplemental Eligible
Account Holder and the denominator is the total amount of Qualifying Deposits of
all Supplemental Eligible Account Holders, in each case on the Supplemental
Eligibility Record Date and subject to the provisions of Section 6; PROVIDED
that the Bank may, in its sole discretion and without further notice to or
solicitation of subscribers or other prospective purchasers, increase such
maximum purchase limitation to 5% of the maximum number of shares offered in the
Stock Offering or decrease such maximum purchase limitation to 0.1% of the
maximum number of shares offered in the Stock Offering, subject to the overall
purchase limitations set forth in Section 6. In the event Supplemental Eligible
Account Holders subscribe for a number of shares which, when added to the shares
subscribed for by Eligible Account Holders and the Tax-Qualified Employee Plans,
is in excess of the total shares offered in the Stock Offering, the
subscriptions of Supplemental Eligible Account Holders will be allocated among
subscribing Supplemental Eligible Account Holders so as to permit each
subscribing Supplemental Eligible Account Holder to purchase a number of shares
sufficient to make his total allocation equal to the lesser of 100 shares or the
number of shares subscribed for. Thereafter, unallocated shares will be
allocated to each subscribing Supplemental Eligible Account Holder whose
subscription remains unfilled in the same proportion that such
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subscriber's Qualifying Deposits on the Supplemental Eligibility Record Date
bear to the total amount of Qualifying Deposits of all subscribing Supplemental
Eligible Account Holders whose subscriptions remain unfilled.
PRIORITY 4: VOTING MEMBERS. To the extent there are sufficient
shares remaining after satisfaction of subscriptions by Eligible Account
Holders, the Tax-Qualified Employee Plans, and Supplemental Eligible Account
Holders, each Voting Member, as of the Voting Member Eligibility Date, other
than Eligible Account Holders and Supplemental Account Holders, shall receive
non-transferable subscription rights to subscribe for shares of Common Stock
offered in the Stock Offering in an amount equal to the greater of $150,000,
one-tenth of one percent (0.1%) of the total shares offered in the Stock
Offering, or 15 times the product (rounded down to the nearest whole number)
obtained by multiplying the total number of shares of Common Stock to be issued
in the Stock Offering by a fraction, of which the numerator is the Qualifying
Deposit of the Voting Members and the denominator is the total number of
Qualifying Deposits of all Voting Members, in each case on the Voting Member
Eligibility Date and subject to the provisions of Section 6; provided that the
Holding Company may, in its sole discretion and without further notice to or
solicitation of subscribers or other prospective purchasers, increase such
maximum purchase limitation to 5% of the maximum number of shares offered in the
Stock Offering or decrease such maximum purchase limitation to 0.1% of the
maximum number of shares offering in the Stock Offering, subject to the overall
purchase limitations set forth in Section 6. In the event Voting Members
subscribe for a number of shares which, when added to the shares subscribed for
by Eligible Account Holders, the Tax-Qualified Employee Plans and Supplemental
Eligible Account Holders, is in excess of the total shares offered in the Stock
Offering, the subscriptions of Voting Members will be allocated among
subscribing Voting Members so as to permit each subscribing Voting Member to
purchase a number of shares sufficient to make his total allocation equal to the
lesser of 100 shares or the number of shares subscribed for. Thereafter,
unallocated shares will be allocated to each subscribing Voting Member whose
subscription remains unfilled in the same proportion that such subscriber's
Qualifying Deposits on the Voting Member Eligibility Date bear to the total
amount of Qualifying Deposits of all subscribing Voting Members whose
subscriptions remain unfilled.
B. Community Offering.
Any shares of Common Stock not subscribed for in the
Subscription Offering may be offered for sale in a Community Offering. This will
involve an offering of all unsubscribed shares directly to the general public
with a preference to those natural persons Residing in the Community. The
Community Offering, if any, shall be for a period of not more than 45 days
unless extended by the Holding Company and the Bank, and shall commence
concurrently with, during or promptly after the Subscription Offering. The
Holding Company and the Bank may use one or more investment banking firms on a
best efforts basis to sell the unsubscribed shares in the Subscription Offering
and Community Offering. The Holding Company and the Bank may pay a commission or
other fee to such investment banking firm(s) as to the shares sold by such
firm(s) in the Subscription Offering and Community Offering and may also
reimburse such firm(s) for expenses incurred in connection with the sale. The
Community Offering may include a Syndicated Community Offering managed by such
investment banking firm(s). The Common Stock will be offered and sold in the
Community Offering, in accordance with the Regulations, so as to achieve the
widest distribution of the Common Stock. No Person may purchase more than
$150,000 of Common Stock in the Community Offering, subject to the overall
purchase limitations set forth in Section 6. In the event orders for Common
Stock in the Community Offering exceed the number of shares available for sale,
shares will be allocated (to the extent shares remain available) first to cover
orders of natural persons Residing in the Community, and thereafter to cover
orders of other members of the general public, so that each Person in such
category of the Community Offering may receive 1,000 shares. In the event orders
for Common Stock in any of these categories exceed the number of shares
available for sale, shares may be allocated on a pro rata basis
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within a category based on the amount of the respective orders. In addition,
orders received for Common Stock in the Community Offering or any Syndicated
Community Offering shall first be filled up to a maximum of two percent (2%) of
the shares sold and thereafter, remaining shares will be allocated on an equal
number of shares basis per order until all orders are filled.
The Bank and the Holding Company, in their sole discretion,
may reject subscriptions, in whole or in part, received from any Person under
this Section 5(B).
C. Syndicated Community Offering.
Any shares of Common Stock not sold in the Subscription
Offering or in the Community Offering, if any, may be offered for sale to the
general public by a selling group of broker-dealers in a Syndicated Community
Offering, subject to terms, conditions and procedures, including the timing of
the offering, as may be determined by the Bank and the Holding Company in a
manner that is intended to achieve the widest distribution of the Common Stock
subject to the rights of the Holding Company to accept or reject in whole or in
part all orders in the Syndicated Community Offering. It is expected that the
Syndicated Community Offering would commence as soon as practicable after
termination of the Subscription Offering and the Community Offering, if any. The
Syndicated Community Offering shall be completed within 45 days after the
termination of the Subscription Offering, unless such period is extended as
provided herein. No Person may purchase more than $150,000 of Common Stock in
the Syndicated Community Offering, subject to the overall purchase limitations
set forth in Section 6.
If for any reason a Syndicated Community Offering of
unsubscribed shares of Common Stock cannot be effected and any shares remain
unsold after the Subscription Offering and the Community Offering, if any, the
Boards of Directors of the Holding Company and the Bank will seek to make other
arrangements for the sale of the remaining shares. Such other arrangements will
be subject to the approval of the OTS and to compliance with applicable
securities laws.
6. ADDITIONAL LIMITATIONS ON PURCHASES OF COMMON STOCK.
Purchases of Common Stock in the Stock Offering will be subject to the
following purchase limitations:
A. The aggregate amount of outstanding Common Stock owned
or controlled by Persons other than MHC at the close of the Stock Offering shall
be less than 50% of the Holding Company's total outstanding Common Stock.
B. The maximum purchase of Common Stock in the Subscription
Offering by a Person or group of Persons through a single Deposit Account is
$150,000. No Person by himself, or with an Associate or group of Persons Acting
in Concert, may purchase more than $250,000 of the Common Stock offered in the
Stock Offering, except that: (i) the Holding Company may, in its sole discretion
and without further notice to or solicitation of subscribers or other
prospective purchasers, increase such maximum purchase limitation to 5% of the
number of shares offered in the Stock Offering; (ii) the Tax-Qualified Employee
Plans may purchase up to 10% of the shares offered in the Stock Offering; and
(iii) for purposes of this Section 6(B) shares to be held by any Tax-Qualified
Employee Plan and attributable to a Person shall not be aggregated with other
shares purchased directly by or otherwise attributable to such Person.
C. The aggregate amount of Common Stock acquired in the
Stock Offering, plus all prior issuances by the Holding Company, by any
Non-Tax-Qualified Employee Plan or any Management Person and his or her
Associates, exclusive of any shares of Common Stock acquired by such plan or
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Management Person and his or her Associates in the secondary market, shall not
exceed 4.9% of the outstanding shares of Common Stock at the conclusion of the
Stock Offering. In calculating the number of shares held by any Management
Person and his or her Associates under this paragraph, shares held by any
Tax-Qualified Employee Plan or Non-Tax-Qualified Employee Plan of the Holding
Company or the Bank that are attributable to such Person shall not be counted.
D. The aggregate amount of Common Stock acquired in the
Stock Offering, plus all prior issuances by the Holding Company, by any
Non-Tax-Qualified Employee Plan or any Management Person and his or her
Associates, exclusive of any Common Stock acquired by such plan or Management
Person and his or her Associates in the secondary market, shall not exceed 4.9%
of the stockholders' equity of the Holding Company at the conclusion of the
Stock Offering. In calculating the number of shares held by any Management
Person and his or her Associates under this paragraph, shares held by any
Tax-Qualified Employee Plan or Non-Tax-Qualified Employee Plan of the Holding
Company or the Bank that are attributable to such Person shall not be counted.
E. The aggregate amount of Common Stock acquired in the
Stock Offering, plus all prior issuances by the Holding Company, by any one or
more Tax-Qualified Employee Plans, exclusive of any shares of Common Stock
acquired by such plans in the secondary market, shall not exceed 4.9% of the
outstanding shares of Common Stock at the conclusion of the Stock Offering.
F. The aggregate amount of Common Stock acquired in the
Stock Offering, plus all prior issuances by the Holding Company, by any one or
more Tax-Qualified Employee Plans, exclusive of any shares of Common Stock
acquired by such plans in the secondary market, shall not exceed 4.9% of the
stockholders' equity of the Holding Company at the conclusion of the Stock
Offering.
G. The aggregate amount of Common Stock acquired in the
Stock Offering, plus all prior issuances by the Holding Company, by all stock
benefit plans of the Holding Company or the Bank, other than employee stock
ownership plans, shall not exceed 25% of the outstanding Common Stock held by
Persons other than the MHC.
H. The aggregate amount of Common Stock acquired in the
Stock Offering, plus all prior issuances by the Holding Company, by all
Non-Tax-Qualified Employee Plans or Management Persons and their Associates,
exclusive of any Common Stock acquired by such plans or Management Persons and
their Associates in the secondary market, shall not exceed 25% of the
outstanding shares of Common Stock held by Persons other than the MHC at the
conclusion of the Stock Offering. In calculating the number of shares held by
Management Persons and their Associates under this paragraph or paragraph I.
below, shares held by any Tax-Qualified Employee Plan or Non-Tax-Qualified
Employee Plan that are attributable to such Persons shall not be counted.
I. The aggregate amount of Common Stock acquired in the
Stock Offering, plus all prior issuances by the Holding Company, by all
Non-Tax-Qualified Employee Plans or Management Persons and their Associates,
exclusive of any Common Stock acquired by such plans or Management Persons and
their Associates in the secondary market, shall not exceed 25% of the
stockholders' equity of the Holding Company held by Persons other than the MHC
at the conclusion of the Stock Offering.
J. Notwithstanding any other provision of this Plan, no
Person shall be entitled to purchase any Common Stock to the extent such
purchase would be illegal under any federal law or state law or regulation or
would violate regulations or policies of the National Association of Securities
Dealers, Inc., particularly those regarding free riding and withholding. The
Holding Company and/or its agents may ask for an acceptable legal opinion from
any purchaser as to the legality of such purchase and may refuse to honor any
purchase order if such opinion is not timely furnished.
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K. The Board of Directors of the Holding Company has the
right in its sole discretion to reject any order submitted by a Person whose
representations the Board of Directors believes to be false or who it otherwise
believes, either alone or Acting in Concert with others, is violating,
circumventing, or intends to violate, evade or circumvent the terms and
conditions of this Plan.
L. A minimum of 25 shares of Common Stock must be purchased
by each Person purchasing shares in the Stock Offering to the extent those
shares are available; provided, however, that in the event the minimum number of
shares of Common Stock purchased times the price per share exceeds $500, then
such minimum purchase requirement shall be reduced to such number of shares
which when multiplied by the price per share shall not exceed $500, as
determined by the Board.
SUBSCRIPTION RIGHTS AFFORDED UNDER THIS PLAN AND BY THE
REGULATIONS ARE NON-TRANSFERABLE. NO PERSON MAY TRANSFER, OFFER TO TRANSFER, OR
ENTER INTO ANY AGREEMENT OR UNDERSTANDING TO TRANSFER, THE LEGAL OR BENEFICIAL
OWNERSHIP OF ANY SUBSCRIPTION RIGHTS UNDER THIS PLAN. NO PERSON MAY TRANSFER,
OFFER TO TRANSFER OR ENTER INTO AN AGREEMENT OR UNDERSTANDING TO TRANSFER LEGAL
OR BENEFICIAL OWNERSHIP OF ANY SHARES OF COMMON STOCK EXCEPT PURSUANT TO THIS
PLAN.
EACH PERSON PURCHASING COMMON STOCK IN THE STOCK OFFERING WILL
BE DEEMED TO CONFIRM THAT SUCH PURCHASE DOES NOT CONFLICT WITH THE PURCHASE
LIMITATIONS IN THIS PLAN. ALL QUESTIONS CONCERNING WHETHER ANY PERSONS ARE
ASSOCIATES OR A GROUP ACTING IN CONCERT OR WHETHER ANY PURCHASE CONFLICTS WITH
THE PURCHASE LIMITATIONS IN THIS PLAN OR OTHERWISE VIOLATES ANY PROVISION OF
THIS PLAN SHALL BE DETERMINED BY THE BANK IN ITS SOLE DISCRETION. SUCH
DETERMINATION SHALL BE CONCLUSIVE, FINAL AND BINDING ON ALL PERSONS, AND THE
BANK MAY TAKE ANY REMEDIAL ACTION INCLUDING, WITHOUT LIMITATION, REJECTING THE
PURCHASE OR REFERRING THE MATTER TO THE OTS FOR ACTION, AS THE BANK MAY IN ITS
SOLE DISCRETION DEEM APPROPRIATE.
7. PAYMENT FOR STOCK.
All payments for Common Stock subscribed for or ordered in the Stock
Offering must be delivered in full to the Bank, together with a properly
completed and executed Order Form, or purchase order in the case of the
Syndicated Community Offering, on or prior to the expiration date specified on
the Order Form or purchase order, as the case may be, unless such date is
extended by the Bank; PROVIDED, that if the Employee Plans subscribe for shares
of Common Stock during the Subscription Offering, such plans may pay for such
shares at the Actual Purchase Price upon consummation of the Stock Offering. The
Holding Company or the Bank may make scheduled discretionary contributions to
the ESOP provided such contributions from the Bank, if any, do not cause the
Bank to fail to meet its regulatory capital requirement.
Payment for Common Stock shall be made either by check or money order,
or if a purchaser has a Deposit Account in the Bank, such purchaser may pay for
the shares subscribed for by authorizing the Bank to make a withdrawal from the
purchaser's Deposit 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 requirements, the certificate shall
be canceled at the time of withdrawal, without penalty, and the remaining
balance will earn interest at the Bank's passbook rate. Funds for which a
withdrawal is
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authorized will remain in the purchaser's Deposit Account but may not be used by
the purchaser 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 Stock 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 Actual Purchase Price per share. Interest will continue to be
earned on any amounts authorized for withdrawal until such withdrawal is given
effect. Payment for Common Stock made by check or money order will earn interest
at a rate no less than the Bank's passbook rate. Such interest will be paid from
the date payment is received by the Bank until consummation or termination of
the Stock Offering. If for any reason the Stock Offering is not consummated, all
payments made by subscribers in the Stock Offering will be refunded to them with
such interest. In case of amounts authorized for withdrawal from Deposit
Accounts, refunds will be made by canceling the authorization for withdrawal.
8. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS.
As soon as practicable after the prospectus prepared by the Holding
Company and the Bank has been declared effective by the OTS and the SEC, copies
of the prospectus and Order Forms will be distributed to all Eligible Account
Holders, Supplemental Eligible Account Holders, the Tax-Qualified Employee Plans
and the Voting Members at their last known addresses appearing on the records of
the Bank for the purpose of subscribing for shares of Common Stock in the
Subscription Offering and will be made available to those Persons that purchase
Common Stock in the Community Offering.
Each Order Form will be preceded or accompanied by the prospectus
describing the Holding Company, the Bank, the Common Stock and the Subscription
Offering and the Community Offering. Each Order Form will contain, among other
things, the following:
A. A specified date by which all Order Forms must be
received by the Bank, which date shall be not less than 20, nor more than 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 Offering and the Community Offering;
C. A description of the minimum and maximum number of
shares of Common Stock that 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
must 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 prior to execution of the Order
Form;
F. A statement indicating the consequences of failing to
properly complete and return the Order Form, including a statement to the effect
that all subscription rights are nontransferable, will be void at the end of the
Subscription Offering, and can only be exercised by delivering to the Bank
within the subscription period such properly completed and executed Order Form,
together with a 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 Deposit
Account at the Bank); and
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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 and the Holding Company reserve the
right in their sole discretion to accept or reject orders received on
photocopied or facsimiled Order Forms.
9. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; 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 for the shares of
Common Stock subscribed for (including cases in which Deposit 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, that
the Bank may, but will not be required to, waive any immaterial irregularity on
any Order Form or require the submission of corrected Order Forms or the
remittance of full payment for subscribed shares by such date as the Bank may
specify. The interpretation by the Bank of terms and conditions of this Plan and
of the Order Forms will be final, subject to the authority of the OTS.
10. COMPLETION OF THE STOCK OFFERING.
The Stock Offering will be terminated if not completed within 90 days
from the date on which the prospectus is declared effective by the OTS, unless
an extension is approved by the OTS.
11. MARKET FOR COMMON STOCK.
If at the close of the Stock Offering the Holding Company has more than
100 shareholders of any class of stock, the Holding Company shall use its best
efforts to:
(i) encourage and assist a Market Maker to
establish and maintain a market for that class of stock; and
(ii) list that class of stock on a national
or regional securities exchange, or on the Nasdaq quotation
system.
12. STOCK PURCHASES BY MANAGEMENT PERSONS AFTER THE STOCK
OFFERING.
For a period of three years after the Stock Offering, no Management
Person or his or her Associates may purchase, without the prior written approval
of the OTS, any Common Stock, except from a broker-dealer registered with the
SEC, except that the foregoing shall not apply to:
A. Negotiated transactions involving more than 1% of the
outstanding stock in the class of stock; or
B. Purchases of stock made by and held by any Tax-Qualified
or Non-Tax-Qualified Employee Plan even if such stock is attributable to
Management Persons or their Associates.
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13. RESALES OF STOCK BY DIRECTORS AND OFFICERS.
Common Stock purchased by Management Persons and their Associates in
the Stock Offering may not be resold for a period of at least one year following
the date of purchase, except in the case of death of a Management Person or an
Associate.
14. STOCK CERTIFICATES.
Each stock certificate shall bear a legend giving appropriate notice of
the restrictions set forth in Section 13 above. Appropriate instructions shall
be issued to the Holding Company's transfer agent with respect to applicable
restrictions on transfers of such stock. Any shares of stock issued as a stock
dividend, stock split or otherwise with respect to such restricted stock, shall
be subject to the same restrictions as apply to the restricted stock.
15. RESTRICTION ON FINANCING STOCK PURCHASES.
The Holding Company and the Bank will not loan funds to any Person,
other than the ESOP, to purchase Common Stock in the Stock Offering, and will
not knowingly offer or sell any of the Common Stock to any Person whose purchase
would be financed by funds loaned to the Person by the Holding Company, the Bank
or any Affiliate.
16. HOLDING COMPANY FEDERAL STOCK CHARTER AND BYLAWS.
The MHC shall take all appropriate steps to establish the Holding
Company and to adopt the Holding Company's federal stock charter and bylaws to
authorize the issuance of capital stock and otherwise to read in a form
consistent with a subsidiary holding company as a federally chartered
corporation.
17. STOCK BENEFIT PLANS.
The Board of Directors of the Bank and/or the Holding Company intend to
adopt one or more stock benefit plans for employees, officers and directors,
including an ESOP, stock award plans and stock option plans, which will be
authorized to purchase Common Stock and grant options for Common Stock. However,
only the Tax-Qualified Employee Plans will be permitted to purchase Common Stock
in the Stock Offering, subject to the purchase priorities set forth in this
Plan. The Board of Directors of the Bank intends to establish the ESOP and
authorize the ESOP and any other Tax-Qualified Employee Plans to purchase in the
aggregate up to 10% of the shares issued in the Stock Offering. It is
anticipated that the ESOP will fund its purchase in the Stock Offering through a
loan from the Holding Company. The Bank or the Holding Company may make
scheduled discretionary contributions to one or more Tax-Qualified Employee
Plans to purchase Common Stock issued in the Stock Offering, or to purchase
issued and outstanding shares of Common Stock in the open market or from
authorized but unissued shares of Common Stock or treasury shares from the
Holding Company subsequent to the completion of the Stock Offering; PROVIDED
such contributions do not cause the Bank to fail to meet any of its regulatory
capital requirements. In addition to shares purchased by one or more
Tax-Qualified Employee Plans in this Stock Offering, any subsequent stock
offering, and/or from authorized but unissued shares or treasury shares of the
Holding Company, this Plan specifically authorizes the Holding Company to grant
awards under one or more stock benefit plans, including stock recognition and
award plans and stock option plans, in an amount up to 25% of the number of
shares of Common Stock held by Persons other than the MHC.
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18. POST-STOCK ISSUANCE FILING.
If the Holding Company has more than 35 stockholders of any class of
stock, the Holding Company shall register its Common Stock with the SEC pursuant
to the Exchange Act, and shall undertake not to deregister such Common Stock for
a period of three years thereafter.
19. 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 Common Stock under the Plan if such participant resides in a foreign country
or resides in a jurisdiction of the United States with respect to which all of
the following apply: (a) there are few participants otherwise eligible to
subscribe for shares under this Plan who reside in such jurisdiction; (b) the
granting of subscription rights or the offer or sale of shares of Common Stock
to such participants would require any of the Holding Company or the Bank or
their respective directors and Officers, under the laws of such jurisdiction, to
register as a broker-dealer, salesman or selling agent or to register or
otherwise qualify the Common 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.
20. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK.
The Holding Company may not declare or pay a cash dividend on its
Common Stock if the effect thereof would cause the regulatory capital of the
Bank to be reduced below the amount required under Section 567.2 of the
Regulations. Otherwise, the Holding Company may declare dividends or make other
capital distributions in accordance with Section 563b.520 of the Regulations.
Following completion of the Stock Offering, the Holding Company may repurchase
its Common Stock consistent with Section 563b.510 and Section 563b.515 of the
Regulations relating to stock repurchases, as long as such repurchases do not
cause the regulatory capital of the Bank to be reduced below the amount required
under Section 563b.550. of the Regulations. The MHC may from time to time
purchase Common Stock. Subject to any notice or approval requirements of the OTS
under the Regulations, the MHC may waive its right to receive dividends declared
by the Holding Company.
21. STOCK OFFERING EXPENSES.
The Regulations require that the expenses of any Stock Offering must be
reasonable. The Bank will use its best efforts to assure that the expenses
incurred by the Bank and the Holding Company in effecting the Stock Offering
will be reasonable.
22. EMPLOYMENT AND OTHER SEVERANCE AGREEMENTS.
Following or contemporaneously with the Stock Offering, the Bank and/or
the Holding Company may enter into employment and/or severance arrangements with
one or more executive officers of the Bank and/or the Holding Company. It is
anticipated that any employment contracts entered into by the Bank and/or the
Holding Company will be for terms not exceeding three years and that such
contracts will provide for annual renewals of the term of the contracts, subject
to approval by the Board of Directors. The Bank and/or the Holding Company also
may enter into severance arrangements with one or more executive officers which
provide for the payment of severance compensation in the event of a change in
control of the Bank and/or the Holding Company. The terms of such employment and
15
severance arrangements have not been determined as of this time, but will be
described in any prospectus circulated in connection with the Stock Offering and
will be subject to and comply with all Regulations.
23. INTERPRETATION.
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Bank or
the Holding Company shall be final, subject to the authority of the OTS.
24. AMENDMENT OR TERMINATION OF THE PLAN.
If necessary or desirable, the terms of the Plan may be substantially
amended by a majority vote of the Bank's Board of Directors as a result of
comments from regulatory authorities or otherwise at any time prior to the
approval of the Plan by the OTS and at any time thereafter with the concurrence
of the OTS. The Plan may be terminated by a majority vote of the Board of
Directors at any time prior to the earlier of approval of the Plan by the OTS
and may be terminated by a majority vote of the Board of Directors at any time
thereafter with the concurrence of the OTS.
Dated: July 19, 2005.
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