GATEWAY COMMUNITY FINANCIAL, MHC
GATEWAY COMMUNITY FINANCIAL CORP.
GLOUCESTER COUNTY
FEDERAL SAVINGS BANK
Sewell, New Jersey
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PLAN OF STOCK ISSUANCE
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Adopted by the Board of Directors
on
January 29, 2007
and Subsequently Amended
PLAN OF STOCK ISSUANCE
GATEWAY COMMUNITY FINACIAL, MHC
GATEWAY COMMUNITY FINANCIAL CORP.
GLOUCESTER COUNTY FEDERAL SAVINGS BANK
TABLE OF CONTENTS
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PAGE
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1. Introduction..................................................... 1
2. Definitions...................................................... 1
3. Conditions to Completion of Stock Offering....................... 4
4. Stock Offering Documents......................................... 5
5. Stock Offering................................................... 5
6. Subscription Rights of Eligible Account Holders
(First Priority)............................................... 6
7. Subscription Rights of Employee Plans (Second Priority).......... 6
8. Supplemental Eligible Account Holders (Third Priority)........... 7
9. Subscription Rights of Other Members (Fourth Priority) .......... 7
10. Community Offering............................................... 8
11. Syndicated Community Offering.................................... 8
12. Limitation on Purchases.......................................... 9
13. Payment for Common Stock......................................... 10
14. Manner of Exercising Subscription Rights Through Order Forms..... 11
15. Undelivered, Defective or Late Order Forms:
Insufficient Payment........................................... 12
16. Restrictions on Resale or Subsequent Disposition................. 12
17. Charter and Bylaws of the Mutual Holding Company, the Stock
Holding Company and the Bank................................... 13
18. Payment of Dividends and Repurchase of Stock..................... 13
19. Conversion of Mutual Holding Company to Stock 13
Form...........................................
20. Residents of Foreign Countries and Certain States................ 14
21. Registration and Market Making................................... 14
22. Expenses of Offering............................................. 14
23. Amendment or Termination of Plan of Stock Issuance............... 14
24. Miscellaneous.................................................... 15
PLAN OF STOCK ISSUANCE
1. INTRODUCTION
On December 7, 2001, pursuant to a Plan of Reorganization from a Federal
Mutual Savings Bank to a Federal Mutual Holding Company, Gloucester County
Federal Savings Bank (the "Bank") reorganized into the mutual holding company
form of organization without conducting a minority stock offering and is now a
Federal Stock Savings Bank wholly owned by Gateway Community Financial Corp.
(the "Stock Holding Company"), a federally chartered mutual holding company
subsidiary, which is wholly owned by Gateway Community Financial, MHC (the
"Mutual Holding Company"), a federally chartered mutual holding company. On
January 29, 2007, the Boards of Directors of the Bank, the Stock Holding Company
and the Mutual Holding Company, by at least two-thirds votes, resolved to adopt
this Plan of Stock Issuance, pursuant to which the Stock Holding Company
proposes to conduct a stock offering of up to but less than 50% of the Stock
Holding Company's total outstanding common stock. At the close of the Stock
Offering, the Bank will change its name to GCF Bank.
In adopting this Plan, the Board of Directors has determined that the Stock
Offering is advisable and in the best interest of the Bank, the Stock Holding
Company, the Mutual Holding Company and the Bank's depositors. The Stock
Offering will enable the Stock Holding Company and the Bank to increase capital
through the issuance of stock without undertaking a full conversion from the
mutual to the stock form of organization. The Stock Offering will not foreclose
the opportunity to effect a conversion of the Mutual Holding Company to a stock
form of organization at a later date. The Stock Offering will significantly
increase capital and enable the Bank to further grow through internal expansion,
the possible acquisition of branch offices or financial institutions and
possible diversification into other related financial service activities,
enhancing the Bank's ability to render services to the public. The mutual
holding company structure also will allow the Bank to minimize
over-capitalization by providing the flexibility to raise capital through the
issuance of stock in a manner designed to meet the Bank's growth needs, rather
than in a single stock offering as required in a standard mutual-to-stock
conversion.
Pursuant to Section 10(o) of the Home Owners' Loan Act, as amended, 12
U.S.C. 1467a(o), the Stock Offering will be accomplished in accordance with the
procedures contained in this Plan, the Rules and Regulations of the Office of
Thrift Supervision (the "OTS"), and as otherwise may be required by the OTS.
2. DEFINITIONS
As used in this Plan, the terms set forth below have the following
meanings:
Account Holder: any Person holding a Savings Account in the Bank.
Acting in Concert: (i) knowing participation in a joint activity or
interdependent conscious parallel action towards a common goal whether or
not pursuant to an express agreement; or (ii) a combination or pooling of
voting or other interests in the securities of an issuer for a common
purpose pursuant to any contract, understanding, relationship, agreement or
other arrangement, whether written or otherwise. A Person which acts in
concert with another Person ("other party") shall also be deemed to be
acting in concert with any Person who is also acting in concert with that
other party, except that any Tax-Qualified Employee Stock Benefit Plan will
not be deemed to be acting in concert with its trustee or a Person who
serves in a similar capacity solely for the purpose of determining whether
stock held by the trustee and stock held by the plan will be aggregated.
Persons who have the same address on an account or stock order form or who
have a joint account relationship may be considered to be acting in
concert.
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Affiliate: a Person who, directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control
with another Person.
Associate: when used to indicate a relationship with any Person, means (i)
A corporation or organization (other than the Stock Holding Company, the
Bank or any of their majority-owned subsidiaries) if such Person is a
senior officer or partner, or beneficially owns, directly or indirectly, 10
percent or more of any class of equity securities of the corporation or
organization; (ii) a trust or other estate if the Person has a substantial
beneficial interest in the trust or estate or is a trustee or fiduciary of
the trust or estate; provided, however that a Person who has a substantial
beneficial interest in a Tax-Qualified or non-tax-qualified Employee Stock
Benefit Plan of the Bank or the Stock Holding Company, or who is a trustee
or a fiduciary of such plan, is not an associate of such plan and provided
further that for purposes of aggregating total shares that may be held by
Officers, Directors and their Associates, a Tax-Qualified Employee Stock
Benefit Plan of the Bank or the Stock Holding Company is not an Associate
of any Person; (iii) Any Person who is related by blood or marriage to such
Person and (i) who lives in the same home as the Person; or (ii) who is a
Director or Officer.
Bank: Gloucester County Federal Savings Bank, a federally chartered stock
savings bank, to be known as GCF Bank, upon Closing.
Common Stock: the common stock, par value $0.10, of the Stock Holding
Company.
Capital Stock: Any and all authorized stock of the Stock Holding Company.
Community Offering: the offering of the Common Stock for sale to certain
members of the general public directly by the Stock Holding Company.
Director: a member of the Board of Directors of the Bank and, where
applicable, a member of the Board of Directors of the Mutual Holding
Company and the Stock Holding Company.
Effective Date: date of completion of the Stock Offering in accordance with
this Plan and the Rules and Regulations of the OTS.
Eligible Account Holder: any Person holding a Qualifying Deposit in a
Savings Account at the Bank on the Eligibility Record Date. Only the
name(s) of the Person(s) listed on the account as of the Eligibility Record
Date (or a successor entity or estate) is an Eligible Account Holder. Any
Person(s) added to a Savings Account after the Eligibility Record Date is
not an Eligible Account Holder.
Eligibility Record Date: the date for determining Eligible Account Holders
in the Bank as of the close of business on December 31, 2005.
Employee: a Person employed by the Bank at the date of the Stock Offering.
Employee Plans: the Tax-Qualified Employee Stock Benefit Plans, including
the Employee Stock Ownership Plan, approved by the Board of Directors of
the Bank or Stock Holding Company.
FDIC: Federal Deposit Insurance Corporation.
Independent Appraiser: an appraiser retained to prepare an appraisal of the
pro forma market value of the Common Stock.
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Independent Valuation: The term Independent Valuation means the estimated
pro forma market value of the Common Stock as determined by the Independent
Appraiser prior to the Subscription Offering and as it may be amended from
time to time thereafter.
Local Community: the counties in which the Bank has an office and the
counties in the Bank's Community Reinvestment Act assessment area.
Majority Interest: greater than fifty percent (50%) of the combined voting
power or value of all classes of stock of the Stock Holding Company.
Members: All persons or entities who qualify as members of the Mutual
Holding Company pursuant to its Charter and Bylaws.
Minority Stock Offering: one or more offerings of up to but less than 50%
in the aggregate of the outstanding Common Stock of the Stock Holding
Company to Persons other than the Mutual Holding Company.
Mutual Holding Company: Gateway Community Financial, MHC, a federally
chartered mutual holding company, established in 2001.
Officer: an executive officer of the Mutual Holding Company, Stock Holding
Company or Bank, which includes the President, Chief Executive Officer, any
Executive Vice President or Senior Vice President in charge of a principal
business unit, division or function, and any other individual who performs
significant policy making functions.
Order Form: any form together with attached cover letter, sent by the Bank
to any Person containing among other things a description of the
alternatives available to such Person under this Plan and by which any such
Person may make elections regarding subscriptions for Common Stock in the
Subscription and Community Offerings.
OTS: the Office of Thrift Supervision or any successor agency.
Other Member: any person holding a Qualifying Deposit in a Savings Account
of the Bank as of April 30, 2007.
Participants: the Eligible Account Holders, Employee Plans and Supplemental
Eligible Account Holders.
Person: an individual, a corporation, a partnership, an association, a
joint venture, a joint-stock company, a limited liability company, a trust,
an unincorporated organization, a government, a political subdivision of a
government or any other entity.
Plan: this Plan of Stock Issuance as it exists on the date hereof and as it
may hereafter be amended in accordance with its terms.
Purchase Price: the per share price at which the Common Stock will be sold
in accordance with the terms hereof.
Qualifying Deposit: the balance of each Savings Account of $50 or more in
the Bank at the close of business on the Eligibility Record Date or
Supplemental Eligibility Record Date. Savings Accounts with total deposit
balances of less than $50 shall not constitute a Qualifying Deposit.
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Savings Account: any withdrawable account as defined in the Rules and
Regulations of the OTS, including certificates of deposit and demand
accounts as defined in the Rules and Regulations of the OTS.
SEC: the United States Securities and Exchange Commission.
Stock Holding Company: Gateway Community Financial Corp., a federally
chartered mutual holding company subsidiary, established in 2001.
Stock Offering: the offering of the Common Stock to Persons other than the
Mutual Holding Company in a Subscription Offering, and to the extent shares
remain available, in a Community Offering or otherwise.
Subscription Offering: the offering of the Common Stock for purchase
through Order Forms to Participants.
Supplemental Eligibility Record Date: the close of business on the last day
of the calendar quarter preceding the approval of this Plan by the OTS.
Supplemental Eligible Account Holder: a holder of a Qualifying Deposit in
the Bank (other than an Officer or Director or their Associates) at the
close of business on the Supplemental Eligibility Record Date.
Syndicated Community Offering: the offering of the Common Stock for sale
through a syndicate of registered brokers or dealers.
Tax-Qualified Employee Stock Benefit Plan: any defined benefit or defined
contribution plan, such as an employee stock ownership plan, stock bonus
plan, profit-sharing plan or other plan, which, with its related trust,
meets the requirements to be "qualified" under Section 401 of the Internal
Revenue Code.
3. CONDITIONS TO COMPLETION OF STOCK OFFERING
Completion of the Stock Offering is expressly conditioned upon the
following:
1. This Plan is approved by at least two-thirds of the Boards of
Directors;
2. A Notice of Stock Offering is filed with and approved by the OTS;
3. Receipt of a favorable ruling of the Internal Revenue Service or an
opinion of the Bank's tax advisor with respect to federal taxation to
the effect that the Stock Offering will not be a taxable event to the
Mutual Holding Company, the Stock Holding Company, the Bank or the
Bank's depositors; and
4. Receipt of either a private letter ruling of the New Jersey Department
of Revenue or an opinion of the Bank's tax advisor with respect to
state taxation to the effect that completion of the Stock Offering
will not be a taxable event to the Mutual Holding Company, the Stock
Holding Company, the Bank or to the Bank's depositors.
5. The stock offering prospectus of the Stock Holding Company is declared
effective by the SEC.
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4. STOCK OFFERING DOCUMENTS
The Stock Holding Company and the Bank intend to commence a Minority Stock
Offering within ten (10) days of the satisfaction of all of the conditions of
Section 3 hereof. The Stock Holding Company and the Bank shall not distribute
the final prospectus until such prospectus has been approved for use by the OTS
and declared effective by the SEC.
5. STOCK OFFERING
A. Number of Shares. The number of shares and price per share of Common
Stock to be offered pursuant to this Plan shall be initially determined by the
Boards of Directors of the Stock Holding Company and the Bank in conjunction
with the determination of the Independent Appraiser. The number of shares to be
issued will be on a minimum-maximum basis within a range determined by the Board
of Directors (the "Offering Range") and may be adjusted at or immediately
subsequent to the completion of the Stock Offering without notifying
Participants and without a resolicitation of subscriptions. The number of shares
to be offered or Offering Range may be subsequently adjusted at or immediately
subsequent to the completion of the Stock Offering for any reason, including a
change in the appraisal. The total number of shares of Common Stock that may be
issued to Persons other than the Mutual Holding Company at the close of the
Stock Offering must be less than 50% of the issued and outstanding shares of the
Stock Holding Company.
B. Independent Valuation and Purchase Price of Shares. All shares of Common
Stock sold in the Stock Offering shall be sold at a uniform price per share,
referred to herein as the "Purchase Price." The Purchase Price and number of
shares shall be determined by the Board of Directors of the Stock Holding
Company and the Bank immediately prior to the simultaneous completion of all
such sales contemplated by this Plan on the basis of the estimated pro forma
market value of the Stock Holding Company and the Bank and the fact that the
shares offered represent a minority interest in the Stock Holding Company (the
"Independent evaluation"). Therefore, the Independent Valuation and the
resulting Purchase Price may reflect a discount to the valuation applied to a
standard mutual-to-stock conversion. The aggregate Purchase Price for the Common
Stock will not be inconsistent with such market value of the Stock Holding
Company and the Bank. The Independent Valuation of the Stock Holding Company and
the Bank shall be determined for such purpose by an Independent Appraiser on the
basis of such appropriate factors as are not inconsistent with OTS regulations.
The total amount of Common Stock that may be issued to Persons other than the
Mutual Holding Company must be less than 50% of the outstanding stock of the
Stock Holding Company. The Common Stock to be issued in the Stock Offering shall
be fully paid and nonassessable.
C. Minority Ownership Percentage. Based upon the Independent Appraiser's
valuation of the Stock Holding Company and the Bank as updated prior to the
commencement of the Stock Offering, the Board of Directors will establish the
minimum and maximum ownership percentage applicable to the Stock Offering. The
final minority ownership percentages or interest will be determined by the Stock
Holding Company and the Bank as follows: (a) the product of (x) the total number
of shares of Common Stock to be issued and sold and (y) the Purchase Price shall
be by divided by (b) the estimated aggregate pro forma market value of the Stock
Holding Company and the Bank immediately after the Stock Offering as determined
by the Independent Appraiser, expressed in terms of a specific aggregate dollar
amount upon the closing of the Stock Offering or sale of all the Common Stock.
D. Method of Offering Shares. Subject to the discretion of the Stock
Holding Company and the Bank and the limitations set forth in Section 12, the
opportunity to purchase Common Stock will be given, at no cost, in accordance
with Sections 6, 7, 8, 9, 10 and 11 hereof and pursuant to priorities
established by the Board of Directors in accordance with this Plan. The Stock
Offering shall be conducted on a minimum-maximum basis, setting forth the
minimum and maximum amount of stock that must be offered and sold before
closing. The Stock Holding Company and the Bank may elect to pay fees on either
a fixed fee or commission
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basis or combination thereof to an investment bank firm which assists it in the
sale of the Common Stock in the Stock Offering.
The Stock Holding Company and the Bank may also elect to offer to pay fees
on a per share basis to brokers who assist purchasers in determining to purchase
shares in the Syndicated Community Offering and whose broker's name appears on
the purchaser's Order Form.
6. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)
A. Each Eligible Account Holder shall receive, without payment,
nontransferable subscription rights to subscribe for shares of Common Stock
equal to the greater of: (i) the maximum established for the Community Offering;
(ii) one-tenth of one percent of the Conversion Stock offered; or (iii) 15 times
the product (rounded down to the next whole number) obtained by multiplying the
total number of shares of Common Stock offered by a fraction of which the
numerator is the amount of the Qualifying Deposit of such Eligible Account
Holder and the denominator is the total amount of Qualifying Deposits of all
Eligible Account Holders but in no event greater than the maximum purchase
limitation specified in Section 12 hereof. All such purchases are subject to the
maximum and minimum purchase limitations specified in Section 12 and are
exclusive of an increase in the total number of shares issued due to an increase
in the maximum of the Offering Range of up to 15%. Only a Person(s) with a
Qualifying Deposit as of the Eligibility Record Date (or a successor entity or
estate) shall receive subscription rights. Any Person(s) added to a Savings
Account after the Eligibility Record Date is not an Eligible Account Holder.
B. In the event that Eligible Account Holders exercise Subscription Rights
for a number of shares of Common Stock in excess of the total number of such
shares eligible for subscription, the shares of Common Stock shall be allocated
among the subscribing Eligible Account Holders so as to permit each subscribing
Eligible Account Holder, to the extent possible, to purchase a number of shares
sufficient to make his or her total allocation of Common Stock equal to the
lesser of 100 shares or the number of shares subscribed for by the Eligible
Account Holder. Any shares remaining after that allocation will be allocated
among the subscribing Eligible Account Holders whose subscriptions remain
unsatisfied in the proportion that the amount of the Qualifying Deposit of each
Eligible Account Holder whose subscription remains unsatisfied bears to the
total amount of the Qualifying Deposits of all Eligible Account Holders whose
subscriptions remain unsatisfied. If the amount so allocated exceeds the amount
subscribed for by any one or more Eligible Account Holders, the excess shall be
reallocated (one or more times as necessary) among those Eligible Account
Holders whose subscriptions are still not fully satisfied on the same principle
until all available shares have been allocated or all subscriptions satisfied.
C. Subscription rights as Eligible Account Holders received by Directors
and Officers and their Associates which are based on deposits made by such
Persons during the twelve (12) months preceding the Eligibility Record Date
shall be subordinated to the Subscription Rights of all other Eligible Account
Holders.
7. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)
Subject to the availability of sufficient shares after filling subscription
orders of Eligible Account Holders under Section 6, the Employee Plans shall
receive without payment nontransferable subscription rights to purchase in the
Subscription Offering the number of shares of Common Stock requested by such
Plans, subject to the purchase limitations set forth in Section 12. The Employee
Plans may, in whole or in part, fill their orders through open market purchases
subsequent to the closing of the Stock Offering.
The Employee Plans shall not be deemed to be Associates of or Acting in
Concert with any Director or Officer of the Mutual Holding Company, the Stock
Holding Company or the Bank.
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8. 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 filed prior to OTS
approval, then, and only in that event, each Supplemental Eligible Account
Holder shall receive, without payment, nontransferable subscription rights
entitling such Supplemental Eligible Account Holder to purchase that number of
shares of Common Stock which is equal to the greater of: (i) the maximum
purchase limitation established for the Community Offering; (ii) one-tenth of 1%
of the Common Stock Offered; and (iii) or 15 times the product (rounded down to
the next whole number) obtained by multiplying the total number of shares of
Common Stock to be issued by a fraction of which the numerator is the amount of
the Qualifying Deposit of the Supplemental Eligible Account Holder and the
denominator is the total amount of the Qualifying Deposits of all Supplemental
Eligible Account Holders. All such purchases are subject to the maximum and
minimum purchase limitations in Section 12 and are exclusive of an increase in
the total number of shares issued due to an increase in the maximum of the
Offering Range of up to 15%. Any Person(s) added to a Savings Account after the
Supplemental Eligibility Record Date is not a Supplemental Account Holder.
B. Subscription rights received pursuant to this Category shall be
subordinated to the subscription rights received by Eligible Account Holders and
by the Employee Plans.
C. Any subscription rights to purchase shares of Common Stock received by
an Eligible Account Holder in accordance with Section 6 shall reduce to the
extent thereof the subscription rights to be distributed pursuant to this
Section.
D. In the event of an oversubscription for shares of Common Stock pursuant
to this Section, shares of Common Stock shall be allocated among the subscribing
Supplemental Eligible Account Holders as follows:
(1) Shares of Common Stock shall be allocated so as to permit
each such Supplemental Eligible Account Holder, to the extent possible,
to purchase a number of shares of Common Stock sufficient to make his
total allocation (including the number of shares of Common Stock, if
any, allocated in accordance with Section 6) equal to 100 shares of
Common Stock or the total amount of his subscription, whichever is
less.
(2) Any shares of Common Stock not allocated in accordance
with subparagraph (1) above shall be allocated among the subscribing
Supplemental Eligible Account Holders on an equitable basis, related to
the amounts of their respective Qualifying Deposits as compared to the
total Qualifying Deposits of all subscribing Supplemental Eligible
Account Holders.
9. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)
A. Each Other Member shall receive, without payment, nontransferable
subscription rights to subscribe for shares of Common Stock in an amount equal
to the greater of the maximum purchase limitation established for the Community
Offering or one-tenth of one percent of the Common Stock offered, subject to the
maximum and minimum purchase limitations specified in Section 12 and exclusive
of an increase in the total number of shares issued due to an increase in the
maximum of the Offering Range of up to 15%, which will be allocated only after
first allocating to Eligible Account Holders, the Employee Plans and
Supplemental Eligible Account Holders all shares of Common Stock subscribed for
pursuant to Sections 6, 7 and 8 above.
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B. In the event that such Other Members subscribe for a number of shares of
Common Stock which, when added to the shares of Common Stock subscribed for by
the Eligible Account Holders, the Employee Plans and the Supplemental Eligible
Account Holders is in excess of the total number of shares of Common Stock being
issued, the subscriptions of such Other Members will be allocated among the
subscribing Other Members so as to permit each subscribing Other Member, to the
extent possible, to purchase a number of shares sufficient to make his total
allocation of Common Stock equal to the lesser of 100 shares or the number of
shares subscribed for by the Other Member. Any shares remaining will be
allocated among the subscribing Other Members whose subscriptions remain
unsatisfied on a 100 shares (or whatever less amount is available) per order
basis until all orders have been filled or the remaining shares have been
allocated.
10. COMMUNITY OFFERING
If less than the total number of shares of Common Stock to be subscribed
for in the Stock Offering are sold in the Subscription Offering, shares
remaining may be made available for purchase in the Community Offering to
certain members of the general public.
The maximum amount of Common Stock that any Person may purchase in the
Community Offering, subject to the further limitations of Section 12 hereof (and
exclusive of an increase in the total number of shares issued due to an increase
in the maximum of the Offering Range of up to 15%), shall not exceed $150,000.
The maximum amount may be decreased or increased to up to 5% of the total
offering of shares in the Stock Offering, subject to any required regulatory
approval but without notice to Participants, subject to the preferences set
forth in Section 12 hereof. In the Community Offering, if any, shares will be
available for purchase by certain members of the general public, and a
preference may be given to natural persons and trusts of natural persons
residing in the Local Community and second, to natural persons and trusts of
natural persons residing in the State of New Jersey ("Community Purchasers").
If the Persons whose orders would otherwise be accepted, subscribe for more
shares than are available for purchase, the shares available to them will be
allocated among those Persons submitting orders in the Community Offering up to
a maximum of 2% of the Common Stock offered in the Stock Offering and thereafter
remaining shares shall be allocated on an equal number of shares basis per order
until all orders have been filled. The Stock Holding Company and the Bank may
establish all terms and conditions of such offer in order to allocate shares in
an equitable manner as determined by the Board of Directors.
The Community Offering, if any, may commence simultaneously with, during or
subsequent to the completion of the Subscription Offering and if commenced
simultaneously with or during the Subscription Offering the Community Offering
may be limited to Community Purchasers. The Community Offering must be completed
within 45 days after the completion of the Subscription Offering unless
otherwise extended by the OTS.
The Bank and the Stock Holding Company, in their absolute discretion,
reserve the right to reject any or all orders in whole or in part which are
received in the Community Offering, at the time of receipt or as soon as
practicable following the completion of the Community Offering.
11. SYNDICATED COMMUNITY OFFERING
Any shares of Common Stock not sold in the Subscription Offering or in the
Community Offering, if any, may then be sold through a syndicate of registered
brokers or dealers at the Purchase Price in a Syndicated Community Offering,
subject to such terms, conditions and procedures as may be determined by the
Board of Directors of the Bank and the Stock Holding Company, in a manner that
will achieve a wide distribution of the
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Common Stock and subject to the right of the Bank and the Stock Holding Company,
in their absolute discretion, to accept or reject in whole or in part all
subscriptions in the Syndicated Community Offering. In the Syndicated Community
Offering, if any, any Person together with any Associate or group of Persons
Acting in Concert may purchase up to the maximum purchase limitation established
for the Community Offering, subject to the maximum and minimum purchase
limitations specified in Section 12 and exclusive of an increase in the total
number of shares issued due to an increase in the maximum of the Offering Range
of up to 15%. Shares purchased by any Person together with any Associate or
group of Persons Acting in Concert pursuant to Section 10 shall be counted
toward meeting the maximum purchase limitation specified for this Section. The
Bank may commence the Syndicated Community Offering at any time after the
commencement of the Subscription Offering. It is expected that the Syndicated
Community Offering, if any, will commence just prior to, or as soon as
practicable after, the termination of the Subscription Offering. The Syndicated
Community Offering shall be completed within 45 days after the termination of
the Subscription Offering, unless such period is extended as provided above.
12. LIMITATION ON PURCHASES
The following limitations shall apply to all purchases of shares of Common
Stock in the Stock Offering:
A. The maximum number of shares of Common Stock which may be purchased in
the Subscription Offering by any Person, or Persons through a single account, in
the First Priority, Third Priority and Fourth Priority shall not exceed $150,000
divided by the Purchase Price.
B. The number of shares of Common Stock which may be purchased by any
Person or group of Persons Acting in Concert in the Community and/or Syndicated
Community Offering shall not exceed $150,000 divided by the Purchase Price.
C. The maximum number of shares of Common Stock which may be subscribed for
or purchased in all categories in the Stock Offering by any Person together with
any Associate or group of Persons Acting in Concert shall not exceed $250,000
divided by the Purchase Price per share, except for Employee Plans, which in the
aggregate may subscribe for up to 8% of the shares of Common Stock issued in the
Stock Offering to Persons other than the Mutual Holding Company.
D. The maximum number of shares of Common Stock which may be purchased in
all categories in the Stock Offering by Officers and Directors and their
Associates in the aggregate shall not exceed 28% of the total number of shares
of Common Stock issued in the Stock Offering.
E. A minimum of 25 shares of Common Stock must be purchased by each Person
purchasing shares in the Stock Offering to the extent those shares are
available; provided, however, that the minimum number of shares requirement will
not apply if the number of shares of Common Stock purchased times the price per
share exceeds $500.
F. If the number of shares of Common Stock otherwise allocable pursuant to
Sections 6 through 11, inclusive, to any Person or that Person's Associates
would be in excess of the maximum number of shares permitted as set forth above,
the number of shares of Common Stock allocated to each such Person shall be
reduced to the lowest limitation applicable to that Person, and then the number
of shares allocated to each group consisting of a Person and that Person's
Associates shall be reduced so that the aggregate allocation to that Person and
his Associates complies with the above maximums, and such maximum number of
shares shall be reallocated among that Person and his Associates as they may
agree, or in the absence of an agreement, in proportion to the shares subscribed
by each (after first applying the maximums applicable to each Person,
separately).
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G. Depending upon market or financial conditions, the Board of Directors of
the Mutual Holding Company, the Stock Holding Company and the Bank, without
notification to Participants, may decrease or increase the purchase limitations
herein, provided that the maximum purchase limitations may not be increased to a
percentage in excess of 5% of the Stock Offering. If the Mutual Holding Company,
the Stock Holding Company and the Bank increase the maximum purchase
limitations, the Stock Holding Company is only required to resolicit Persons who
subscribed for the maximum purchase amount and may, in the sole discretion of
the Stock Holding Company, resolicit certain other large subscribers. For
purposes of this Section, Directors shall not be deemed to be Associates or a
group affiliated with each other or otherwise Acting in Concert solely as a
result of their being Directors.
H. In the event of an increase in the total number of shares offered in the
Stock Offering due to an increase in the maximum of the Offering Range of up to
15% (the "Adjusted Maximum") the additional shares will be used in the following
order of priority: (i) to fill the Employees Plan's subscription (unless the
Employee Plans elect to purchase stock subsequent to the Stock Offering in the
open market); (ii) in the event that there is an oversubscription at the
Eligible Account Holder level, to fill unfilled subscriptions of Eligible
Account Holders exclusive of the Adjusted Maximum according to Section 6; (iii)
in the event that there is an oversubscription at the Supplemental Eligible
Account Holder level, to fill unfilled subscriptions of Supplemental Eligible
Account Holders exclusive of the Adjusted Maximum according to Section 8; and
(iv) to fill unfilled Subscriptions in the Community Offering exclusive of the
Adjusted Maximum.
I. Each Person purchasing Common Stock in the Stock Offering shall be
deemed to confirm that such purchase does not conflict with the above purchase
limitations contained herein.
J. For a period of three years following the Stock Offering, no Officer,
Director or their Associates shall purchase, without the prior written approval
of the OTS, any outstanding shares of the Common Stock, except from a registered
broker-dealer. This provision shall not apply to negotiated transactions
involving more than one percent of the outstanding shares of the Common Stock,
the exercise of any options pursuant to a stock option plan or purchases of the
Common Stock made by or held by any Tax-Qualified Employee Stock Benefit Plan or
Non-Tax Qualified Employee Stock Benefit Plan of the Stock Bank or Stock Holding
Company (including the Employee Plans) which may be attributable to any Officer
or Director. As used herein, the term "negotiated transaction" means a
transaction in which the securities are offered and the terms and arrangements
relating to any sale are arrived at through direct communications between the
seller or any Person acting on its behalf and the purchaser or his investment
representative. The term "investment representative" shall mean a professional
investment advisor acting as agent for the purchaser and independent of the
seller and not acting on behalf of the seller in connection with the
transaction.
13. PAYMENT FOR COMMON STOCK
All payments for Common Stock subscribed for in the Subscription and
Community Offering (if any), must be delivered in full to the Bank, together
with a properly completed and executed Order Form, on or prior to the expiration
date specified on the Order Form or purchase order, as the case may be, unless
such date is extended by the Bank; provided, however, that if the Employee Plans
subscribe for shares during the Subscription Offering, the Employee Plans will
not be required to pay for the shares at the time they subscribe but rather may
pay for such shares of Common Stock upon consummation of the Stock Offering. The
Bank may make scheduled discretionary contributions to Employee Plans provided
such contributions do not cause the Bank to fail to meet its regulatory capital
requirement.
Notwithstanding the foregoing, the Bank and the Stock Holding Company shall
have the right, in their sole discretion, to permit institutional investors to
submit contractually irrevocable orders in the Community Offering (if any), and
to thereafter submit payment for the Common Stock for which they are subscribing
in the Community Offering (if any), at any time prior to the completion of the
Stock Offering.
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Payment for Common Stock subscribed for shall be made by cash (if delivered
in person), check or money order. Alternatively, subscribers in the Subscription
and Community Offering (if any) may pay for the shares subscribed for by
authorizing the Bank on the Order Form to make a withdrawal from the
subscriber's Savings Account at the Bank in an amount equal to the purchase
price of such shares. Such authorized withdrawal, whether from a savings
passbook or certificate account, shall be without penalty as to premature
withdrawal. If the authorized withdrawal is from a certificate account, and the
remaining balance does not meet the applicable minimum balance requirement, the
certificate shall be canceled at the time of withdrawal, without penalty, and
the remaining balance will earn interest at the passbook rate. Funds for which a
withdrawal is authorized will remain in the subscriber's Savings Account but may
not be used by the subscriber until the Common Stock has been sold or the 45-day
period (or such longer period as may be approved by the OTS) following the
Subscription Offering has expired, whichever occurs first. Thereafter, the
withdrawal will be given effect only to the extent necessary to satisfy the
subscription (to the extent it can be filled) at the Purchase Price per share.
Interest will continue to be earned on any amounts authorized for withdrawal
until such withdrawal is given effect. Interest will be paid by the Bank at not
less than the annual passbook rate on payments for Common Stock received by
cash, money order or check. Such interest will be paid from the date payment is
received by the Bank until consummation or termination of the Stock Offering. If
for any reason the Stock Offering is not consummated, all payments made by
subscribers in the Stock Offering will be refunded to them with interest. In
case of amounts authorized for withdrawal from Savings Accounts, refunds will be
made by canceling the authorization for withdrawal.
The Bank is prohibited by regulation from knowingly making any loans or
granting any lines of credit for the purchase of stock in the Stock Offering.
14. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the prospectus prepared by the Bank and the
Stock Holding Company has been approved by the OTS and declared effective by the
SEC, Order Forms will be distributed to the Participants at their last known
addresses appearing on the records of the Bank for the purpose of subscribing to
shares of Common Stock in the Subscription Offering and may be made available
for use in the Community Offering. Notwithstanding the foregoing, the Bank may
elect to send Order Forms only to those Persons who request them after such
notice as is approved by the OTS and is adequate to apprise the Participants of
the pendency of the Subscription Offering has been given.
Each Order Form will be preceded or accompanied by a prospectus. Each Order
Form will contain, among other things, the following:
A. A specified date by which all Order Forms must be received by the Bank,
which date shall be not less than twenty (20), nor more than forty-five (45)
days, following the date on which the Order Forms are mailed by the Bank, and
which date will constitute the termination of the Subscription Offering;
B. The purchase price per share for shares of Common Stock to be sold in
the Subscription and Community Offering (if any);
C. A description of the minimum and maximum number of shares of Common
Stock which may be subscribed for pursuant to the exercise of Subscription
Rights or otherwise purchased in the Community Offering;
D. Instructions as to how the recipient of the Order Form is to indicate
thereon the number of shares of Common Stock for which such Person elects to
subscribe and the available alternative methods of payment therefor;
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E. An acknowledgment that the recipient of the Order Form has received a
final copy of the prospectus, as the case may be, prior to execution of the
Order Form.
F. A statement to the effect that all subscription rights are
nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering within the subscription period such properly
completed and executed Order Form, together with cash (if delivered in person),
check or money order in the full amount of the purchase price as specified in
the Order Form for the shares of Common Stock for which the recipient elects to
subscribe in the Subscription Offering (or by authorizing on the Order Form that
the Bank withdraw said amount from the subscriber's Savings Account at the Bank)
to the Bank; and
G. A statement to the effect that the executed Order Form, once received by
the Bank, may not be modified or amended by the subscriber without the consent
of the Bank.
Notwithstanding the above, the Bank reserves the right in its sole
discretion to accept or reject orders received on photocopied or facsimilied
order forms or whose payment is to be made by wire transfer.
15. UNDELIVERED, DEFECTIVE OR LATE ORDER FORMS: INSUFFICIENT PAYMENT
In the event Order Forms (a) are not delivered and are returned to the Bank
by the United States Postal Service or the Bank is unable to locate the
addressee, (b) are not received back by the Bank or are received by the Bank
after the expiration date specified thereon, (c) are defectively filled out or
executed, (d) are not accompanied by the full required payment, or, in the case
of institutional investors in the Community Offering, by delivering irrevocable
orders together with a legally binding commitment to pay by cash, check, money
order or wire transfer the full amount of the purchase price prior to 48 hours
before the completion of the conversion for the shares of Common Stock
subscribed for (including cases in which Savings Accounts from which withdrawals
are authorized are insufficient to cover the amount of the required payment), or
(e) are not mailed pursuant to a "no mail" order placed in effect by the account
holder, the subscription rights of the Person to whom such rights have been
granted will lapse as though such Person failed to return the completed Order
Form within the time period specified thereon; provided, however, that the Bank
may, but will not be required to, waive any immaterial irregularity on any Order
Form or require the submission of corrected Order Forms or the remittance of
full payment for subscribed shares by such date as the Bank may specify. The
interpretation of the Bank of terms and conditions of this Plan and of the Order
Forms will be final, subject to the authority of the OTS.
16. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
A. All shares of Common Stock purchased by Directors or Officers in the
Stock Offering shall be subject to the restriction that, except as provided in
Section 16B below, or as may be approved by the OTS, no interest in such shares
may be sold or otherwise disposed of for value for a period of one year
following the date of purchase.
B. The restriction on disposition of shares of Common Stock set forth in
Section 16A above shall not apply to any disposition of such shares following
the death of the individual to whom such shares were initially sold under the
terms of this Plan.
C. With respect to all shares of Common Stock subject to restrictions on
resale or subsequent disposition, each of the following provisions shall apply;
(i) Each certificate representing shares restricted within the meaning
of Section 16A, above, shall bear a legend prominently stamped on its face
giving notice of the restriction;
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(ii) Instructions shall be issued to the stock transfer agent to
recognize or effect any transfer of any certificate or record of ownership of
any such shares in violation of the restriction on transfer; and
(iii) Any shares of capital stock of the Stock Holding Company issued
with respect to a stock dividend, stock split, or otherwise with respect to
ownership of outstanding shares of Common Stock subject to the restriction on
transfer hereunder shall be subject to the same restriction as is applicable to
such Common Stock.
17. CHARTER AND BYLAWS OF THE MUTUAL HOLDING COMPANY, THE STOCK HOLDING COMPANY
AND THE BANK
As part of the Stock Offering, the charters and bylaws of the Mutual
Holding Company, the Stock Holding Company and the Bank shall be revised as
necessary in connection with the Stock Offering.
18. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
The Bank and the Stock Holding Company may declare dividends or make other
capital distributions or repurchase stock in accordance with applicable laws and
regulations. In accordance with applicable law, and the regulations and policies
of the OTS and the Federal Deposit Insurance Corporation, the Mutual Holding
Company may waive its right to receive dividends declared to it by the Stock
Holding Company.
19. CONVERSION OF MUTUAL HOLDING COMPANY TO STOCK FORM
Once the Offering is completed, the Mutual Holding Company may, if approved
by the OTS, elect to convert to the stock form of ownership pursuant to federal
law. As long as required by federal law or regulation, any such conversion is
also subject to the approval of the Members of the Mutual Holding Company. The
terms and conditions of such a conversion cannot be determined at this time and
there is no assurance when, if ever, such a conversion will occur. If the
conversion does not occur, the Mutual Holding Company will always own a majority
of the Common Stock of the Stock Holding Company.
If the Mutual Holding Company converts to stock form, either on a
stand-alone basis or in the context of a conversion-merger ("Conversion
Transaction"), under federal law, shares of stock issued in connection with the
Conversion Transaction shall be subject to subscription rights granted in
accordance with OTS regulations. In addition, pursuant to federal law and OTS
Regulations, in the Conversion Transaction, the shares of stock held by the
stockholders of the Stock Holding Company shall be exchanged for shares of the
converted Mutual Holding Company in a proportion established by independent
appraisals of the Mutual Holding Company, the Stock Holding Company and the
Bank. If, in a Conversion Transaction, the stockholders of the Bank or Stock
Holding Company do not receive, for any reason, shares of the converted Mutual
Holding Company (or its successor) on such proportionate basis, the Mutual
Holding Company (or its successor) shall be obligated to purchase all shares not
owned by it simultaneously with the closing of such Conversion Transaction at
the fair market value of such shares, determined as if such shares had such
exchange rights, as determined by the independent appraisals. Moreover, in the
event that the Mutual Holding Company converts to stock form in a Conversion
Transaction, any options or other convertible securities held by any Officer,
Director, or Employee of the Stock Holding Company, convertible into shares of
the Stock Holding Company shall be convertible into shares of the converted
Mutual Holding Company (or its successor), provided, that any exchange ratio
shall provide the holder of such options or convertible securities with shares
at least equal in value to those exchanged; provided, further however, that if
such shares cannot be so converted, the holders of such options or other
convertible securities shall be entitled to receive cash payment for such
options and other convertible securities in an amount equal to the appraised
value of the underlying securities represented by such options or other
convertible securities.
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In any Conversion Transaction, stockholders of the Stock Holding Company
other than the Mutual Holding Company ("Minority Stockholders"), if any, will be
entitled to maintain the same percentage ownership interest in the Stock Holding
Company after the Conversion Transaction as their ownership interest in the
Stock Holding Company immediately prior to the Conversion Transaction, subject
only to certain adjustments (i.e., the transfer of assets held solely by the
Mutual Holding Company to the resulting stock company) that may be required by
the OTS. These adjustments may result in a decrease of ownership interest of the
Minority Stockholders.
Each certificate representing shares of Common Stock shall bear a legend
giving appropriate notice of the provisions applicable to a Conversion
Transaction.
20. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
The Stock Holding Company will make reasonable efforts to comply with the
securities laws of all states in the United States in which Persons entitled to
subscribe for shares of Common Stock pursuant to this Plan reside. However,
Persons may not be issued subscription rights nor be permitted to purchase
shares of Conversion Stock in the Subscription Offering (i) if such Person
resides in a foreign country or (ii) if such Person resides in a state of the
United States with respect to which, in the sole judgment of the Board of
Directors, any of the following apply: (a) a small number of Persons otherwise
eligible to subscribe for shares under this Plan reside in such state; (b) the
issuance of subscription rights or the offer or sale of shares of Common Stock
to such Persons would require the Bank, under the securities laws of such state,
to register as a broker, dealer, salesman or agent or to register or otherwise
qualify its securities for sale in such state; and (c) registration or
qualification in such state would be impracticable for reasons of cost or
otherwise.
21. REGISTRATION AND MARKET MAKING
Within the time period required by applicable laws and regulations, the
Stock Holding Company will register the securities issued in connection with the
Offering pursuant to the Securities Exchange Act of 1934 and will not deregister
such securities for a period of at least three years thereafter, except that the
maintenance of registration for three years requirement may be fulfilled by any
successor to the Stock Holding Company. In addition, the Stock Holding Company
will use its best efforts to encourage and assist a market-maker to establish
and maintain a market for the Common Stock and to list those securities on a
national or regional securities exchange or the Nasdaq System.
22. EXPENSES OF OFFERING
The Bank shall use its best efforts to assure that expenses incurred by it
in connection with the Offering shall be reasonable.
23. AMENDMENT OR TERMINATION OF PLAN OF STOCK ISSUANCE
This Plan may be substantively amended by the Board of Directors of the
Bank as a result of comments from the regulatory authorities or otherwise prior
to the commencement of the Offering, and at any time thereafter with the
concurrence of the OTS. This Plan may be terminated by the Board of Directors of
the Bank at any time prior to the completion of the Offering, and at any time
thereafter with the concurrence of the OTS.
In the event that mandatory new regulations pertaining to mutual holding
companies are adopted by the OTS prior to the completion of the Stock Offering,
this Plan may be amended to conform to the new mandatory regulations. In the
event that new mutual holding company regulations adopted by the OTS prior to
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completion of the Stock Offering contain optional provisions, this Plan may be
amended to utilize such optional provisions at the discretion of the Board of
Directors.
24. MISCELLANEOUS
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Mutual
Holding Company, the Stock Holding Company and the Bank shall be final, subject
to the authority of the OTS.
If any term, provision, covenant or restriction contained in this Plan is
held by a court or a federal or state regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions contained in this Plan shall remain in
full force and effect, and shall in no way be affected, impaired or invalidated.
This Plan is to be governed by and construed in accordance with the laws of
the United States. None of the cover page, the table of contents, or the section
headings are to be considered a part of this Plan, but are included solely for
convenience of reference and shall in no way define, limit, extend, or describe
the scope or intent of any of the provisions hereof. Words in the singular
include the plural, and words in the plural include the singular. Except for
such rights as are set forth herein for eligible account holders, this Plan
shall create no rights in any Person.
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