Exhibit 2.0
INDIAN VILLAGE COMMUNITY BANK
GNADENHUTTEN, OHIO
PLAN OF CONVERSION
FROM FEDERAL MUTUAL SAVING BANK
TO FEDERAL STOCK SAVINGS BANK
AND FORMATION OF A HOLDING COMPANY
INTRODUCTION
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I. General
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The Board of Directors of Indian Village Community Bank ("Bank") desires to
attract new capital to the Bank to increase its net worth, to support future
growth, to increase the amount of funds available for other lending and
investment, to provide greater resources for the expansion of customer services
and to facilitate future expansion by the Bank. In addition, the Board of
Directors intends to implement stock option plans and other stock benefit plans
as part of the Conversion in order to attract and retain qualified directors and
officers. It is the further desire of the Board of Directors to reorganize the
Bank as the wholly owned subsidiary of a holding company to enhance flexibility
of operations, diversification of business opportunities and financial
capability for business and regulatory purposes and to enable the Bank to
compete more effectively with other financial service organizations.
Accordingly, on January 20, 1999, the Board of Directors, after careful study
and consideration, adopted by unanimous vote this Plan of Conversion From
Federal Mutual Savings Bank To Federal Stock Savings Bank And Formation Of A
Holding Company ("Plan"), which provides for the conversion of the Bank from a
federally chartered mutual savings bank to a federally chartered stock savings
bank and the concurrent formation of a holding company for the Bank ("Holding
Company").
All capitalized terms contained in the Plan shall have the meanings
ascribed to them in Section II hereof.
Pursuant to this Plan, shares of Conversion Stock will be offered as part
of the Conversion in a Subscription Offering pursuant to nontransferable
Subscription Rights at a predetermined and uniform price first to the Bank's
Eligible Account Holders, second to the Tax-Qualified Employee Stock Benefit
Plans, third to the Bank's Supplemental Eligible Account Holders, and fourth to
Other Members of the Bank. Shares not subscribed for in the Subscription
Offering will be offered as part of the Conversion to the general public in a
Direct Community Offering. Shares still remaining may then be offered to the
general public in a Syndicated Community Offering, an underwritten public
offering, or otherwise. The aggregate Purchase Price of the Conversion Stock
will be based upon an independent appraisal of the Bank and will reflect the
estimated pro forma market value of the Association as a subsidiary of the
Holding Company.
The Conversion is subject to the regulations of the Director of the OTS
(Part 563b of the Rules and Regulations of the Office of Thrift Supervision) as
promulgated pursuant to Section 5(i) of the Home Owners' Loan Act.
Consummation of the Conversion is subject to the approval of this Plan and
the Conversion by the OTS and by the affirmative vote of Members of the Bank
holding not less than a majority of the total votes eligible to be cast at a
special meeting of the Members to be called to consider the Conversion.
No change will be made in the Board of Directors or management of the Bank
as a result of the Conversion.
II. Definitions
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As used in this Plan, the terms set forth below have the following
meanings:
A. Acting in Concert: (i) Knowing participation in a joint activity or
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interdependent conscious parallel action towards a common goal whether or not
pursuant to an express agreement; or (ii) a combination or pooling of voting or
other interests in the securities of an issuer for a common purpose pursuant to
any contract, understanding, relationship, agreement or other arrangement,
whether written or otherwise. A Person (as defined herein) who acts in concert
with another Person ("other party") shall also be deemed to be acting in concert
with any Person who is also acting in concert with that other party, except that
any Tax-Qualified Employee Stock Benefit Plan will not be deemed to be acting in
concert with its trustee or a Person who serves in a similar capacity solely for
the purpose of determining whether stock held by the trustee and stock held by
the Tax-Qualified Employee Benefit Plan will be aggregated.
B. Associate: When used to indicate a relationship with any Person,
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means (i) any corporation or organization (other than the Bank or a majority-
owned subsidiary of the Bank, or the Holding Company) of which such Person is an
officer or partner or is, directly or indirectly, the beneficial owner of ten
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 it
does not include a Tax-Qualified Employee Stock Benefit Plan and (iii) any
relative or spouse of such Person, or any relative of such spouse, who has the
same home as such Person or who is a director or officer of the Bank, any of its
subsidiaries, or the Holding Company.
C. Bank: Indian Village Community Bank, in its present form as a
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federally chartered mutual savings bank.
D. Capital Stock: Any and all authorized capital stock in the Converted
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Bank.
E. Common Stock: Any and all authorized common stock in the Holding
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Company subsequent to the Conversion.
F. Conversion: (i) Amendment of the Bank's Charter and Bylaws to
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authorize issuance of shares of Capital Stock by the Converted Bank and to
conform to the requirements of a Federal stock savings bank under the laws of
the United States and rules and regulations of the OTS; (ii) issuance and sale
of Conversion Stock by the Holding Company in the Subscription Offering and
Direct Community Offering; and (iii) purchase by the Holding Company of all of
the issued and outstanding shares of Capital Stock of the Converted Bank to be
issued in the Conversion immediately following or concurrently with the close of
the sale of all Conversion Stock.
G. Conversion Stock: Holding Company common stock to be issued and sold
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by the Holding Company pursuant to the Plan.
H. Converted Bank: Indian Village Community Bank, in its converted form
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as a federally chartered stock savings bank.
I. Direct Community Offering: The offering for sale of Conversion Stock
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to the public.
J. Eligibility Record Date: December 31, 1997.
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K. Eligible Account Holder: Holder of a Qualifying Deposit in the Bank
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on the Eligibility Record Date.
L. FDIC: Federal Deposit Insurance Corporation.
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M. Form AC Application: The application submitted to the OTS on OTS Form
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AC for approval of the Conversion.
N. H-(e)1 Application: The application submitted to the OTS on OTS Form
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H-(e)1 or, if applicable, Form H-(e)1-S for approval of the Holding Company's
acquisition of all of the Capital Stock of the Converted Bank.
O. Holding Company: A corporation to be formed by the Bank under state
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law for the purpose of becoming a holding company through the issuance and sale
of its stock under the Plan, and concurrent acquisition of 100% of the Capital
Stock of the Converted Bank to be issued pursuant to the Plan.
P. Holding Company Stock: Any and all authorized capital stock of the
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Holding Company.
Q. Local Community: Tuscarawas County, Ohio.
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R. Market Maker: A dealer (i.e., any Person who engages directly or
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indirectly as agent, broker, or principal in the business of offering, buying,
selling, or otherwise dealing or trading in securities issued by another Person)
who, with respect to a particular security, (i) regularly publishes bona fide,
competitive bid and offer quotations in a recognized inter-dealer quotation
system or furnishes bona fide competitive bid and offer quotations on request
and (ii) is ready, willing and able to effect transactions in reasonable
quantities at his quoted prices with other brokers or dealers.
S. Members: All Persons or entities who qualify as members of the Bank
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pursuant to its Charter and Bylaws prior to the Conversion.
T. Officer: An executive officer of the Bank, which includes the
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Chairman of the Board, President, Vice President, Secretary, Treasurer or
Principal Financial Officer, Comptroller or Principal Accounting Officer, and
Senior Vice Presidents, Vice Presidents in charge of principal business
functions, the Secretary and the Treasurer as well as any other person
performing similar functions.
U. Order Forms: Forms to be used for the purchase of Conversion Stock
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sent to Eligible Account Holders and other parties eligible to purchase
Conversion Stock in the Subscription Offering pursuant to the Plan.
V. Other Member: Holder of a Savings Account (other than Eligible
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Account Holders and Supplemental Eligible Account Holders) as of the Record
Date, and borrowers from the Bank as provided in the Bank's Federal Mutual
Charter who continue as borrowers from the Bank as of the Record Date.
W. OTS: Office of Thrift Supervision of the United States Department of
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the Treasury.
X. Person: An individual, corporation, partnership, Bank, joint stock
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company, trusts of natural Persons, unincorporated organization or a government
or any political subdivision thereof.
Y. Plan: This Plan of Conversion, which provides for the conversion of
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the Bank from a federally chartered mutual Bank to a federally chartered capital
stock Bank as a wholly owned subsidiary of the Holding Company, as originally
adopted by the Board of Directors or as amended in accordance with the terms
hereof.
Z. Qualifying Deposit: The deposit balance in any Savings Account, and
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any certificate of deposit, any demand deposit account and any noninterest-
bearing deposit account, as of the close of business on the Eligibility Record
Date or the Supplemental Eligibility Record Date, as applicable; provided,
however, that no account with a deposit balance of less than $50.00 on such date
shall constitute a Qualifying Deposit.
AA. Record Date: Date which determines which Members are entitled to vote
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at the Special Meeting.
BB. Registration Statement: The registration statement on SEC Form S-1,
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or other applicable form, filed by the Holding Company with the SEC for the
purpose of registering the Conversion Stock under the Securities Act of 1933, as
amended.
CC. Savings Account(s): Withdrawable deposit(s) in the Bank or the
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Converted Bank.
DD. SEC: Securities and Exchange Commission.
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EE. Special Meeting: The special meeting of Members called for the
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purpose of considering the Plan for approval.
FF. Subscription Offering: The offering of Conversion Stock to Eligible
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Account Holders, Tax-Qualified Employee Stock Benefit Plans, Supplemental
Eligible Account Holders and Other Members under the Plan.
GG. Subscription Rights: Nontransferable, non-negotiable, personal rights
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of Eligible Account Holders, Tax-Qualified Employee Stock Benefit Plans,
Supplemental Eligible Account Holders and Other Members to purchase Conversion
Stock.
HH. Supplemental Eligibility Record Date: The last day of the calendar
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quarter preceding the approval of the Plan by the OTS.
II. Supplemental Eligible Account Holder: Holder of a Qualifying Deposit
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in the Bank (other than an Officer or director of the Bank or their Associates)
on the Supplemental Eligibility Record Date.
JJ. Syndicated Community Offering: The offering for sale by a syndicate
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of broker-dealers to the general public of shares of Conversion Stock not
purchased in the Subscription Offering and the Direct Community Offering.
KK. Tax-Qualified Employee Stock Benefit Plan: Any defined benefit plan or
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defined contribution plan of the Bank or Holding Company, such as an employee
stock ownership plan, bonus plan, profit-sharing plan or other plan, which, with
its related trust, meets the requirements to be "qualified" under section 401 of
the Internal Revenue Code. A "non-tax-qualified employee stock benefit plan" is
any defined benefit plan or defined contribution plan that is not so qualified.
III. Steps Prior to Submission of the Plan to the Members for Approval
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Prior to submission of the Plan to the Members for approval, the Bank must
receive approval from the OTS of the Form AC Application. Prior to such
regulatory approval:
A. The Board of Directors shall adopt the Plan by a vote of not less than
two-thirds of its entire membership.
B. The Bank shall notify the Members of the adoption of the Plan by
publishing legal notice in a newspaper having a general circulation in each
community in which the Bank maintains an office.
C. A press release relating to the proposed Conversion may be submitted
to the local media.
D. Copies of the Plan as adopted by the Board of Directors shall be made
available for inspection at each office of the Bank.
E. The Bank shall cause the Holding Company to be incorporated under
state law and the Board of Directors of the Holding Company shall concur in the
Plan by at least a two-thirds vote.
F. As soon as practicable following the adoption of this Plan, the Bank
shall file the Form AC Application, and the Holding Company shall file the
Registration Statement and the H-(e)1 Application. Upon filing the Form AC
Application, the Bank shall publish legal notice of the filing of the Form AC
Application in a newspaper having a general circulation in each community in
which the Bank maintains an office and/or by mailing a letter to each of its
Members, and shall publish such other notices of the Conversion as may be
required in connection with the H-(e)1 Application and by the regulations and
policies of the OTS.
G. The Bank shall obtain an opinion of its tax advisors or a favorable
ruling from the United States Internal Revenue Service which shall state that
the Conversion will not result in any gain or loss for Federal income tax
purposes to the Bank or its Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members. Receipt of a favorable opinion or ruling is a
condition precedent to completion of the Conversion.
IV. Meeting of Members
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Subsequent to the approval of the Plan by the OTS, the Special Meeting
shall be scheduled in accordance with the Bank's Bylaws. Promptly after receipt
of approval and at least 20 days but not more than 45 days prior to the Special
Meeting, the Bank shall distribute proxy solicitation materials to all Members
and beneficial owners of accounts held in fiduciary capacities where the
beneficial owners possess voting rights, as of the Record Date. The proxy
solicitation materials shall include a copy of the proxy statement to be used in
connection with such solicitation ("Proxy Statement") and other documents
authorized for use by the regulatory authorities and may also include a copy of
the Plan and/or a prospectus ("Prospectus") as provided in Paragraph V below.
The Bank shall also advise each Eligible Account Holder and Supplemental
Eligible Account Holder not entitled to vote at the Special Meeting of the
proposed Conversion and the scheduled Special Meeting, and provide a postage
prepaid card on which to indicate whether he wishes to receive the Prospectus,
if the Subscription Offering is not held concurrently with the proxy
solicitation.
Pursuant to OTS regulations, an affirmative vote of not less than a
majority of the total outstanding votes of the Members is required for approval
of the Plan. Voting may be in person or by proxy. The OTS shall be notified
promptly of the actions of the Members.
V. Summary Proxy Statement
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The Proxy Statement furnished to Members may be in summary form, provided
that a statement is made in bold-face type that a more detailed description of
the proposed transaction may be obtained by returning an enclosed postage
prepaid card or other written communication requesting supplemental information.
Without prior approval of the OTS, the Special Meeting shall not be held less
than 20 days after the last day on which the supplemental information statement
is mailed to requesting Members. The supplemental information statement may be
combined with the Prospectus if the Subscription Offering is commenced
concurrently with or during the proxy solicitation of Members for the Special
Meeting.
VI. Offering Documents
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The Holding Company may commence the Subscription Offering and, provided
that the Subscription Offering has commenced, may commence the Direct Community
Offering concurrently with or during the proxy solicitation of Members. The
Holding Company may close the Subscription Offering before the Special Meeting,
provided that the offer and sale of the Conversion Stock shall be conditioned
upon approval of the Plan by the Members at the Special Meeting. The Bank's
proxy solicitation materials may require Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members to return to the Bank by a reasonable
certain date a postage prepaid card or other written communication requesting
receipt of a Prospectus with respect to the Subscription Offering, provided that
if the Prospectus is not mailed concurrently with the proxy solicitation
materials, the Subscription Offering shall not be closed until the expiration of
30 days after the mailing of the proxy solicitation materials. If the
Subscription Offering is not commenced within 45 days after the Special Meeting,
the Bank may transmit, not more than 30 days prior to the
commencement of the Subscription Offering, to each Eligible Account Holder,
Supplemental Eligible Account Holder and other eligible subscribers who had been
furnished with proxy solicitation materials a notice which shall state that the
Bank is not required to furnish a Prospectus to them unless they return by a
reasonable date certain a postage prepaid card or other written communication
requesting the receipt of the Prospectus.
Prior to commencement of the Subscription Offering, the Direct Community
Offering and the Syndicated Community Offering, the Holding Company shall file
the Registration Statement. The Holding Company shall not distribute the final
Prospectus until the Registration Statement containing same has been declared
effective by the SEC and the Prospectus has been declared effective by the OTS.
VII. Combined Subscription and Direct Community Offering
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Instead of a separate Subscription Offering, all Subscription Rights may be
exercised by delivery of properly completed and executed Order Forms to the Bank
or selling group utilized in connection with the Direct Community Offering and
the Syndicated Community Offering. If a separate Subscription Offering is not
held, orders for Conversion Stock in the Direct Community Offering shall first
be filled pursuant to the priorities and limitations stated in Paragraph IX.C.,
below.
VIII. Consummation of the Conversion
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After receipt of all orders for Conversion Stock, the amendment of the
Bank's Federal Mutual Charter and Bylaws to authorize the issuance of shares of
Capital Stock and to conform to the requirements of a federal stock Bank, as
approved by the Members at the Special Meeting will be declared effective by the
OTS. At such time, the Conversion Stock will be issued and sold by the Holding
Company, the Capital Stock to be issued in the Conversion will be issued and
sold to the Holding Company, and the Converted Bank will become a wholly owned
subsidiary of the Holding Company. The Converted Bank will issue to the Holding
Company 1,000 shares of its common stock, representing all of the shares of
Capital Stock to be issued by the Converted Bank, and the Holding Company will
make payment to the Converted Bank of that portion of the aggregate net proceeds
realized by the Holding Company from the sale of the Conversion Stock under the
Plan as may be authorized or required by the OTS.
IX. Stock Offering
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A. Number of Shares
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The number of shares of Conversion Stock to be offered pursuant to the Plan
shall be determined initially by the Board of Directors of the Bank and the
Board of Directors of the Holding Company in conjunction with the determination
of the Purchase Price (as that term is defined in Paragraph IX.B. below). The
number of shares to be offered may be subsequently adjusted by the Board of
Directors prior to completion of the offering.
B. Independent Evaluation and Purchase Price of Shares
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All shares of Conversion Stock sold in the Conversion, including shares
sold in any Direct Community Offering, shall be sold at a uniform price per
share, referred to herein as the "Purchase Price." The Purchase Price shall be
determined by the Board of Directors of the Bank and the Board of Directors of
the Holding Company immediately prior to the simultaneous completion of all such
sales contemplated by this Plan on the basis of the estimated pro forma market
value of the Converted Bank and the Holding Company at such time. The estimated
pro forma market value of the Converted Bank and the Holding Company shall be
determined for such purpose by an independent appraiser on the basis of such
appropriate factors not inconsistent with the regulations of the OTS.
Immediately prior to the Subscription Offering, a subscription price range shall
be established which shall vary from 15% above to 15% below the average of the
minimum and maximum of the estimated price range. The maximum subscription
price (i.e., the per share amount to be remitted when subscribing for shares of
Conversion Stock) shall then be determined within the
subscription price range by the Board of Directors of the Bank. The subscription
price range and the number of shares to be offered may be revised after the
completion of the Subscription Offering with OTS approval without a
resolicitation of proxies or Order Forms or both.
C. Method of Offering Shares
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Subscription Rights shall be issued at no cost to Eligible Account Holders,
Tax-Qualified Employee Stock Benefit Plans, Supplemental Eligible Account
Holders and Other Members pursuant to priorities established by this Plan and
the regulations of the OTS. In order to effect the Conversion, all shares of
Conversion Stock proposed to be issued in connection with the Conversion must be
sold and, to the extent that shares are available, no subscriber shall be
allowed to purchase less than 25 shares; provided, however, that if the purchase
price is greater than $20.00 per share, the minimum number of shares which must
be subscribed for shall be adjusted so that the aggregate actual purchase price
required to be paid for such minimum number of shares does not exceed $500.00.
The priorities established for the purchase of shares are as follows:
1. Category 1: Eligible Account Holders
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a. Each Eligible Account Holder shall receive, without payment,
Subscription Rights entitling such Eligible Account Holder to purchase that
number of shares of Conversion Stock which is equal to the greater of the
maximum purchase limitation established for the Direct Community Offering,
one-tenth of one percent of the total offering or 15 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. If the allocation made in this
paragraph results in an oversubscription, shares of Conversion Stock shall
be allocated among subscribing Eligible Account Holders so as to permit
each such account holder, to the extent possible, to purchase a number of
shares of Conversion Stock sufficient to make his total allocation equal to
100 shares of Conversion Stock or the total amount of his subscription,
whichever is less. Any shares of Conversion Stock not so allocated shall
be allocated among the subscribing Eligible Account Holders on an equitable
basis, related to the amounts of their respective Qualifying Deposits as
compared to the total Qualifying Deposits of all subscribing Eligible
Account Holders.
b. Subscription Rights received by Officers and directors of the
Bank and their Associates, as Eligible Account Holders, based on their
increased deposits in the Bank in the one-year period preceding the
Eligibility Record Date shall be subordinated to all other subscriptions
involving the exercise of Subscription Rights pursuant to this Category.
2. Category 2: Tax-Qualified Employee Stock Benefit Plans
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a. Tax-Qualified Employee Stock Benefit Plans shall receive,
without payment, nontransferable Subscription Rights to purchase in the
aggregate up to 8% of the Conversion Stock, including shares of Conversion
Stock to be issued in the Conversion as result of an increase in the
estimated price range after commencement of the Subscription Offering and
prior to the completion of the Conversion. The Subscription Rights granted
to Tax-Qualified Stock Benefit Plans shall be subject to the availability
of shares of Conversion Stock after taking into account the shares of
Conversion Stock purchased by Eligible Account Holders; provided, however,
that in the event the number of shares offered in the Conversion is
increased to an amount greater than the maximum of the estimated price
range as set forth in the Prospectus ("Maximum Shares"), the Tax-Qualified
Employee Stock Benefit Plans shall have a priority right to purchase any
such shares exceeding the Maximum Shares up to an aggregate of 8% of the
Conversion Stock. Tax-Qualified Employee Stock
Benefit Plans may use funds contributed or borrowed by the Holding Company
or the Bank and/or borrowed from an independent financial institution to
exercise such Subscription Rights, and the Holding Company and the Bank may
make scheduled discretionary contributions thereto, provided that such
contributions do not cause the Holding Company or the Bank to fail to meet
any applicable capital requirements.
3. Category 3: Supplemental Eligible Account Holders
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a. In the event that the Eligibility Record Date is more than 15
months prior to the date of the latest amendment to the Form AC Application
filed prior to OTS approval, then, and only in that event, each
Supplemental Eligible Account Holder shall receive, without payment,
Subscription Rights entitling such Supplemental Eligible Account Holder to
purchase that number of shares of Conversion Stock which is equal to the
greater of the maximum purchase limitation established for the Direct
Community Offering, one-tenth of one percent of the total offering or 15
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 subscribing Supplemental
Eligible Account Holders.
b. Subscription Rights received pursuant to this category shall
be subordinated to Subscription Rights granted to Eligible Account Holders
and Tax-Qualified Employee Stock Benefit Plans.
c. Any Subscription Rights to purchase shares of Conversion Stock
received by an Eligible Account Holder in accordance with Category Number 1
shall reduce to the extent thereof the Subscription Rights to be
distributed pursuant to this Category.
d. In the event of an oversubscription for shares of Conversion
Stock pursuant to this Category, shares of Conversion Stock shall be
allocated among the subscribing Supplemental Eligible Account Holders as
follows:
(1) Shares of Conversion Stock shall be allocated so as to
permit each such Supplemental Eligible Account Holder, to the extent
possible, to purchase a number of shares of Conversion Stock
sufficient to make his total allocation (including the number of
shares of Conversion Stock, if any, allocated in accordance with
Category Number 1) equal to 100 shares of Conversion Stock or the
total amount of his subscription, whichever is less.
(2) Any shares of Conversion Stock not allocated in
accordance with subparagraph (1) above shall be allocated among the
subscribing Supplemental Eligible Account Holders on an equitable
basis, related to the amounts of their respective Qualifying Deposits
as compared to the total Qualifying Deposits of all subscribing
Supplemental Eligible Account Holders.
4. Category 4: Other Members
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a. Other Members shall receive, without payment, Subscription
Rights to purchase shares of Conversion Stock, after satisfying the
subscriptions of Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans and Supplemental Eligible Account Holders pursuant to
Category Nos. l, 2 and 3 above, subject to the following conditions:
(1) Each such Other Member shall be entitled to subscribe
for the greater of the maximum purchase limitation established for the
Direct Community Offering or one-tenth of one percent of the total
offering.
(2) In the event of an oversubscription for shares of Conversion
Stock pursuant to Category No. 4, the shares of Conversion Stock
available shall be allocated among the subscribing Other Members pro
rata on the basis of the amounts of their respective subscriptions.
D. Direct Community Offering and Syndicated Community Offering
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1. Any shares of Conversion Stock not purchased through the exercise
of Subscription Rights set forth in Category Nos. 1 through 4 above may be
sold by the Holding Company to Persons under such terms and conditions as
may be established by the Bank's Board of Directors with the concurrence of
the OTS. The Direct Community Offering may commence concurrently with or as
soon as possible after the completion of the Subscription Offering and must
be completed within 45 days after completion of the Subscription Offering,
unless extended with the approval of the OTS. No Person, including Persons
on a joint account, may purchase shares of Conversion Stock in the Direct
Community Offering having an aggregate purchase price of more than
$100,000. The right to purchase shares of Conversion Stock under this
Category is subject to the right of the Bank or the Holding Company to
accept or reject such subscriptions in whole or in part. In the event of
an oversubscription for shares in this Category, the shares available shall
be allocated among prospective purchasers pro rata on the basis of the
amounts of their respective orders. The offering price for which such
shares are sold to the general public in the Direct Community Offering
shall be the Purchase Price.
2. Orders received in the Direct Community Offering first shall be
filled up to a maximum of 2% of the Conversion Stock and thereafter
remaining shares shall be allocated on an equal number of shares basis per
order until all orders have been filled.
3. The Conversion Stock offered in the Direct Community Offering
shall be offered and sold in a manner that will achieve the widest
distribution thereof. Preference shall be given in the Direct Community
Offering to natural Persons and trusts of natural Persons residing in the
Local Community.
4. Subject to such terms, conditions and procedures as may be
determined by the Bank and the Holding Company, all shares of Conversion
Stock not subscribed for in the Subscription Offering or ordered in the
Direct Community Offering may be sold by a syndicate of broker-dealers to
the general public in a Syndicated Community Offering. No Person,
including Persons on a joint account, may purchase shares of Conversion
Stock in the Syndicated Community Offering having an aggregate purchase
price of more than $100,000. Each order for Conversion Stock in the
Syndicated Community Offering shall be subject to the absolute right of the
Bank and the Holding Company to accept or reject any such order in whole or
in part either at the time of receipt of an order or as soon as practicable
after completion of the Syndicated Community Offering. The Bank and the
Holding Company may commence the Syndicated Community Offering concurrently
with, at any time during, or as soon as practicable after the end of the
Subscription Offering and/or Direct Community Offering, provided that the
Syndicated Community Offering must be completed within 45 days after the
completion of the Subscription Offering, unless extended by the Bank and
the Holding Company with the approval of the OTS.
5. If for any reason a Syndicated Community Offering of shares of
Conversion Stock not sold in the Subscription Offering and the Direct
Community Offering cannot be effected, or in the event that any
insignificant residue of shares of Conversion Stock is not sold in the
Subscription Offering, Direct Community Offering or Syndicated Community
Offering, the Bank and the Holding Company shall use their best efforts
to obtain other purchasers for such shares in such manner and upon such
conditions as may be satisfactory to the OTS.
6. In the event a Direct Community Offering or Syndicated Community
Offering do not appear feasible, the Bank will immediately consult with the
OTS to determine the most viable alternative available to effect the
completion of the Conversion. Should no viable alternative exist, the Bank
may terminate the Conversion with the concurrence of the OTS.
E. Limitations Upon Purchases
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The following additional limitations and exceptions shall be imposed upon
purchases of shares of Conversion Stock:
1. No Person, together with Associates of or Persons Acting in
Concert with such Person, may purchase in the aggregate more than the
overall maximum purchase limitation of $150,000 of Conversion Stock, except
that Tax-Qualified Employee Stock Benefit Plans may purchase up to 8% of
the total Conversion Stock issued and shares held or to be held by the Tax-
Qualified Employee Stock Benefit Plans and attributable to a Person shall
not be aggregated with other shares purchased directly by or otherwise
attributable to such Person.
2. Officers and directors of the Bank and Associates thereof may not
purchase in the aggregate more than 35% of the shares issued in the
Conversion.
3. The Bank's and Holding Company's Boards of Directors will not be
deemed to be Associates or a group of Persons Acting in Concert with other
directors or trustees solely as a result of membership on the Board of
Directors.
4. The Bank's Board of Directors, with the approval of the OTS and
without further approval of Members, may, as a result of market conditions
and other factors, increase or decrease the purchase limitation in
paragraphs 1 and 4 above or the number of shares of Conversion Stock to be
sold in the Conversion. If the Bank or the Holding Company, as the case may
be, increases the maximum purchase limitations or the number of shares of
Conversion Stock to be sold in the Conversion, the Bank or the Holding
Company, as the case may be, is only required to resolicit Persons who
subscribed for the maximum purchase amount and may, in the sole discretion
of the Bank or the Holding Company, as the case may be, resolicit certain
other large subscribers. If the Bank or the Holding Company, as the case
may be, decreases the maximum purchase limitations or the number of shares
of Conversion Stock to be sold in the Conversion, the orders of any Person
who subscribed for the maximum purchase amount shall be decreased by the
minimum amount necessary so that such Person shall be in compliance with
the then maximum number of shares permitted to be subscribed for by such
Person.
Each Person purchasing Conversion Stock in the Conversion shall be deemed
to confirm that such purchase does not conflict with the purchase limitations
under the Plan or otherwise imposed by law, rule or regulation. In the event
that such purchase limitations are violated by any Person (including any
Associate or group of Persons affiliated or otherwise Acting in Concert with
such Person), the Holding Company shall have the right to purchase from such
Person at the actual Purchase Price per share all shares acquired by such Person
in excess of such purchase limitations or, if such excess shares have been sold
by such Person, to receive from such Person the difference between the actual
Purchase Price per share paid for such excess shares and the price at which such
excess shares were sold by such Person. This right of the Holding Company to
purchase such excess shares shall be assignable by the Holding Company.
F. Restrictions On and Other Characteristics of the Conversion Stock
-----------------------------------------------------------------
1. Transferability. Conversion Stock purchased by Officers and
---------------
directors of the Bank and officers and directors of the Holding Company and
each of their Associates shall not be sold or otherwise disposed of for
value for a period of one year from the date of Conversion, except for any
disposition (i) following the death of the original purchaser or (ii)
resulting from an exchange of securities in a merger or acquisition
approved by the regulatory authorities having jurisdiction.
The Conversion Stock issued by the Holding Company to such Officers
and directors and each of their Associates shall bear a legend giving
appropriate notice of the one-year holding period restriction. Said legend
shall state as follows:
"The shares evidenced by this certificate are restricted as to
transfer for a period of one year from the date of this certificate
pursuant to Part 563b of the Rules and Regulations of the Office of
Thrift Supervision. These shares may not be transferred prior thereto
without a legal opinion of counsel that said transfer is permissible
under the provisions of applicable laws and regulations."
In addition, the Holding Company shall give appropriate instructions
to the transfer agent of the Holding Company Stock with respect to the
foregoing restrictions. Any shares of Holding Company Stock subsequently
issued as a stock dividend, stock split or otherwise, with respect to any
such restricted stock, shall be subject to the same holding period
restrictions for such Persons as may be then applicable to such restricted
stock.
2. Subsequent Purchases by Officers and Directors. Without prior
----------------------------------------------
approval of the OTS, if applicable, Officers and directors of the Bank and
officers and directors of the Holding Company, and their Associates, shall
be prohibited for a period of three years following completion of the
Conversion from purchasing outstanding shares of Holding Company Stock,
except from a broker or dealer registered with the SEC. Notwithstanding
this restriction, purchases involving more than 1% of the total outstanding
shares of Holding Company Stock and purchases made and shares held by a
Tax-Qualified or non-Tax-Qualified Employee Stock Benefit Plan which may be
attributable to such directors and Officers may be made in negotiated
transactions without OTS permission or the use of a broker or dealer.
3. Repurchase and Dividend Rights. For a period of three years
------------------------------
following the consummation of the Conversion, any repurchases of Holding
Company Stock by the Holding Company from any Person shall be subject to
the then applicable rules and regulations and policies of the OTS. The
Converted Bank may not declare or pay a cash dividend on or repurchase any
of its Capital Stock if the result thereof would be to reduce the
regulatory capital of the Converted Bank below the amount required for the
liquidation account described in Paragraph XIII. Further, any dividend
declared or paid on the Capital Stock shall comply with the then applicable
rules and regulations of the OTS.
4. Voting Rights. After the Conversion, holders of Savings Accounts
-------------
in and obligors on loans of the Converted Bank will not have voting rights
in the Converted Bank. Exclusive voting rights with respect to the Holding
Company shall be vested in the holders of Holding Company Stock; holders of
Savings Accounts in and obligors on loans of the Converted Bank will not
have any voting rights in the Holding Company except and to the extent that
such Persons become stockholders of the Holding Company, and the Holding
Company will have exclusive voting rights with respect to the Converted
Bank's Capital Stock.
G. Mailing of Offering Materials and Collation of Subscriptions
------------------------------------------------------------
The sale of all shares of Conversion Stock offered pursuant to the Plan
must be completed within 24 months after approval of the Plan at the Special
Meeting. After approval of the Plan by the OTS and the declaration of the
effectiveness of the Prospectus, the Holding Company shall distribute
Prospectuses and Order Forms for the purchase of shares of Conversion Stock in
accordance with the terms of the Plan.
The recipient of an Order Form shall be provided not less than 20 days nor
more than 45 days from the date of mailing, unless extended, properly to
complete, execute and return the Order Form to the Holding Company or the Bank.
Self-addressed, postage prepaid, return envelopes shall accompany all Order
Forms when they are mailed. Failure of any eligible subscriber to return a
properly completed and executed Order Form within the prescribed time limits
shall be deemed a waiver and a release by such eligible subscriber of any rights
to purchase shares of Conversion Stock under the Plan.
The sale of all shares of Conversion Stock proposed to be issued in
connection with the Conversion must be completed within 45 days after the last
day of the Subscription Offering, unless extended by the Holding Company with
the approval of the OTS.
H. Method of Payment
-----------------
Payment for all shares of Conversion Stock may be made in cash, by check or
by money order, or if a subscriber has a Savings Account(s) in the Bank, such
subscriber may authorize the Bank to charge the subscriber's Savings Account(s).
The Bank shall pay interest at not less than the passbook rate on all amounts
paid in cash or by check or money order to purchase shares of Conversion Stock
in the Subscription Offering from the date payment is received until the
Conversion is completed or terminated. The Bank is not permitted knowingly to
loan funds or otherwise extend any credit to any Person for the purpose of
purchasing Conversion Stock.
If a subscriber authorizes the Bank to charge the subscriber's Savings
Account(s), the funds shall remain in the subscriber's Savings Account(s) and
shall continue to earn interest, but may not be used by such subscriber until
the Conversion is completed or terminated, whichever is earlier. The withdrawal
shall be given effect only concurrently with the sale of all shares of
Conversion Stock proposed to be sold in the Conversion and only to the extent
necessary to satisfy the subscription at a price equal to the aggregate Purchase
Price. The Bank shall allow subscribers to purchase shares of Conversion Stock
by withdrawing funds from certificate accounts held with the Bank without the
assessment of early withdrawal penalties, subject to the approval, if necessary,
of the applicable regulatory authorities. In the case of early withdrawal of
only a portion of such account, the certificate evidencing such account shall be
canceled if the remaining balance of the account is less than the applicable
minimum balance requirement. In that event, the remaining balance shall earn
interest at the passbook rate. This waiver of the early withdrawal penalty is
applicable only to withdrawals made in connection with the purchase of
Conversion Stock under the Plan.
Tax-Qualified Employee Stock Benefit Plans may subscribe for shares by
submitting an Order Form, along with evidence of a loan commitment from a
financial institution for the purchase of shares, if applicable, during the
Subscription Offering and by making payment for the shares on the date of the
closing of the Conversion.
I. Undelivered, Defective or Late Order Forms; Insufficient Payment
----------------------------------------------------------------
If an Order Form (i) is not delivered and is returned to the Holding
Company or the Bank by the United States Postal Service (or the Holding Company
or Bank is unable to locate the addressee); (ii) is not returned to the Holding
Company or Bank, or is returned to the Holding Company or Bank after expiration
of the date specified thereon; (iii) is defectively completed or executed; or
(iv) is not accompanied by the total required payment for the shares of
Conversion Stock subscribed for (including cases in which the subscribers'
Savings Accounts are insufficient to cover the authorized withdrawal for the
required payment), the Subscription Rights of the Person to whom such rights
have
been granted shall not be honored and shall be treated as though such Person
failed to return the completed Order Form within the time period specified
therein. Alternatively, the Holding Company or Bank may, but shall not be
required to, waive any irregularity relating to any Order Form or require the
submission of a corrected Order Form or the remit tance of full payment for the
shares of Conversion Stock subscribed for by such date as the Holding Company or
Bank may specify. Subscription orders, once tendered, shall not be revocable.
The Holding Company's and Bank's interpreta tion of the terms and conditions of
the Plan and of the Order Forms shall be final.
J. Members in Non-Qualified States or in Foreign Countries
-------------------------------------------------------
The Holding Company and the Bank will make reasonable efforts to comply
with the securities laws of all states in the United States in which persons
entitled to subscribe for stock pursuant to the Plan reside. However, the
Holding Company and the Bank are not required to offer stock in the Subscription
Offering to any person who resides in a foreign country or resides in a state of
the United States with respect to which (i) a small number of persons otherwise
eligible to subscribe for shares of Common Stock reside in such state; or (ii)
the Holding Company or the Bank determines that compliance with the securities
laws of such state would be impracticable for reasons of cost or otherwise,
including but not limited to a request or requirement that the Holding Company
and the Bank or their officers, directors or trustees register as a broker,
dealer, salesman or selling agent, under the securities laws of such state, or a
request or requirement to register or otherwise qualify the Subscription Rights
or Common Stock for sale or submit any filing with respect thereto in such
state. Where the number of persons eligible to subscribe for shares in one
state is small relative to other states, the Holding Company and the Bank will
base their decision as to whether or not to offer the Common Stock in such state
on a number of factors, including the size of accounts held by account holders
in the state, the cost of reviewing the registration and qualification
requirements of the state (and of actually registering or qualifying the shares)
or the need to register the Holding Company, its officers, directors or
employees as brokers, dealers or salesmen.
X. Federal Stock Charter and Bylaws
--------------------------------
As part of the Conversion, a Federal Stock Charter and Bylaws will be
adopted to authorize the Converted Bank to operate as a federal stock savings
bank. By approving the Plan, the Members of the Bank will thereby approve the
Federal Stock Charter and Bylaws. Prior to completion of the Conversion, the
Federal Stock Charter and Bylaws may be amended in accordance with the
provisions and limitations for amending the Plan under Paragraph XVII below.
The effective date of the adoption of the Federal Stock Charter and Bylaws shall
be the date of the issuance of the Conversion Stock, which shall be the date of
consummation of the Conversion.
XI. Post Conversion Filing and Market Making
----------------------------------------
In connection with the Conversion, the Holding Company shall register the
Conversion Stock with the SEC pursuant to the Securities Exchange Act of 1934,
as amended, and shall undertake not to deregister such Conversion Stock for a
period of three years thereafter.
The Holding Company shall use its best efforts to encourage and assist
various Market Makers to establish and maintain a market for the shares of its
stock. The Holding Company shall also use its best efforts to list its stock
through The Nasdaq Stock Market or on a national or regional securities
exchange.
XII. Status of Savings Accounts and Loans Subsequent to Conversion
-------------------------------------------------------------
All Savings Accounts shall retain the same status after Conversion as these
accounts had prior to Conversion. Each Savings Account holder shall retain,
without payment, a withdrawable Savings Account(s) after the Conversion, equal
in amount to the withdrawable value of such holder's Savings Account(s) prior to
Conversion. All Savings Accounts will continue to be insured by the Savings
Association Insurance Fund of the FDIC up to the applicable limits
of insurance coverage. All loans shall retain the same status after the
Conversion as they had prior to the Conversion. See Paragraph IX.F.4. with
respect to the termination of voting rights of Members.
XIII. Liquidation Account
-------------------
After the Conversion, holders of Savings Accounts shall not be entitled to
share in any residual assets in the event of liquidation of the Converted Bank.
However, the Bank shall, at the time of the Conversion, establish a liquidation
account in an amount equal to its total net worth as of the date of the latest
statement of financial condition contained in the final Prospectus. The
function of the liquidation account shall be to establish a priority on
liquidation and, except as provided in Paragraph IX.F.3 above, the existence of
the liquidation account shall not operate to restrict the use or application of
any of the net worth accounts of the Converted Bank.
The liquidation account shall be maintained by the Converted Bank
subsequent to the Conversion for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders who retain their Savings Accounts in the
Converted Bank. Each Eligible Account Holder and Supplemental Eligible Account
Holder shall, with respect to each Savings Account held, have a related inchoate
interest in a portion of the liquidation account balance ("subaccount").
The initial subaccount balance for a Savings Account held by an Eligible
Account Holder and/or a Supplemental Eligible Account Holder shall be determined
by multiplying the opening balance in the liquidation account by a fraction of
which the numerator is the amount of such holder's Qualifying Deposit in the
Savings Account and the denominator is the total amount of the Qualifying
Deposits of all Eligible Account Holders and Supplemental Eligible Account
Holders. Such initial subaccount balance shall not be increased, and it shall
be subject to downward adjustment as provided below.
If the deposit balance in any Savings Account of an Eligible Account Holder
or Supplemental Eligible Account Holder at the close of business on any annual
closing date subsequent to the Eligibility Record Date is less than the lesser
of (i) the deposit balance in such Savings Account at the close of business on
any other annual closing date subsequent to the Eligibility Record Date or the
Supplemental Eligibility Record Date or (ii) the amount of the Qualifying
Deposit in such Savings Account on the Eligibility Record Date or the
Supplemental Eligibility Record Date, then the subaccount balance for such
Savings Account shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of
a downward adjustment, such subaccount balance shall not be subsequently
increased, notwithstanding any increase in the deposit balance of the related
Savings Account. If any such Savings Account is closed, the related subaccount
balance shall be reduced to zero.
In the event of a complete liquidation of the Converted Bank, each Eligible
Account Holder and Supplemental Eligible Account Holder shall be entitled to
receive a liquidation distribution from the liquidation account in the amount of
the then current adjusted subaccount balance(s) for Savings Account(s) then held
by such holder before any liquida tion distribution may be made to
stockholders. No merger, consolidation, bulk purchase of assets with
assumptions of Savings Accounts and other liabilities or similar transactions
with another Federally-insured institution in which the Converted Bank is not
the surviving institution shall be considered to be a complete liquidation. In
any such transaction, the liquidation account shall be assumed by the surviving
institution.
XIV. Regulatory Restrictions on Acquisition of Holding Company
---------------------------------------------------------
A. OTS regulations provide that for a period of three years following
completion of the Conversion, no Person (i.e, individual, a group Acting in
Concert, a corporation, a partnership, an Bank, a joint stock company, a trust,
or any 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 or its holding company) shall directly, or indirectly,
offer to purchase or actually acquire the beneficial ownership of more than 10%
of any class of equity security of the Holding Company without the prior
approval of the OTS. However, approval is not required for purchases directly
from
the Holding Company or the underwriters or selling group acting on its behalf
with a view towards public resale, or for purchases not exceeding 1% per annum
of the shares outstanding. Civil penalties may be imposed by the OTS for willful
violation or assistance of any violation. Where any Person, directly or
indirectly, acquires beneficial ownership of more than 10% of any class of
equity security of the Holding Company within such three-year period, without
the prior approval of the OTS, stock of the Holding Company beneficially owned
by such Person in excess of 10% 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 matter submitted to the stockholders for a vote. The provisions of this
regulation shall not apply to the acquisition of securities by Tax-Qualified
Employee Stock Benefit Plans provided that such plans do not have beneficial
ownership of more than 25% of any class of equity security of the Holding
Company.
B. The Holding Company may provide in its articles/certificate of
incorporation, or similar document, a provision that, for a specified period of
up to five years following the date of the completion of the Conversion, no
Person shall directly or indirectly offer to acquire or actually acquire the
beneficial ownership of more than 10% of any class of equity security of the
Holding Company. Such provisions would not apply to acquisition of securities
by Tax-Qualified Employee Stock Benefit Plans provided that such plans do not
have beneficial ownership of more than 25% of any class of equity security of
the Holding Company. The Holding Company may provide in its articles/certificate
of incorporation, or similar document, for such other provisions affecting the
acquisition of its stock as shall be determined by its Board of Directors.
XV. Directors and Officers of the Converted Bank
--------------------------------------------
The Conversion is not intended to result in any change in the directors or
Officers. Each Person serving as a director of the Bank at the time of
Conversion shall continue to serve as a member of the Converted Bank's Board of
Directors, subject to the Converted Bank's Federal Stock Charter and Bylaws.
The Persons serving as Officers immediately prior to the Conversion will
continue to serve at the discretion of the Board of Directors in their
respective capacities as Officers of the Converted Bank. In connection with the
Conversion, the Bank and the Holding Company may enter into employment
agreements on such terms and with such officers as shall be determined by the
Boards of Directors of the Bank and the Holding Company.
XVI. Executive Compensation
----------------------
The Bank and the Holding Company may adopt, subject to any required
approvals, executive compensation or other benefit programs, including but not
limited to compensation plans involving stock options, stock appreciation
rights, restricted stock grants, employee recognition programs and the like.
XVII. Amendment or Termination of Plan
--------------------------------
If necessary or desirable, the Plan may be amended by a two-thirds vote of
the Bank's Board of Directors, at any time prior to submission of the Plan and
proxy materials to the Members. At any time after submission of the Plan and
proxy materials to the Members, the Plan may be amended by a two-thirds vote of
the Board of Directors only with the concurrence of the OTS. The Plan may be
terminated by a two-thirds vote of the Board of Directors at any time prior to
the Special Meeting, and at any time following such Special Meeting with the
concurrence of the OTS. In its discretion, the Board of Directors may modify or
terminate the Plan upon the order of the regulatory authorities without a
resolicitation of proxies or another meeting of the Members.
In the event that mandatory new regulations pertaining to conversions are
adopted by the OTS prior to the completion of the Conversion, the Plan shall be
amended to conform to the new mandatory regulations without a resolicitation of
proxies or another meeting of Members. In the event that new conversion
regulations adopted by the OTS prior to completion of the Conversion contain
optional provisions, the Plan may be amended to utilize such optional provisions
at the discretion of the Board of Directors without a resolicitation of proxies
or another meeting of Members.
By adoption of the Plan, the Members authorize the Board of Directors to
amend and/or terminate the Plan under the circumstances set forth above.
XVIII. Expenses of the Conversion
--------------------------
The Holding Company and the Bank shall use their best efforts to assure
that expenses incurred in connection with the Conversion shall be reasonable.
XIX. Contributions to Tax-Qualified Plans
------------------------------------
The Holding Company and/or the Bank may make discretionary contributions to
the Tax-Qualified Employee Stock Benefit Plans, provided such contributions do
not cause the Bank to fail to meet its regulatory capital requirements.
* * *