EXHIBIT 2.1 PLAN OF CONVERSION (INCLUDING THE FEDERAL STOCK CHARTER AND
BYLAWS OF FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN)
PLAN OF CONVERSION
FOR
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
WARREN, OHIO
AS ADOPTED ON
JUNE 15, 1998
PLAN OF CONVERSION
1. INTRODUCTION
This Plan of Conversion ("Plan") provides for the conversion of First
Federal Savings and Loan Association of Warren ("ASSOCIATION") from a federally-
chartered mutual savings association to a federally-chartered capital stock
savings association. The Board of Directors of the ASSOCIATION currently
contemplates that all of the stock of the ASSOCIATION shall be held by a
Delaware corporation (the "Holding Company"). The Board of Directors has
carefully considered the alternatives available to the ASSOCIATION with respect
to its corporate structure and has determined that a mutual to stock conversion
as described in this Plan is in the best interests of the ASSOCIATION, its
depositors and the community served by the ASSOCIATION. The Board of Directors
believes that the decline in mutuality is placing mutual savings associations,
such as the ASSOCIATION, at a disadvantage to the increasing base of stock
thrift and commercial bank institutions. The restructuring of the ASSOCIATION
into the capital stock form of organization will enable the ASSOCIATION to
compete more effectively with commercial banks and other financial institutions
for new business opportunities, and as a stock institution, to increase its
equity capital base and access the capital markets when needed and to enhance
the ASSOCIATION'S ability to expand its franchise and the products it offers.
The use of the Holding Company would also provide greater organizational and
operating flexibility. Shares of capital stock of the ASSOCIATION will be sold
to the Holding Company and the Holding Company will offer the Conversion Stock
upon the terms and conditions set
forth herein to the Eligible Account Holders, the Employee Plans established by
the ASSOCIATION or Holding Company, Supplemental Eligible Account Holders and
Other Members in the respective priorities set forth in this Plan. Any shares of
Conversion Stock not subscribed for by the foregoing classes of persons will be
offered for sale to certain members of the public either directly by the
ASSOCIATION and the Holding Company through a Community Offering or a Syndicated
Community Offering or through a combination thereof. In addition to the
foregoing, the ASSOCIATION and the Holding Company, as part of this Plan, intend
to implement stock option plans and other stock benefit plans and will provide
employment or severance agreements to certain management employees and certain
other compensation to the directors, officers and employees of the ASSOCIATION
as described in the prospectus for the Conversion Stock.
In furtherance of the ASSOCIATION's long term commitment to its community,
the Plan provides for the establishment of a charitable foundation as part of
the Conversion. The charitable foundation is intended to complement the
ASSOCIATION's existing community reinvestment activities in a manner that will
allow the communities in which the ASSOCIATION operates to share in the
potential growth and profitability of the Holding Company. Consistent with the
ASSOCIATION's goals, the Holding Company intends to donate to the charitable
foundation from its authorized but unissued common stock up to 8% of the number
of shares sold in the Conversion. It is intended that the ASSOCIATION's Board
of Directors will serve as the Board of Directors of the charitable foundation.
The establishment of the charitable foundation is subject to the approval of the
Voting Members of the ASSOCIATION. In the
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event the charitable foundation is not approved, the ASSOCIATION may determine
to complete the Conversion without the charitable foundation.
This Plan, which has been unanimously approved by the Board of Directors of
the ASSOCIATION, must also be approved by the affirmative vote of a majority of
the total number of outstanding votes entitled to be cast by Voting Members of
the ASSOCIATION at a special meeting to be called for that purpose. Prior to
the submission of this Plan to the Voting Members for consideration, the Plan
must be approved by the Office of Thrift Supervision.
2. DEFINITIONS
For the purposes of this Plan, the following terms have the following
meanings:
Account Holder - The term Account Holder means any Person holding a Savings
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Account in the ASSOCIATION.
Acting in Concert - The term "Acting in Concert" means (i) knowing
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participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement; (ii) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise; or
(iii) a person or company which acts in concert with another person or company
shall also be deemed to be acting in concert with any person or company who is
also acting in concert with that other party, except that any tax-qualified
employee stock benefit plan will not be deemed to be acting in concert with its
trustee or a person who serves in a similar capacity solely for the purpose of
determining whether stock held by the trustee and stock held by the plan will be
aggregated.
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Actual Purchase Price - The term Actual Purchase Price means the per share
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price at which the Conversion Stock is ultimately sold in accordance with the
terms hereof.
Associate - The term Associate when used to indicate a relationship with
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any person, means (i) any corporation or organization (other than the
ASSOCIATION or a majority-owned subsidiary of the ASSOCIATION) of which such
person is an officer or partner or is, directly or indirectly, the beneficial
owner of 10 percent or more of any class of equity securities, (ii) any trust or
other estate in which such person has a substantial beneficial interest or as to
which such person serves as trustee or in a similar fiduciary capacity except
that, the term "Associate" does not include any Non-Tax-Qualified Employee Stock
Benefit Plan or any Tax-Qualified Employee Stock Benefit Plan in which a person
has a substantial beneficial interest or serves as a trustee or in a similar
fiduciary capacity, and except that, for purposes of aggregating total shares
that may be held by Officers and Directors the term "Associate" does not include
any Tax-Qualified Employee Stock Benefit Plan, and (iii) any relative or spouse
of such person, or any relative of such spouse, who has the same home as such
person or who is a Director or Officer of the ASSOCIATION or the Holding
Company, if utilized, or any of its parents or subsidiaries.
Association - The term ASSOCIATION means First Federal Savings and Loan
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Association of Warren.
Community Offering - The term Community Offering means the offering for
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sale to certain members of the general public directly by the Holding Company of
any shares of Conversion Stock not subscribed for in the Subscription Offering.
The Community Offering may run concurrently with the Subscription Offering.
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Conversion Stock - The term Conversion Stock means the $.01 par value
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common stock offered and issued by the Holding Company.
Director - The term Director means a member of the Board of Directors of
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the ASSOCIATION and, where applicable, a member of the Board of Directors of the
Holding Company.
Eligible Account Holder - The term Eligible Account Holder means any person
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holding a Qualifying Deposit on the Eligibility Record Date.
Eligibility Record Date - The term Eligibility Record Date means the date
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for determining Eligible Account Holders in the ASSOCIATION and is March 31,
1997.
Employees - The term Employees means all Persons who are employed by the
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ASSOCIATION but does not include an Officer or Director.
Employee Plans - The term Employee Plans means the Tax Qualified Employee
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Stock Benefit Plans of the ASSOCIATION.
Estimated Price Range - The term Estimated Price Range means the range of
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the estimated pro forma market value of the Conversion Stock as determined by
the Independent Appraiser prior to the Subscription Offering and as it may be
amended from time to time thereafter.
FDIC - The term FDIC means the Federal Deposit Insurance Corporation.
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Holding Company - The term Holding Company means the Delaware corporation
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formed for the purpose of acquiring all of the shares of capital stock of the
ASSOCIATION to be issued upon its conversion to stock form. Shares of common
stock of the Holding Company will be issued in the conversion to Participants
and others in a Subscription, Community or Syndicated Community offering, or
through a combination thereof.
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Independent Appraiser - The term Independent Appraiser means an independent
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appraiser retained by the ASSOCIATION to prepare an appraisal of the pro forma
market value of the Conversion Stock.
Local Community - The term Local Community means the Counties of Trumbull
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and Mahoning.
Member - The term Member means any Person or entity who qualifies as a
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member of the ASSOCIATION pursuant to its charter and bylaws.
OTS - The term OTS means Office of Thrift Supervision of the Department of
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the Treasury.
Officer - The term Officer means an executive officer of the ASSOCIATION
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which includes the Chief Executive Officer, President, Executive Vice President,
Senior Vice Presidents, Vice Presidents in charge of principal business
functions, Secretary, Treasurer and Controller and any Person performing
functions similar to those performed by the foregoing persons.
Order Form - The term Order Form means the form sent by the ASSOCIATION to
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any Participant or Person containing a description of the alternatives available
to such Person under the Plan and by which any such Person may make elections
regarding subscriptions for Conversion Stock in the Subscription and Community
Offerings.
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Other Member - The term Other Member means any person who is a Member of
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the ASSOCIATION (other than an Eligible Account Holder or Supplemental Eligible
Account Holder) at the close of business on the Voting Record Date.
Participants - The term Participants means the Eligible Account Holders,
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Employee Plans, Supplemental Eligible Account Holders and Other Members.
Person - The term Person means an individual, a corporation, a partnership,
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an association, a joint-stock company, a trust (including Individual Retirement
Accounts and KEOGH Accounts), any unincorporated organization, a government or
political subdivision thereof or any other entity.
Plan - The term Plan means this Plan of Conversion of the ASSOCIATION as it
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exists on the date hereof and as it may hereafter be amended in accordance with
its terms.
Preferred Subscribers - The term Preferred Subscribers means those members
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of the general public who are natural persons residing in the ASSOCIATION'S
Local Community.
Qualifying Deposit - The term Qualifying Deposit means the balance of each
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Savings Account of $50 or more in the ASSOCIATION at the close of business on
the Eligibility Record Date or the Supplemental Eligibility Record Date,
whichever may be the case. Savings Accounts with total deposit balances of less
than $50 shall not constitute a Qualifying Deposit.
SEC - The term SEC refers to the United States Securities and Exchange
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Commission.
Savings Account - The term Savings Account includes savings accounts as
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that term is defined in Section 561.42 of the Rules and Regulations of the OTS,
withdrawable accounts, including certificates of deposit, and demand accounts
which are defined in Section 561.16 of the Rules and Regulations of the OTS.
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Special Meeting of Members - The term Special Meeting of Members means the
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special meeting and any adjournments thereof held to consider and vote upon this
Plan.
Subscription Offering - The term Subscription Offering means the offering
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of Conversion Stock for subscription through Order Forms to Participants.
Subscription Price - The term Subscription Price means the amount per share
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of Conversion Stock to be paid initially by Participants in the Subscription
Offering and persons in the Community Offering.
Supplemental Eligibility Record Date - The Supplemental Eligibility Record
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Date shall be the last day of the calendar quarter preceding the OTS' approval
of the application for conversion.
Supplemental Eligible Account Holder - The term Supplemental Eligible
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Account Holder means any person (other than an Eligible Account Holder) holding
a Qualifying Deposit, except officers, directors and their associates, as of the
Supplemental Eligibility Record Date.
Syndicated Community Offering - The term Syndicated Community Offering
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means the offering of Conversion Stock following the Subscription and Community
Offerings through a syndicate of broker-dealers.
Tax-Qualified Employee Stock Benefit Plan - The term Tax-Qualified Employee
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Stock Benefit Plan means any defined benefit plan or defined contribution plan,
such as an employee stock ownership plan, stock bo nus plan, profit-sharing plan
or other plan, which, with its related trust, meets the requirements to be
"qualified" under Section 401 of the Internal Revenue Code. A "Non-Tax-
Qualified Employee Stock Benefit Plan" is any defined benefit plan or defined
contribution plan which is not so qualified.
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Voting Members - The term Voting Members means those persons qualifying as
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voting members of the ASSOCIATION pursuant to its charter and bylaws.
Voting Record Date - The term Voting Record Date means the date fixed by
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the Directors in accordance with OTS regulations for determining eligibility to
vote at the Special Meeting of Members.
3. PROCEDURE FOR CONVERSION
After approval of the Plan by the Board of Directors of the ASSOCIATION,
the Plan shall be submitted together with all other requisite material to the
OTS for its approval. Notice of the adoption of the Plan by the Board of
Directors of the ASSOCIATION and the submission of the Plan to the OTS for its
approval will be published in a newspaper having general circulation in each
community in which an office of the ASSOCIATION is located and copies of the
Plan will be made available at each office of the ASSOCIATION for inspection by
the Members. The ASSOCIATION also will cause to be published a notice of the
filing with the OTS of an application to convert in accordance with the
provisions of the Plan. Following approval by the OTS, the Plan will be
submitted to a vote of the Voting Members at the Special Meeting of Members
called for that purpose. Upon approval of the Plan by a majority of the total
outstanding votes of the Voting Members, the ASSOCIATION will take all other
necessary steps pursuant to applicable laws and regulations to convert the
ASSOCIATION to stock form. The conversion must be completed within 24 months of
the approval of the Plan by the Voting Members, unless a longer time period is
permitted by governing laws and regulations.
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The Board of Directors of the ASSOCIATION intends to take all necessary
steps to establish the charitable foundation and to fund such charitable
foundation in the manner set forth in Section 7A hereof, subject to the approval
of the Voting Members.
The Conversion Stock will not be insured by the FDIC. The ASSOCIATION will
not knowingly lend funds or otherwise extend credit to any Person to purchase
shares of the Conversion Stock.
4. HOLDING COMPANY APPLICATIONS AND APPROVALS
The Holding Company shall make timely applications for any requisite
regulatory approvals, including an Application on Form H-(e)1 or an H-(e)1-S, if
available to the Holding Company, to be filed with the OTS and a Registration
Statement on Form S-1 to be filed with the SEC. The ASSOCIATION shall be a
wholly-owned subsidiary of the Holding Company.
5. SALE OF CONVERSION STOCK
The Conversion Stock will be offered simultaneously in the Subscription
Offering to the Eligible Account Holders, Employee Plans, Supplemental Eligible
Account Holders and Other Members in the respective priorities set forth in
Sections 8 through 11 of this Plan. The Subscription Offering may be commenced
as early as the mailing of the Proxy Statement for the Special Meeting of
Members and must be commenced in time to complete the Conversion within the time
period specified in Section 3.
Any shares of Conversion Stock not subscribed for in the Subscription
Offering will be offered for sale in the Community Offering as provided in
Section 12 of this Plan. The Subscription Offering may be commenced prior to
the Special Meeting of Members and, in that event, the Community Offering may
also be commenced prior to the Special Meeting of Members. The offer and sale
of Conversion Stock prior to the Special Meeting of Members shall, however, be
conditioned upon approval of the Plan by the Voting Members.
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If feasible, any shares of Conversion Stock remaining after the
Subscription and Community Offerings may be sold in a Syndicated Community
Offering, as provided in Section 13 of this Plan in a manner that will achieve
the widest distribution of the Conversion Stock as determined by the
ASSOCIATION. The sale of all Conversion Stock subscribed for in the
Subscription and Community Offerings will be consummated simultaneously on the
date the sale of Conversion Stock in the Syndicated Community Offering is
consummated and only if all unsubscribed for Conversion Stock is sold.
6. NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK
The total number of shares (or a range thereof) of Conversion Stock to be
issued and offered for sale will be determined jointly by the Board of Directors
of the ASSOCIATION and the Board of Directors of the Holding Company immediately
prior to the commencement of the Subscription and Community Offerings, subject
to adjustment thereafter if necessitated by market or financial conditions, with
the approval of the OTS, if necessary. In particular, the total number of
shares may be increased by up to 15% of the number of shares offered in the
Subscription and Community Offering if the Estimated Price Range is increased
subsequent to the commencement of the Subscription and Community Offering due to
regulatory considerations or to reflect changes in market conditions or general
or economic conditions.
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All shares sold in the Conversion will be sold at a uniform price per share
referred to in this Plan as the Actual Purchase Price. The aggregate purchase
price for all shares of Conversion Stock will not be inconsistent with the
estimated consolidated pro forma market value of the ASSOCIATION and the Holding
Company. The estimated consolidated pro forma market value of the ASSOCIATION
and the Holding Company will be determined for such purpose by the Independent
Appraiser. Prior to the commencement of the Subscription and Community
Offerings, an Estimated Price Range will be established, which range will vary
within 15% above to 15% below the midpoint of such range. The number of shares
of Conversion Stock to be issued and the purchase price per share may be
increased or decreased by the ASSOCIATION and the Holding Company. In the event
that the aggregate purchase price of the Conversion Stock is below the minimum
of the Estimated Price Range, or materially above the maximum of the Estimated
Price Range, resolicitation of purchasers may be required provided that up to a
15% increase above the maximum of the Estimated Price Range will not be deemed
material so as to require a resolicitation. Up to a 15% increase in the number
of shares to be issued which is supported by an appropriate change in the
estimated pro forma market value of the ASSOCIATION and the Holding Company will
not be deemed to be material so as to require a resolicitation of subscriptions.
In the event that the aggregate purchase price of the Conversion Stock is below
the minimum of the Estimated Price Range or in excess of 15% above the maximum
of the Estimated Price Range, and a resolicitation is required, such
resolicitation shall be effected in such manner and within such time as the
ASSOCIATION shall establish, with the approval of the OTS, if required.
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Based upon the independent valuation as updated prior to the commencement
of the Subscription and Community Offerings, the Board of Directors of the
Holding Company and the Board of Directors of the ASSOCIATION will fix the
Subscription Price and the range of the number of shares to be offered. If upon
completion of the Subscription and Community Offerings all of the Conversion
Stock is subscribed for, or if because of a limited number of unsubscribed
shares or otherwise a Syndicated Community Offering cannot be effected, the
total number of shares of Conversion Stock to be issued and sold will be jointly
determined by the ASSOCIATION and Holding Company as follows: (a) the estimated
aggregate pro forma market value of the ASSOCIATION and the Holding Company
immediately after conversion as determined by the Independent Appraiser,
expressed in terms of a specific aggregate dollar amount rather than as a range,
upon completion of the Subscription and Community Offerings or other sale of all
of the Conversion Stock, shall be divided by (b) the Actual Purchase Price.
If there is a Syndicated Community Offering of shares of Conversion Stock
not subscribed for in the Subscription and Community Offerings, the price per
share at which the Conversion Stock is sold in such Syndicated Community
Offering shall be the Subscription Price.
Notwithstanding the foregoing, no sale of Conversion Stock may be
consummated unless, prior to such consummation, the Independent Appraiser
confirms to the ASSOCIATION and Holding Company and to the OTS that, to the best
knowledge of the Independent Appraiser, nothing of a material nature has
occurred which, taking into account all relevant factors, would cause the
Independent Appraiser to conclude that the aggregate value of the Conversion
Stock at the Actual Purchase Price is incompatible with its estimate of the
aggregate consolidated pro forma market value of the Holding Company and the
ASSOCIATION. If such confirmation is not received, the ASSOCIATION may cancel
the Subscription and Community Offerings and/or the Syndicated Community
Offering, extend the Conversion, establish a new Subscription Price Range and/or
Estimated Price Range, extend, reopen or hold new Subscription and Community
Offerings and/or Syndicated Community Offering or take such other action as the
OTS may permit.
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The Conversion Stock to be issued in the Conversion shall be fully paid and
nonassessable.
7. PURCHASE BY THE HOLDING COMPANY OF THE STOCK OF THE ASSOCIATION
Upon the consummation of the sale of all of the Conversion Stock, the
Holding Company will purchase from the ASSOCIATION all of the capital stock of
the ASSOCIATION to be issued by the ASSOCIATION in the Conversion.
The Holding Company will apply to the OTS to retain up to 50% of the
proceeds of the Conversion. The ASSOCIATION believes that the Conversion
proceeds will provide economic strength to the Holding Company and the
ASSOCIATION for the future in a highly competitive and regulated environment and
would facilitate expansion through acquisitions, diversification into other
related businesses and for other business and investment purposes, including the
payment of dividends and future repurchases of Conversion Stock as permitted by
the OTS.
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7A. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION
As part of the Conversion, the Holding Company and the ASSOCIATION intend
to establish a charitable foundation that will qualify as an exempt organization
under Section 501(c)(3) of the Internal Revenue Code ( the "Foundation") and to
donate to the Foundation up to 8% of the number of shares of Common Stock sold
in the Conversion. The Foundation is being formed in connection with the
Conversion in order to complement the ASSOCIATION's existing community
reinvestment activities and to share with the communities in which the
ASSOCIATION operates a part of the ASSOCIATION's financial success as a locally
headquartered, community minded, financial services institution. The funding of
the Foundation with Common Stock of the Holding Company accomplishes this goal
as it enables such communities to share in the potential growth and
profitability of the Holding Company and the ASSOCIATION over the long-term.
The Foundation will be dedicated to the promotion of charitable purposes
within the communities in which the ASSOCIATION operates, and may include but
not be limited to, grants or donations to support housing assistance,
scholarships, local education, not-for-profit medical facilities, not-for-profit
community groups and other types of organizations or civic minded projects.
The Foundation will annually distribute total grants to assist charitable
organizations or to fund projects within its local community of not less than 5%
of the average fair value of Foundation assets each year. In order to serve
the purposes for which it was formed and maintain its 501(c)(3) qualification,
the Foundation may sell, on an annual basis, a limited portion of the Common
Stock contributed to it by the Holding Company.
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The board of directors of the Foundation will be responsible for
establishing the polices 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
is subject to the approval of the Voting Members by an affirmative vote of a
majority of the votes eligible to be cast by Voting Members in person or by
proxy at the Special Meeting. In the event that the ASSOCIATION's Members
approve this Plan, but not the charitable foundation, the ASSOCIATION may
determine to complete the Conversion without the establishment of the Foundation
and may do so without amending this Plan or obtaining any further vote of the
ASSOCIATION's Members. Failure of the Voting Members to approve the Foundation
may materially affect the pro forma market value of the ASSOCIATION and the
Holding Company. In such an event, the ASSOCIATION and Holding Company may
establish a new Estimated Price Range and commence a resolicitation of
subscribers. For comparison purposes, Voting Members will be provided with a
projection of the pro forma market value of the Conversion Stock, an Estimated
Price Range and certain selected pro forma financial data that would result if
the Conversion were consummated without establishment of the charitable
foundation.
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS
(FIRST PRIORITY)
A. Each Eligible Account Holder shall receive, as first priority and
without payment, nontransferable subscription rights to subscribe for shares of
Conversion Stock equal to an amount up to the greater of: the amount permitted
to be subscribed for in the Community Offering which amount, pursuant to Section
12, currently is $250,000 of the Conversion Stock offered, but which may be
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increased to 5% of the Conversion Stock offered or decreased to less than
$250,000 without the further approval of members or resolicitation of
subscribers; one-tenth of one percent (.10%) of the total offering of shares of
Conversion Stock; or fifteen times the product (rounded down to the next whole
number) obtained by multiplying the total number of shares of Conversion Stock
to be issued by a fraction of which the numerator is the amount of 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 Record Date, subject to the maximum purchase limitation
specified in Section 14A and the minimum purchase limitation specified in
Section 14C and exclusive of an increase in the total number of shares issued
due to an increase in the Estimated Price Range of up to 15%.
B. In the event that Eligible Account Holders exercise subscription
rights for a number of shares of Conversion Stock in excess of the total number
of shares eligible for subscription, the shares of Conversion Stock shall be
allocated among the subscribing Eligible Account Holders so as to permit each
subscribing Eligible Account Holder, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation of Conversion
Stock equal to the lesser of 100 shares or the number of shares subscribed for
by the Eligible Account Holders. Any shares remaining after that allocation will
be allocated among the subscribing Eligible Account Holders whose subscriptions
remain unsatisfied in the proportion that the amount of the Qualifying Deposit
of each Eligible Account Holder whose subscription remains unsatisfied bears to
the total amount of the Qualifying Deposits of all Eligible Account Holders
whose subscriptions remain unsatisfied. If the amount so allocated exceeds the
amount subscribed for by any one or more Eligible Account Holders, the excess
shall be reallocated (one or more times as necessary) among those Eligible
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Account Holders whose subscriptions are still not fully satisfied on the same
principle until all available shares have been allocated or all subscriptions
satisfied.
C. Subscription rights as Eligible Account Holders received by Directors
and Officers and their Associates which are based on deposits made by such
persons during the twelve (12) months preceding the Eligibility Record Date
shall be subordinated to the Subscription Rights of all other Eligible Account
Holders.
9. SUBSCRIPTION RIGHTS OF THE EMPLOYEE PLANS (SECOND PRIORITY)
The Employee Plans shall receive, without payment, as a second priority
after the filling of subscriptions of Eligible Account Holders, nontransferable
subscription rights to purchase in the Subscription Offering the number of
shares of Conversion Stock requested by such Employee Plans. If, after the
filling of subscriptions of Eligible Account Holders, a sufficient number of
shares are not available to fill the subscriptions by such Employee Plans, the
subscription by such Employee Plans shall be filled to the maximum extent
possible; provided, however, that in the event of an increase in the total
number of shares issued due to an increase in the Estimated Price Range of up to
15%, the additional shares may be sold to the Employee Plans subject to the
provisions of Section 14.
The Employee Plans shall not be deemed to be an associate or affiliate of
or Person Acting in Concert with any Director or Officer of the Holding Company
or the ASSOCIATION.
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10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD
PRIORITY)
A. Each Supplemental Eligible Account Holder shall receive, as third
priority and without payment, nontransferable subscription rights to subscribe
for shares of Conversion Stock equal to an amount up to the greater of: the
amount permitted to be subscribed for in the Community Offering which amount,
pursuant to Section 12, currently is $250,000 of the Conversion Stock offered,
but which may be increased to 5% of the Conversion Stock offered or decreased to
less than $250,000 without the further approval of members or resolicitation of
subscribers; one-tenth of one percent (.10%) of the total offering of Conversion
Stock; or fifteen times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Conversion Stock to be
issued by a fraction of which the numerator is the amount of the Qualifying
Deposit of the Supplemental Eligible Account Holder and the denominator is the
total amount of the Qualifying Deposits of all Supplemental Eligible Account
Holders in the ASSOCIATION on the Supplemental Eligibility Record Date, subject
to the maximum purchase limitation specified in Section 14A and the minimum
purchase limitation specified in Section 14C and exclusive of an increase in the
total number of shares issued due to an increase in the Estimated Price Range of
up to 15%.
B. In the event that Supplemental Eligible Account Holders exercise
subscription rights for a number of shares of Conversion Stock in excess of the
total number of shares eligible for subscription, the remaining shares of
Conversion Stock shall be allocated among the subscribing Supplemental Eligible
Account Holders so as to permit each subscribing Supplemental Eligible Account
Holder, to the extent possible, to purchase a number of shares sufficient to
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make his or her total allocation of Conversion Stock equal to the lesser of 100
shares or the number of shares subscribed for by the Supplemental Eligible
Account Holder. Any shares remaining after that allocation will be allocated
among the subscribing Supplemental Eligible Account Holders whose subscriptions
remain unsatisfied in the proportion that the amount of the Qualifying Deposit
of each Supplemental Eligible Account Holder whose subscription remains
unsatisfied bears to the total amount of the Qualifying Deposits of all
Supplemental Eligible Account Holders whose subscriptions remain unsatisfied. If
the amount so allocated exceeds the amount subscribed for by any one or more
remaining Supplemental Eligible Account Holders, the excess shall be reallocated
(one or more times as necessary) among those remaining Supplemental Eligible
Account Holders whose subscriptions are still not fully satisfied on the same
principle until all available shares have been allocated or all subscriptions
satisfied.
C. Subscription rights received by an Eligible Account Holder pursuant to
Section 8 shall be applied in partial satisfaction of the subscription rights to
be received as a Supplemental Eligible Account Holder pursuant to this Section
10.
11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)
A. Each Other Member shall receive, without payment, as a fourth priority
after the filling of subscriptions of the Eligible Account Holders, the Employee
Plans, and the Supplemental Eligible Account Holders, nontransferable
subscription rights to subscribe for shares of Conversion Stock equal to an
amount up to the greater of: the amount permitted to be subscribed for in the
Community Offering which amount, pursuant to Section 12, currently is $250,000
of the Conversion Stock offered, but which may be increased to 5% of the
20
Conversion Stock offered or decreased to less than $250,000 without the further
approval of members or resolicitation of subscribers; or one-tenth of one
percent (.10%) of the total offering of shares of Conversion Stock, subject to
the maximum purchase limitation specified in Section 14A and the minimum
purchase limitation specified in Section 14C and exclusive of an increase in the
total number of shares issued due to an increase in the Estimated Price Range of
up to 15%.
B. In the event that Other Members exercise subscription rights for a
number of shares of Conversion Stock in excess of the total number of shares
eligible for subscription, the remaining shares of Conversion Stock shall be
allocated among the subscribing Other Members so as to permit each subscribing
Other Member, to the extent possible, to purchase a number of shares sufficient
to make his or her total allocation of Conversion Stock equal to the lesser of
100 shares or the number of shares subscribed for by the Other Member. Any
shares remaining after that allocation will be allocated among the subscribing
Other Members whose subscriptions remain unsatisfied pro rata in the same
proportion that the number of votes of a subscribing Other Member on the Voting
Record Date bears to the total votes on the Voting Record Date of all
subscribing Other Members. If the amount so allocated exceeds the amount
subscribed for by any one or more remaining Other Members, the excess shall be
reallocated (one or more times as necessary) among those remaining Other Members
whose subscriptions are still not fully satisfied on the same principle until
all available shares have been allocated or all subscriptions satisfied.
21
12. COMMUNITY OFFERING (FIFTH PRIORITY)
If less than the total number of shares of Conversion Stock to be
subscribed for in the Conversion are sold in the Subscription Offering, it is
expected that shares remaining unsubscribed for will be made available for
purchase in the Community Offering to certain members of the general public,
with preference given to Preferred Subscribers, who may subscribe together with
any Associate or group of persons Acting in Concert for up to $250,000 of the
shares of Conversion Stock offered subject to the Maximum Overall Purchase
Limitation as specified in Section 14A and the minimum purchase limitation
specified in Section 14C and exclusive of an increase in the total number of
shares issued due to an increase in the Estimated Price Range of up to 15%;
provided, however, that the amount permitted to be purchased in the Community
Offering may be increased to 5% of the Conversion Stock offered or decreased to
less than $250,000 without the further approval of members or resolicitation of
subscribers. The shares may be made available in the Community Offering through
a direct community marketing program which may provide for utilization of a
broker, dealer, consultant or investment banking firm, experienced and expert in
the sale of savings institution securities. Such entities may be compensated on
a fixed fee basis or on a commission basis, or a combination thereof. The
ASSOCIATION shall make distribution of the Conversion Stock to be sold in the
Community Offering in such a manner as to promote the widest distribution of
Conversion Stock. The ASSOCIATION reserves the right to reject any or all
orders, in whole or in part, which are received in the Community Offering.
If the Preferred Subscribers in the Community Offering, whose orders would
otherwise be accepted, subscribe for more shares than are available for
purchase, the shares available to them will be allocated among the Preferred
22
Subscribers in the manner which permits each such person to the extent possible,
to purchase the number of shares necessary to make his total allocation of
Conversion Stock equal to the lesser of 100 shares or the number of shares
subscribed for by such person with preference given to Preferred Subscribers.
Thereafter, unallocated shares will be allocated among the Preferred Subscribers
whose subscriptions remain unsatisfied on a 100 shares per order basis until all
such orders have been filled or the remaining shares have been a llocated. To
the extent that there are shares remaining after all subscriptions by Preferred
Subscribers, any remaining shares will be allocated among members of the general
public using the foregoing allocation as applied to Preferred Subscribers. The
ASSOCIATION may establish all other terms and conditions of such offer. It is
expected that the Community Offering will commence concurrently with the
Subscription Offering. The Community Offering must be completed within 45 days
after the completion of the Subscription Offering unless otherwise extended by
the OTS.
13. SYNDICATED COMMUNITY OFFERING
If feasible, all shares of Conversion Stock not subscribed for in the
Subscription and Community Offerings may be sold in a Syndicated Community
Offering, subject to such terms, conditions and procedures as may be determined
by the ASSOCIATION, in a manner that will achieve the widest distribution of the
Conversion Stock subject to the right of the ASSOCIATION to accept or reject in
whole or in part all subscriptions in the Syndicated Community Offering. In the
Syndicated Community Offering, any person together with any Associate or group
of persons Acting in Concert may purchase up to $250,000 of the total number of
23
shares of Conversion Stock offered subject to the maximum purchase limitation
specified in Section 14A and the minimum purchase limitation specified in
Section 14C and exclusive of an increase in the total number of shares issued
due to an increase in the Estimated Price Range of up to 15%; provided, however,
that this amount may be increased to 5% of the Conversion Stock offered or
decreased to less than $250,000 without the further approval of members or
resolicitation of subscribers. The shares purchased by any Person together with
any Associate or group of persons Acting in Concert pursuant to Section 12 shall
be counted toward meeting the maximum percentage of shares permitted to be
purchased pursuant to this Section. Provided that the Subscription Offering has
commenced, the ASSOCIATION may commence the Syndicated Community Offering at any
time after the mailing to the Members of the Proxy Statement to be used in
connection with the Special Meeting of Members, provided that the completion of
the offer and sale of the Conversion Stock shall be conditioned upon the
approval of this Plan by the Voting Members. If the Syndicated Community
Offering is not sooner commenced pursuant to the provisions of the preceding
sentence, the Syndicated Community Offering will be commenced as soon as
practicable following the date upon which the Subscription and Community
Offerings terminate.
Alternatively, if a Syndicated Community Offering is not held, the
ASSOCIATION shall have the right to sell any shares of Conversion Stock
remaining following the Subscription and Community Offerings in an underwritten
firm commitment public offering. The provisions of Section 14 hereof shall not
be applicable to sales to underwriters for purposes of such an offering but
shall be applicable to the 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 ASSOCIATION, which will in no event exceed an amount deemed
to be acceptable by the OTS.
24
If for any reason a Syndicated Community Offering or an underwritten firm
commitment public offering of shares of Conversion Stock not sold in the
Subscription and Community Offerings cannot be effected, or in the event that
any insignificant residue of shares of Conversion Stock is not sold in the
Subscription and Community Offerings or in the Syndicated Community Offering or
an underwritten firm commitment public offering, other purchase arrangements
will be made for the sale of unsubscribed shares by the ASSOCIATION, if
possible. Such other purchase arrangements will be subject to the approval of
the OTS.
14. LIMITATION ON PURCHASES
In addition to the maximum amount of Conversion Stock that may be
subscribed for as set forth in Sections 8, 10, 11, 12 and 13, the following
limitations shall apply to all purchases of shares of Conversion Stock:
A. The maximum number of shares of Conversion Stock which may be subscribed
for or purchased in all categories in the Conversion by any Person or
Participant together with any Associate or group or persons Acting in Concert
shall not exceed 1.0% of the Conversion Stock offered (the "Maximum Overall
Purchase Limitation"), except for the Employee Stock Ownership Plan which may
subscribe for up to 8% of the Conversion Stock issued and except for certain
Eligible Account Holders and Supplemental Eligible Account Holders which may
subscribe for or purchase shares in accordance with Sections 8 and 10 herein,
respectively; provided, however, in the event that the Maximum Overall Purchase
Limitation is increased to more than 2.0% of the shares of Conversion Stock
25
offered, orders for Conversion Stock in the Community Offering and in the
Syndicated Community Offering (or, alternatively an underwritten firm commitment
public offering), if any, shall, as determined by the ASSOCIATION, first be
filled to a maximum of 2.0% of the total number o f shares of Conversion Stock
offered and thereafter remaining shares shall be allocated on an equal number of
shares basis per order until all orders have been filled.
B. The maximum number of shares of Conversion Stock which may be purchased
in all categories in the Conversion by Officers and Directors of the ASSOCIATION
and their Associates in the aggregate shall not exceed 25% of the total number
of shares of Conversion Stock issued.
C. A minimum of 25 shares of Conversion Stock must be purchased by each
Person purchasing shares in the Conversion to the extent those shares are
available; provided, however, that in the event the minimum number of shares of
Conversion Stock purchased times the price per share exceeds $500, then such
minimum purchase requirement shall be reduced to such number of shares of
Conversion Stock which when multiplied by the price per share shall not exceed
$500, as determined by the Board.
If the number of shares of Conversion Stock otherwise allocable pursuant to
Sections 8, 10, 11, 12 and 13, to any Person or that Person's Associates would
be in excess of the maximum number of shares permitted as set forth above, the
number of shares of Conversion Stock allocated to each such person shall be
reduced to the lowest limitation applicable to that Person, and then the number
of shares allocated to each group consisting of a Person and that Person's
26
Associates shall be reduced so that the aggregate allocation to that Person and
his or her Associates complies with the above maximums, and such maximum number
of shares shall be reallocated among that Person and his or her Associates as
they may agree, or in the absence of an agreement, in proportion to the shares
subscribed for by each (after first applying the maximums applicable to each
Person, separately).
Depending upon market or financial conditions, the Board of Directors of
the ASSOCIATION and the Holding Company, without further approval of the
Members, may decrease or increase the purchase limitations in this Plan,
provided that the maximum purchase limitations may not be increased to a
percentage in excess of 5% and that the Maximum Overall Purchase Limitation may
not be decreased to less than 1% of the Conversion Stock offered.
Notwithstanding the foregoing, the Maximum Overall Purchase Limitation may be
increased up to 9.99% provided that orders for Conversion Stock exceeding 5% of
the shares being offered shall not exceed, in the aggregate, 10% of the total
offering. If the ASSOCIATION and the Holding Company increases the maximum
purchase limitations, the ASSOCIATION and the Holding Company are only required
to resolicit Persons who subscribed for the maximum purchase amount and may, in
the sole discretion of the ASSOCIATION and the Holding Company resolicit certain
other large subscribers.
In the event shares of Conversion stock are sold in excess of the maximum
of the Estimated Price Range (the "Adjusted Maximum"), such shares will be
allocated in the following order of priority: (i) to fill the Employee Plans'
subscription to the Adjusted Maximum; (ii) in the event that there is an
oversubscription at the Eligible Account Holder level, to fill unfulfilled
subscriptions of Eligible Account Holders exclusive of the Adjusted Maximum in
27
accordance with Section 8; (iii) in the event there is an oversubscription at
the Supplemental Eligible Account Holder level, to fill unfulfilled
subscriptions of Supplemental Eligible Account Holders exclusive of the Adjusted
Maximum in accordance with Section 10; (iv) in the event that there is an
oversubscription at the Other Member level, to fill unfulfilled subscriptions of
Other Members exclusive of the Adjusted Maximum in accordance with Section 11;
and (v) to fill unfulfilled Subscriptions in the Community Offering exclusive of
the Adjusted Maximum in accordance with Section 12.
For purposes of this Section 14, the Directors and Officers of the
ASSOCIATION and the Holding Company shall not be deemed to be Associates or a
group affiliated with each other or otherwise Acting in Concert solely as a
result of their being Directors or Officers of the ASSOCIATION or the Holding
Company.
Each Person purchasing Conversion Stock in the Conversion shall be deemed
to confirm that such purchase does not conflict with the above purchase
limitations contained in this Plan.
For a period of three years following the Conversion, no Officer, Director
or their Associates shall purchase, without the prior written approval of the
OTS, any outstanding shares of common stock of the Holding Company except from a
broker-dealer registered with the SEC. This provision shall not apply to
negotiated transactions involving more than one percent of the outstanding
shares of common stock of the Holding Company, the exercise of any options
pursuant to a stock option plan or purchases of common stock of the Holding
Company made by or held by any Tax-Qualified Employee Stock Benefit Plan or Non-
Tax-Qualified Employee Stock Benefit Plan of the ASSOCIATION or the Holding
Company (including the Employee Plans) which may be attributable to any Officer
or Director. As used herein, the term "negotiated transaction" means a
28
transaction in which the securities are offered and the terms and arrangements
relating to any sale are arrived at through direct communications between the
seller or any person acting on its behalf and the purchaser or his investment
representative. The term "investment representative" shall mean a professional
investment advisor acting as agent for the purchaser, independent of the seller,
and not acting on behalf of the seller in connection with the transaction.
15. PAYMENT FOR CONVERSION STOCK
All payments for Conversion Stock subscribed for in the Subscription,
Community and Syndicated Community Offerings must be delivered in full to the
ASSOCIATION, 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 ASSOCIATION; provided, however, that
if the Employee Stock Ownership Plan subscribes for shares during the
Subscription Offering, such plan will not be required to pay for the shares at
the time it subscribes but rather may pay for such shares of Conversion Stock
subscribed for by such plan at the Actual Purchase Price upon consummation of
the Conversion, provided that there is in force from the time of its
subscription until the consummation of the Conversion, a loan commitment from
the Holding Company or an unrelated financial institution to lend to the
Employee Stock Ownership Plan, at such time, the aggregate Subscription Price of
the shares for which it subscribed. The ASSOCIATION may make scheduled
discretionary contributions to an Employee Stock Ownership Plan provided such
contributions do not cause the ASSOCIATION to fail to meet its regulatory
capital requirement.
29
Notwithstanding the foregoing, the ASSOCIATION and the Holding Company
shall have the right, in their sole discretion, to permit institutional
investors to submit contractually irrevocable orders in the Community Offering
and to thereafter submit payment for the Conversion Stock for which they are
subscribing in the Community Offering at any time prior to 48 hours before the
completion of the Conversion, unless such 48 hour period is waived by the
ASSOCIATION and the Holding Company, in their sole discretion.
Payment for Conversion Stock subscribed for shall be made either by check
or money order. Alternatively, subscribers in the Subscription and Community
Offerings may pay for the shares subscribed for by authorizing the ASSOCIATION
on the Order Form to make a withdrawal from the subscriber's Savings Account at
the ASSOCIATION in an amount equal to the purchase price of such shares. Such
authorized withdrawal, whether from a savings passbook or certificate account,
shall be without penalty as to premature withdrawal. If the authorized
withdrawal is from a certificate account, and the remaining balance does not
meet the applicable minimum balance requirement, the certificate shall be
canceled at the time of withdrawal, without penalty, and the remaining balance
will earn interest at the passbook rate. Funds for which a withdrawal is
authorized will remain in the subscriber's Savings Account but may not be used
by the subscriber until the Conversion Stock has been sold or the 45-day period
(or such longer period as may be approved by the OTS) following the Subscription
and Community Offering has expired, whichever occurs first. Thereafter, the
withdrawal will be given effect only to the extent necessary to satisfy the
subscription (to the extent it can be filled) at the purchase price per share.
30
Interest will continue to be earned on any amounts authorized for withdrawal
until such withdrawal is given effect. Interest will be paid by the ASSOCIATION
at not less than the passbook annual rate on payments for Conversion Stock
received by check or money order. Such interest will be paid from the date
payment is received by the ASSOCIATION until consummation or termination of the
Conversion. If for any reason the Conversion is not consummated, all payments
made by subscribers in the Subscription, Community and Syndicated Community
Offerings will be refunded to them with interest. In case of amounts authorized
for withdrawal from Savings Accounts, refunds will be made by canceling the
authorization for withdrawal. The ASSOCIATION is prohibited by regulation from
knowingly making any loans or granting any lines of credit for the purchase of
stock in the Conversion, and therefore, will not do so.
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the Prospectus prepared by the Holding Company
and ASSOCIATION has been declared effective by the OTS and the SEC, Order Forms
will be distributed to all Eligible Account Holders, the Employee Plans, the
Supplemental Eligible Account Holders and Other Members at their last known
addresses appearing on the records of the ASSOCIATION for the purpose of
subscribing to shares of Conversion Stock in the Subscription Offering and will
be made available for use by those Persons entitled to purchase in the Community
Offering. Notwithstanding the foregoing, the ASSOCIATION may elect to send
Order Forms only to those Persons who request them after such notice as is
approved by the OTS and is adequate to apprise all Eligible Account Holders, the
Employee Plans, Supplemental Eligible Account Holders and Other Members of the
31
pendency of the Subscription Offering has been given. Such notice may be
included with the proxy sta tement for the Special Meeting of Members and may
also be included in a notice of the pendency of the Conversion and the Special
Meeting of Members sent to all Eligible Account Holders and Supplemental
Eligible Account Holders in accordance with regulations of the OTS.
Each Order Form will be preceded or accompanied by the Prospectus
describing the Holding Company, the ASSOCIATION, the Conversion Stock and the
Subscription and Community Offerings. Each Order Form will contain, among other
things, the following:
A. A specified date by which all Order Forms must be received by the
ASSOCIATION, which date shall be not less than twenty (20), nor more than forty-
five (45) days, following the date on which the Order Forms are mailed by the
ASSOCIATION, and which date will constitute the termination of the Subscription
Offering;
B. The Subscription Price per share for shares of Conversion Stock to be
sold in the Subscription and Community Offerings;
C. A description of the minimum and maximum number of shares of Conversion
Stock which may be subscribed for pursuant to the exercise of subscription
rights or otherwise purchased in the Community Offering;
D. Instructions as to how the recipient of the Order Form is to indicate
thereon the number of shares of Conversion Stock for which such person elects to
subscribe and the available alternative methods of payment therefor;
32
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 to the effect that all subscription rights are
nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering within the subscription period such properly
completed and executed Order Form, together with check or money order in the
full amount of the purchase price as specified in the Order Form for the shares
of Conversion Stock for which the recipient elects to subscribe in the
Subscription Offering (or by authorizing on the Order Form that the ASSOCIATION
withdraw said amount from the subscriber's Savings Account at the ASSOCIATION)
to the ASSOCIATION;
G. A statement to the effect that the executed Order Form, once received by
the ASSOCIATION, may not be modified or amended by the subscriber without the
consent of the ASSOCIATION; and
H. A statement with respect to the residence of the subscriber.
Notwithstanding the above, the ASSOCIATION and the Holding Company will not
accept orders received on photocopied or facsimilied order forms.
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORMS: INSUFFICIENT PAYMENT
In the event Order Forms (a) are not delivered and are returned to the
ASSOCIATION by the United States Postal Service or the ASSOCIATION is unable to
locate the addressee, (b) are not received back by the ASSOCIATION or are
received by the ASSOCIATION after the expiration date specified thereon, (c) are
defectively filled out or executed, (d) are not accompanied by the full required
33
payment, except in the case of institutional investors in the Community
Offering, by delivering irrevocable orders together with a legally binding
commitment to pay in cash, check, money order or wire transfer the full amount
of the purchase price prior to 48 hours before the completion of the Conversion
for the shares of Conversion Stock subscribed for (including cases in which
savings accounts from which withdrawals are authorized are insufficient to cover
the amount of the required payment), or (e) are not mailed pursuant to a "no
mail" order placed in effect by the account holder, the subscription rights of
the person to whom such rights have been granted will lapse as though such
person failed to return the contemplated Order Form within the time period
specified thereon; provided, however, that the ASSOCIATION 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 ASSOCIATION may specify. The
interpretation of the ASSOCIATION of terms and conditions of the Plan and of the
Order Forms will be final, subject to the authority of the OTS.
18. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
A. All shares of Conversion Stock purchased by Directors or Officers of the
ASSOCIATION or the Holding Company in the Conversion shall be subject to the
restriction that, except as provided in Section 18B, below, or as may be
approved by the OTS, no interest in such shares may be sold or otherwise
disposed of for value for a period of one (l) year following the date of
purchase.
B. The restriction on disposition of shares of Conversion Stock set forth
in Section 18A above shall not apply to the following:
34
i) Any exchange of such shares in connection with a merger or acquisition
involving the ASSOCIATION or the Holding Company which has been approved by the
OTS; and
ii) Any disposition of such shares following the death of the person to
whom such shares were initially sold under the terms of the Plan.
C. With respect to all shares of Conversion Stock subject to restrictions
on resale or subsequent disposition, each of the following provisions shall
apply:
i) Each certificate representing shares restricted within the meaning of
Section 18A, above, shall bear a legend prominently stamped on its face giving
notice of the restriction;
ii) Instructions shall be issued to the stock transfer agent for the
Holding Company not to recognize or effect any transfer of any certificate or
record of ownership of any such shares in violation of the restriction on
transfer; and
iii) Any shares of capital stock of the Holding Company, issued with respect
to a stock dividend, stock split, or otherwise with respect to ownership of
outstanding shares of Conversion Stock subject to the restriction on transfer
hereunder shall be subject to the same restriction as is applicable to such
Conversion Stock.
19. VOTING RIGHTS OF STOCKHOLDERS
Upon conversion, the Holding Company, as the holder of the capital stock of
the ASSOCIATION shall have the exclusive voting rights with respect to the
ASSOCIATION as specified in its charter. The holders of the common stock of the
Holding Company shall have the exclusive voting rights with respect to the
Holding Company.
35
20. ESTABLISHMENT OF LIQUIDATION ACCOUNT
The ASSOCIATION shall establish at the time of conversion a liquidation
account in an amount equal to its net worth as of the latest practicable date
prior to conversion ("Liquidation Account"). The liquidation account will be
maintained by the ASSOCIATION for the benefit of the Eligible Account Holders
and Supplemental Eligible Account Holders who continue to maintain their Savings
Accounts at the ASSOCIATION. Each Eligible Account Holder and Supplemental
Eligible Account Holder shall, with respect to his Savings Account, hold a
related inchoate interest in a portion of the Liquidation Account balance, in
relation to his Savings Account balance at the Eligibility Record Date and/or
Supplemental Eligibility Record Date or to such balance as it may be
subsequently reduced, as hereinafter provided.
In the unlikely event of a complete liquidation of the ASSOCIATION (and
only in such event), following all liquidation payments to creditors (including
those to Account Holders to the extent of their Savings Accounts) each Eligible
Account Holder and Supplemental Eligible Account Holder shall be entitled to
receive a liquidating distribution from the Liquidation Account, in the amount
of the then adjusted subaccount balance for his Savings Account then held,
before any liquidation distribution may be made to any holders of the
ASSOCIATION's capital stock. No merger, consolidation, bulk purchase of assets
with assumption of Savings Accounts and other liabilities, or similar
transactions with an FDIC-issued institution, in which the ASSOCIATION is not
the surviving institution, shall be deemed to be a complete liquidation for this
purpose. In such transactions, the Liquidation Account shall be assumed by the
surviving institution.
36
The initial subaccount balance for a Savings Account held by an Eligible
Account Holder and Supplemental Eligible Account Holder shall be determined by
multiplying the opening balance in the Liquidation Account by a fraction, the
numerator of which is the amount of such Eligible Account Holder's and/or
Supplemental Eligible Account Holder's Qualifying Deposit and the denominator of
which is the total amount of all Qualifying Deposits of all Eligible Account
Holders and Supplemental Eligible Account Holders in the ASSOCIATION. Such
initial subaccount balance shall not be increased, but shall be subject to
downward adjustment as described below. For Savings Accounts in existence at
both dates, separate subaccounts shall be determined on the basis of the
Qualifying Deposits in such Savings Account on such record dates. Such initial
subaccount balances shall not be increased but shall be subject to downward
adjustment as described below.
If, at the close of business on any annual closing date, commencing on or
after the effective date of Conversion, the deposit balance in the Savings
Account of an Eligible Account Holder or Supplemental Eligible Account Holder is
less than the lesser of (i) the balance in the Savings Account at the close of
business on any other annual closing date subsequent to the Eligibility Record
Date or Supplemental Eligibility Record Date, or (ii) the amount of the
Qualifying Deposit in such Savings Account, the subaccount balance for such
Savings Acco unt shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of
such downward adjustment, the subaccount balance shall not be subsequently
increased, notwithstanding any subsequent increase in the deposit balance of the
related Savings Account. If any such Savings Account is closed, the related
subaccount shall be reduced to zero.
37
The creation and maintenance of the Liquidation Account shall not operate
to restrict the use or application of any of the net worth accounts of the
ASSOCIATION.
21. TRANSFER OF SAVINGS ACCOUNTS AND CONTINUITY OF THE ASSOCIATION
Upon Conversion, each Savings Account Holder having a Savings Account at
the ASSOCIATION prior to the Conversion will continue to have a Savings Account,
without payment therefor, in the same amount and subject to the same terms and
conditions (except for voting and liquidation rights) as in effect prior to the
Conversion.
After the Conversion, the ASSOCIATION will succeed to all the rights,
interests, duties and obligations of the ASSOCIATION before the Conversion,
including but not limited to all rights and interests of the ASSOCIATION in and
to its assets and properties, whether real, personal or mixed. The ASSOCIATION
will continue to be a member of the Federal Home Loan Bank System and all its
insured savings deposits will continue to be insured by the FDIC to the extent
provided by applicable law.
22. RESTRICTIONS ON ACQUISITION OF THE ASSOCIATION AND HOLDING COMPANY
A. In accordance with OTS regulations, for a period of three years from the
date of consummation of the Conversion, no Person, other than the Holding
Company, shall directly or indirectly offer to acquire or acquire the beneficial
ownership of more than 10% of any class of an equity security of the ASSOCIATION
without the prior written consent of the OTS.
B. 1. The charter of the ASSOCIATION contains a provision stipulating that
no person, except the Holding Company, for a period of five years following the
date of the Conversion shall directly or indirectly offer to acquire or acquire
38
the beneficial ownership of more than 10% of any class of an equity security of
the ASSOCIATION, without the prior written approval of the OTS. In addition,
such charter may also provide that for a period of five years following the
Conversion, shares beneficially owned in violation of the above-described
charter provision shall not be entitled to vote and shall not be voted by any
person or counted as voting stock in connection with any matter submitted to
stockholders for a vote. In addition, special meetings of the stockholders
relating to changes in control or amendment of the charter may only be called by
the Board of Directors, and shareholders shall not be permitted to cumulate
their votes for the election of directors.
2. The Certificate of Incorporation of the Holding Company will contain
a provision stipulating that in no event shall any record owner of any
outstanding shares of the Holding Company's common stock who beneficially owns
in excess of 10% of such outstanding shares be entitled or permitted to any vote
in respect to any shares held in excess of 10%. In addition, the Certificate of
Incorporation and Bylaws of the Holding Company provide for staggered terms of
the directors, noncumulative voting for directors, supermajority voting
requirements, limitations on the calling of special meetings, a fair price
provision for certain business combinations and certain notice requirements.
39
C. For the purposes of this Section 22:
i) The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint stock company, a
trust, an unincorporated organization or similar company, a syndicate or any
other group formed for the purpose of acquiring, holding or disposing of
securities of an insured institution;
ii) The term "offer" includes every offer to buy or acquire,
solicitation of an offer to sell, tender offer for, or request or invitation for
tenders of, a security or interest in a security for value;
iii) The term "acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise; and
iv) The term "security" includes non-transferable subscription rights
issued pursuant to a plan of conversion as well as a "security" as defined in 15
U.S.C. e 78c(a)(10).
23. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
The ASSOCIATION or the Holding Company shall not declare or pay a cash
dividend on, or repurchase any of, their capital stock if the effect thereof
would cause the ASSOCIATION's regulatory capital to be reduced below (i) the
amount required for the Liquidation Account or (ii) the federal regulatory
capital requirement in Section 567.2 of the Rules and Regulations of the OTS.
Otherwise, the ASSOCIATION and the Holding Co mpany may declare dividends, make
capital distributions or repurchase its capital stock in accordance with
applicable law and regulations.
40
24. AMENDMENT OF PLAN
If deemed necessary or desirable, the Plan may be substantively amended at
any time prior to solicitation of proxies from Members to vote on the Plan by a
two-thirds vote of the ASSOCIATION's Board of Directors, and at any time
thereafter by such vote of such Board of Directors with the concurrence of the
OTS. Any amendment to the Plan made after approval by the Members with the
approval of the OTS shall not necessitate further approval by the Members unless
otherwise required by the OTS. The Plan may be terminated by majority vote of
the ASSOCIATION's Board of Directors at any time prior to the Special Meeting of
Members to vote on the Plan, and at any time thereafter with the concurrence of
the OTS.
By adoption of the Plan, the Members of the ASSOCIATION authorize the Board
of Directors to amend or terminate the Plan under the circumstances set forth in
this Section.
25. CHARTER AND BYLAWS
By voting to adopt the Plan, members of the ASSOCIATION will be voting to
adopt a Federal Stock Savings Association Charter and Bylaws for a Federal Stock
Savings Association attached as Exhibits I and II to this Plan. The effective
date of the ASSOCIATION's stock charter and bylaws shall be the date of issuance
and sale of the Conversion Stock as specified by the OTS.
26. CONSUMMATION OF CONVERSION
The Conversion of the ASSOCIATION shall be deemed to take place and be
effective upon the completion of all requisite organizational procedures for
obtaining a Federal Stock Savings Association Charter for the ASSOCIATION and
sale of all Conversion Stock.
41
27. REGISTRATION AND MARKETING
Within the time period required by applicable laws and regulations, the
Holding Company will register the securities issued in connection with the
Conversion pursuant to the Securities Exchange Act of 1934 and will not
deregister such securities for a period of at least three years thereafter,
except that the maintenance of registration for three years requirement may be
fulfilled by any successor to the Holding Company. In addition, the Holding
Company will use its best efforts to encourage and assist a market-maker to
establish and maintain a market for the Conversion Stock and to list those
securities on a national or regional securities exchange or the Nasdaq Stock
Market.
28. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
The ASSOCIATION will make reasonable efforts to comply with the securities
laws of all States in the United States in which Persons entitled to subscribe
for shares of Conversion Stock pursuant to the Plan reside. However, no such
Person will be issued subscription rights or be permitted to purchase shares of
Conversion Stock in the Subscription Offering if such Person resides in a
foreign country or in a state of the United States with respect to which both of
the following apply: A. a small number of Persons otherwise eligible to
subscribe for shares under the Plan reside in such state and; B. the issuance
of subscription rights or the offer or sale of shares of Conversion Stock to
such Persons would require the Holding Company, under the securities laws of
such state, to register as a broker, dealer, salesman or agent or to register or
otherwise qualify its securities for sale in such state and such registration or
qualification would be impracticable for reasons of cost or otherwise.
42
29. EXPENSES OF CONVERSION
The ASSOCIATION shall use its best efforts to assure that expenses incurred
by it in connection with the Conversion shall be reasonable.
30. CONDITIONS TO CONVERSION
The Conversion of the ASSOCIATION pursuant to this Plan is expressly
conditioned upon the following:
a) Prior receipt by the ASSOCIATION of rulings of the United States
Internal Revenue Service and any applicable state taxing authority, or opinions
of counsel, substantially to the effect that the Conversion will not result in
any adverse federal or state tax consequences to Eligible Account Holders or to
the ASSOCIATION and the Holding Company before or after the Conversion;
b) The sale of all of the Conversion Stock offered in the Conversion; and
c) The completion of the Conversion within the time period specified in
Section 3 of this Plan.
31. INTERPRETATION
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the
ASSOCIATION shall be final, subject to the authority of the OTS.
43
EXHIBIT I
FEDERAL STOCK CHARTER
FOR
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WARREN
SECTION 1. CORPORATE TITLE
The full corporate title of the institution is First Federal Savings and
Loan Association of Warren.
SECTION 2. OFFICE
The home office shall be located in the City of Warren, State of Ohio.
SECTION 3. DURATION
The duration of the ASSOCIATION is perpetual.
SECTION 4. PURPOSE AND POWERS
The purpose of the ASSOCIATION is to pursue any or all of the lawful
objectives of a Federal savings association chartered under Section 5 of the
Home Owners' Loan Act and to exercise all the express, implied, and incidental
powers conferred thereby and by all acts amendatory thereof and supplemental
thereto, subject to the Constitution and laws of the United States as they are
now in effect, or as they may hereafter be amended, and subject to all lawful
and applicable rules, regulations, and orders of the Office of Thrift
Supervision ("Office").
SECTION 5. CAPITAL STOCK
The total number of shares of all classes of the capital stock which the
ASSOCIATION has authority to issue is thirty-six million (36,000,000) of which
thirty-three million (33,000,000) shall be common stock, par value $1.00 per
share and of which three million (3,000,000) shall be preferred stock, par value
$1.00 per share. The shares may be issued from time to time as authorized by
the Board of Directors without further approval of shareholders except as
otherwise provided in this Section 5 or to the extent that such approval is
required by governing law, rule, or regulation. The consideration for the
issuance of the shares shall be paid in full before their issuance and shall not
be less than the par value. Neither promissory notes nor future services shall
constitute payment or part payment for the issuance of shares of the
ASSOCIATION. The consideration for the shares shall be cash, tangible or
intangible property (to the extent direct investment in such property would be
permitted), labor or services actually
performed for the ASSOCIATION, or any combination of the foregoing. In the
absence of actual fraud in the transaction, the value of such property, labor,
or services, as determined by the Board of Directors of the ASSOCIATION, shall
be conclusive. Upon payment of such consideration, such shares shall be deemed
to be fully paid and nonassessable. In the case of a stock dividend, that part
of the surplus of the ASSOCIATION which is transferred to stated capital upon
the issuance of shares as a share dividend shall be deemed to be the
consideration for their issuance.
Except for shares issuable in connection with the conversion of the
ASSOCIATION from the mutual to the stock form of capitalization, no shares of
capital stock (including shares issuable upon conversion, exchange, or exercise
of other securities) shall be issued, directly or indirectly, to officers,
directors, or controlling persons of the ASSOCIATION other than as part of a
general public offering or as qualifying shares to a director, unless their
issuance or the plan under which the would be issued has been approved by a
majority of the total votes eligible to be cast at a legal meeting.
Nothing contained in this Section 5 (or in any supplementary sections
hereto) shall entitle the holders of any class or series of capital stock to
vote as a separate class or series or to more than one vote per share, except
as to the cumulation of votes for the election of directors: provided, that
--------
this restriction on voting separately by class or series shall not apply:
(i) To any provision which would authorize the holders of preferred
stock, voting as a class or series, to elect some members of the
Board of Directors, less than a majority thereof, in the event of
default in the payment of dividends on any class or series of
preferred stock;
(ii) To any provision which would require the holders of preferred stock,
voting as a class or series, to approve the merger or consolidation
of the ASSOCIATION with another corporation or the sale, lease, or
conveyance (other than by mortgage or pledge) of properties or
business in exchange for securities of a corporation other than the
ASSOCIATION if the preferred stock is exchanged for securities of
such other corporation; Provided, that no provision may require such
approval for transactions undertaken with the assistance or pursuant
to the direction of the Office, the Federal Deposit Insurance
Corporation, or the Resolution Trust Corporation;
(iii) To any amendment which would adversely change the specific terms of
any class or series of capital stock as set forth in this Section 5
(or any supplementary sections hereto), including any amendment which
would create or enlarge any class or series ranking prior thereto in
rights and preferences. An amendment which increases the number of
authorized shares of any class or series of capital stock, or
substitutes the surviving ASSOCIATION in a merger or consolidation
for the ASSOCIATION shall not be considered to be such an adverse
change.
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A description of the difference classes and series (if any) of the
ASSOCIATION's capital stock and a statement of the designations, and the
relative rights, preferences, and limitations of the shares of each class of and
series (if any) of capital stock are as follows:
A. Common Stock. Except as provided in this Section 5 (or in any
------------
supplementary sections hereto) the holders of the common stock shall
exclusively possess all voting power. Each holder of shares of common
stock shall be entitled to one vote for each share held by such
holder, except as to the cumulation of votes for the election of
directors.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of
stock having preference over the common stock as to the payment of
dividends, the full amount of dividends and of sinking fund, or
retirement fund, or other retirement payments, if any, to which such
holders are respectively entitled in preference to the common stock,
then dividends may be paid on the common stock and on any class or
series of stock entitled to participate therewith as to dividends out
of any assets legally available for the payment of dividends.
In the event of any liquidation, dissolution, or winding up of the
ASSOCIATION, the holders of the common stock (and the holders of any
class or series of stock entitled to participate with the common stock
in the distribution of assets) shall be entitled to receive, in cash
or in kind, the assets of the ASSOCIATION available for distribution
remaining after: (i) payment or provision for payment of the
ASSOCIATION's debts and liabilities; (ii) distributions or provision
for distributions in settlement of its liquidation account; and (iii)
distributions or provision for distributions to holders of any class
or series of stock having preference over the common stock in the
liquidation, dissolution, or winding up of the ASSOCIATION. Each
share of common stock shall have the same relative rights as and be
identical in all respects with all the other shares of common stock.
B. Preferred Stock. The ASSOCIATION may provide in supplementary
---------------
sections to its charter for one or more classes of preferred stock,
which shall be separately identified. The shares of any class may be
divided into and issued in series, with each series separately
designated so as to distinguish the shares thereof from the shares of
all other series and classes. The terms of each series shall be set
forth in a supplementary section to the charter. All shares of the
same class shall be identical except as to the following relative
rights and preferences, as to which there may be variations between
different series:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and,
if so, from which
I-3
date(s), the payment date(s) for dividends, and the participating
or other special rights, if any, with respect to dividends;
(c) The voting powers, full or limited, if any, of the shares of such
series;
(d) Whether the shares of such series shall be redeemable and, if so,
the price(s) at which, and the terms and conditions on which,
such shares may be redeemed;
(e) The amount(s) payable upon the shares of such series in the event
of voluntary or involuntary, liquidation, dissolution, or winding
up of the ASSOCIATION;
(f) Whether the shares of such series shall be entitled to the
benefit of a sinking or retirement fund to be applied to the
purchase or redemption of such shares, and if so entitled, the
amount of such fund and the manner of its application, including
the price(s) at which such shares may be redeemed or purchased
through the application of such fund;
(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock
of the ASSOCIATION and, if so, the conversion price(s) or the
rate(s) of exchange, and the adjustments thereof, if any, at
which such conversion or exchange, may be made, and any other
terms and conditions of such conversion or exchange;
(h) The price or other consideration for which the shares of such
series shall be issued; and
(i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial
preferred stock and whether such shares may be reissued as shares
of the same or any other series of serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative rights as and be identical in all respects with all the other shares of
the same series.
The Board of Directors shall have authority to divide, by the adoption of
supplementary charter sections, any authorized class of preferred stock into
series, and, within the limitations set forth in this section and the remainder
of this charter, fix and determine the relative rights and preferences of the
shares of any series so established.
Prior to the issuance of any preferred shares of a series established by a
supplementary charter section adopted by the Board of Directors, the ASSOCIATION
shall file with the
I-4
Secretary of the Office a dated copy of that supplementary section of this
charter establishing and designating the series and fixing and determining the
relative rights and preferences thereof.
SECTION 6. PREEMPTIVE RIGHTS
Holders of the capital stock of the ASSOCIATION shall not be entitled to
preemptive rights with respect to any shares of the ASSOCIATION which may be
issued.
SECTION 7. LIQUIDATION ACCOUNT
Pursuant to the requirements of the Office's regulations (12 C.F.R.
563b.3), the ASSOCIATION shall establish and maintain a liquidation account for
the benefit of its savings account holders as of March 31, 1997 and
____________, 1998, respectively ("eligible savers"). In the event of a
complete liquidation of the ASSOCIATION, it shall comply with such regulations
with respect to the amount and the priorities on liquidation of each of the
ASSOCIATION's eligible saver's inchoate interest in the liquidation account, to
the extent it is still in existence; Provided, that an eligible saver's inchoate
interest in the liquidation account shall not entitle such eligible saver to any
voting rights at meetings of the ASSOCIATION's shareholders.
SECTION 8. CERTAIN PROVISIONS APPLICABLE FOR FIVE YEARS
Notwithstanding anything contained in the ASSOCIATION's charter or bylaws
to the contrary, for a period of five years from the date of consummation of the
conversion of the ASSOCIATION from mutual to stock form, the following
provisions shall apply:
A. Beneficial Ownership Limitation. No person shall directly or
-------------------------------
indirectly offer to acquire or acquire the beneficial ownership of
more than 10 percent of any class of any equity security of the
ASSOCIATION. This limitation shall not apply to a transaction in
which the ASSOCIATION forms a holding company in conjunction with
conversion, or thereafter, if such formation i s without change in the
respective beneficial ownership interests of the ASSOCIATION's
shareholders other than pursuant to the exercise of any dissenter and
appraisal rights, the purchase of shares by underwriters in connection
with a public offering, or the purchase of shares by a tax-qualified
employee stock benefit plan which is exempt from the approval
requirements under Section 574.3(c)(1)(vi) of the Office Regulations.
In the event shares are acquired in violation of this Section 8, all
shares beneficially owned by any person in excess of 10% shall be
considered "excess shares" and shall not be counted as shares entitled
to vote and shall not be voted by any person or counted as voting
shares in connection with any matters submitted to the shareholders
for a vote.
For the purposes of this Section 8, the following definitions apply:
I-5
(i) The term "person" includes an individual, a group acting in concert,
a corporation, a partnership, an association, a joint stock company,
a trust, any unincorporated organization or similar company, a
syndicate or any other group formed for the purpose of acquiring,
holding or disposing of the equity securities of the ASSOCIATION.
(ii) The term "offer" includes every offer to buy or otherwise acquire,
solicitation of an offer to sell, tender offer for, or request or
invitation for tenders of, a security or interest in a security for
value.
(iii) The term "acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise.
(iv) The term "acting in concert" means (a) knowing participation in a
joint activity or conscious parallel action towards a common goal
whether or not pursuant to an express agreement, or (b) 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.
B. Cumulative Voting Limitation. Shareholders shall not be permitted to
----------------------------
cumulate their votes for the election of directors.
C. Call for Special Meetings. Special meetings of shareholders relating
-------------------------
to changes in control of the ASSOCIATION or amendments to its charter
shall be called only at the direction of the Board of Directors.
SECTION 9. DIRECTORS
The ASSOCIATION shall be under the direction of a Board of Directors. The
authorized number directors, as stated in the ASSOCIATION's bylaws, shall be not
be fewer than five nor more than 15 except when a greater number is approved by
the Office or its delegates.
SECTION 10. AMENDMENT OF CHARTER
Except as provided in Section 5, no amendment, addition, alteration,
change, or repeal of this charter shall be made, unless such is first proposed
by the Board of Directors of the ASSOCIATION, then preliminary approved by the
Office, which preliminary approval may be granted by the Office pursuant to
regulations specifying pre-approved charter amendments, and thereafter approved
by the shareholders by a majority of the total votes eligible to be cast at a
legal meeting. Any amendment, addition, alteration, change or repeal so acted
upon shall be effective upon filing with the Office in accordance with the
regulatory procedures or on such other date as the Office may specify in its
preliminary approval.
I-6
As adopted by the ASSOCIATION's members on , 1998, to be
---------------
effective on the date the ASSOCIATION converts from mutual to stock form of
organization.
Attest: By:
---------------------- ---------------------
Mary Ann Roberts Steven R. Lewis
Corporate Secretary President and
Chief Executive Officer
OFFICE OF THRIFT SUPERVISION
Attest: By:
--------------------- ---------------------
Corporate Secretary to the
Office of Thrift Supervision
Declared effective on
the day of , 1998.
--- ----------------
I-7
EXHIBIT II
BYLAWS OF FIRST FEDERAL SAVINGS AND
LOAN ASSOCIATION OF WARREN
ARTICLE I. HOME OFFICE
The home office of First Federal Savings and Loan Association of Warren
("ASSOCIATION"), is 185 East Market Street, Warren, Ohio.
ARTICLE II. SHAREHOLDERS
Section 1. Place of Meetings. All annual and special meetings of
----------------------------
shareholders shall be held at the home office of the ASSOCIATION or at such
other place in the State in which the principal place of business of the
ASSOCIATION is located as the board of directors may determine.
Section 2. Annual Meeting. A meeting of the shareholders of the
--------------------------
ASSOCIATION for the election of directors and for the transaction of any other
business of the ASSOCIATION shall be held annually within 120 days after the end
of the ASSOCIATION's fiscal year as the board of directors may determine.
Section 3. Special Meetings. For a period of five years from the date of
----------------------------
the completion of the conversion of the ASSOCIATION from mutual to stock form,
special meetings of the shareholders relating to a change in control of the
ASSOCIATION or to an amendment of the Charter of the ASSOCIATION may be called
only by the board of directors. Thereafter, special meetings of the
shareholders for any purpose or purposes, unless otherwise prescribed by the
regulations of the Office of Thrift Supervision ("OTS"), may be called at any
time by the chairman of the board, the president, or a majority of the board of
directors, and shall be called by the chairman of the board, the president or
the secretary upon the written request of the holders of not less than one-tenth
of all the outstanding capital stock of the ASSOCIATION entitled to vote at the
meeting. Such written request shall state the purpose or purposes of the
meeting and shall be delivered at the home office of the ASSOCIATION addressed
to the chairman of the board, the president or the secretary.
Section 4. Conduct of Meetings. Annual and special meetings shall be
------------------------------
conducted in accordance with the most current edition of Robert's Rules of Order
unless otherwise prescribed by regulations of the OTS or these bylaws. The
board of directors shall designate, when present, either the chairman of the
board or president to preside at such meetings.
Section 5. Notice of Meetings. Written notice stating the place, day and
-----------------------------
hour of the meeting and the purpose(s) for which the meeting is called shall be
delivered not fewer than 10 nor more than 50 days before the date of the
meeting, either personally or by mail, by or at the direction of the chairman of
the board, the president, the secretary, or the directors calling the meeting,
to each shareholder of record entitled to vote at such meeting. If mailed, such
notice
II-1
shall be deemed to be delivered when deposited in the mail, addressed to the
shareholder at the address as it appears on the stock transfer books or records
of the ASSOCIATION as of the record date prescribed in Section 6 of this Article
II, with postage prepaid. When any shareholders' meeting, either annual or
special, is adjourned for 30 days or more, notice of the adjourned meeting shall
be given as in the case of an original meeting. It shall not be necessary to
give any notice of the time and place of any meeting adjourned for less than 30
days or of the business to be transacted at the meeting, other than an
announcement at the meeting at which such adjournment is taken.
Section 6. Fixing of Record Date. For the purpose of determining
--------------------------------
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment, or shareholders entitled to receive payment of any dividend, or
in order to make a determination of shareholders for any other proper purpose,
the board of directors shall fix in advance a date as the record date for any
such determination of shareholders. Such date in any case shall be not more
than 60 days and, in case of a meeting of shareholders, not fewer than 10 days
prior to the date on which the particular action requiring such determination
of shareholders, is to be taken. When a determination of shareholders entitled
to vote at any meeting of shareholders has been made as provided in this
section, such determination shall apply to any adjournment.
Section 7. Voting Lists. At least 20 days before each meeting of the
-----------------------
shareholders, the officer or agent having charge of the stock transfer books for
shares of the ASSOCIATION shall make a complete list of the shareholders
entitled to vote at such meeting, or any adjournment, arranged in alphabetical
order, with the address and the number of shares held by each. This list of
shareholders shall be kept on file at the home office of the ASSOCIATION and
shall be subject to inspection by any shareholder at any time during usual
business ho urs, for a period of 20 days prior to such meeting. Such list shall
also be produced and kept open at the time and place of the meeting and shall be
subject to the inspection by any shareholder during the entire time of the
meeting. The original stock transfer book shall constitute prima facie evidence
of the shareholders entitled to examine such list or transfer books or to vote
at any meeting of shareholders.
In lieu of making the shareholder list available for inspection by
shareholders as provided in the preceding paragraph, the board of directors may
elect to follow the procedures prescribed in (S)552.6(d) of the OTS's
Regulations as now or hereafter in effect.
Section 8. Quorum. A majority of the outstanding shares of the ASSOCIATION
-----------------
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
is represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to constitute less than a quorum.
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Section 9. Proxies. At all meetings of shareholders, a shareholder may
------------------
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney in fact. Proxies solicited on behalf of the management shall be voted
as directed by the shareholder or, in the absence of such direction, as
determined by a majority of the board of directors. No proxy shall be valid
more than eleven months from the date of its execution except for a proxy
coupled with an interest.
Section 10. Voting of Shares in the Name of Two or More Persons. When
----------------------------------------------------------------
ownership stands in the name of two or more persons, in the absence of written
directions to the ASSOCIATION to the contrary, at any meeting of the
shareholders of the ASSOCIATION any one or more of such shareholders may cast,
in person or by proxy, all votes to which such ownership is entitled. In the
event an attempt is made to cast conflicting votes, in person or by proxy, by
the several persons in whose names shares of stock stand, the vote or votes to
which those persons are entitled shall be cast as directed by a majority of
those holding such and present in person or by proxy at such meeting, but no
votes shall be cast for such stock if a majority cannot agree.
Section 11. Voting of Shares by Certain Holders. Shares standing in the
-----------------------------------------------
name of another corporation may be voted by any officer, agent or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by him, either in
person or by proxy, without a transfer of such shares into his name. Shares
standing in the name of a trustee may be voted by him, either in person or by
proxy, but no trustee shall be entitled to vote shares held by him without a
transfer of such shares into his name. Shares standing in the name of a
receiver may be voted by such receiver, and shares held by or under the control
of a receiver may be voted by such receiver without the transfer into his name
if authority to do so is contained in an appropriate order of the court or other
public authority by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the ASSOCIATION, nor
shares held by another corporation, if a majority of the shares entitled to vote
for the election of directors of such other corporation are held by the
ASSOCIATION, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
Section 12. Cumulative Voting. Except as otherwise provided in the
-----------------------------
ASSOCIATION's charter, every shareholder entitled to vote at an election for
directors shall have the right to vote, in person or by proxy, the number of
shares owned by the shareholder for as many persons as there are directors to be
elected and for whose election the shareholder has a right to vote, or to
cumulate the votes by giving one candidate as many votes as the number of such
directors to be
II-3
elected multiplied by the number of shares shall equal or by
distributing such votes on the same principle among any number of candidates.
Section 13. Inspectors of Election. In advance of any meeting of
-----------------------------------
shareholders, the board of directors may appoint any persons other than nominees
for office as inspectors of election to act at such meeting or any adjournment.
The number of inspectors shall be either one or three. Any such appointment
shall not be altered at the meeting. If inspectors of election are not so
appointed, the chairman of the board or the president may, or on the request of
not fewer than 10 percent of the votes represented at the meeting shall, make
such appo intment at the meetings. If appointed at the meeting, the majority of
the votes present shall determine whether one or three inspectors are to be
appointed. In case any person appointed as inspector fails to appear or fails
or refuses to act, the vacancy may be filled by appointment by the board of
directors in advance of the meeting, or at the meeting by the chairman of the
board or the president.
Unless otherwise prescribed by regulations of the OTS, the duties of such
inspectors shall include: determining the number of shares and the voting power
of each share, the shares represented at the meeting, the existence of a quorum,
and the authenticity, validity and effect of proxies, receiving votes, ballots,
or consents; hearing and determining all challenges and questions in any way
arising in connection with the rights to vote; counting and tabulating all votes
or consents; determining the result; and such acts as may be proper to conduct
the election or vote with fairness to all shareholders.
Section 14. Nominating Committee. The board of directors shall act as a
--------------------------------
nominating committee for selecting the management nominees for election as
directors. Except the case of a nominee substituted as a result of the death or
other incapacity of a management nominee, the nominating committee shall deliver
written nominations to the secretary at least 20 days prior to the date of the
annual meeting. Upon delivery, such nominations shall be posted in a
conspicuous place in each office of the ASSOCIATION. No nominations for
directors except those made by the nominating committee shall be voted upon at
the annual meeting unless other nominations by shareholders are made in writing
and delivered to the secretary of the ASSOCIATION at least five days prior to
the date of the annual meeting. Upon delivery, such nominations shall be posted
in a conspicuous place in each office of the ASSOCIATION. Ballots bearing the
names of all persons nominated by the nominating committee and by shareholders
shall be provided for use at the annual meeting. However, if the nominating
committee shall fail or refuse to act at least 20 days prior to the annual
meeting, nominations for directors may be made at the annual meeting by any
shareholder entitled to vote and shall be voted upon.
Section 15. New Business. Any new business to be taken up at the annual
------------------------
meeting shall be stated in writing and filed with the secretary of the
ASSOCIATION at least 5 days before the date of the annual meeting, and all
business so stated, proposed, and filed shall be considered at the annual
meeting, but no other proposal shall be acted upon at the annual meeting. Any
shareholder may make any other proposal at the annual meeting and the same may
be discussed and considered, but unless stated in writing and filed with the
secretary at least 5 days before the meeting, such proposal shall be laid over
for action at an adjourned, special, or annual meeting of
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the shareholders taking place 30 days or more thereafter. This provision shall
not prevent the consideration and approval or disapproval at the annual meeting
of reports of officers, directors and committees; but in connection with such
reports no new business shall be acted upon at such annual meeting unless stated
and filed as herein provided.
Section 16. Informal Action by Shareholders. Any action required to be
-------------------------------------------
taken at a meeting of shareholders, or any other act on which may be taken at a
meeting of the shareholders, may be taken without a meeting if consent in
writing, setting forth the action so taken, shall be given by all of the
shareholders entitled to vote with respect to the subject matter.
ARTICLE III. BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the ASSOCIATION
-------------------------
shall be under the direction of its board of directors. The board of directors
shall annually elect a chairman of the board and a president from among its
members and shall designate, when present, either the chairman of the board or
the president to preside at its meetings.
Section 2. Number and Term. The board of directors shall consist of eight
--------------------------
(8) members and shall be divided into three classes as nearly equal in number as
possible. The members of each class shall be elected for a term of three years
and until their successors are elected and qualified. One class shall be
elected by ballot annually.
Section 3. Regular Meetings. A regular meeting of the board of directors
---------------------------
shall be held without other notice than this bylaw immediately after, and at the
same place as, the annual meeting of shareholders. The board of directors may
provide, by resolution, the time and place, within the ASSOCIATION's normal
lending territory, for the holding of additional regular meetings without other
notice than such resolution.
Section 4. Qualification. Each director shall at all times be the
------------------------
beneficial owner of not less than 100 shares of capital stock of the ASSOCIATION
unless the ASSOCIATION is a wholly owned subsidiary of a holding company.
Section 5. Special Meetings. Special meetings of the board of directors
---------------------------
may be called by or at the req uest of the chairman of the board, the president
or one-third of the directors. The persons authorized to call special meetings
of the board of directors may fix any place, within the ASSOCIATION's normal
lending territory, as the place for holding any special meeting of the board of
directors called by such persons.
Members of the board of directors may participate in special meetings by
means of conference telephone, or by means of similar communications equipment
by which all persons participating in the meeting can hear each other. Such
participation shall constitute presence in person but shall not constitute
attendance for the purpose of compensation pursuant to Section 12 of this
Article.
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Section 6. Notice. Written notice of any special meeting shall be given
------------------
to each director at least two days prior thereto when delivered personally or by
telegram, or at least five days prior thereto when delivered by mail at the
address at which the director is most likely to be reached. Such notice shall
be deemed to be delivered when deposited in the mail so addressed, with postage
prepaid if mailed, or when delivered to the telegraph company if sent by
telegram. Any director may waive notice of any meeting by a writing filed with
the secretary. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
Section 7. Quorum. A majority of the number of directors fixed by Section
-----------------
2 of this Article III shall constitute a quorum for the transaction of business
at any meeting of the board of directors, but if less than such majority is
present at a meeting, a majority of the directors present may adjourn the
meeting from time to time. Notice of any adjourned meeting shall be given in
the same manner as prescribed by Section 6 of this Article III.
Section 8. Manner of Acting. The act of the majority of the directors
---------------------------
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by regulation of the OTS or
by these bylaws.
Section 9. Action Without a Meeting. Any action required or permitted to
-----------------------------------
be taken by the board of directors at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the directors.
Section 10. Resignation. Any director may resign at any time by sending a
-----------------------
written notice of such resignation to the home office of the ASSOCIATION
addressed to the chairman of the board or president. Unless otherwise specified
such resignation shall take effect upon receipt by the chairman of the board or
president. More than three consecutive absences from regular meetings of the
board of directors, unless excused by resolution of the board of directors,
shall automatically constitute a resignation, effective when such resignation is
accepted by the board of directors.
Section 11. Vacancies. Any vacancy occurring in the board of directors may
---------------------
be filled by the affirmative vote of a majority of the remaining directors,
although less than a quorum of the board of directors. A director elected to
fill a vacancy shall be elected to serve until the next election of directors by
the shareholders. Any directorship to be filled by reason of an increase in the
number of directors may be filled by election by the board of directors for a
term of office continuing only until the next election of directors by the
shareholders.
Section 12. Compensation. Directors, as such, may receive a stated salary
-------------------------
for their services. By resolution of the board of directors, a reasonable fixed
sum, and reasonable expenses of attendance, if any, may be allowed for actual
attendance at each regular or special meeting of the board of directors.
Members of either standing or special committees may be
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allowed such compensation for actual attendance at committee meetings as the
board of directors may determine.
Section 13. Presumption of Assent. A director of the ASSOCIATION who is
----------------------------------
present at a meeting of the board of directors at which action on any
ASSOCIATION matter is taken shall be presumed to have assented to the action
taken unless his dissent or abstention shall be entered in the minutes of the
meeting or unless he shall file a written dissent to such action with the person
acting as the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the secretary of the ASSOCIATION
within five days after the date a copy of the minutes of the meeting is
received. Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 14. Removal of Directors. At a meeting of shareholders called
---------------------------------
expressly for that purpose, any director may be removed for cause by a vote of
the holders of a majority of the shares then entitled to vote at an election of
directors. Whenever the holders of the shares of any class are entitled to
elect one or more directors by the provisions of the Charter or supplemental
sections thereto, the provisions of this section shall app ly, in respect to the
removal of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class and not to the vote of the outstanding shares
as a whole.
Section 15. Age Limitations on Directors. No person seventy-two years of
------------------------------------------
age shall be eligible for election, reelection, appointment or reappointment to
the board of directors. No director shall serve as such beyond the annual
meeting immediately following the director becoming seventy-two years of age.
This age limitation does not apply to an advisory or emeritus director.
ARTICLE IV. EXECUTIVE AND OTHER COMMITTEES
Section 1. Appointment. The board of directors, by resolution adopted by a
----------------------
majority of the full board, may designate the chief executive officer and two or
more of the other directors to constitute an executive committee. The
designation of any committee pursuant to this Article IV and the delegation of
authority shall not operate to relieve the board of directors, or any director,
of any responsibility, imposed by law or regulation.
Section 2. Authority. The executive committee, when the board of directors
--------------------
is not in session, shall have and may exercise all of the authority of the board
of directors except to the extent, if any, that such authority shall be limited
by the resolution appointing the executive committee; and except also that the
executive committee shall not have the authority of the board of directors with
reference to: the declaration of dividends; the amendment of the Charter or
bylaws of the ASSOCIATION, or recommending to the shareholders a plan of merger,
consolidation, or conversion; the sale, lease or other disposition of all or
substantially all of the property and assets of the ASSOCIATION otherwise than
in the usual and regular course of its business; a voluntary dissolution of the
ASSOCIATION; a revocation of any of the foregoing; or the approval of a
transaction in which any member of the executive committee, directly or
indirectly, has any material beneficial interest.
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Section 3. Tenure. Subject to the provisions of Section 8 of this Article
-----------------
IV, each member of the executive committee shall hold office until the next
regular annual meeting of the board of directors following his or her
designation and until a successor is designated as a member of the executive
committee.
Section 4. Meetings. Regular meetings of the executive committee may be
-------------------
held without notice at such times and places as the executive committee may fix
from time to time by resolution. Special meetings of the executive committee
may be called by any member thereof upon not less than one day's notice stating
the place, date and hour of the meetings, which notice may be written or oral.
Any member of the executive committee may waive notice of any meeting and no
notice of any meeting need be given to any member thereof who attends in person.
The notice of a meeting of the executive committee need not state the business
proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the executive committee
-----------------
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the executive committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
Section 6. Action Without a Meeting. Any action required or permitted to
-----------------------------------
be taken by the executive committee at a meeting may be taken without a meeting
if a consent in writing the setting forth the action so taken, shall be signed
by all of the members of the executive committee.
Section 7. Vacancies. Any vacancy in the executive committee may be filled
--------------------
by a resolution adopted by a majority of the full board of directors.
Section 8. Resignations and Removal. Any member of the executive committee
-----------------------------------
may be removed at any time with or without cause by resolution adopted by a
majority of the full board of directors. Any member of the executive committee
may resign from the executive committee at any time by giving written notice to
the president or secretary of the ASSOCIATION. Unless otherwise specified, such
resignation shall take effect upon its receipt; the acceptance of such
resignation shall not be necessary to make it effective.
Section 9. Procedure. The executive committee shall elect a presiding
--------------------
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these bylaws. It shall keep regular minutes of its
proceedings and report the same to the board of directors for its information at
the meeting held next after the proceedings shall have occurred.
Section 10. Other Committees. The board of directors may by resolution
----------------------------
establish an audit, loan, or other committees composed of directors as they may
determine to be necessary or appropriate for the conduct of the business of the
ASSOCIATION and may prescribe the duties, constitution and procedures thereof.
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ARTICLE V. OFFICERS
Section l. Positions. The officers of the ASSOCIATION shall be the
--------------------
president, one or more vice pres idents, a secretary and a treasurer, each of
whom shall be elected by the board of directors. The board of directors may
also designate the chairman of the board as an officer. The president shall be
the chief executive officer, unless the board of directors designates the
chairman of the board as chief executive officer. The president shall be a
director of the ASSOCIATION. The offices of the secretary and treasurer may be
held by the same person and a vice president may also be either the secretary or
the treasurer. The board of directors may designate one or more vice presidents
as executive vice president or senior vice president. The board of directors
may also elect or authorize the appointment of such other officers as the
business of the ASSOCIATION may require. The officers shall have such authority
and perform such duties as the board of directors may from time to time
authorize or determine. In the absence of action by the board of directors, the
officers shall have such powers and duties as generally pertain to their
respective offices.
Section 2. Election and Term of Office. The officers of the ASSOCIATION
--------------------------------------
shall be elected annually at the first meeting of the board of directors held
after each annual meeting of the shareholders. If the election of officers is
not held at such meeting, such election shall be held as soon thereafter as
possible. Each officer shall hold office until a successor has been duly
elected and qualified or until the officer's death, resignation or removal in
the manner hereinafter provided. Election or appointment of an officer,
employee or agent shall not of itself create contractual rights. The board of
directors may authorize the ASSOCIATION to enter into an employment contract
with any officer in accordance with regulations of the OTS; but no such contract
shall impair the right of the board of directors to remove any officer at any
time in accordance with Section 3 of this Article V.
Section 3. Removal. Any officer may be removed by the board of directors
-------------------
whenever in its judgment the best interests of the ASSOCIATION will be served
thereby, but such removal, other than for cause, shall be without prejudice to
the contractual rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
--------------------
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
Section 5. Remuneration. The remuneration of the officers shall be fixed
-----------------------
from time to time by the board of directors.
Section 6. Age Limitation on Officers. No person sixty-five (65) years of
---------------------------------------
age or older who has been an officer employed in an executive or high
policymaking position for a period of two or more years and is eligible for
immediate non-forfeitable annual retirement benefits from an ASSOCIATION pension
plan which equals in the aggregate the amount as set forth by any applicable age
discrimination and employment law shall be eligible for election, reelection,
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appointment or reappointment as an officer of the ASSOCIATION to act in an
executive or high policymaking position.
ARTICLE VI. CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. To the extent permitted by regulations of the OTS,
--------------------
and except as otherwise prescribed by these bylaws with respect to certificates
for shares, the board of directors may authorize any officer, employee, or agent
of the ASSOCIATION to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the ASSOCIATION. Such authority may
be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
----------------
ASSOCIATION and no evidence of indebtedness shall be issued in its name unless
authorized by the board of directors. Such authority may be general or confined
to specific instances.
Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for the
------------------------------
payment of money, notes or other evidences of indebtedness issued in the name of
the ASSOCIATION shall be signed by one or more officers, employees or agents of
the ASSOCIATION in such manner as shall from time to time be determined by the
board of directors.
Section 4. Deposits. All funds of the ASSOCIATION not otherwise employed
---------------------
shall be deposited from time to time to the credit of the ASSOCIATION in any
duly authorized depositories as the board of directors may select.
ARTICLE VII. CERTIFICATES FOR SHARES
AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares of
----------------------------------
capital stock of the ASSOCIATION shall be in such form as shall be determined by
the board of directors and approved by the OTS. Such certificates shall be
signed by the chief executive officer or by any other officer of the ASSOCIATION
authorize d by the board of directors, attested by the secretary or an assistant
secretary, and sealed with the corporate seal or a facsimile thereof. The
signatures of such officers upon a certificate may be facsimiles if the
certificate is manually signed on behalf of a transfer agent or a registrar,
other than the ASSOCIATION itself or one of its employees. Each certificate for
shares of capital stock shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares are issued, with the
number of shares and date of issue, shall be entered on the stock transfer books
of the ASSOCIATION. All certificates surrendered to the ASSOCIATION for
transfer shall be canceled and no new certificate shall be issued until the
former certificate for a like number of shares has been surrendered and
canceled, except that in case of a lost or destroyed certificate, a new
certificate may be issued upon such terms and indemnity to the ASSOCIATION as
the board of directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of capital stock of the
-----------------------------
ASSOCIATION shall be made only on its stock transfer books. Authority for such
transfer shall be given only by
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the holder of record or by his legal representative, who shall furnish proper
evidence of such authority, or by his attorney authorized by a duly executed
power of attorney and filed with the ASSOCIATION. Such transfer shall be made
only on surrender for cancellation of the certificate for such shares. The
person in whose name shares of capital stock stand on the books of the
ASSOCIATION shall be deemed by the ASSOCIATION to be the owner for all purposes.
ARTICLE VIII. FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the ASSOCIATION shall end on June 30 of each year. The
ASSOCIATION shall be subject to an annual audit as of the end of its fiscal year
by independent public accountants appointed by and responsible to the board of
directors. The appointment of such accountants shall be subject to annual
ratification by the shareholders.
ARTICLE IX. DIVIDENDS
Subject to the terms of the ASSOCIATION's Charter and the regulations and
orders of the OTS, the board of directors may, from time to time, declare, and
the ASSOCIATION may pay, dividends on its outstanding shares of capital stock.
ARTICLE X. CORPORATE SEAL
The board of directors shall provide an ASSOCIATION seal, which shall be
two concentric circles between which shall be the name of the ASSOCIATION. The
year of incorporation or an emblem may appear in the center.
ARTICLE XI. AMENDMENTS
These bylaws may be amended in a manner consistent with regulations of the
OTS at any time by a majority vote of the full board of directors, or by a
majority vote of the votes cast by the shareholders of the ASSOCIATION at any
legal meeting.
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