SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _______)
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a 6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant toss.240.14a-11(c) orss.240.14a-12
Synergy Financial Group, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SYNERGY FINANCIAL GROUP, INC.
310 North Avenue East
Cranford, New Jersey 07016
(908) 272-3838
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Notice is hereby given that a Special Meeting of Stockholders (the
"Special Meeting") of Synergy Financial Group, Inc. (the "Company") will be held
at the office of the Company, located at 310 North Avenue East, Cranford, New
Jersey on December 22, 2003 at 10:30 a.m., eastern time. As of the date hereof,
the Company owns 100% of the common stock of Synergy Bank and is majority-owned
by Synergy, MHC (the "Mutual Holding Company").
The Special Meeting is for the purpose of considering and voting upon:
1. A Plan of Conversion and Reorganization (the "Plan"), pursuant to
which the Mutual Holding Company will be merged into Synergy Bank
and the Company will be succeeded by a newly incorporated New
Jersey corporation with the same name as the Company (the "New
Holding Company"), which has been established for the purpose of
completing the conversion and reorganization. As part of the
conversion and reorganization, shares of common stock
representing the Mutual Holding Company's ownership interest in
the Company will be offered for sale in a subscription and
community offering. Common stock currently held by the public
stockholders of the Company will be converted into new shares of
the New Holding Company pursuant to an exchange ratio that will
ensure that each stockholder at the time of the conversion and
reorganization will own the same percentage of the New Holding
Company's common stock as he or she held in the Company's common
stock immediately prior to the conversion, exclusive of any
shares purchased by the stockholder in the offering and cash
received in lieu of fractional shares.
2. Any other matters that may lawfully come before the Special
Meeting. As of the date of mailing of this Notice, the Board of
Directors is not aware of any other matters that may come before
the Special Meeting.
Stockholders of Synergy Financial Group, Inc. at the close of business
on October 31, 2003 are entitled to notice of and to vote at the Special
Meeting.
/s/Kevin A. Wenthen
------------------------
Kevin A. Wenthen
Secretary
November 12, 2003
Cranford, New Jersey
_________________________________
YOUR VOTE IS VERY IMPORTANT. THE ENCLOSED PROSPECTUS PROVIDES A MORE
DETAILED DESCRIPTION OF THE PROPOSED TRANSACTION AND IS INCORPORATED BY
REFERENCE HERETO. IF YOU HAVE ANY QUESTIONS, PLEASE CALL OUR CONVERSION
CENTER AT (908) 956-4011.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE PLAN BY COMPLETING THE ENCLOSED PROXY CARD AND PROMPTLY
RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE. YOUR
VOTE IS VERY IMPORTANT. ANY PROXY GIVEN BY A STOCKHOLDER MAY BE REVOKED BY
FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED
PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING MAY REVOKE
HIS PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE SPECIAL MEETING.
QUESTIONS AND ANSWERS
FOR STOCKHOLDERS OF SYNERGY FINANCIAL GROUP, INC.
You should read this document and the accompanying Prospectus (which
includes a detailed index) for information about the conversion and
reorganization. The Plan of Conversion and Reorganization described herein has
been conditionally approved by our regulators.
Q. What are stockholders being asked to approve?
A. The Company's stockholders as of October 31, 2003 are being asked to vote
on the proposed Plan of Conversion and Reorganization, under which the
Mutual Holding Company will convert into stock form and merge into Synergy
Bank and the New Holding Company will offer for sale to depositors of
Synergy Bank and the public the ownership position in Synergy Financial
Group, Inc. now owned by the Mutual Holding Company.
Q. What are the reasons for the mutual-to-stock conversion and related stock
offering?
A. The primary reason for the conversion and reorganization is to raise
additional equity capital, which will support future deposit growth and
expanded operations. We also intend to list the common stock on the Nasdaq
National Market, which will provide additional liquidity and visibility for
the common stock, additional flexibility in merger and acquisition
transactions, and easier access to the capital markets for possible future
equity and debt offerings.
Q. What will stockholders receive for their existing Synergy Financial Group,
Inc. shares?
A. As more fully described in the sections of the Prospectus entitled "The
Conversion" and "The Stock Offering," depending on the number of shares
sold in the offering, each share of common stock that you own upon
completion of the conversion and reorganization will be exchanged for
between 2.3929 new shares at the minimum and 3.2374 new shares at the
maximum of the offering range (though cash will be paid in lieu of
fractional shares).
Q. Why will the shares that I receive be based on a price of $10.00 per share
rather than the trading price of the Synergy Financial Group, Inc. common
stock prior to the conversion?
A. The Company's Board of Directors selected a price of $10.00 per share for
the stock offered for sale because it is a commonly selected per share
price for mutual-to-stock conversions of savings institutions. The number
of new shares that you will receive for your existing shares will not
depend on the market price of Synergy Financial Group, Inc. common stock.
It will depend on the number of shares sold in the offering, which will in
turn depend on the final independent appraisal of the pro forma market
value of Synergy Financial Group, Inc. assuming completion of the
conversion and the stock offering. The result will be that you will own the
same percentage of common stock of the New Holding Company after the
conversion and reorganization as you held in the common stock of the
Company immediately prior thereto, exclusive of (i) any shares purchased by
you in the stock offering and (ii) cash received in lieu of fractional
shares.
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Q. Should I submit my stock certificate(s) now?
A. No. If you hold your certificate(s), instructions for exchanging the shares
will be sent to you after completion of the conversion and reorganization.
If your shares are held in "street name" rather than in certificate form,
the share exchange will occur automatically upon completion of the
conversion and reorganization.
Q. If my shares are held in street name, will my broker automatically vote on
my behalf?
A. No. Your broker will not be able to vote your shares without instructions
from you. You should instruct your broker how to vote your shares, using
the directions that your broker provides to you.
Q. What if I do not give voting instructions to my broker?
A. Your vote is important. The Plan of Conversion and Reorganization requires
the approval of at least two-thirds of the outstanding shares of common
stock of Synergy Financial Group, Inc., including those shares held by the
MHC, and a majority of the votes eligible to be cast, excluding those
shares held by the MHC. If you do not instruct your broker to vote your
shares, the unvoted proxy will be considered as a vote cast against the
Plan of Conversion and Reorganization.
Q. May I place an order to purchase shares in the offering, in addition to the
shares that I will receive in the exchange?
A. Yes. Eligible depositors of Synergy Bank have priority subscription rights
allowing them to purchase common stock in the subscription offering. Shares
not purchased in the subscription offering may be available for sale to the
public in a community offering, as fully described in the Prospectus.
Other Questions?
For answers to other questions, please read the Proxy Statement and the
Prospectus. Questions about the offering or voting may be directed to the
Conversion Center by calling (908) 956-4011, Monday through Friday, between 9:00
a.m. and 5:00 p.m., eastern time.
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SYNERGY FINANCIAL GROUP, INC.
310 North Avenue East
Cranford, New Jersey 07016
(908) 272-3838
PROXY STATEMENT/PROSPECTUS
November 12, 2003
YOUR PROXY, IN THE FORM ENCLOSED, IS SOLICITED BY THE BOARD OF
DIRECTORS OF SYNERGY FINANCIAL GROUP, INC. (THE "COMPANY"), FOR USE AT THE
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 22 , 2003, AND AT ANY
ADJOURNMENT OF THAT MEETING, FOR THE PURPOSES SET FORTH IN THE FOREGOING NOTICE
OF SPECIAL MEETING.
VOTING IN FAVOR OF THE PLAN WILL NOT OBLIGATE ANY PERSON TO PURCHASE
CONVERSION STOCK. SHARES OF CONVERSION STOCK ARE BEING OFFERED ONLY BY THE
PROSPECTUS.
THIS PROXY STATEMENT IS A SUMMARY OF INFORMATION ABOUT THE MUTUAL
HOLDING COMPANY, THE COMPANY, THE BANK AND THE NEW HOLDING COMPANY
(COLLECTIVELY, THE "PRIMARY PARTIES") AND THE PROPOSED CONVERSION AND
REORGANIZATION. A MORE DETAILED DESCRIPTION OF THE PRIMARY PARTIES AND THE
CONVERSION AND REORGANIZATION IS INCLUDED IN THE PROSPECTUS, WHICH IS
INCORPORATED BY REFERENCE HEREIN.
VOTING RIGHTS AND VOTE REQUIRED FOR APPROVAL
Only stockholders of record at the close of business on October 31,
2003 (the "Voting Record Date") are entitled to notice of and to vote at the
Special Meeting. Pursuant to Office of Thrift Supervision ("OTS") regulations,
consummation of the proposed conversion and reorganization is conditioned upon
the approval of the Plan by the OTS, as well as (1) the approval of at least
two-thirds of the total number of votes eligible to be cast by the stockholders
of the Company, including those shares held by the Mutual Holding Company, and a
majority of the votes eligible to be cast at the Special Meeting by the
stockholders of the Company, excluding those shares held by the Mutual Holding
Company (the "Public Stockholders"), as of the close of business on the Voting
Record Date, and (2) the approval of at least a majority of the votes eligible
to be cast by the members of the Mutual Holding Company as of the voting record
date for the special meeting of members called for the purpose of considering
the Plan. The Mutual Holding Company intends to vote its shares of Synergy
Financial Group, Inc. Common Stock, which amount to 56.5% of the outstanding
shares, in favor of the Plan at the Special Meeting.
This Proxy Statement, including the enclosed Prospectus dated November
12, 2003, which is incorporated by reference, and related materials are first
being mailed to stockholders of the Company on or about November 21, 2003.
THE BOARD OF DIRECTORS OF THE COMPANY URGES YOU TO CAST YOUR VOTE FOR
THE PLAN AND TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE, EVEN IF YOU DO NOT INTEND TO PURCHASE
COMMON STOCK. THIS WILL ENSURE THAT YOUR VOTE WILL BE COUNTED.
THE OTS HAS APPROVED THE PLAN, SUBJECT TO THE APPROVAL OF THE
STOCKHOLDERS OF THE COMPANY AND THE SATISFACTION OF CERTAIN OTHER CONDITIONS.
HOWEVER, SUCH APPROVAL DOES NOT CONSTITUTE AN ENDORSEMENT OR RECOMMENDATION OF
THE PLAN BY THE OTS.
PROXIES
The Company's Board of Directors is soliciting the proxy which
accompanies this Proxy Statement for use at the Special Meeting. Stockholders
may vote at the Special Meeting or any adjournment thereof in person or by
proxy. All properly executed proxies received by the Board of Directors of the
Company will be voted in accordance with the instructions indicated thereon by
the stockholders giving such proxies. If no contrary instructions are given,
such proxies will be voted in favor of the proposals as described herein. If any
other matters are properly presented before the Special Meeting and may properly
be voted upon, the proxies solicited hereby will be voted on such matters in
accordance with the best judgment of the proxy holders named therein. Any
stockholder giving a proxy will have the right to revoke his proxy at any time
before it is voted by delivering written notice or a duly executed proxy bearing
a later date to the Secretary of the Company, provided that such notice or proxy
is received by the Secretary prior to the Special Meeting or any adjournment
thereof, or by attending the Special Meeting and voting in person. If there are
not sufficient votes for approval of the proposals at the time of the Special
Meeting, the Special Meeting may be adjourned to permit further solicitation of
proxies.
Proxies may be solicited by officers, directors or other employees of
the Mutual Holding Company in person, by telephone or through other forms of
communication. Sandler O'Neill & Partners, L.P. ("Sandler") will assist in the
solicitation of proxies. Sandler will receive a $25,000 management fee plus
out-of-pocket expenses for its management and proxy solicitation services in
connection with the conversion and reorganization.
The proxies solicited hereby will be used only at the Special Meeting
and at any adjournment thereof; they will not be used at any other meeting.
The approval of the Plan will require the affirmative vote of at least
two-thirds of the total votes eligible to be cast by all stockholders of the
Company, including the Mutual Holding Company, and the affirmative vote of at
least a majority of the total votes eligible to be cast by the Public
Stockholders.
As of October 31, 2003, the Mutual Holding Company held 1,889,502
shares or 56.5% of the outstanding shares of the Company's common stock and the
Mutual Holding Company intends to vote all such shares in favor of the Plan.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP THEREOF
On the Voting Record Date, there were 3,344,252 shares of Synergy
Financial Group, Inc. Common Stock outstanding, and the Company had no other
class of equity securities outstanding. Each share of Synergy Financial Group,
Inc. Common Stock outstanding on the Voting Record Date is entitled to one vote
at the Special Meeting on all matters properly presented at the Special Meeting.
As provided in the Company's Charter, for a period of five years from
the effective date of the Charter, no person, except for the Mutual Holding
Company, is permitted to beneficially own in excess
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of 10% of the outstanding shares of common stock (the "Limit") of the Company,
and any shares of common stock acquired in violation of this Limit are not
entitled to any vote. A person or entity is deemed to beneficially own shares
owned by an affiliate of such person or entity, as well as persons acting in
concert with such person or entity.
A majority of the outstanding shares of Synergy Financial Group, Inc.
Common Stock entitled to vote, represented in person or by proxy, shall
constitute a quorum at the Special Meeting. Shares as to which the "ABSTAIN" box
has been marked on the proxy and any shares held by brokers in street name for
customers which are not voted in the absence of instructions from the customers
("broker non-votes") will be counted as present for determining if a quorum is
present. Because the Plan must be approved by the vote of at least two-thirds of
the outstanding Synergy Financial Group, Inc. Common Stock (including those
shares held by the Mutual Holding Company) and the affirmative vote of a
majority of the votes eligible to be cast by Public Stockholders, abstentions
and broker non-votes will have the same effect as a vote against such proposal.
Beneficial Ownership of Stock
The following table sets forth, as of the Voting Record Date,
information as to the Company's common stock beneficially owned by persons or
groups who own more than 5%of the Company. Other than the Mutual Holding
Company, management knows of no person or group that owns more than 5% of the
outstanding shares of common stock as of the Voting Record Date.
Percent of Shares
Amount of of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
- ------------------------------------ -------------------- -----------
Synergy, MHC
310 North Avenue East 1,889,502 56.5%
Cranford, New Jersey 07016
INCORPORATION OF INFORMATION BY REFERENCE
The Prospectus that accompanies this Proxy Statement is incorporated by
reference into this Proxy Statement in its entirety. The Company urges you to
carefully read both this Proxy Statement and the Prospectus before voting on
Proposal I presented at the Special Meeting. The Prospectus sets forth
descriptions of the conversion and reorganization and the related offering of
Synergy Financial Group, Inc. Common Stock under the sections entitled
"Summary," "The Conversion" and "The Stock Offering." Such sections also
describe the effects of the conversion and reorganization on the stockholders of
the Company, including the tax consequences thereof.
Information regarding the Primary Parties is set forth in the
Prospectus under the captions "Summary - The Companies," "- Synergy Financial
Group, Inc.," and "- Synergy Bank," as well as under "Business of Synergy
Financial Group, Inc." and "Business of Synergy Bank." The Prospectus further
describes the business and financial condition of the Bank under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The capital stock of the Company is described in the Prospectus in
"Description of Capital Stock." A discussion of the restrictions imposed on
acquisition of the New Holding Company by its certificate of incorporation and
bylaws and
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OTS regulations can be found in the Prospectus at "Restrictions on Acquisition
of Synergy Financial Group, Inc." In addition, the historical, consolidated
financial statements of the Bank are included in the Prospectus. Information
regarding the use of proceeds from the sale of Synergy Financial Group, Inc.
Common Stock in connection with the conversion and reorganization, the
historical capitalization and the pro forma capitalization of the Bank, other
pro forma data, as well as information pertaining to regulation, employees and
legal proceedings are set forth in the Prospectus under the captions "Use of
Proceeds," "Capitalization," "Pro Forma Data," "Historical and Pro Forma Capital
Compliance," "Regulation," "Business of Synergy Bank - Personnel" and "- Legal
Proceedings," respectively. The Pro Forma Data show the effects of the
conversion and reorganization on the Bank's total stockholders' equity and net
income, on both an aggregate and per share basis, based upon the assumptions set
forth therein.
The Prospectus also sets forth a description of the current management
of the Company, the Mutual Holding Company and Synergy Bank, as well as the
management of the New Holding Company after the conversion and reorganization,
including current compensation and benefits as well as proposed future stock
benefit plans. See the section entitled "Management" in the Prospectus.
PROPOSAL I - APPROVAL OF THE PLAN OF CONVERSION AND REORGANIZATION
The Board of Directors of the Company has approved the Plan, as has the
OTS, subject to approval by the members of the Mutual Holding Company and the
stockholders of the Company entitled to vote on the matter, and subject to the
satisfaction of certain other conditions. Such OTS approval, however, does not
constitute a recommendation or endorsement of the Plan by such agency.
In addition to this Proxy Statement, you have received as part of this
mailing a Prospectus that describes the Company, the New Holding Company, the
conversion and reorganization and the related stock offering. The Prospectus is
incorporated by reference into this Proxy Statement in its entirety. The Company
urges you to carefully read both this Proxy Statement and the Prospectus before
voting on Proposal I presented at the Special Meeting.
Comparison of Stockholders' Rights under Federal and New Jersey Law and Certain
Anti-Takeover Provisions
General. As a result of the conversion, the current public stockholders
of the Company will become stockholders of the New Holding Company. There are
certain differences in stockholder rights arising from distinctions between the
Company's federal charter and bylaws and the New Holding Company's New Jersey
certificate of incorporation and bylaws, which are based on New Jersey corporate
law. Additionally, there are distinctions between laws applicable to federally
chartered savings institutions and holding companies and laws applicable to New
Jersey corporations.
The discussion herein is not intended to be a complete statement of the
differences affecting the rights of stockholders, but rather as a summary of the
material differences and similarities affecting the rights of stockholders. The
discussion herein is qualified in its entirety by reference to the New Holding
Company's certificate of incorporation and bylaws and the New Jersey Business
Corporation Act. Procedures for obtaining a copy of the New Holding Company's
certificate of incorporation and bylaws can be found under the caption "Where
You Can Find Additional Information" in the Prospectus.
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Authorized Capital Stock. The New Holding Company's authorized capital
stock consists of 20,000,0000 shares of common stock, par value $.10 per share,
and 5,000,000 shares of preferred stock, no par value. The Company's current
federal charter authorizes capital stock consisting of 18,000,000 shares of
common stock and 2,000,000 shares of preferred stock, par value $.10 per share.
The shares of the New Holding Company's common stock and preferred stock were
authorized in an amount greater than that to be issued in the conversion to
provide the New Holding Company's Board of Directors with flexibility to effect,
among other transactions, financing acquisitions, stock dividends, stock splits
and employee stock options. However, these additional authorized shares may also
be used by the New Holding Company's Board of Directors, consistent with its
fiduciary duty, to deter future attempts to gain control of the New Holding
Company. The New Holding Company's Board of Directors will also have sole
authority to determine the terms of any one or more series of preferred stock,
including voting rights, conversion rates, and liquidation preferences. As a
result of the ability to fix voting rights for a series of preferred stock, the
Board of Directors of the New Holding Company will also have the power, to the
extent consistent with its fiduciary duty, to issue a series of preferred stock
to persons friendly to management in order to attempt to block a post tender
offer merger or other transaction by which a third party seeks control, and
thereby assist management to retain its position. The New Holding Company's
Board of Directors currently has no plans for the issuance of additional shares,
other than the issuance of additional shares pursuant to stock benefit plans.
Issuance of Capital Stock. Pursuant to applicable federal laws and
regulations, Synergy, MHC is required to own not less than a majority of the
Company's currently outstanding common stock. There will be no such restriction
applicable to the ownership of the New Holding Company's common stock following
consummation of the conversion.
Neither the New Holding Company's certificate of incorporation nor New
Jersey law contains restrictions on the issuance of shares of capital stock to
directors, officers or controlling persons, whereas the Company's current
federal charter restricts such issuance to general public offerings or, if
qualifying shares, to directors, unless the share issuance or the plan under
which they would be issued has been approved by a majority of the total votes
eligible to be cast at a legal stockholders' meeting. Thus, stock- related
compensation plans, such as stock option plans, could be adopted by the New
Holding Company without stockholder approval and shares of the New Holding
Company's capital stock could be issued directly to directors or officers
without stockholder approval. The bylaws of the National Association of
Securities Dealers, Inc., however, generally require corporations with
securities quoted on the Nasdaq National Market System to obtain stockholder
approval of most stock compensation plans for directors, officers and key
employees of the corporation. Moreover, although generally not required,
stockholder approval of stock-related compensation plans may be sought in
certain instances in order to qualify such plans for favorable federal income
tax and securities law treatment under current laws and regulations.
Voting Rights. Neither the Company's current federal charter or bylaws
nor the New Holding Company's certificate of incorporation or bylaws provide for
cumulative voting in elections of directors. For additional information
regarding voting rights, see "Limitations on Acquisitions of Voting Stock and
Voting Rights" below.
Payment of Dividends. The current ability of the Company to pay
dividends on its capital stock is restricted by regulations and by federal
income tax considerations related to federal savings institutions and federal
holding companies such as Synergy Bank and the Company. Although the New Holding
Company will not be subject to these restrictions on its dividends, such
restrictions will indirectly affect the New Holding Company because dividends
from Synergy Bank will be its primary source of funds for
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the payment of dividends to its stockholders. See the section of the Prospectus
entitled "Regulation - Regulation of Synergy Bank - Dividend and Other Capital
Distribution Limitations."
Certain restrictions generally imposed on New Jersey corporations may
also have an impact on the New Holding Company's ability to pay dividends. New
Jersey law generally provides that a corporation is prohibited from paying a
dividend if, after such payment, it would not be able to pay its debts as they
became due or if the corporation's total assets would be less than the sum of
its total liabilities.
Board of Directors. The Company's current federal bylaws and the New
Holding Company's certificate of incorporation and bylaws each require that the
Company's Board of Directors and the New Holding Company's Board shall be
divided into three classes as nearly equal in number as possible and that the
members of each class shall be elected for a term of three years and until their
successors are elected and qualified, with one class being elected annually.
Under the Company's federal bylaws, any vacancies in the Company's
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, and
persons so elected to fill vacancies may only serve until the next annual
meeting of stockholders. Under the New Holding Company's certificate of
incorporation, any vacancy occurring in its Board of Directors, including any
vacancy created by reason of an increase in the number of directors, may be
filled by the remaining directors, and any director so chosen shall hold office
for the remainder of the term to which the director has been elected and until
his or her successor is elected and qualified.
Limitations on Liability. The New Holding Company's certificate of
incorporation provides that its directors shall not be personally liable for
monetary damages to the New Holding Company for certain actions as directors,
except for liabilities that involve a director's willful misconduct or the
director's conscious disregard for the best interest of the company, the
authorization of unlawful distributions, a director's receipt of an improper
personal benefit from his or her position as a director or a violation of
criminal law, unless the director had reasonable cause to believe that his or
her conduct was lawful. This provision might, in certain instances, discourage
or deter stockholders or management from bringing a lawsuit against the New
Holding Company's directors for a breach of their duties even though such an
action, if successful, might have benefitted the New Holding Company.
Currently, the OTS does not permit federally chartered holding
companies like the Company to limit the personal liability of directors in the
manner provided by New Jersey law and the laws of many other states.
Indemnification of Directors, Officers, Employees and Agents. The
current federal charter and bylaws of the Company do not contain any provision
relating to indemnification of directors and officers. Under current OTS
regulations, however, the Company, as a federal holding company, is required to
indemnify its directors, officers and employees for any costs incurred in
connection with any litigation involving any such person's activities as a
director, officer or employee if such person obtains a final judgment on the
merits in his or her favor. In addition, indemnification is permitted in the
case of a settlement, a final judgment against such person or final judgment
other than on the merits, if a majority of disinterested directors determine
that such person was acting in good faith within the scope of his or her
employment as he or she could reasonably have perceived it under the
circumstances and for a purpose he or she could reasonably have believed under
the circumstances was in the best interest of the Company or its stockholders.
The Company is also currently permitted under federal regulations to pay ongoing
6
expenses incurred by a director, officer or employee if a majority of
disinterested directors concludes that such person may ultimately be entitled to
indemnification. Before making any indemnification payment, the Company is
required to notify the OTS of its intention and such payment cannot be made if
the OTS objects thereto.
The New Holding Company's officers, directors, agents and employees
will be indemnified with respect to certain actions pursuant to its certificate
of incorporation, which complies with New Jersey law regarding indemnification.
New Jersey law allows the New Holding Company to indemnify the aforementioned
persons for expenses, settlements, judgments and fines in suits in which such
person has been made a party by reason of the fact that he or she is or was an
agent of the New Holding Company. Generally, indemnification would be permitted
if such person acted in good faith or in a manner he or she reasonably believed
to be in or not opposed to the New Holding Company's best interests and, with
respect to any criminal proceeding, such person had no reasonable cause to
believe his or her conduct was unlawful.
Special Meetings of Stockholders. The New Holding Company's certificate
of incorporation provides that special meetings of its stockholders may be
called by the president, the Board of Directors or a duly designated committee
of the Board of Directors. The Company's current federal charter provides that
special meetings of stockholders may be called by the chairman, the president, a
majority of the Board of Directors or the holders of not less than one-tenth of
the outstanding capital stock of the Company entitled to vote.
Stockholder Nominations and Proposals. The current federal bylaws of
the Company generally provide that stockholders may submit nominations for
election of director at an annual meeting of stockholders at least five days
before the date of any such meeting and may submit any new business to be taken
up at such a meeting by filing such in writing with the Company at least five
days before the date of any such meeting.
The New Holding Company's bylaws generally provide that any stockholder
desiring to make a nomination for the election of directors or a proposal for
new business at a meeting of stockholders must submit written notice to the New
Holding Company not less than 60 days prior to the anniversary date of its
immediately preceding annual meeting of stockholders. Failure to comply with
these advance notice requirements will preclude such nominations or new business
from being considered at the meeting. Management believes that it is in the best
interests of the New Holding Company and its stockholders to provide sufficient
time to enable management to disclose to stockholders information about a
dissident slate of nominations for directors. This advance notice requirement
may also give management time to solicit its own proxies in an attempt to defeat
any dissident slate of nominations, should management determine that doing so is
in the best interest of stockholders, generally. Similarly, adequate advance
notice of stockholder proposals will give management time to study such
proposals and to determine whether to recommend to the stockholders that such
proposals be adopted. In certain instances, such provisions could make it more
difficult to oppose management's nominees or proposals, even if stockholders
believe such nominees or proposals are in their best interests.
Stockholders' Right to Examine Books and Records. A federal regulation
applicable to the Company provides that stockholders may inspect and copy
specified books and records of a federally chartered holding company after
proper written notice for a proper purpose. New Jersey law similarly provides
that a stockholder may inspect certain books and records if the stockholder
makes a written demand for a proper purpose.
7
Limitations on Acquisitions of Voting Stock and Voting Rights. The New
Holding Company's certificate of incorporation provides that in no event shall
any record owner of any outstanding common stock which is beneficially owned,
directly or indirectly, by a person who beneficially owns in excess of 10% of
the then outstanding shares of common stock be entitled or permitted to any vote
in respect of the shares held in excess of such limit. The Company's current
federal charter provides for a similar voting restriction on shares of common
stock beneficially owned by any person in excess of 10% of the outstanding
shares, but such restriction expires five years from the completion of Synergy
Bank's conversion from mutual to stock form.
Mergers, Consolidations and Sales of Assets. A federal regulation
currently requires the approval of two-thirds of the Board of Directors of the
Company and the holders of two-thirds of the outstanding stock of the Company
entitled to vote thereon for mergers, consolidations and sales of all or
substantially all of the assets of the Company. Such regulation permits the
Company to merge with another corporation without obtaining the approval of its
stockholders if:
(1) the merger does not involve an interim savings institution;
(2) the Company's federal stock charter is not changed;
(3) each share of the Company's stock outstanding immediately prior to
the effective date of the transaction is to be an identical outstanding share or
a treasury share of the Company after such effective date; and
(4) either:
(a) no shares of voting stock of the Company and no securities
convertible into such stock are to be issued or delivered under the
plan of combination; or
(b) the authorized unissued shares or the treasury shares of
voting stock of the Company to be issued or delivered under the plan of
combination, plus those initially issuable upon conversion of any
securities to be issued or delivered under such plan, do not exceed 15%
of the total shares of voting stock of the Company outstanding
immediately prior to the effective date of the transaction.
Under New Jersey law, mergers, consolidations and other forms of
business combination must generally be approved by the vote of a majority of the
outstanding shares of each class of voting stock of a corporation, unless a
corporation's certificate of incorporation imposes a higher vote requirement.
Approval by the stockholders of a New Jersey corporation that survives a merger
is not required under New Jersey law if:
(1) the certificate of incorporation of the corporation is not amended
thereby;
(2) each stockholder of the surviving corporation will hold the same
number of shares, with the same designations, preferences and rights, after the
merger as such stockholder had before; and
(3) the number of voting shares outstanding after the merger, plus the
number of voting shares issuable on conversion of other securities or on
exercise of rights and warrants issued pursuant to the
8
merger, will not exceed by more than 40% the total number of voting shares of
the surviving corporation that were outstanding before the merger.
The New Holding Company's certificate of incorporation provides that,
if a merger, consolidation or sale of all or substantially all the assets of the
New Holding Company is approved by two-thirds of its Board of Directors, the
stockholder vote required to approve such transaction will be that specified by
New Jersey law. However, if a merger, consolidation or sale of all or
substantially all the assets of the New Holding Company is not approved by a
two-thirds vote of the Board of Directors, the certificate of incorporation
provides that any such transaction must be approved by the vote of at least 80%
of the New Holding Company's outstanding shares of capital stock eligible to
vote.
In addition, the New Holding Company's certificate of incorporation
requires the approval of the holders of at least 80% of its outstanding shares
of voting stock to approve certain "Business Combinations" involving an
"Interested Shareholder" except in cases where the proposed transaction has been
approved in advance by two-thirds of those members of the New Holding Company's
Board of Directors who are unaffiliated with the Interested Shareholder and were
directors prior to the time when the Interested Shareholder became an Interested
Shareholder. The term "Interested Shareholder" is defined to include any
individual, corporation, partnership or other entity, other than the New Holding
Company or its subsidiaries, which owns beneficially or controls, directly or
indirectly, 20% or more of the outstanding shares of voting stock of the New
Holding Company or an affiliate of such person or entity. This provision of the
certificate of incorporation applies to any "Business Combination," which is
defined to include, among other things, any merger, consolidation, sale of 25%
or more of the New Holding Company's assets, reclassification of the common
stock or recapitalization of the New Holding Company with or involving an
Interested Shareholder. If, however, the proposed transaction is approved in
advance by two-thirds of the members of the New Holding Company's Board of
Directors who were directors before the Interested Shareholder became an
Interested Shareholder, such transaction would require only the majority vote of
stockholders otherwise required by New Jersey law.
The New Holding Company's certificate of incorporation requires its
Board of Directors to consider certain factors in addition to the amount of
consideration to be paid when evaluating certain business combinations or a
tender or exchange offer. These additional factors include the social and
economic effects of the transaction on its customers and employees and the
communities served by the New Holding Company.
Dissenters' Rights of Appraisal. OTS regulations generally provide that
a stockholder of a federally chartered holding company that engages in a merger,
consolidation or sale of all or substantially all of its assets shall have the
right to demand from such company payment of the fair or appraised value of his
or her stock in the company, subject to specified procedural requirements. This
regulation also provides, however, that the stockholders of a federally
chartered holding company with stock listed on a national securities exchange or
quoted on the Nasdaq Stock Market are not entitled to dissenters' rights in
connection with a merger involving such savings institution if the stockholder
is required to accept only "qualified consideration" for his or her stock, which
is defined to include cash, shares of stock of any institution or corporation
which at the effective date of the merger will be listed on a national
securities exchange or quoted on the Nasdaq Stock Market or any combination of
such shares of stock and cash.
Pursuant to general New Jersey corporate law, a stockholder of a New
Jersey corporation generally has the right to dissent from any merger or
consolidation involving the corporation or sale of all or substantially all of
the corporation's assets. However, dissenters' rights are not available for the
shares
9
of any class or series of a New Jersey corporation's capital stock if (i) such
shares are either listed on a national securities exchange or held of record by
more than 1,000 stockholders or (ii) the consideration to be received in the
merger consists of cash and/or shares of stock that are either listed on a
national securities exchange or held of record by more than 1,000 stockholders.
Amendment of Governing Instruments. No amendment of the Company's
current federal charter may be made unless it is first proposed by the Board of
Directors, then preliminarily approved by the OTS, and thereafter approved by
the holders of a majority of the total votes eligible to be cast at a legal
meeting. The New Holding Company's certificate of incorporation may be amended
by the vote of the holders of a majority of the outstanding shares of its common
stock, except that the provisions of the certificate of incorporation governing
the calling of meetings of stockholders, stockholders' nominations and
proposals, authorized capital stock, denial of preemptive rights, the number and
staggered terms of directors, removal of directors, approval of certain business
combinations, the evaluation of certain business combinations, elimination of
directors' liability, indemnification of officers and directors, and the manner
of amending the certificate of incorporation and bylaws, each may not be
repealed, altered, amended or rescinded except by the vote of the holders of at
least 80% of the New Holding Company's outstanding shares. This provision is
intended to prevent the holders of a lesser percentage of the New Holding
Company's outstanding stock from circumventing any of the foregoing provisions
by amending the certificate of incorporation to delete or modify one of such
provisions.
The Company's current federal bylaws may be amended by a majority vote
of the full Board of Directors or by a majority vote of the votes cast by the
stockholders of the Company at any legal meeting. The New Holding Company's
bylaws may only be amended by a two-thirds vote of its Board of Directors or by
the holders of at least 80% of its outstanding stock.
Purpose and Takeover Defensive Effects of the New Holding Company's
Certificate of Incorporation and Bylaws. The Board of Directors of the Company
believes that the provisions described above are prudent and will reduce the New
Holding Company's vulnerability to takeover attempts and certain other
transactions that have not been negotiated with and approved by the New Holding
Company's Board of Directors. These provisions will also assist the Company in
the orderly deployment of the conversion proceeds into productive assets during
the initial period after the conversion. The Board of Directors believes these
provisions are in the best interest of Synergy Bank, the New Holding Company and
the New Holding Company's stockholders. In the judgment of the Board of
Directors, the New Holding Company's Board will be in the best position to
determine the true value of the New Holding Company and to negotiate more
effectively for what may be in the best interests of its stockholders.
Accordingly, the Board of Directors believes that it is in the best interest of
the New Holding Company and its stockholders to encourage potential acquirers to
negotiate directly with the New Holding Company's Board of Directors and that
these provisions will encourage such negotiations and discourage hostile
takeover attempts. It is also the view of the Board of Directors that these
provisions should not discourage persons from proposing a merger or other
transaction that is at a price reflective of the true value of New Holding
Company and that is in the best interest of all of the New Holding Company's
stockholders.
Attempts to acquire control of financial institutions and their holding
companies have recently become increasingly common. Takeover attempts that have
not been negotiated with and approved by the Board of Directors present to
stockholders the risk of a takeover on terms that may be less favorable than
might otherwise be available. A transaction that is negotiated and approved by
the Board of Directors, on the other hand, can be carefully planned and
undertaken at an opportune time in order to obtain maximum value for the
stockholders of the New Holding Company, with due consideration given to matters
such as
10
the management and business of the acquiring corporation and maximum strategic
development of its assets.
An unsolicited takeover proposal can seriously disrupt the business and
management of a corporation and cause it great expense. Although a tender offer
or other takeover attempt may be made at a price substantially above the current
market prices, such offers are sometimes made for less than all of the
outstanding shares of a target company. As a result, stockholders may be
presented with the alternative of partially liquidating their investment at a
time that may be disadvantageous, or retaining their investment in an enterprise
that is under different management and whose objectives may not be similar to
those of the remaining stockholders. The concentration of control, which could
result from a tender offer or other takeover attempt, could also deprive the New
Holding Company's remaining stockholders of benefits of certain protective
provisions of the Securities Exchange Act of 1934, if the number of beneficial
owners became fewer than 300, thereby allowing for deregistration under the act.
These provisions of the New Holding Company's certificate of
incorporation and bylaws may also have the effect of discouraging a future
takeover attempt that would not be approved by the New Holding Company's Board,
but pursuant to which stockholders may receive a substantial premium for their
shares over then current market prices. As a result, stockholders who might
desire to participate in such a transaction may not have any opportunity to do
so. Such provisions will also render the removal of the New Holding Company's
Board of Directors and management more difficult. The Boards of Directors of
Synergy Bank and the New Holding Company, however, have concluded that the
potential benefits outweigh the possible disadvantages.
Following the conversion, pursuant to applicable law and, if required,
following the approval by stockholders, the New Holding Company may adopt
additional anti-takeover provisions or other devices regarding the acquisition
of its equity securities that would be permitted for a New Jersey business
corporation.
The cumulative effect of the restrictions on acquisitions of the New
Holding Company's shares contained in the New Holding Company's certificate of
incorporation and bylaws and in federal and New Jersey law may be to discourage
potential takeover attempts and perpetuate incumbent management, even though
certain of the New Holding Company's stockholders may deem a potential
acquisition to be in their best interests, or deem existing management not to be
acting in their best interests.
Rights of Dissenting Stockholders
Under federal law, dissenters' rights of appraisal are available to
holders of common stock in connection with the conversion and reorganization.
The following discussion is not a complete statement of the law pertaining to
dissenters' rights under the OTS Rules and Regulations, and is qualified in its
entirety by the full text of Section 552.14 of the OTS Rules and Regulations,
which is referred to as Section 552.14 and is reprinted in its entirety as
Appendix A to this proxy statement. Any Synergy Financial Group, Inc.
stockholder who desires to exercise his or her dissenters' rights should review
carefully Section 552.14 and is urged to consult a legal advisor before electing
or attempting to exercise his or her rights. All references in Section 552.14 to
a "stockholder" and in this summary are to the record holder of shares of
Synergy Financial Group, Inc. Common Stock as to which dissenters' rights are
asserted. Subject to the exceptions stated below, holders of Synergy Financial
Group, Inc. Common Stock who comply with the applicable procedures summarized
below will be entitled to exercise dissenters' rights under Section 552.14.
11
A stockholder electing to exercise his or her rights to dissent from
the Plan is required to file with Synergy Financial Group, Inc. (addressed to
Kevin A. Wenthen, Secretary, Synergy Financial Group, Inc., 310 North Avenue
East, Cranford, New Jersey 07016), prior to voting on the Plan, a written
statement identifying himself or herself and stating his or her intention to
demand appraisal of, and payment for, his or her shares. This demand must be
made in addition to, and separate from, any proxy or vote. A failure to vote on
the proposal to approve the Plan will not constitute a waiver of appraisal
rights, but a vote for the Plan will be deemed a waiver of such rights. A vote
against the proposal will not be deemed to satisfy the requirement to file the
written statement. However, if a stockholder returns a signed proxy but does not
specify a vote against the Plan, or a direction to abstain, the proxy, if not
revoked prior to the Meeting, will be voted for approval of the Plan, which will
have the effect of waiving that stockholder's dissenters' rights.
Within ten days after the Effective Date of the Plan, the Company shall
(i) give written notice of the Effective Date by mail to any dissenting
stockholder who has not voted in favor of the Plan, (ii) make a written offer to
each dissenting stockholder to pay for his or her shares at a specified price
deemed by the Company to be fair value of such shares, and (iii) inform any
dissenting stockholder that, within 60 days of the Effective Date, the
dissenting stockholder must file a petition with the Office of Thrift
Supervision, 1700 G Street, N.W., Washington, D.C. 20552, if the stockholder and
the Company do not agree as to the fair market value, and surrender the
certificates representing the shares as to which the dissent applies.
If within 60 days of the Effective Date the fair value is agreed upon
between the Company and any dissenting stockholder, payment will be made within
90 days of the Effective Date. If within such period, however, the Company and
any dissenting stockholder do not agree as to the fair value of such shares,
such stockholder may file a petition with the OTS demanding a determination of
the fair market value of the stock. A copy of such petition must be sent by
registered or certified mail to the Company. Any such stockholder who fails to
file the petition within 60 days of the Effective Date is deemed to have
accepted the terms of the Plan.
Each dissenting stockholder, within 60 days of the Effective Date, must
submit his or her certificates to the transfer agent for notation thereon that
an appraisal and payment have been demanded. Any stockholder who fails to submit
his or her certificates will not be entitled to appraisal rights and will be
deemed to have accepted the terms of the Plan.
Any stockholder who is demanding payment for his shares in accordance
with Section 552.14 shall not thereafter be entitled to vote or exercise any
rights of a stockholder except the right to receive payment for his shares
pursuant to the provisions of Section 552.14 and the right to maintain certain
legal actions. The respective shares for which payment has been demanded shall
not thereafter be considered outstanding for the purposes of any subsequent vote
of stockholders.
Additional Information
The Plan is attached hereto as Appendix B. The Certificate of
Incorporation and Bylaws of the New Holding Company are available at no cost by
contacting the Company at (908) 272-3838 or by writing to the Corporate
Secretary at 310 North Avenue East, Cranford, New Jersey 07016. Adoption of the
Plan by the stockholders authorizes the Boards of Directors of the Primary
Parties to amend or terminate the Plan, including the Charter of Synergy Bank
and the Certificate of Incorporation of the New Holding Company, prior to the
closing of the conversion and
12
reorganization. All statements made in this document are hereby qualified by the
contents of such documents as set forth above.
The information contained in the accompanying Prospectus, including a
more detailed description of the Plan, certain financial statements of the
Company and the New Holding Company, a description of the capitalization,
business, the directors and officers of the Company and the New Holding Company,
and the compensation and other benefits of directors and officers, a description
of the Synergy Financial Group, Inc. Common Stock and anticipated use of the net
proceeds from the offering of such stock, is intended to help you evaluate the
conversion and reorganization and is incorporated herein by reference.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR THE PLAN. NOT VOTING WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE
PLAN. VOTING FOR THE PLAN WILL NOT OBLIGATE YOU TO PURCHASE ANY SHARES OF
SYNERGY FINANCIAL GROUP, INC. COMMON STOCK. SHARES OF SYNERGY FINANCIAL GROUP,
INC. COMMON STOCK ARE BEING OFFERED ONLY BY THE PROSPECTUS, WHICH IS
INCORPORATED BY REFERENCE HERETO.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Special Meeting other than the matters described above in this Proxy Statement.
However, if any matters should properly come before the Special Meeting, it is
intended that holders of the proxies will act as directed by a majority of the
Board of Directors.
13
Appendix A
DISSENTER AND APPRAISAL RIGHTS
- -552.14 Dissenter and appraisal rights.
(a) Right to demand payment of fair or appraised value. Except as
provided in paragraph (b) of this section, any stockholder of a Federal stock
association combining in accordance with 552.13 of this part shall have the
right to demand payment of the fair or appraised value of his stock: Provided,
That such stockholder has not voted in favor of the combination and complies
with the provisions of paragraph (c) of this section.
(b) Exceptions. No stockholder required to accept only qualified
consideration for his or her stock shall have the right under this section to
demand payment of the stock's fair or appraised value, if such stock was listed
on a national securities exchange or quoted on the National Association of
Securities Dealers' Automated Quotation System ("NASDAQ") on the date of the
meeting at which the combination was acted upon or stockholder action is not
required for a combination made pursuant to 552.13(h)(2) of this part.
"Qualified consideration" means cash, shares of stock of any association or
corporation which at the effective date of the combination will be listed on a
national securities exchanged or quoted on NASDAQ or any combination of such
shares of stock and cash.
(c) Procedure.
(1) Notice. Each constituent Federal stock association shall
notify all stockholders entitled to rights under this section, not less than
twenty days prior to the meeting at which the combination agreement is to be
submitted for stockholder approval, of the right to demand payment of appraised
value of shares, and shall include in such notice a copy of this section. Such
written notice shall be mailed to stockholders of record and may be part of the
management's proxy solicitation for such meeting.
(2) Demand for Appraisal and Payment. Each stockholder
electing to make a demand under this section shall deliver to the Federal stock
association, before voting on the combination, a writing identifying himself or
herself and stating his or her intention thereby to demand appraisal of and
payment for his or her shares. Such demand must be in addition to and separate
from any proxy or vote against the combination by the stockholder.
(3) Notification of Effective Date and Written Offer. Within
ten days after the effective date of the combination, the resulting association
shall;
(i) Give written notice by mail to stockholders of
constituent Federal Stock associations who have complied with the provisions of
paragraph (c)(2) of this section and have not voted in favor of the combination,
of the effective date of the combination;
(ii) Make a written offer to each stockholder to pay
for dissenting shares at a specified price deemed by the resulting association
to be the fair value thereof; and
(iii) Inform them that, within sixty days of such
date, the respective requirements of paragraphs (c)(5) and (6) of this section
(set out in the notice) must be satisfied.
A-1
The notice and offer shall be accompanied by a balance sheet and
statement of income of the association the shares of which the dissenting
stockholder holds, for a fiscal year ending not more than sixteen months before
the date of notice and offer, together with the latest available interim
financial statements.
(4) Acceptance of Offer. If within sixty days of the effective
date of the combination the fair value is agreed upon between the resulting
association and any stockholder who has complied with the provisions of
paragraph (c)(2) of this section, payment therefor shall be made within ninety
days of the effective date of the combination.
(5) Petition to be Filed if Offer Not Accepted. If within
sixty days of the effective date of the combination the resulting association
and any stockholder who has complied with the provisions of paragraph (c)(2) of
this section do not agree as to the fair value, then any such stockholder may
file a petition with the Office, with a copy by registered or certified mail to
the resulting association, demanding a determination of the fair market value of
the stock of all such stockholders. A stockholder entitled to file a petition
under this section who fails to file such petition within sixty days of the
effective date of the combination shall be deemed to have accepted the terms
offered under the combination.
(6) Stock Certificates to be Noted. Within sixty days of the
effective date of the combination, each stockholder demanding appraisal and
payment under this section shall submit to the transfer agent his certificates
of stock for notation thereon that an appraisal and payment have been demanded
with respect to such stock and that appraisal proceedings are pending. Any
stockholder who fails to submit his stock certificates for such notation shall
no longer be entitled to appraisal rights under this section and shall be deemed
to have accepted the terms offered under the combination.
(7) Withdrawal of Demand. Notwithstanding the foregoing, at
any time within sixty days after the effective date of the combination, any
stockholder shall have the right to withdraw his or her demand for appraisal and
to accept the terms offered upon the combination.
(8) Valuation and Payment. The Director shall, as he or she
may elect, either appoint one or more independent persons or direct appropriate
Staff of the Office to appraise the shares to determine their fair market value,
as of the effective date of the combination, exclusive of any element of value
arising from the accomplishment or expectation of the combination. Appropriate
staff of the Office shall review and provide an opinion on appraisals prepared
by independent persons as to the suitability of the appraisal methodology and
the adequacy of the analysis and supportive data. The Director after
consideration of the appraisal report and the advice of the appropriate staff
shall, if he or she concurs in the valuation of the shares, direct payment by
the resulting association of the appraised fair market value of the shares, upon
surrender of the certificates representing such stock. Payment shall be made,
together with interest from the effective date of the combination, at a rate
deemed equitable by the Director.
(9) Costs and Expenses. The costs and expenses of any
proceeding under this section may be apportioned and assessed by the Director as
he or she may deem equitable against all or some of the parties. In making this
determination the Director shall consider whether any party has acted
arbitrarily, vexatiously, or not in good faith in respect to the rights provided
by this section.
(10) Voting and Distribution. Any stockholder who has demanded
appraisal rights as provided in paragraph (c)(2) of this section shall
thereafter neither be entitled to vote such stock for any purpose nor be
entitled to the payment of dividends or other distributions on the stock (except
dividends
A-2
or other distribution payable to, or a vote to be taken by stockholders of
record at a date which is on or prior to, the effective date of the
combination): Provided, That if any stockholder becomes unentitled to appraisal
and payment of appraised value with respect to such stock and accepts or is
deemed to have accepted the terms offered upon the combination, such stockholder
shall thereupon be entitled to vote and receive the distributions described
above.
(11) Status. Shares of the resulting association into which
shares of the stockholders demanding appraisal rights would have been converted
or exchanged, had they assented to the combination, shall have the status of
authorized and unissued shares of the resulting association.
A-3
Appendix B
PLAN OF CONVERSION AND REORGANIZATION
of
SYNERGY, MHC
and
PLANS OF MERGER
between
SYNERGY, MHC, SYNERGY FINANCIAL GROUP, INC.
and
SYNERGY BANK
ADOPTED ON JULY 26, 2003 AND SUBSEQUENTLY AMENDED
TABLE OF CONTENTS
Section
Number Page
1. Introduction....................................................... 1
2. Definitions........................................................ 3
3. General Procedure for Conversion and Reorganization................ 9
4. Total Number of Shares and Purchase Price of
Conversion Stock................................................. 11
5. Subscription Rights of Eligible Account Holders (First Priority)... 13
6. Subscription Rights of the Tax-Qualified Employee Stock
Benefit Plans (Second Priority).................................. 13
7. Subscription Rights of Supplemental Eligible Account Holders
(Third Priority)................................................. 14
8. Subscription Rights of Other Members (Fourth Priority)............. 14
9. Community Offering, Syndicated Community Offering
and Other Offerings.............................................. 15
10. Limitations on Subscriptions and Purchases of Conversion Stock..... 17
11. Timing of Subscription Offering; Manner of Exercising
Subscription Rights and Order Forms.............................. 19
12. Payment for Conversion Stock....................................... 20
13. Account Holders in Nonqualified States or Foreign Countries........ 21
14. Dissenters' Rights................................................. 22
15. Voting Rights of Stockholders...................................... 22
16. Liquidation Account................................................ 22
17. Transfer of Deposit Accounts....................................... 24
18. Requirements Following Conversion and Reorganization for
Registration, Market Making and Stock Exchange Listing........... 24
19. Directors and Officers of the Bank and the Holding Company......... 24
20. Requirements for Stock Purchases by Directors and Officers
Following the Conversion and Merger............................... 24
21. Restrictions on Transfer of Stock.................................. 25
22. Restrictions on Acquisition of Stock of the Holding Company........ 25
23. Tax Rulings or Opinions............................................ 26
24. Stock Compensation Plans........................................... 26
25. Dividend and Repurchase Restrictions on Stock...................... 27
26. Payment of Fees to Brokers......................................... 27
27. Effective Date..................................................... 27
28. Amendment or Termination of the Plan............................... 27
29. Interpretation of the Plan......................................... 28
Appendix A - Plan of Merger between Interim Bank No. 1 (formerly the Mutual
Holding Company) and the Bank
Appendix B - Plan of Merger between Interim Bank No. 2 (formerly Middle Tier
Holding Company) and the Bank
Appendix C - Plan of Merger between Interim Bank No. 3 (subsidiary of the
Holding Company) and the Bank
B-i
1. INTRODUCTION
For purposes of this section, all capitalized terms have the meaning
ascribed to them in Section 2.
In 2001, Synergy Bank (the "Bank"), a federally chartered mutual
savings bank (formerly Synergy Federal Savings Bank) reorganized into the mutual
holding company form of organization and converted to a federal stock savings
bank (the "MHC Reorganization"). Subsequent to the MHC Reorganization, in
September 2002, Synergy Financial Group, Inc., a federally chartered corporation
("Middle Tier Holding Company"), sold 1,454,750 shares (or approximately 43.5%)
of its common stock in a subscription offering at $10.00 per share and issued
the remaining 56.5% to Synergy, MHC. A total of 3,344,252 shares of common stock
of Synergy Financial Group, Inc. ("Middle Tier Holding Company Common Stock")
were issued in connection with the MHC Minority Stock Offering. Upon completion
of these transactions, the Bank became the wholly owned subsidiary of Synergy
Financial Group, Inc. As of June 30, 2003, the MHC and the Public Stockholders
own an aggregate of 1,889,502 (56.5%) and 1,454,750 (43.5%) of the outstanding
Middle Tier Holding Company Common Stock, respectively. Pursuant to this Plan of
Conversion, the Bank will form a new state-chartered stock holding company,
Synergy Financial Group, Inc. ("Holding Company") and the existing shares of
Middle Tier Holding Company Common Stock owned by Public Stockholders will be
converted pursuant to an Exchange Ratio into shares of common stock of the
Holding Company ("Holding Company Common Stock").
The Boards of Directors of the Mutual Holding Company, the Middle Tier
Holding Company, the Holding Company and the Bank believe that a conversion of
the Mutual Holding Company to stock form pursuant to this Plan of Conversion is
in the best interests of the Mutual Holding Company and the Bank, as well as the
best interests of their respective Members and Stockholders. The Boards of
Directors have determined that this Plan of Conversion equitably provides for
the interests of Members through the granting of subscription rights and the
establishment of a liquidation account. The Conversion and Merger will result in
the Bank being wholly owned by a state-chartered stock holding company which is
owned by public stockholders, which is a more common structure and form of
ownership than a mutual holding company. In addition, the Conversion and Merger
will result in the raising of additional capital for the Bank and the Holding
Company and should result in a more active and liquid market for the Holding
Company Common Stock than currently exists for Middle Tier Holding Company
Common Stock. Finally, the Conversion and Merger is designed to enable the Bank
and the Holding Company to compete more effectively in a market which is
consolidating.
In the current transaction, (i) the Middle Tier Holding Company will
convert into an interim federal stock savings bank, which will merge with and
into the Bank, and (ii) the Mutual Holding Company will convert into an interim
federal stock savings bank and merge with and into the Bank, pursuant to which
merger Mutual Holding Company will cease to exist and the shares of Middle Tier
Holding Company Stock held by the Mutual Holding Company will be canceled. The
Mutual Holding Company will cease to exist and a liquidation account will be
established for the benefit of depositor Members as of specified dates. Shares
of Middle Tier Holding Company Common Stock held by Public Stockholders shall be
automatically converted into the right to receive shares of Holding Company
Common Stock based on an Exchange Ratio plus cash in lieu of any fractional
share interest.
In connection with the Conversion and Mergers, the Holding Company will
offer shares of Conversion Stock in the Offerings as provided herein. Shares of
Conversion Stock will be offered in a Subscription Offering in descending order
of priority to Eligible Account Holders, Tax-Qualified Employee Stock Benefit
Plans, Supplemental Eligible Account Holders and Other Members. Any shares of
B-1
Conversion Stock remaining unsold after the Subscription Offering will be
offered for sale to the public through a Community Offering and/or Syndicated
Community Offering, as determined by the Boards of Directors of the Holding
Company and the Bank in their sole discretion.
The Conversion is intended to raise capital and provide support to the
Bank's lending and investment activities and thereby enhance the Bank's
capabilities to serve the borrowing and other financial needs of the communities
it serves. The use of the Holding Company will provide greater organizational
flexibility and facilitate possible acquisitions and diversification.
This Plan of Conversion was adopted by the Boards of Directors of the
Mutual Holding Company, the Middle Tier Holding Company and the Bank on July 26,
2003, and subsequently amended.
This Plan is subject to the approval of the OTS and also must be
approved by (1) at least a majority of the total number of votes eligible to be
cast by Voting Members of the Mutual Holding Company at the Special Meeting, (2)
the vote of at least two-thirds of the outstanding shares of Middle Tier Holding
Company Common Stock at the Stockholders' Meeting and (3) the vote at the
Stockholders' Meeting of at least a majority of the shares of Middle Tier
Holding Company Common Stock held by the Public Stockholders.
After the Conversion, the Bank will continue to be regulated by the
OTS, as its chartering authority, and by the FDIC, which insures the Bank's
deposits. In addition, the Bank will continue to be a member of the Federal Home
Loan Bank System, and all insured savings deposits will continue to be insured
by the FDIC up to the maximum amount provided by law.
2. DEFINITIONS
As used in this Plan, the terms set forth below have the following
meanings:
Actual Purchase Price means the price per share at which the Conversion
---------------------
Stock is ultimately sold by the Holding Company in the Offerings in accordance
with the terms hereof.
Affiliate means a Person who, directly or indirectly, through one or
---------
more intermediaries, controls or is controlled by or is under common control
with the Person specified.
Associate, when used to indicate a relationship with any Person, means
---------
(i) a corporation or organization (other than the Holding Company, the Mutual
Holding Company, the Middle Tier Holding Company, the Bank, a majority-owned
subsidiary of the Holding Company, Bank or the Middle Tier Holding Company) of
which such Person is a director, officer or partner or is, directly or
indirectly, the beneficial owner of 10% or more of any class of equity
securities, (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity, provided, however, that such term shall not
include any Tax-Qualified Employee Stock Benefit Plan of the Holding Company or
the Bank in which such Person has a substantial beneficial interest or serves as
a trustee or in a similar fiduciary capacity, and (iii) any relative or spouse
of such Person, or any relative of such spouse, who has the same home as such
Person or who is a director or officer of the Holding Company, the Mutual
Holding Company, the Middle Tier Holding Company or the Bank or any of the
subsidiaries of the foregoing.
B-2
Bank means Synergy Bank in its current stock form as a subsidiary of
----
the Middle Tier Holding Company or Synergy Bank as a subsidiary of the Holding
Company following consummation of the Conversion and Reorganization, as the
context of the reference indicates.
Bank Common Stock means the common stock of the Bank, par value $0.10
-----------------
per share, which stock is not and will not be insured by the FDIC or any other
governmental authority.
Code means the Internal Revenue Code of 1986, as amended.
----
Community Offering means the offering for sale by the Holding Company
-------------------
of any shares of Conversion Stock not subscribed for in the Subscription
Offering to (i) Public Stockholders, (ii) natural persons residing in the Local
Community, and (iii) such other Persons within or without the State of New
Jersey as may be selected by the Holding Company and the Bank within their sole
discretion.
Control (including the terms "controlling," "controlled by," and "under
-------
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Conversion and Reorganization means (i) the conversion of the Mutual
-------------------------------
Holding Company to an interim federal stock savings bank and the subsequent
merger, pursuant to which the Mutual Holding Company will cease to exist, (ii)
the conversion of Middle Tier Holding Company to an interim federal stock
savings bank and merger into Bank, and (iii) the issuance of Conversion Stock by
the Holding Company in the Offerings as provided herein.
Conversion Stock means the Holding Company Common Stock to be issued
-----------------
and sold in the Offerings pursuant to the Plan of Conversion.
Deposit Account means savings and demand accounts, including passbook
---------------
accounts, money market deposit accounts and negotiable order of withdrawal
accounts, and certificates of deposit and other authorized accounts of the Bank
held by a Member.
Director, Officer and Employee means the terms as applied respectively
-------------------------------
to any person who is a director, officer or employee of the Mutual Holding
Company, the Bank, the Middle Tier Holding Company, the Holding Company or any
subsidiary thereof.
Effective Date means the effective date of the Conversion and
----------------
Reorganization, as set forth in Section 27 hereof.
Eligible Account Holder means any Person holding a Qualifying Deposit
------------------------
on the Eligibility Record Date for purposes of determining subscription rights
and establishing subaccount balances in the liquidation account to be
established pursuant to the provision herein.
Eligibility Record Date means the date for determining Qualifying
-------------------------
Deposits of Eligible Account Holders and is the close of business on March 31,
2002.
B-3
Estimated Price Range means the range of the estimated aggregate pro
----------------------
forma market value of the Conversion Stock to be issued in the Offerings, as
determined by the Independent Appraiser in accordance with Section 4 hereof.
Exchange Ratio means the rate at which shares of Holding Company Common
--------------
Stock will be received by the Public Stockholders in exchange for their Middle
Tier Holding Company Common Stock. The exact rate shall be determined by the
Mutual Holding Company and the Holding Company in order to ensure that upon
consummation of the Conversion and Reorganization, the Public Stockholders will
own in the aggregate approximately the same percentage of the Holding Company
Common Stock to be outstanding upon completion of the Conversion and
Reorganization as the percentage of Middle Tier Holding Company Common Stock
owned by them in the aggregate on the Effective Date, but before giving effect
to (a) cash paid in lieu of any fractional interests of Middle Tier Holding
Company Common Stock and (b) any shares of Conversion Stock purchased by the
Public Stockholders in the Offerings or tax- qualified employee stock benefit
plans thereafter.
Exchange Shares means the shares of Holding Company Common Stock to be
----------------
issued to the Public Stockholders in connection with the merger of Interim Bank
No. 1 (formerly Mutual Holding Company ("Merger No. 2") with and into the Bank.
FDIC means the Federal Deposit Insurance Corporation or any successor
----
thereto.
Holding Company means Synergy Financial Group, Inc., a corporation
----------------
newly organized under the laws of the State of New Jersey. At the completion of
the Reorganization, the Bank will become a wholly owned subsidiary of the
Holding Company.
Holding Company Common Stock means the Common Stock of the Holding
-------------------------------
Company, par value $.10 per share, which stock cannot and will not be insured by
the FDIC or any other governmental authority.
Independent Appraiser means the independent investment banking or
----------------------
financial consulting firm retained by the Holding Company and the Bank to
prepare an appraisal of the estimated pro forma market value of the Conversion
Stock.
Initial Purchase Price means the price per share to be paid initially
------------------------
by Participants for shares of Conversion Stock subscribed for in the
Subscription Offering and by Public Stockholders and other Persons for shares of
Conversion Stock ordered in the Community Offering and/or Syndicated Community
Offering.
Interim Bank No. 1 means the interim federal stock savings bank that
------------------
will be formed as a result of the conversion of Synergy, MHC into the stock form
of organization.
Interim Bank No. 2 means the interim federal stock savings bank that
------------------
will be formed as a result of the conversion of Middle Tier Holding Company into
an interim federal stock savings bank.
Interim Bank No. 3 means an interim federal stock savings bank wholly
------------------
owned by the Holding Company, which will be merged with and into the Bank.
Local Community means all counties in which the Bank has its home
----------------
office or a branch office.
B-4
Member means any Person qualifying as a member of the Mutual Holding
------
Company in accordance with its mutual charter and bylaws and the laws of the
United States.
Merger No. 1 means the merger of Interim Bank No. 2 (formerly Middle
------------
Tier Holding Company) with and into the Bank.
Merger No. 2 means the merger of Interim Bank No. 1 (formerly Mutual
------------
Holding Company) with and into the Bank.
Merger No. 3 means the merger of Interim Bank No. 3, a subsidiary of
------------
the Holding Company, with and into the Bank.
Mergers means the completion of Merger No. 1, Merger No. 2, and Merger
-------
No. 3.
Middle Tier Holding Company means Synergy Financial Group, Inc., a
----------------------------
corporation organized under the laws of the United States that, since the
completion of the MHC Reorganization in 2001, has held all of the outstanding
capital stock of the Bank.
Middle Tier Holding Company Common Stock means the Common Stock of the
-----------------------------------------
Middle Tier Holding Company, par value $.10 per share, which stock cannot and
will not be insured by the FDIC or any other governmental authority.
Mutual Holding Company means Synergy, MHC prior to its conversion into
----------------------
an interim federal stock savings bank.
Offerings means the Subscription Offering, the Community Offering and
---------
the Syndicated Community Offering, if applicable.
Officer means the president, executive vice president, senior vice
-------
president, vice president, secretary, treasurer or principal financial officer,
comptroller or principal accounting officer and any other person performing
similar functions with respect to any organization whether incorporated or
unincorporated.
Order Form means the form or forms provided by the Holding Company,
----------
containing all such terms and provisions as set forth herein, to a Participant
or other Person by which Conversion Stock may be ordered in the Offerings.
Other Member means a Voting Member who is not an Eligible Account
-------------
Holder or a Supplemental Eligible Account Holder.
OTS means the Office of Thrift Supervision or any successor thereto.
---
Participant means any Eligible Account Holder, Tax-Qualified Employee
-----------
Stock Benefit Plan, Supplemental Eligible Account Holder and Other Member.
Person means an individual, a corporation, a partnership, an
------
association, a joint stock company, a limited liability company, a trust, an
unincorporated organization, or a government or political subdivision of a
government.
B-5
Plan and Plan of Conversion mean this Plan of Conversion and
-------------------------------
Reorganization and Plan of Merger as adopted by the Boards of Directors of the
Mutual Holding Company, the Middle Tier Holding Company and the Bank and any
amendments hereto approved as provided herein. The Board of Directors of Interim
No. 1, Interim No. 2 and Interim No. 3 shall adopt the Plans of Merger included
as Appendices hereto as soon as practicable following their organization.
Primary Parties means the Middle Tier Holding Company, Mutual Holding
---------------
Company, the Bank and the Holding Company.
Prospectus means the one or more documents to be used in offering the
----------
Conversion Stock in the Offerings.
Public Stockholders means those Persons who own shares of Middle Tier
--------------------
Holding Company Common Stock, excluding the Mutual Holding Company, as of the
Stockholder Voting Record Date.
Qualifying Deposit means the aggregate balance of all Deposit Accounts
-------------------
in the Bank of (i) an Eligible Account Holder at the close of business on the
Eligibility Record Date, provided such aggregate balance is not less than $50,
and (ii) a Supplemental Eligible Account Holder at the close of business on the
Supplemental Eligibility Record Date, provided such aggregate balance is not
less than $50.
Resident means any person who, on the date designated for that category
--------
of subscriber in the Plan, maintained a bona fide residence within the Local
Community and has manifested an intent to remain within the Local Community for
a period of time. The designated dates for Eligible Account Holders,
Supplemental Eligible Account Holders and Other Members are the Eligibility
Record Date, the Supplemental Eligibility Record Date and the Voting Record
Date, respectively. To the extent the person is a corporation or other business
entity, the principal place of business or headquarters must be within the Local
Community in order to qualify as a Resident. To the extent the person is a
personal benefit plan, the circumstances of the beneficiary shall apply with
respect to this definition. In the case of all other benefit plans,
circumstances of the trustee shall be examined for purposes of this definition.
The Bank may utilize deposit or loan records or such other evidence provided to
it to make a determination as to whether a person is a bona fide resident of the
Local Community. Subscribers in the Community Offering who are natural persons
also will have a purchase preference if they were residents of the Local
Community on the date of the Prospectus. In all cases, however, such
determination shall be in the sole discretion of the Bank and the Holding
Company.
SEC means the Securities and Exchange Commission.
---
Special Meeting means the Special Meeting of Members of the Mutual
----------------
Holding Company called for the purpose of submitting this Plan to the Members
for their approval, including any adjournments of such meeting.
Stockholders means those Persons who own shares of Holding Company
------------
Common Stock.
Stockholders' Meeting means the annual or special meeting of
-----------------------
stockholders of Middle Tier Holding Company called for the purpose of submitting
this Plan to the Stockholders for their approval, including any adjournments of
such meeting.
B-6
Stockholder Voting Record Date means the date for determining the
---------------------------------
Public Stockholders of the Middle Tier Holding Company eligible to vote at the
Stockholders' Meeting.
Subscription Offering means the offering of the Conversion Stock to
----------------------
Participants.
Subscription Rights means nontransferable rights to subscribe for
--------------------
Conversion Stock granted to Participants pursuant to the terms of this Plan.
Supplemental Eligible Account Holder means any Person holding a
---------------------------------------
Qualifying Deposit at the close of business on the Supplemental Eligibility
Record Date.
Supplemental Eligibility Record Date, if applicable, means the date for
------------------------------------
determining Qualifying Deposits of Supplemental Eligible Account Holders and
shall be required if the Eligibility Record Date is more than 15 months prior to
the date of the latest amendment to the Application for Conversion filed by the
Mutual Holding Company prior to approval of such application by the OTS. If
applicable, the Supplemental Eligibility Record Date shall be the last day of
the calendar quarter preceding OTS approval of the Application for Conversion
submitted by the Mutual Holding Company pursuant to this Plan of Conversion.
Syndicated Community Offering means the offering for sale by a
-------------------------------
syndicate of broker-dealers to the general public of shares of Conversion Stock
not purchased in the Subscription Offering and the Community Offering.
Tax-Qualified Employee Stock Benefit Plan means any defined benefit
--------------------------------------------
plan or defined contribution plan, such as an employee stock ownership plan,
stock bonus plan, profit-sharing plan or other plan, which is established for
the benefit of the employees of the Holding Company and the Bank and which, with
its related trust, meets the requirements to be "qualified" under Section 401 of
the Code as from time to time in effect. A "Non-Tax-Qualified Employee Stock
Benefit Plan" is any defined benefit plan or defined contribution stock benefit
plan which is not so qualified.
Voting Member means a Person who at the close of business on the Voting
-------------
Record Date is entitled to vote as a Member of the Mutual Holding Company in
accordance with its mutual charter and bylaws.
Voting Record Date means the date or dates for determining the
--------------------
eligibility of Members to vote at the Special Meeting.
3. GENERAL PROCEDURE FOR CONVERSION AND REORGANIZATION
A. An Application for the Conversion and Reorganization, including the
Plan and all other requisite material (the "Application for Conversion"), shall
be submitted to the OTS for approval. The Mutual Holding Company, the Middle
Tier Holding Company and the Bank also will cause notice of the adoption of the
Plan by the Boards of Directors of the Mutual Holding Company, the Middle Tier
Holding Company and the Bank to be given by publication in a newspaper having
general circulation in each community in which an office of the Bank is located
and will cause copies of the Plan to be made available at each office of the
Mutual Holding Company, the Middle Tier Holding Company and the Bank for
inspection by Members and Stockholders. The Mutual Holding Company, the Middle
Tier Holding Company and the Bank will cause to be published, in accordance with
the requirements of applicable
B-7
regulations of the OTS, a notice of the filing with the OTS of an application to
convert the Mutual Holding Company from mutual to stock form.
B. Promptly following receipt of requisite approval of the OTS, this
Plan will be submitted to the Members for their consideration and approval at
the Special Meeting. The Mutual Holding Company may, at its option, mail to all
Members as of the Voting Record Date, at their last known address appearing on
the records of the Mutual Holding Company and the Bank, a proxy statement in
either long or summary form describing the Plan which will be submitted to a
vote of the Members at the Special Meeting. The Holding Company also shall mail
to all such Members (as well as other Participants) either a Prospectus and
Order Form for the purchase of Conversion Stock or a letter informing them of
their right to receive a Prospectus and Order Form and a postage prepaid card to
request such materials, subject to the provisions herein. The Plan must be
approved by the affirmative vote of at least a majority of the total number of
votes eligible to be cast by Voting Members at the Special Meeting.
C. Subscription Rights to purchase shares of Conversion Stock will be
issued without payment therefor to Eligible Account Holders, Tax-Qualified
Employee Plans, Supplemental Eligible Account Holders and Other Members.
D. The Middle Tier Holding Company shall file preliminary proxy
materials with the OTS in order to seek the approval of the Plan by its
Stockholders. Promptly following clearance of such proxy materials and the
receipt of any other requisite approval of the OTS, the Middle Tier Holding
Company will mail definitive proxy materials to all Stockholders as of the
Stockholder Voting Record Date, at their last known address appearing on the
records of the Middle Tier Holding Company, for their consideration and approval
of this Plan at the Stockholders' Meeting. The Plan must be approved by (a) the
vote of at least two-thirds of the outstanding shares of Middle Tier Holding
Company Common Stock as of the Stockholder Voting Record Date and (b) the vote
of at least a majority of the shares of Middle Tier Holding Company Common Stock
held by the Public Stockholders as of the Stockholder Voting Record Date.
E. The Mutual Holding Company shall apply to convert to a federal
interim stock savings bank.
F. The Middle Tier Holding Company shall apply to convert to a federal
interim stock savings bank.
G. The Holding Company shall file a Registration Statement with the SEC
to register the Holding Company Common Stock to be issued in the Conversion and
Merger under the Securities Act of 1933, as amended, and shall register such
Holding Company Common Stock under any applicable state securities laws. Upon
registration and after the receipt of all required regulatory approvals, the
Conversion Stock shall be first offered for sale in a Subscription Offering to
Eligible Account Holders, Tax-Qualified Employee Stock Benefit Plans,
Supplemental Eligible Account Holders and Other Members. It is anticipated that
any shares of Conversion Stock remaining unsold after the Subscription Offering
will be sold through a Community Offering and/or a Syndicated Community
Offering. The purchase price per share for the Conversion Stock shall be a
uniform price determined in accordance with the provisions herein. The Holding
Company shall contribute to the Bank an amount of the net proceeds received by
the Holding Company from the sale of Conversion Stock as shall be determined by
the Boards of Directors of the Holding Company and the Bank and as shall be
approved by the OTS.
B-8
H. The Effective Date of the Conversion and Reorganization shall be the
date set forth in Section 27 hereof. Upon the Effective Date, the following
transactions shall occur:
(i) The Mutual Holding Company will convert into an interim
federal stock savings bank to be known as Interim Bank No. 1.
(ii) Middle Tier Holding Company will adopt an interim federal
stock savings bank charter to be known as Interim Bank No. 2; Interim
Bank No. 2 will then merge with and into the Bank ("Merger No. 1"),
with the Bank as the surviving entity.
(iii) Immediately following Merger No. 1, Interim Bank No. 1,
formerly the Mutual Holding Company, will merge with and into the Bank
with the Bank as the surviving entity ("Merger No. 2"). The shares of
Middle Tier Holding Company Common Stock previously held by the Mutual
Holding Company (now Interim Bank No. 1) will be canceled. Eligible
members of the Mutual Holding Company as of certain specified dates
will be granted interests in a liquidation account to be established by
the Bank. The amount in the liquidation account will be the greater of
(a) 100% of retained earnings as of March 31, 2002 (the date of the
latest statement of financial condition contained in the final offering
circular utilized in the Bank's initial stock offering), or (b) 56.5%
of Middle Tier Holding Company's total shareholders' equity as
reflected in its latest statement of financial condition.
(iv) The Holding Company will form an interim corporation
("Interim Bank No. 3"), a new, wholly owned first-tier subsidiary with
an interim federal stock savings bank charter.
(v) Immediately following Merger No. 2, Interim Bank No. 3
will merge with and into the Bank, with the Bank as the surviving
entity ("Merger No. 3"). As a result of Merger No. 3, Bank stock deemed
held by Public Stockholders will be converted into Holding Company
Common Stock based upon the Exchange Ratio which is designed to ensure
that the same Public Stockholders will own, approximately the same
percentage of Holding Company Common Stock as the percentage of Middle
Tier Holding Company Common Stock owned by them immediately prior to
the Conversion and Reorganization before giving effect to (a) cash paid
in lieu of fractional shares and (b) any shares of Holding Company
stock purchased by Public Stockholders in the Offering.
(vi) The Holding Company shall sell the Conversion Stock in
the Offerings, as provided herein.
I. The Primary Parties may retain and pay for the services of financial
and other advisors and investment bankers to assist in connection with any or
all aspects of the Conversion and Reorganization, including in connection with
the Offerings, the payment of fees to brokers and investment bankers for
assisting Persons in completing and/or submitting Order Forms. All fees,
expenses, retainers and similar items shall be reasonable.
4. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK
A. The aggregate price at which shares of Conversion Stock shall be
sold in the Offerings shall be based on a pro forma valuation of the aggregate
market value of the Conversion Stock prepared by the Independent Appraiser. The
valuation shall be based on financial information relating to the Primary
B-9
Parties, market, financial and economic conditions, a comparison of the Primary
Parties with selected publicly held financial institutions and holding companies
and such other factors as the Independent Appraiser may deem to be important.
The valuation shall be stated in terms of an Estimated Price Range, the maximum
of which shall generally be no more than 15% above the average of the minimum
and maximum of such price range and the minimum of which shall generally be no
more than 15% below such average. As mandated by OTS regulations, the amount of
Conversion Stock is based upon an independent valuation, which is not approved
or otherwise determined by the Holding Company or the Board of Directors. The
valuation shall be updated during the Conversion as market and financial
conditions warrant and as may be required by the OTS.
B. Based upon the independent valuation, the Initial Purchase Price and
the number (or range) of shares of Conversion Stock ("Offering Range") to be
offered in the Offerings shall be established. The Actual Purchase Price and the
total number of shares of Conversion Stock to be issued in the Offerings shall
be determined upon conclusion of the Offerings, subject to review by the OTS and
in consultation with the Independent Appraiser.
C. Subject to the approval of the OTS, the Estimated Price Range may be
increased or decreased prior to completion of the Conversion to reflect changes
in market, financial and economic conditions since the commencement of the
Offerings, and under such circumstances the total number of shares of Conversion
Stock to be issued in the Conversion may correspondingly be increased or
decreased, to reflect any such change. Notwithstanding anything to the contrary
contained in this Plan, no resolicitation of subscribers shall be required and
subscribers shall not be permitted to modify or cancel their subscriptions
unless the aggregate funds received from the offer of the Conversion Stock in
the Conversion are less than the minimum or (excluding purchases, if any, by the
Holding Company's and the Bank's Tax-Qualified Employee Stock Benefit Plans)
more than 15% above the maximum of the Estimated Price Range set forth in the
Prospectus. In the event of an increase in the total number of shares offered in
the Conversion due to an increase in the Estimated Price Range, the priority of
share allocation shall be as set forth in this Plan, provided, however, that
such priority will have no effect whatsoever on the ability of the Tax-Qualified
Employee Stock Benefit Plans to purchase additional shares pursuant to Section
4.D.
D. (i) In the event that Tax-Qualified Employee Stock Benefit Plans are
unable to purchase the number of shares subscribed for by such Tax-Qualified
Employee Stock Benefit Plans due to an oversubscription for shares of Conversion
Stock pursuant to Section 5 hereof, Tax-Qualified Employee Stock Benefit Plans
may (unless the Tax-Qualified Employee Stock Benefit Plans elect to purchase
stock subsequent to the Offerings in the open market) purchase from the Holding
Company, and the Holding Company may sell to the Tax-Qualified Employee Stock
Benefit Plans, such additional shares ("Additional Shares") of Holding Company
Common Stock necessary to fill the subscriptions of the Tax-Qualified Employee
Stock Benefit Plans, provided that such Additional Shares may not exceed 8% of
the total number of shares of Conversion Stock sold in the Conversion. The sale
of Additional Shares, if necessary, will occur contemporaneously with the sale
of the Conversion Stock. The sale of Additional Shares to Tax- Qualified
Employee Stock Benefit Plans by the Holding Company is conditioned upon receipt
by the Holding Company of a letter from the Independent Appraiser to the effect
that such sale would not have a material effect on the Conversion and
Reorganization or the Actual Purchase Price and the approval of the OTS. The
ability of the Tax-Qualified Employee Stock Benefit Plans to purchase up to an
additional 8% of the total number of shares of Conversion Stock sold in the
Conversion shall not be affected or limited in any manner by the priorities or
purchase limitations otherwise set forth in this Plan of Conversion.
B-10
(ii) Notwithstanding anything to the contrary contained in
this Plan, if the final valuation of the Conversion Stock exceeds the maximum of
the Estimated Price Range, up to 8% of the total number of shares of Conversion
Stock sold in the Conversion may be sold to Tax-Qualified Stock Benefit Plans
prior to filling any other orders for Conversion Stock from such shares in
excess of the maximum of the Estimated Price Range. However, at the election of
the Holding Company, the Tax- Qualified Stock Benefit Plans may, in whole or in
part, fill their orders through open market purchases subsequent to the closing
of the Offerings.
5. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS
(FIRST PRIORITY)
A. Each Eligible Account Holder shall receive, without payment,
nontransferable Subscription Rights to purchase, subject to the further
limitations of Section 10 hereof, up to the greater of (i) the maximum purchase
limitation set forth in Section 9 hereof, (ii) one-tenth of 1% of the total
offering of shares of Conversion Stock in the Subscription Offering, and (iii)
15 times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares of Conversion Stock offered in the
Subscription Offering by a fraction, of which the numerator is the amount of the
Qualifying Deposit of the Eligible Account Holder and the denominator is the
total amount of all Qualifying Deposits of all Eligible Account Holders, subject
to Section 13 hereof.
B. In the event of an oversubscription for shares of Conversion Stock
pursuant to the provisions herein, available shares shall be allocated among
subscribing Eligible Account Holders so as to permit each such Eligible Account
Holder, to the extent possible, to purchase a number of shares which will make
his total allocation equal to the lesser of the number of shares subscribed for
or 100 shares. Any available shares remaining after each such subscribing
Eligible Account Holder has been allocated the lesser of the number of shares
subscribed for or 100 shares shall be allocated among the subscribing Eligible
Account Holders in the proportion which the Qualifying Deposit of each such
subscribing Eligible Account Holder bears to the total Qualifying Deposits of
all such subscribing Eligible Account Holders whose orders are unfilled,
provided that no fractional shares shall be issued. Subscription Rights of
Eligible Account Holders who are also Directors or Officers and their Associates
shall be subordinated to those of other Eligible Account Holders to the extent
that they are attributable to increased deposits during the one-year period
preceding the Eligibility Record Date.
6. SUBSCRIPTION RIGHTS OF THE TAX-QUALIFIED EMPLOYEE STOCK BENEFIT
PLANS (SECOND PRIORITY)
Notwithstanding the purchase limitations discussed below, Tax-Qualified
Employee Stock Benefit Plans of the Holding Company and the Bank shall receive,
without payment, Subscription Rights to purchase in the aggregate up to 10% of
the Conversion Stock, including first priority to purchase any shares of
Conversion Stock to be issued in the Conversion and Reorganization as a result
of an increase in the Estimated Price Range after commencement of the
Subscription Offering and prior to completion of the Conversion and
Reorganization. The Tax-Qualified Employee Stock Benefit Plans may, in whole or
in part, fill their orders through open market purchases subsequent to the
closing of the Offering. The Tax-Qualified Employee Stock Benefit Plans shall
not be deemed to be Associates or Affiliates of or Persons Acting in Concert
with any Director or Officer of the Mutual Holding Company, the Holding Company
or the Bank. Consistent with applicable laws, regulations, policies and
practices of the OTS, Tax-Qualified Employee Stock Benefit Plans may use funds
contributed by the Holding Company or the Bank and/or borrowed from an
independent third party to exercise such Subscription Rights, and the
B-11
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 regulatory capital requirement.
7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS
(THIRD PRIORITY)
A. In the event that the Eligibility Record Date is more than 15 months
prior to the date of the latest amendment to the Application for Conversion
filed prior to OTS approval, then, and only in that event, a Supplemental
Eligibility Record Date shall be set and each Supplemental Eligible Account
Holder shall, subject to the further limitations of Section 10 hereof, receive,
without payment, Subscription Rights to purchase up to the greater of (i) the
maximum purchase limitation set forth in Section 9 hereof, (ii) one- tenth of 1%
of the total offering of shares of Conversion Stock in the Subscription
Offering, and (iii) 15 times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Conversion Stock offered
in the Subscription Offering by a fraction, of which the numerator is the amount
of the Qualifying Deposits of the Supplemental Eligible Account Holder and the
denominator is the total amount of all Qualifying Deposits of all Supplemental
Eligible Account Holders, subject to Section 13 hereof and the availability of
shares of Conversion Stock for purchase after taking into account the shares of
Conversion Stock purchased by Eligible Account Holders and Tax-Qualified
Employee Stock Benefit Plans though the exercise of Subscription Rights under
Sections 5 and 6 hereof.
B. In the event of an oversubscription for shares of Conversion Stock,
available shares shall be allocated among subscribing Supplemental Eligible
Account Holders so as to permit each such Supplemental Eligible Account Holder,
to the extent possible, to purchase a number of shares sufficient to make his
total allocation (including the number of shares, if any, allocated in
accordance with Section 5.A) equal to the lesser of the number of shares
subscribed for or 100 shares. Any remaining available shares shall be allocated
among subscribing Supplemental Eligible Account Holders in the proportion that
the Qualifying Deposits of each bears to the total amount of the Qualifying
Deposits of all such subscribing Supplemental Eligible Account Holders whose
orders are unfilled, provided that no fractional shares shall be issued.
8. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)
A. Each Other Member shall, subject to the further limitations of
Section 10 hereof, receive, without payment, Subscription Rights to purchase up
to the greater of (i) the maximum purchase limitation set forth in Section 9
hereof and (ii) one-tenth of 1% of the total offering of shares of Conversion
Stock in the Subscription Offering, in each case subject to Section 13 hereof
and the availability of shares of Conversion Stock for purchase after taking
into account the shares of Conversion Stock purchased by Eligible Account
Holders, Tax-Qualified Employee Stock Benefit Plans, and Supplemental Eligible
Account Holders, if any, through the exercise of Subscription Rights under
Sections 5, 6 and 7 hereof.
B. If, pursuant to this Section, Other Members subscribe for a number
of shares of Conversion Stock in excess of the total number of shares of
Conversion Stock remaining, available shares shall be allocated among
subscribing Other Members so as to permit each such Other Members, to the extent
possible, to purchase a number of shares sufficient to make his total allocation
equal to the lesser of the number of shares subscribed or 100 shares. Any
remaining available shares shall be allocated among subscribing Other Members on
a pro rata basis in the same proportion as each such Other Member's
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subscription bears to the total subscriptions of all such subscribing Other
Members whose orders are unfilled, provided that no fractional shares shall be
issued.
9. COMMUNITY OFFERING, SYNDICATED COMMUNITY OFFERING AND OTHER
OFFERINGS
A. If less than the total number of shares of Conversion Stock are sold
in the Subscription Offering, it is anticipated that all remaining shares of
Conversion Stock shall, if practicable, be sold in a Community Offering and/or a
Syndicated Community Offering. Subject to the requirements set forth herein, the
manner in which the Conversion Stock is sold in the Community Offering and/or
the Syndicated Community Offering shall have as the objective the achievement of
a wide distribution of such stock, subject to the right of the Primary Parties,
in their absolute discretion, to accept or reject in whole or in part all orders
in the Community Offering and/or Syndicated Community Offering.
B. In the event of a Community Offering, all shares of Conversion Stock
which are not subscribed for in the Subscription Offering shall be offered for
sale by means of a direct community marketing program, which may provide for the
use of brokers, dealers or investment banking firms experienced in the sale of
financial institution securities. Any available shares in excess of those not
subscribed for in the Subscription Offering will be available for purchase by
members of the general public to whom a Prospectus is delivered by the Holding
Company or on its behalf, with preference first given to Public Stockholders as
of the Stockholder Voting Record Date and then to natural persons who are
Residents of the Local Community ("Preferred Subscribers").
C. A Prospectus and Order Form shall be furnished to such Persons as
the Primary Parties may select in connection with the Community Offering, and
each order for Conversion Stock in the Community Offering shall be subject to
the absolute right of the Primary Parties to accept or reject any such order in
whole or in part either at the time of receipt of an order or as soon as
practicable following completion of the Community Offering. Available shares
will be allocated first to each Preferred Subscriber whose order is accepted in
an amount equal to the lesser of 100 shares or the number of shares subscribed
for by each such Preferred Subscriber, if possible. Thereafter, unallocated
shares shall be allocated among the Preferred Subscribers whose accepted orders
remain unsatisfied in an equitable manner as determined by the Board of
Directors. If there are any shares remaining after all accepted orders by
Preferred Subscribers have been satisfied, any remaining shares shall be
allocated to other members of the general public who place orders in the
Community Offering, applying the same allocation described above for Preferred
Subscribers.
D. The maximum amount of Conversion Stock that any Person may purchase
in the Community Offering shall, subject to the further limitations of Section
10 hereof, not exceed $100,000, provided, however, that this amount may be
decreased or increased to up to 5% of the total offering of shares in the
Conversion and Reorganization, subject to any required regulatory approval but
without the further approval of Members of the Mutual Holding Company or the
Stockholders of the Middle Tier Holding Company, subject to the preferences set
forth in Section 9.B and 9.C of this Plan. The Primary Parties may commence the
Community Offering concurrently with, at any time during, or as soon as
practicable after the end of, the Subscription Offering, and the Community
Offering must be completed within 45 days after the completion of the
Subscription Offering, unless extended by the Primary Parties with any required
regulatory approval.
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E. Subject to such terms, conditions and procedures as may be
determined by the Primary Parties, all shares of Conversion Stock not subscribed
for in the Subscription Offering or ordered in the Community Offering may be
sold by a syndicate of broker-dealers to the general pubic in a Syndicated
Community Offering. Each order for Conversion Stock in the Syndicated Community
Offering shall be subject to the absolute right of the Primary Parties to accept
or reject any such order in whole or in part either at the time of receipt of an
order or as soon as practicable after completion of the Syndicated Community
Offering. The amount of Conversion Stock that any Person may purchase in the
Syndicated Community Offering shall, subject to the further limitations of
Section 10 hereof, not exceed $100,000, provided, however, that this amount may
be decreased or increased to up to 5% of the total offering of shares in the
Conversion and Reorganization, subject to any required regulatory approval but
without the further approval of Members of the Mutual Holding Company or the
Stockholders of the Middle Tier Holding Company. The Primary Parties 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 the Community Offering. The Syndicated Community Offering must be
completed within 45 days after the completion of the Subscription Offering,
unless extended by the Primary Parties with any required regulatory approval.
F. If for any reason a Syndicated Community Offering of shares of
Conversion Stock not sold in the Subscription Offering and the Community
Offering cannot be effected, or in the event that any insignificant residue of
shares of Conversion Stock is not sold in the Subscription Offering, Community
Offering or Syndicated Community Offering, the Primary Parties 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.
G. In addition, in any Community Offering or Syndicated Community
Offering, orders shall first be filled up to a maximum of 2% of the total shares
issued in the Offering in a manner that will achieve a wide distribution of the
Holding Company Common Stock, and thereafter any remaining shares will be
allocated on an equal number of shares per order basis, until all orders have
been filled or the shares have been exhausted.
10. LIMITATIONS ON SUBSCRIPTIONS AND PURCHASES OF CONVERSION STOCK
The following limitations shall apply to all purchases of Conversion
Stock:
A. The number of shares of Conversion Stock which may be purchased by
any Person (or persons through a single account), in the First Priority, Third
Priority and Fourth Priority in the Subscription Offering shall not exceed such
number of shares of Conversion Stock that when combined with Exchange Shares
received shall equal $100,000 of Holding Company Common Stock, except for Tax-
Qualified Employee Stock Benefit Plans, which in the aggregate may subscribe for
up to 8% of the Conversion Stock.
B. The number of shares of Conversion Stock which may be purchased by
any Person in the Public Stockholders, the Community and/or the Syndicated
Community Offerings shall not exceed such number of shares of Conversion Stock
that when combined with Exchange Shares received shall equal $100,000 of Holding
Company Common Stock.
C. Except for the Tax-Qualified Employee Stock Benefit Plans, the
maximum number of shares of Conversion Stock which may be purchased in all of
the combined categories of the Conversion and Reorganization by any Person (or
persons through a single account) together with any Associate or
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group of persons Acting in Concert shall not exceed such number of shares of
Conversion Stock that when combined with Exchange Shares shall equal $200,000 of
Holding Company Common Stock.
D. The number of shares of Conversion Stock which Directors and
Officers and their Associates may purchase in the aggregate in the Offering
shall not exceed 25% of the total number of shares of Conversion Stock sold in
the Offerings, including any shares which may be issued in the event of an
increase in the maximum of the Estimated Price Range to reflect changes in
market, financial and economic conditions after commencement of the Subscription
Offering and prior to completion of the Offerings.
E. No Person may purchase fewer than 25 shares of Conversion Stock in
the Offerings, to the extent such shares are available; provided, however, that
if the Actual Purchase Price is greater than $20.00 per share, such minimum
number of shares shall be adjusted so that the aggregate Actual Purchase Price
for such minimum shares will not exceed $500.00.
F. For purposes of the foregoing limitations and the determination of
Subscription Rights, (i) Directors, Officers and Employees shall not be deemed
to be Associates or a group acting in concert solely as a result of their
capacities as such, (ii) shares purchased by Tax-Qualified Employee Stock
Benefit Plans shall not be attributable to the individual trustees or
beneficiaries of any such plan for purposes of determining compliance with the
limitations set forth in this Section, (iii) shares purchased by Tax-Qualified
Employee Stock Benefit Plans shall not be attributable to the individual
trustees or beneficiaries of any such plan for purposes of determining
compliance with the limitation set forth in this Section, and (iv) Exchange
Shares shall be valued at the Actual Purchase Price.
G. Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the Members of
the Mutual Holding Company or the Stockholders of the Middle Tier Holding
Company, the Primary Parties may increase or decrease the individual or overall
purchase limitations set forth herein to a percentage which does not exceed 5%
of the total shares of Holding Company Common Stock issued in the Conversion and
Reorganization whether prior to, during or after the Subscription Offering,
Community Offering and/or Syndicated Community Offering. Notwithstanding the
foregoing, the maximum purchase limitation may be increased up to 9.99%,
provided that orders for exceeding 5% of the shares being offered shall not
exceed, in the aggregate, 10% of the total offering. In the event that the
individual or overall purchase limitations are increased after commencement of
the Subscription Offering or any other offering, the Primary Parties shall
permit any Person who subscribed for the maximum number of shares of Conversion
Stock (plus certain large subscribers as determined in the sole discretion of
the Primary Parties) to purchase an additional number of shares, so that such
Person shall be permitted to subscribe for the then maximum number of shares
permitted to be subscribed for by such Person, subject to the rights and
preferences of any Person who has priority Subscription Rights. In the event
that the individual or overall purchase limitations are decreased after
commencement of the Subscription Offering or any other offering, the orders of
any Person who subscribed for more than the new purchase limitation 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.
H. The Primary Parties shall have the right to take all such action as
they may, in their sole discretion, deem necessary, appropriate or advisable in
order to monitor and enforce the terms, conditions, limitations and restrictions
contained in this Section and elsewhere in this Plan and the terms, conditions
and representations contained in the Order Form, including, but not limited to,
the absolute right (subject
B-15
only to any necessary regulatory approvals or concurrences) to reject, limit or
revoke acceptance of any subscription or order and to delay, terminate or refuse
to consummate any sale of Conversion Stock which they believe might violate, or
is designed to, or is any part of a plan to, evade or circumvent such terms,
conditions, limitations, restrictions and representations. Any such action shall
be final, conclusive and binding on all persons, and the Primary Parties and
their respective Boards shall be free from any liability to any Person on
account of any such action.
I. Notwithstanding anything to the contrary contained in this Plan,
except as may otherwise be required by the OTS, the Public Stockholders will
generally not have to sell any Mid-Tier Common Stock or be limited in receiving
Exchange Shares even if their ownership of Mid-Tier Common Stock when converted
into Exchange Shares pursuant to the MHC Merger would exceed an applicable
purchase limitation; however, they might be precluded from purchasing any
Conversion Stock in the Offerings.
11. TIMING OF SUBSCRIPTION OFFERING; MANNER OF EXERCISING SUBSCRIPTION
RIGHTS AND ORDER FORMS
A. The Subscription Offering may be commenced concurrently with or at
any time after the mailing to Voting Members of the Mutual Holding Company and
Stockholders of the Middle Tier Holding Company of the proxy statement(s) to be
used in connection with the Special Meeting and the Stockholders' Meeting. The
Subscription Offering may be closed before the Special Meeting and the
Stockholders' Meeting, provided that the offer and sale of the Conversion Stock
shall be conditioned upon the approval of the Plan by the Voting Members of the
Mutual Holding Company and the Stockholders of the Middle Tier Holding Company
at the Special Meeting and the Stockholders' Meeting, respectively.
B. The exact timing of the commencement of the Subscription Offering
shall be determined by the Primary Parties in consultation with the Independent
Appraiser and any financial or advisory or investment banking firm retained by
them in connection with the Conversion. The Primary Parties may consider a
number of factors, including, but not limited to, their current and projected
future earnings, local and national economic conditions, and the prevailing
market for stocks in general and stocks of financial institutions in particular.
The Primary Parties shall have the right to withdraw, terminate, suspend, delay,
revoke or modify any such Subscription Offering, at any time and from time to
time, as they in their sole discretion may determine, without liability to any
Person, subject to compliance with applicable securities laws and any necessary
regulatory approval or concurrence.
C. The Primary Parties shall, promptly after the SEC has declared the
Registration Statement, which includes the Prospectus, effective and all
required regulatory approvals have been obtained, distribute or make available
the Prospectus, together with Order Forms for the purchase of Conversion Stock,
to all Participants for the purpose of enabling them to exercise their
respective Subscription Rights, subject to Section 14 hereof. The Primary
Parties may elect to mail a Prospectus and Order Form only to those Participants
who request such materials by returning a postage-paid card to the Primary
Parties by a date specified in the letter informing them of their Subscription
Rights. Under such circumstances, the Subscription Offering shall not be closed
until the expiration of 30 days after the mailing by the Primary Parties of the
postage-paid card to Participants.
D. A single Order Form for all Deposit Accounts maintained with the
Bank by an Eligible Account Holder, Supplemental Eligible Account Holder and any
Other Member may be furnished, irrespective of the number of Deposit Accounts
maintained with the Bank on the Eligibility Record Date and Supplemental
Eligibility Record Date and the Voting Record Date, respectively.
B-16
E. The recipient of an Order Form shall have no less than 20 days and
no more than 45 days from the date of mailing of the Order Form (with the exact
termination date to be set forth on the Order Form) to properly complete and
execute the Order Form and deliver it to the Primary Parties. The Primary
Parties may extend such period by such amount of time as they determine is
appropriate. Failure of any Participant to deliver a properly executed Order
Form to the Primary Parties, along with payment (or authorization for payment by
withdrawal) for the shares of Conversion Stock subscribed for, within time
limits prescribed, shall be deemed a waiver and release by such person of any
rights to subscribe for shares of Conversion Stock. Each Participant shall be
required to confirm to the Primary Parties by executing an Order Form that such
Person has fully complied with all of the terms, conditions, limitations and
restrictions in the Plan.
F. The Primary Parties shall have the absolute right, in their sole
discretion and without liability to any Participant or other Person, to reject
any Order Form, including, but not limited to, any Order Form that is (i)
improperly completed or executed; (ii) not timely received; (iii) not
accompanied by the proper payment (or authorization of withdrawal for payment)
or, in the case of institutional investors in the Community Offering, not
accompanied by an irrevocable order together with a legally binding commitment
to pay the full amount of the purchase price prior to 48 hours before the
completion of the Offerings; or (iv) submitted by a Person whose representations
the Primary Parties believe to be false or who they otherwise believe, either
alone, or acting in concert with others, is violating, evading or circumventing,
or intends to violate, evade or circumvent, the terms and conditions of the
Plan. The Primary Parties may, but will not be required to, waive any
irregularity on any Order Form or may require the submission of corrected Order
Forms or the remittance of full payment for shares of Conversion Stock by such
date as they may specify. The interpretation of the Primary Parties of the terms
and conditions of the Order Forms shall be final and conclusive.
12. PAYMENT FOR CONVERSION STOCK
A. Payment for shares of Conversion Stock subscribed for by
Participants in the Subscription Offering and payment for shares of Conversion
Stock ordered by Public Stockholders and other Persons in the Community Offering
and Syndicated Community Offering (if applicable) shall be equal to the Initial
Purchase Price multiplied by the number of shares which are being subscribed for
or ordered, respectively. Such payment may be made in cash, if delivered in
person, or by check or money order at the time the Order Form is delivered to
the Primary Parties. In addition, the Primary Parties may elect to provide
Participants and/or other Persons who have a Deposit Account with the Bank the
opportunity to pay for shares of Conversion Stock by authorizing the Bank to
withdraw from such Deposit Account an amount equal to the aggregate Purchase
Price of such shares. If the Actual Purchase Price is less than the Initial
Purchase Price, the Primary Parties shall refund the difference to all
Participants and other Persons, unless the Primary Parties choose to provide
Participants and other Persons the opportunity on the Order Form to elect to
have such difference applied to the purchase of additional whole shares of
Conversion Stock. If the Actual Purchase Price is more than the Initial Purchase
Price, the Primary Parties shall reduce the number of shares of Conversion Stock
ordered by Participants and other Persons and refund any remaining amount which
is attributable to a fractional share interest, unless the Primary Parties
choose to provide Participants and other Persons the opportunity to increase the
amount of funds submitted to pay for their shares of Conversion Stock.
B. Consistent with applicable laws and regulations and policies and
practices of the OTS, payment for shares of Conversion Stock subscribed for by
Tax-Qualified Employee Stock Benefit Plans may be made with funds contributed by
the Holding Company and/or funds obtained pursuant to a loan
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from an independent third party pursuant to a loan commitment which is in force
from the time that any such plan submits an Order Form until the closing of the
transactions contemplated hereby.
C. If a Participant or other Person authorizes the Bank to withdraw the
amount of the Initial Purchase Price from his Deposit Account, the Bank shall
have the right to make such withdrawal or to freeze funds equal to the aggregate
Initial Purchase Price upon receipt of the Order Form. Notwithstanding any
regulatory provisions regarding penalties for early withdrawals from certificate
accounts, the Bank may allow payment by means of withdrawal from certificate
accounts without the assessment of such penalties. In the case of an early
withdrawal of only a portion of such account, the certificate evidencing such
account shall be canceled if any applicable minimum balance requirement ceases
to be met. In such case, at the sole discretion of the Bank, the remaining
balance will be either returned to the depositor or will earn interest at the
regular savings account rate subsequent to the withdrawal. However, where any
applicable minimum balance is maintained in such certificate account, the rate
of return on the balance of the certificate account shall remain the same as
prior to such early withdrawal. This waiver of the early withdrawal penalty
applies only to withdrawals made in connection with the purchase of Conversion
Stock and is entirely within the discretion of the Primary Parties.
D. The Bank shall pay interest, at not less than the regular savings
account rate, for all amounts paid in cash, by check or money order to purchase
shares of Conversion Stock in the Subscription Offering and the Community
Offering from the date payment is received until the date the Conversion and
Reorganization is completed or terminated.
E. The Bank shall not knowingly loan funds or otherwise extend credit
to any Participant or other Person to purchase Conversion Stock.
F. Each share of Conversion Stock shall be non-assessable upon payment
in full of the Actual Purchase Price.
13. ACCOUNTHOLDERS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES
The Primary Parties shall make reasonable efforts to comply with the
securities laws of all jurisdictions in the United States in which Participants
reside. However, no Participant will be offered or receive any Conversion Stock
under the Plan if such Participant resides in a foreign country or resides in a
jurisdiction of the United States with respect to which any of the following
apply; (a) there are few Participants otherwise eligible to subscribe for shares
under this Plan who reside in such jurisdiction; (b) the granting of
Subscription Rights or the offer or sale of shares of Conversion Stock to such
Participants would require any of the Primary Parties or their respective
Directors and Officers, under the laws of such jurisdiction, to register as a
broker-dealer, salesman or selling agent or to register or otherwise qualify the
Conversion Stock for sale in such jurisdiction, or any of the Primary Parties
would be required to qualify as a foreign corporation or file a consent to
service of process in such jurisdiction; or (c) such registration, qualification
or filing in the judgment of the Primary Parties would be impracticable or
unduly burdensome for reasons of cost or otherwise.
14. DISSENTERS' RIGHTS
The stockholders of the Middle Tier Holding Company shall have
dissenter and appraisal rights in connection with their vote on the Conversion
and Reorganization to the extent required by Section 552.14 of the Regulations
Applicable to All Savings Associations, or any successor thereto.
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15. VOTING RIGHTS OF STOCKHOLDERS
Following consummation of the Conversion and Reorganization, voting
rights with respect to the Bank shall be held and exercised exclusively by the
Holding Company as holder of all of the Bank's outstanding voting capital stock,
and voting rights with respect to the Holding Company shall be held and
exercised exclusively by the holders of the Holding Company's voting capital
stock.
16. LIQUIDATION ACCOUNT
A. At the time of the Merger No. 2, the Bank shall establish a
liquidation account in an amount equal to the greater of (i) the retained
earnings of the Bank as of the date of the latest statement of financial
condition contained in the final offering circular utilized in the Bank's
initial public offering, or (ii) 56.5% of the Middle Tier Holding Company's
total stockholders' equity as reflected in its latest statement of financial
condition contained in the final Prospectus utilized in the Conversion and
Reorganization. The function of the liquidation account will be to preserve the
rights of certain holders of Deposit Accounts in the Bank who maintain such
accounts in the Bank following the Conversion and Reorganization to priority to
distributions in the unlikely event of a liquidation of the Bank subsequent to
the Conversion and Reorganization.
B. The liquidation account shall be maintained for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders, if any, who
maintain their Deposit Accounts in the Bank after the Conversion and
Reorganization. Each such account holder will, with respect to each Deposit
Account held, have a related inchoate interest in a portion of the liquidation
account balance, which interest will be referred to in this Section as the
"subaccount balance." All Deposit Accounts having the same social security
number will be aggregated for purposes of determining the initial subaccount
balance with respect to such Deposit Accounts, except as provided in this
Section.
C. In the event of a complete liquidation of the Bank subsequent to the
Conversion and Reorganization (and only in such event), each Eligible Account
Holder and Supplemental Eligible Account Holder, if any, shall be entitled to
receive a liquidation distribution from the liquidation account in the amount of
the then current subaccount balances for Deposit Accounts then held (adjusted as
described below) before any liquidation distribution may be made with respect to
the capital stock of the Bank. No merger, consolidation, sale of bulk assets or
similar combination transaction with another FDIC-insured institution in which
the Bank is not the surviving entity shall be considered a complete liquidation
for this purpose. In any merger or consolidation transaction, the liquidation
account shall be assumed by the surviving entity.
D. The initial subaccount balance for a Deposit Account held by an
Eligible Account Holder and Supplemental Eligible Account Holder, if any, shall
be determined by multiplying the opening balance in the liquidation account by a
fraction, of which the numerator is the amount of the Qualifying Deposits of
such account holder and the denominator is the total amount of Qualifying
Deposits of all Eligible Account Holders and Supplemental Eligible Account
Holders, if any. For Deposit Accounts in existence at both the Eligibility
Record Date and the Supplemental Eligibility Record Date, if any, separate
initial subaccount balances shall be determined on the basis of the Qualifying
Deposits in such Deposit Accounts on each such record date. Initial subaccount
balances shall not be increased, and shall be subject to downward adjustment as
provided below.
B-19
E. If the aggregate deposit balance in the Deposit Account(s) of any
Eligible Account Holder or Supplemental Eligible Account Holder, if any, at the
close of business on any September 30 annual closing date is less than the
lesser of (a) the aggregate deposit balance in such Deposit Account(s) at the
close of business on any other annual closing date subsequent to such record
dates or (b) the aggregate deposit balance in such Deposit Account(s) as of the
Eligibility Record Date or the Supplemental Eligibility Record Date, the
subaccount balance for such Deposit Accounts(s) shall be adjusted by reducing
such subaccount balance in an amount proportionate to the reduction in such
deposit balance. In the event of such a downward adjustment, the subaccount
balance shall not be subsequently increased, notwithstanding any subsequent
increase in the deposit balance of the related Deposit Account(s). The
subaccount balance of an Eligible Account Holder or Supplemental Eligible
Account Holder, if any, will be reduced to zero if the Account Holder ceases to
maintain a Deposit Account at the Bank that has the same social security number
as appeared on his Deposit Account(s) at the Eligibility Record Date or, if
applicable, the Supplemental Eligibility Record Date.
F. Subsequent to the Conversion and Reorganization, the Bank may not
pay cash dividends generally on deposit accounts and/or capital stock of the
Bank, if such dividend or repurchase would reduce the Bank's regulatory capital
below the aggregate amount of the then current subaccount balances for Deposit
Accounts then held; otherwise, the existence of the liquidation account shall
not operate to restrict the use or application of any of the net worth accounts
of the Bank.
G. For purposes of this Section, a Deposit Account includes a
predecessor or successor account which is held by an Account Holder with the
same social security number.
17. TRANSFER OF DEPOSIT ACCOUNTS
Each Deposit Account in the Bank at the time of the consummation of the
Conversion and Reorganization shall become, without further action by the
holder, a Deposit Account in the Bank equivalent in withdrawable amount to the
withdrawal value (as adjusted to give effect to any withdrawal made for the
purchase of Conversion Stock), and subject to the same terms and conditions
(except as to voting and liquidation rights) as such Deposit Account in the Bank
immediately preceding consummation of the Conversion and Reorganization. Holders
of Deposit Accounts in the Bank shall not, as such holders, have any voting
rights.
18. REQUIREMENTS FOLLOWING CONVERSION AND REORGANIZATION FOR
REGISTRATION, MARKET MAKING AND STOCK EXCHANGE LISTING
In connection with the Conversion and Reorganization, the Holding
Company shall register the Holding Company Common Stock pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended, and shall undertake
not to deregister such stock for a period of three years thereafter. The Holding
Company also shall use its best efforts to (i) encourage and assist a market
maker to establish and maintain a market for the Holding Company Common Stock
and (ii) list the Holding Company Common Stock on a national or regional
securities exchange or to have quotations for such stock disseminated on the
National Association of Securities Dealers Automated Quotation System.
19. DIRECTORS AND OFFICERS OF THE BANK AND THE HOLDING COMPANY
Each person serving as a Director or Officer of the Bank or the Holding
Company at the time of the Conversion and Reorganization shall continue to serve
as a Director or Officer of the Bank or the
B-20
Holding Company for the balance of the term for which the person was elected
prior to the Conversion and Reorganization, and until a successor is elected and
qualified.
20. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS
FOLLOWING THE CONVERSION AND REORGANIZATION
For a period of three years following the Conversion and
Reorganization, the Directors and Officers of the Holding Company and the Bank
and their Associates may not purchase, without the prior written approval of the
OTS, Holding Company Common Stock except from a broker-dealer registered with
the SEC. This prohibition shall not apply, however, to (i) a negotiated
transaction arrived at by direct negotiation between buyer and seller and
involving more than 1% of the outstanding Holding Company Common Stock and (ii)
purchases of stock made by and held by any Tax-Qualified Employee Stock Benefit
Plan (and purchases of stock made by and held by any Non-Tax-Qualified Employee
Stock Benefit Plan following the receipt of stockholder approval of such plan)
which may be attributable to individual officers or directors.
The foregoing restriction on purchases of Holding Company Common Stock
shall be in addition to any restrictions that may be imposed by federal and
state securities laws.
21. RESTRICTIONS ON TRANSFER OF STOCK
All shares of the Conversion Stock which are purchased by Persons other
than Directors and Officers shall be transferable without restriction, except in
connection with a transaction proscribed by Section 22 of this Plan. Shares of
Conversion Stock (excluding Exchange Shares) purchased by Directors and Officers
of the Holding Company and the Bank on original issue from the Holding Company
(by subscription or otherwise) shall be subject to the restriction that such
shares shall not be sold or otherwise disposed of for value for a period of one
year following the date of purchase, except for any disposition of such shares
following the death of the original purchaser or pursuant to any merger or
similar transaction approved by the OTS. The shares of Conversion Stock
(excluding Exchange Shares) issued by the Holding Company to Directors and
Officers shall bear the following legend giving appropriate notice of such one-
year restriction.
The shares of stock evidenced by this Certificate are
restricted as to transfer for a period of one year from the
date of this Certificate pursuant to Part 563b of the Rules
and Regulations of the Office of Thrift Supervision. These
shares may not be transferred during such one-year period
without a legal opinion of counsel for the Company that said
transfer is permissible under the provisions of applicable
law and regulation. This restrictive legend shall be deemed
null and void after one year from the date of this
Certificate.
In addition, the Holding Company shall give appropriate instructions to
the transfer agent for the Holding Company Common Stock with respect to the
applicable restrictions relating to the transfer of restricted stock. Any shares
issued at a later date as a stock dividend, stock split or otherwise with
respect to any such restricted stock shall be subject to the same holding period
restrictions as may then be applicable to such restricted stock.
The foregoing restriction on transfer shall be in addition to any
restrictions on transfer that may be imposed by federal and state securities
laws.
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22. RESTRICTIONS ON ACQUISITION OF STOCK OF THE HOLDING COMPANY
The certificate of incorporation of the Holding Company shall prohibit
any Person together with Associates or groups of Persons acting in concert from
offering to acquire or acquiring, directly or indirectly, beneficial ownership
of more than 10% of any class of equity securities of the Holding Company, or of
securities convertible into more than 10% of any such class, for five years
following completion of the Conversion and Reorganization. The certificate of
incorporation of the Holding Company also shall provide that all equity
securities beneficially owned by any Person in excess of 10% of any class of
equity securities during such five-year period shall be considered "excess
shares," and that excess shares shall not be counted as shares entitled to vote
and shall not be voted by any Person or counted as voting shares in connection
with any matters submitted to the stockholders for a vote. The foregoing
restrictions shall not apply to (i) any offer with a view toward public resale
made exclusively to the Holding Company by underwriters or a selling group
acting on this behalf, (ii) the purchase of shares by a Tax- Qualified Employee
Stock Benefit Plan established for the benefit of the employees of the Holding
Company and its subsidiaries which is exempt from approval requirements under 12
C.F.R. ss. 574.3(c)(1)(vi) or any successor thereto, and (iii) any offer or
acquisition approved in advance by the affirmative vote of two-thirds of the
entire Board of Directors of the Holding Company. Directors, Officers or
Employees of the Holding Company or the Bank or any subsidiary thereof shall not
be deemed to be Associates or a group acting in concert with respect to their
individual acquisition of any class of equity securities of the Holding Company
solely as a result of their capacities as such.
23. TAX RULINGS OR OPINIONS
Consummation of the Conversion and Reorganization is conditioned upon
prior receipt by the Primary Parties of either a ruling or an opinion of counsel
with respect to federal tax laws, and either a ruling or an opinion of counsel
with respect to New Jersey tax laws, to the effect that consummation of the
transactions contemplated hereby will not result in a taxable reorganization
under the provisions of the applicable codes or otherwise result in any material
adverse tax consequences to the Primary Parties or to account holders receiving
Subscription Rights before or after the Conversion and Reorganization, except in
each case to the extent, if any, that Subscription Rights are deemed to have
fair market value on the date such rights are issued.
24. STOCK COMPENSATION PLANS
A. By voting in favor of this Agreement, the Holding Company shall have
approved adoption of the Middle Tier Holding Company's Employee Stock Ownership
Plan, 2003 Stock Option Plan, 2003 Restricted Stock Plan, and Employees' Savings
& Profit Sharing Plan and Trust (collectively, the "Plans") as plans of the
Holding Company and shall have agreed to issue Holding Company Common Stock in
lieu of Middle Tier Holding Company Common Stock pursuant to the terms of such
Plans. As of the Effective Date, rights outstanding under the Plans shall be
assumed by the Holding Company and thereafter shall be rights only for shares of
Holding Company Common Stock, with each such right being for a number of shares
of Holding Company Common Stock equal to the number of shares of Middle Tier
Holding Company Common Stock that were available thereunder immediately prior to
the Effective Date times the Exchange Ratio, as defined in the Plan of
Conversion, and the price of each such right shall be adjusted to reflect the
Exchange Ratio and so that the aggregate purchase price of the right is
unaffected, but with no change in any other term or condition of such right. The
Holding Company shall make appropriate amendments to the Plans to reflect the
adoption of the Plans by the Holding Company without adverse effect upon the
rights outstanding thereunder.
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B. The Holding Company and the Bank are authorized to adopt
Tax-Qualified Employee Stock Benefit Plans in connection with the Conversion and
Reorganization, including without limitation an employee stock ownership plan.
C. The Holding Company and the Bank also are authorized to adopt stock
option plans, restricted stock grant plans and other Non-Tax-Qualified Employee
Stock Benefit Plans, provided that no stock options shall be granted, and no
shares of Conversion Stock shall be purchased, pursuant to any of such plans
prior to the earlier of (i) the one-year anniversary of the consummation of the
Conversion and Reorganization or (ii) the receipt of stockholder approval of
such plans at either the annual or special meeting of stockholders of the
Holding Company to be held not earlier than six months after the completion of
the Conversion and Reorganization.
D. Existing as well as any newly created Tax-Qualified Employee Stock
Benefit Plans may purchase shares of Conversion Stock in the Offerings or in the
open market subsequent to the Offerings, to the extent permitted by the terms of
such benefit plans and this Plan.
25. DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK
A. Except as may otherwise may be permitted by the OTS, the Holding
Company may not repurchase any shares of its capital stock during the first year
following consummation of the Conversion and Reorganization.
B. The Bank may not declare or pay a cash dividend on, or repurchase
any of, its capital stock if the effect thereof would cause the regulatory
capital of the Bank to be reduced below the amount required for the liquidation
account. Any dividend declared or paid on, or repurchase of, the Bank's capital
stock also shall be in compliance with Sections 563.140-146 of the Regulations
Applicable to All Savings Associations, or any successor thereto.
C. Notwithstanding anything to the contrary set forth herein, the
Holding Company may repurchase its capital stock to the extent and subject to
the requirements set forth in Section 563b.510 of the Regulations Applicable to
All Savings Associations, or any successor thereto, or as otherwise may be
approved by the OTS.
26. PAYMENT OF FEES TO BROKERS
The Primary Parties may elect to offer to pay fees on a per share basis
to securities brokers who assist purchasers of Conversion Stock in the
Offerings.
27. EFFECTIVE DATE
The Effective Date of the Conversion and Reorganization shall be the
date upon which the last of the following actions occurs: (i) the filing of
Articles of Combination with the OTS with respect to the Mergers, (ii) the
closing of the issuance of the shares of Conversion Stock in the Offerings. The
filing of Articles of Combination relating to the Mergers and the closing of the
issuance of shares of Conversion Stock in the Offerings shall not occur until
all requisite regulatory, Member and Stockholder approvals have been obtained,
all applicable waiting periods have expired and sufficient subscriptions and
orders for the Conversion Stock have been received. It is intended that the
closing of the Mergers and the sale of shares of Conversion Stock in the
Offerings shall occur consecutively and substantially simultaneously.
B-23
28. AMENDMENT OR TERMINATION OF THE PLAN
If deemed necessary or desirable by the Boards of Directors of the
Primary Parties, this Plan, including the Certificate of Incorporation of the
Holding Company and the Charter of the Bank, may be substantively amended, as a
result of comments from regulatory authorities or otherwise, at any time prior
to the solicitation of proxies from members and Stockholders to vote on the Plan
and at any time thereafter with the concurrence of the OTS. Any amendment to
this Plan made after approval by the Members and Stockholders with the
concurrence of the OTS shall not necessitate further approval by the Members or
Stockholders unless otherwise required by the OTS. This Plan shall terminate if
the sale of all shares of Conversion Stock is not completed within 24 months
from the date of the Special Meeting. Prior to the earlier of the Special
Meeting and the Stockholders' Meeting, this Plan may be terminated by the Boards
of Directors of the Primary Parties without approval of the OTS; after the
Special Meeting or the Stockholder's Meeting, the Boards of Directors may
terminate this Plan only with the approval of the OTS.
29. INTERPRETATION OF THE PLAN
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of each of the Boards of Directors of the
Primary Parties shall be final, subject to the authority of the OTS.
B-24