Exhibit 2
COMMUNITY BANK OF EXCELSIOR SPRINGS, A SAVINGS BANK
Excelsior Springs, Missouri
PLAN OF CONVERSION
From Mutual to Stock Form of Organization
I. GENERAL
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On May 14, 1996, the Board of Directors of Community Bank of Excelsior
Springs, a Savings Bank (the "Bank") adopted a Plan of Conversion whereby the
Bank would convert from a federal mutual savings institution to a federal stock
savings institution pursuant to the Rules and Regulations of the OTS. The Plan
includes, as part of the conversion, the concurrent formation of a holding
company. The new holding company is proposed to be chartered as a Delaware
corporation under the name "CBES Bancorp, Inc." The Plan provides that non-
transferable subscription rights to purchase Holding Company Conversion Stock
will be offered first to Eligible Account Holders of record as of the
Eligibility Record Date, then to the Bank's Tax-Qualified Employee Plans, then
to Supplemental Eligible Account Holders of record as of the Supplemental
Eligibility Record Date, then to Other Members, and then to directors, officers
and employees. Concurrently with, at any time during, or promptly after the
Subscription Offering, and on a lowest priority basis, an opportunity to
subscribe may also be offered to the general public in a Direct Community
Offering. The price of the Holding Company Conversion Stock will be based upon
an independent appraisal of the Bank and will reflect its estimated pro forma
market value, as converted. It is the desire of the Board of Directors of the
Bank to attract new capital to the Bank in order to increase its capital,
support future savings growth and increase the amount of funds available for
residential and other mortgage lending. The Converted Bank is also expected to
benefit from its management and other personnel having a stock ownership in its
business, since stock ownership is viewed as an effective performance incentive
and a means of attracting, retaining and compensating management and other
personnel. No change will be made in the Board of Directors or management as a
result of the Conversion.
II. DEFINITIONS
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Acting in Concert: The term "acting in concert" shall have the same
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meaning given it in (S)574.2(c) of the Rules and Regulations of the OTS.
Actual Subscription Price: The price per share, determined as provided
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in Section V of the Plan, at which Holding Company Conversion Stock will be sold
in the Subscription Offering.
Affiliate: An "affiliate" of, or a Person "affiliated" with, a Specified
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Person, is a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by or is under common control with,
the Person specified.
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Associate: The term "associate," when used to indicate a relationship
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with any Person, means (i) any corporation or organization (other than the
Holding Company, the Bank or a majority-owned subsidiary of the Holding Company)
of which such Person is an officer or partner or is, directly or indirectly, the
beneficial owner of ten percent or more of any class of equity securities, (ii)
any trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar fiduciary
capacity, 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 or the Bank or any subsidiary of the Holding
Company; provided, however, that any Tax-Qualified or Non-Tax-Qualified Employee
Plan shall not be deemed to be an associate of any director or officer of the
Holding Company or the Bank, to the extent provided in Section V hereof.
Bank: Community Bank of Excelsior Springs, a Savings Bank, or such other
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name as the institution may adopt.
Conversion: Change of the Bank's charter and bylaws to federal stock
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charter and bylaws; sale by the Holding Company of Holding Company Conversion
Stock; and issuance and sale by the Converted Bank of Converted Bank Common
Stock to the Holding Company, all as provided for in the Plan.
Converted Bank: The federally chartered stock savings institution
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resulting from the Conversion of the Bank in accordance with the Plan.
Deposit Account: Any withdrawable account or deposit in excess of $50 in
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the Bank.
Direct Community Offering: The offering to the general public of any
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unsubscribed shares which may be effected as provided in Section V hereof.
Eligibility Record Date: The close of business on March 31, 1995.
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Eligible Account Holder: Any Person holding a Qualifying Deposit in the
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Bank on the Eligibility Record Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
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Holding Company: CBES Bancorp, Inc., a Delaware corporation, which upon
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completion of the Conversion will own all of the outstanding common stock of the
Converted Bank.
Holding Company Conversion Stock: Shares of common stock, par value $.01
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per share, to be issued and sold by the Holding Company as a part of the
Conversion; provided, however, that for purposes of calculating Subscription
Rights and maximum purchase limitations under the Plan, references to the number
of shares of Holding Company Conversion Stock shall refer to the number of
shares offered in the Subscription Offering.
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Market Maker: A dealer (i.e., any Person who engages directly or
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indirectly as agent, broker or principal in the business of offering, buying,
selling, or otherwise dealing or trading in securities issued by another Person)
who, with respect to a particular security, (i) regularly publishes bona fide,
competitive bid and offer quotations in a recognized inter-dealer quotation
system; or (ii) furnishes bona fide competitive bid and offer quotations on
request; and (iii) is ready, willing, and able to effect transactions in
reasonable quantities at his quoted prices with other brokers or dealers.
Maximum Subscription Price: The price per share of Holding Company
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Conversion Stock to be paid initially by subscribers in the Subscription
Offering.
Member: Any Person or entity that qualifies as a member of the Bank
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pursuant to its charter and bylaws.
Non-Tax-Qualified Employee Plan: Any defined benefit plan or defined
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contribution plan of the Bank or the Holding Company, such as an employee stock
ownership plan, stock bonus plan, profit-sharing plan or other plan, which with
its related trust does not meet the requirements to be "qualified" under Section
401 of the Internal Revenue Code.
OTS: Office of Thrift Supervision, Department of the Treasury.
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Officer: An executive officer of the Holding Company or the Bank,
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including the Chairman of the Board, President, Executive Vice Presidents,
Senior Vice Presidents in charge of principal business functions, Secretary and
Treasurer.
Order Forms: Forms to be used in the Subscription Offering and in the
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Direct Community Offering to exercise Subscription Rights.
Other Members: Members of the Bank, other than Eligible Account Holders,
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Tax-Qualified Employee Plans or Supplemental Eligible Account Holders, as of the
Voting Record Date.
Person: An individual, a corporation, a partnership, an Bank, a joint-
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stock company, a trust, any unincorporated organization, or a government or
political subdivision thereof.
Plan: This Plan of Conversion of the Bank, including any amendment
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approved as provided in this Plan.
Public Offering: The offering for sale by the Underwriters to the
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general public of any shares of Holding Company Conversion Stock not subscribed
for in the Subscription Offering or the Direct Community Offering.
Public Offering Price: The price per share at which any unsubscribed
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shares of Holding Company Conversion Stock are initially offered for sale in the
Public Offering.
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Qualifying Deposit: The aggregate balance of each Deposit Account of an
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Eligible Account Holder as of the Eligibility Record Date or of a Supplemental
Eligible Account Holder as of the Supplemental Eligibility Record Date.
SAIF: Savings Association Insurance Fund.
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SEC: Securities and Exchange Commission.
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Special Meeting: The Special Meeting of Members called for the purpose
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of considering and voting upon the Plan of Conversion.
Subscription Offering: The offering of shares of Holding Company
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Conversion Stock for subscription and purchase pursuant to Section V of the
Plan.
Subscription Rights: Non-transferable, non-negotiable, personal rights
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of the Bank's Eligible Account Holders, Tax-Qualified Employee Plans,
Supplemental Eligible Account Holders, Other Members, and directors, Officers
and employees, or trusts of any such persons including individual retirement
accounts and Keogh accounts, to subscribe for shares of Holding Company
Conversion Stock in the Subscription Offering.
Supplemental Eligibility Record Date: The last day of the calendar
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quarter preceding approval of the Plan by the OTS.
Supplemental Eligible Account Holder: Any person holding a Qualifying
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Deposit in the Bank (other than an officer or director and their associates) on
the Supplemental Eligibility Record Date.
Tax-Qualified Employee Plans: Any defined benefit plan or defined
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contribution plan of the Bank or the Holding Company, 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.
Underwriters: The investment Banking firm or firms agreeing to purchase
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Holding Company Conversion Stock in order to offer and sell such Holding Company
Conversion Stock in the Public Offering.
Voting Record Date: The date set by the Board of Directors in accordance
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with federal regulations for determining Members eligible to vote at the Special
Meeting.
III. STEPS PRIOR TO SUBMISSION OF PLAN OF CONVERSION TO THE MEMBERS
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FOR APPROVAL
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Prior to submission of the Plan of Conversion to its Members for
approval, the Bank must receive from the OTS approval of the Application for
Approval of Conversion to convert to the
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federal stock form of organization. The following steps must be taken prior to
such regulatory approval:
A. The Board of Directors shall adopt the Plan by not less than a
two-thirds vote.
B. The Bank shall notify its Members of the adoption of the Plan by
publishing a statement in a newspaper having a general circulation in
each community in which the Bank maintains an office.
C. Copies of the Plan adopted by the Board of Directors shall be
made available for inspection at each office of the Bank.
D. The Bank will promptly cause an Application for Approval of
Conversion on Form AC to be prepared and filed with the OTS, an
Application on Form H-(e)1 (or other applicable form) to be prepared and
filed with the OTS and a Registration Statement on Form S-1 to be
prepared and filed with the SEC.
E. Upon receipt of notice from the OTS to do so, the Bank shall
notify its Members that it has filed the Application for Approval of
Conversion by posting notice in each of its offices and by publishing
notice in a newspaper having general circulation in each community in
which the Bank maintains an office.
IV. CONVERSION PROCEDURE
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Following approval of the application by the OTS, the Plan will be
submitted to a vote of the Members at the Special Meeting. If the Plan is
approved by Members holding a majority of the total number of votes entitled to
be cast at the Special Meeting, the Bank will take all other necessary steps
pursuant to applicable laws and regulations to convert to a federal stock
savings institution as part of a concurrent holding company formation pursuant
to the terms of the Plan.
The Holding Company Conversion Stock will be offered for sale in the
Subscription Offering at the Maximum Subscription Price to Eligible Account
Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account Holders,
Other Members and directors, Officers and employees of the Bank, prior to or
within 45 days after the date of the Special Meeting. The Bank may, either
concurrently with, at any time during, or promptly after the Subscription
Offering, also offer the Holding Company Conversion Stock to and accept
subscriptions from other Persons in a Direct Community Offering; provided that
the Bank's Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental
Eligible Account Holders, Other Members and directors, Officers and employees
shall have the priority rights to subscribe for Holding Company Conversion Stock
set forth in Section V of this Plan. However, the Holding Company and the Bank
may delay commencing the Subscription Offering beyond such 45 day period in the
event there exist unforeseen material adverse market or financial conditions.
If the Subscription Offering commences prior to the Special Meeting,
subscriptions will be accepted subject to the approval of the Plan at the
Special Meeting.
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The period for the Subscription Offering will be not less than 20 days
nor more than 45 days and the period for the Direct Community Offering will be
not more than 45 days, unless extended by the Bank. Upon completion of the
Subscription Offering and the Direct Community Offering, if any, any
unsubscribed shares of Holding Company Conversion Stock will, if feasible, be
sold to the Underwriters for resale to the general public in the Public
Offering. If for any reason the Public Offering of all shares not sold in the
Subscription Offering and Direct Community Offering cannot be effected, the
Holding Company and the Bank will use their best efforts to obtain other
purchasers, subject to OTS approval. Completion of the sale of all shares of
Holding Company Conversion Stock not sold in the Subscription Offering and
Direct Community Offering is required within 45 days after termination of the
Subscription Offering, subject to extension of such 45 day period by the Holding
Company and the Bank with the approval of the OTS. The Holding Company and the
Bank may jointly seek one or more extensions of such 45 day period if necessary
to complete the sale of all shares of Holding Company Conversion Stock. In
connection with such extensions, subscribers and other purchasers will be
permitted to increase, decrease or rescind their subscriptions or purchase
orders to the extent required by the OTS in approving the extensions. Completion
of the sale of all shares of Holding Company Conversion Stock is required within
24 months after the date of the Special Meeting.
V. STOCK OFFERING
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A. Total Number of Shares and Purchase Price of Conversion Stock
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The total number of shares of Holding Company Conversion Stock to be
issued and sold in the Conversion will be determined jointly by the Boards of
Directors of the Holding Company and the Bank prior to the commencement of the
Subscription Offering, subject to adjustment if necessitated by market or
financial conditions prior to consummation of the Conversion. The total number
of shares of Holding Company Conversion Stock shall also be subject to increase
in connection with any oversubscriptions in the Subscription Offering or Direct
Community Offering.
The aggregate price for which all shares of Holding Company Conversion
Stock will be sold will be based on an independent appraisal of the estimated
total pro forma market value of the Holding Company and the Converted Bank.
Such appraisal shall be performed in accordance with OTS guidelines and will be
updated as appropriate under or required by applicable regulations.
The appraisal will be made by an independent investment banking or
financial consulting firm experienced in the area of thrift institution
appraisals. The appraisal will include, among other things, an analysis of the
historical and pro forma operating results and net worth of the Converted Bank
and a comparison of the Holding Company, the Converted Bank and the Conversion
Stock with comparable thrift institutions and holding companies and their
respective outstanding capital stocks.
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Based upon the independent appraisal, the Boards of Directors of the
Holding Company and the Bank will jointly fix the Maximum Subscription Price.
If, following completion of the Subscription Offering and Direct
Community Offering, a Public Offering is effected, the Actual Subscription Price
for each share of Holding Company Conversion Stock will be the same as the
Public Offering Price at which unsubscribed shares of Holding Company Conversion
Stock are initially offered for sale by the Underwriters in the Public Offering.
The Public Offering Price will be a price negotiated by the Holding Company and
the Bank with the Underwriters, not in excess of the Maximum Subscription Price.
The price paid by the Underwriters for each unsubscribed share will be the
Public Offering Price less a negotiated underwriting discount.
If, upon completion of the Subscription Offering and Direct Community
Offering, all of the Holding Company Conversion Stock is subscribed for or only
a limited number of shares remain unsubscribed for, or if a Public Offering
otherwise cannot be effected, the Actual Subscription Price for each share of
Holding Company Conversion Stock will be determined by dividing the estimated
appraised aggregate pro forma market value of the Holding Company and the
Converted Bank, based on the independent appraisal as updated upon completion of
the Subscription Offering or other sale of all of the Holding Company Conversion
Stock, by the total number of shares of Holding Company Conversion Stock to be
issued and sold by the Holding Company upon Conversion. Such appraisal will then
be expressed in terms of a specific aggregate dollar amount rather than as a
range.
B. Subscription Rights
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Non-transferable Subscription Rights to purchase shares will be issued
without payment therefor to Eligible Account Holders, Tax-Qualified Employee
Plans, Supplemental Eligible Account Holders, Other Members and directors,
Officers and employees of the Bank as set forth below.
1. Preference Category No. 1: Eligible Account Holders
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Each Eligible Account Holder shall receive non-transferable
Subscription Rights to subscribe for shares of Holding Company Conversion
Stock in an amount equal to the greater of $100,000, one-tenth of one
percent (.10%) of the total offering of shares, 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 Eligible Account
Holder and the denominator is the total amount of qualifying deposits of
all Eligible Account Holders in the converting Bank in each case on the
Eligibility Record Date. If sufficient shares are not available, shares
shall be allocated first to permit each subscribing Eligible Account
Holder to purchase to the extent possible 100 shares, and thereafter
among each subscribing Eligible Account Holder pro rata in the same
proportion that his Qualifying Deposit bears to the total Qualifying
Deposits of all subscribing Eligible Account Holders whose subscriptions
remain unsatisfied.
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Non-transferable Subscription Rights to purchase Holding Company
Conversion Stock received by directors and Officers of the Bank and their
Associates, based on their increased deposits in the Bank in the one year
period preceding the Eligibility Record Date, shall be subordinated to
all other subscriptions involving the exercise of non-transferable
Subscription Rights of Eligible Account Holders.
2. Preference Category No. 2: Tax-Qualified Employee Plans
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Each Tax-Qualified Employee Plan shall be entitled to receive non-
transferable Subscription Rights to purchase up to 10% of the shares of
Holding Company Conversion Stock, provided that singly or in the
aggregate such plans (other than that portion of such plans which is
self-directed) shall not purchase more than 10% of the shares of the
Holding Company Conversion Stock. Subscription Rights received pursuant
to this Category shall be subordinated to all rights received by Eligible
Account Holders to purchase shares pursuant to Category No. 1; provided,
however, that notwithstanding any other provision of this Plan to the
contrary, the Tax-Qualified Employee Plans shall have a first priority
Subscription Right to the extent that the total number of shares of
Holding Company Conversion Stock sold in the Conversion exceeds the
maximum of the appraisal range as set forth in the subscription
prospectus.
3. Preference Category No. 3: Supplemental Eligible Account
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Holders
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Each Supplemental Eligible Account Holder shall receive non-
transferable Subscription Rights to subscribe for shares of Holding
Company Conversion Stock in an amount equal to the greater of $100,000,
one-tenth of one percent (.10%) of the total offering of shares, 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 qualifying deposits of all Supplemental Eligible Account
Holders in the converting Bank in each case on the Supplemental
Eligibility Record Date.
Subscription Rights received pursuant to this category shall be
subordinated to all Subscription Rights received by Eligible Account
Holders and Tax-Qualified Employee Plans pursuant to Category Nos. 1 and
2 above.
Any non-transferable Subscription Rights to purchase shares received
by an Eligible Account Holder in accordance with Category No. 1 shall
reduce to the extent thereof the Subscription Rights to be distributed to
such person pursuant to this Category.
In the event of an oversubscription for shares under the provisions
of this subparagraph, the shares available shall be allocated first to
permit each subscribing 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 Category No. 1) equal to 100 shares, and thereafter among
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each subscribing Supplemental Eligible Account Holder pro rata in the
same proportion that his Qualifying Deposit bears to the total Qualifying
Deposits of all subscribing Supplemental Eligible Account Holders whose
subscriptions remain unsatisfied.
4. Preference Category No. 4: Other Members
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Each Other Member shall receive non-transferable Subscription Rights
to subscribe for shares of Holding Company Conversion Stock remaining
after satisfying the subscriptions provided for under Category Nos. 1
through 3 above, subject to the following conditions:
a. Each Other Member shall be entitled to subscribe for an
amount of shares equal to the greater of $100,000 or one-tenth of one
percent (.10%) of the total offering of shares of common stock in the
Conversion, to the extent that Holding Company Conversion Stock is
available.
b. In the event of an oversubscription for shares under the
provisions of this subparagraph, the shares available shall be
allocated among the subscribing Other Members pro rata in the same
proportion that his number of votes on the Voting Record Date bears
to the total number of votes on the Voting Record Date of all
subscribing Other Members on such date. Such number of votes shall be
determined based on the Bank's mutual charter and bylaws in effect on
the date of approval by members of this Plan of Conversion.
5. Preference Category No. 5: Directors, Officers and Employees
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Each director, Officer and employee of the Bank as of the date of the
commencement of the Subscription Offering shall be entitled to receive
non-transferable Subscription Rights to purchase shares of the Holding
Company Conversion Stock to the extent that shares are available after
satisfying subscriptions under Category Nos. 1 through 4 above. The
shares which may be purchased under this Category are subject to the
following conditions:
a. The total number of shares which may be purchased under this
Category may not exceed 25% of the number of shares of Holding
Company Conversion Stock.
b. The maximum amount of shares which may be purchased under
this Category by any Person is $100,000 of Holding Company Conversion
Stock. In the event of an oversubscription for shares under the
provisions of this subparagraph, the shares available shall be
allocated pro rata among all subscribers in this Category.
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C. Public Offering and Direct Community Offering
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1. Any shares of Holding Company Conversion Stock not subscribed for
in the Subscription Offering may be offered for sale in a Direct
Community Offering. This will involve an offering of all unsubscribed
shares directly to the general public with a preference to those natural
persons residing in the counties in which the Bank maintains its offices.
The Direct Community Offering, if any, shall be for a period of not more
than 45 days unless extended by the Holding Company and the Bank, and
shall commence concurrently with, during or promptly after the
Subscription Offering. The purchase price per share to the general public
in a Direct Community Offering shall be the same as the Actual
Subscription Price. The Holding Company and the Bank may use an
investment banking firm or firms on a best efforts basis to sell the
unsubscribed shares in the Subscription and Direct Community Offering.
The Holding Company and the Bank may pay a commission or other fee to
such investment banking firm or firms as to the shares sold by such firm
or firms in the Subscription and Direct Community Offering and may also
reimburse such firm or firms for expenses incurred in connection with the
sale. The Direct Community Offering may include a syndicated community
offering managed by such investment banking firm or firms. The Holding
Company Conversion Stock will be offered and sold in the Direct Community
Offering, in accordance with OTS regulations, so as to achieve the widest
distribution of the Holding Company Conversion Stock. No person, by
himself or herself, or with an Associate or group of Persons acting in
concert, may subscribe for or purchase more than $100,000 of Holding
Company Conversion Stock offered in the Direct Community Offering.
Further, the Bank may limit total subscriptions under this Section V.C.1
so as to assure that the number of shares available for the Public
Offering may be up to a specified percentage of the number of shares of
Holding Company Conversion Stock. Finally, the Bank may reserve shares
offered in the Community Offering for sales to institutional investors.
In the event of an oversubscription for shares in the Community
Offering, shares may be allocated (to the extent shares remain available)
first to cover any reservation of shares for a public offering or
institutional orders, next to cover orders of natural persons residing in
the counties in which the Bank maintains its offices, then to cover the
orders of any other person subscribing for shares in the Community
Offering so that each such person may receive 1,000 shares, and
thereafter, on a pro rata basis to such persons based on the amount of
their respective subscriptions.
The Bank and the Holding Company, in their sole discretion, may
reject subscriptions, in whole or in part, received from any Person under
this Section V.C.
2. Any shares of Holding Company Conversion Stock not sold in the
Subscription Offering or in the Direct Community Offering, if any, shall
then be sold to the Underwriters for resale to the general public at the
Public Offering Price in the Public Offering. It is expected that the
Public Offering will commence as soon as practicable after termination of
the Subscription Offering and the Direct Community Offering, if any. The
Public Offering shall be completed within 45 days after the termination
of the
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Subscription Offering, unless such period is extended as provided in
Section IV hereof. The Public Offering Price and the underwriting
discount shall be determined as provided in Section V.A hereof and set
forth in the underwriting agreement between the Holding Company, the Bank
and the Underwriters. Such underwriting agreement shall be filed with the
OTS and the SEC.
3. If for any reason a Public Offering of unsubscribed shares of
Holding Company Conversion Stock cannot be effected and any shares remain
unsold after the Subscription Offering and the Direct Community Offering,
if any, the Boards of Directors of the Holding Company and the Bank will
seek to make other arrangements for the sale of the remaining shares.
Such other arrangements will be subject to the approval of the OTS and to
compliance with applicable securities laws.
D. Additional Limitations Upon Purchases of Shares of Holding Company
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Conversion Stock
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The following additional limitations shall be imposed on all purchases of
Holding Company Conversion Stock in the Conversion:
1. No Person, by himself or herself, or with an Associate or group
of Persons acting in concert, may subscribe for or purchase in the
Conversion a number of shares of Holding Company Conversion Stock which
exceeds $200,000 of the Holding Company Conversion Stock offered in the
Conversion. For purposes of this paragraph, an Associate of a Person does
not include a Tax-Qualified or Non-Tax Qualified Employee Plan in which
the person has a substantial beneficial interest or serves as a trustee
or in a similar fiduciary capacity. Moreover, for purposes of this
paragraph, shares held by one or more Tax-Qualified or Non-Tax Qualified
Employee Plans attributed to a Person shall not be aggregated with shares
purchased directly by or otherwise attributable to that Person.
2. Directors and Officers and their Associates may not purchase in
all categories in the Conversion an aggregate of more than 34% of the
Holding Company Conversion Stock. For purposes of this paragraph, an
Associate of a Person does not include any Tax-Qualified Employee Plan.
Moreover, any shares attributable to the Officers and directors and their
Associates, but held by one or more Tax-Qualified Employee Plans shall
not be included in calculating the number of shares which may be
purchased under the limitation in this paragraph.
3. The minimum number of shares of Holding Company Conversion Stock
that may be purchased by any Person in the Conversion is 25 shares,
provided sufficient shares are available.
4. The Boards of Directors of the Holding Company and the Bank may,
in their sole discretion, increase the maximum purchase limitation
referred to in subparagraph 1. herein up to 9.99%, provided that orders
for shares exceeding 5% of the shares being offered in the Subscription
Offering shall not exceed, in the aggregate, 10% of the shares
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being offered in the Subscription Offering. Requests to purchase
additional shares of Holding Company Conversion Stock under this
provision will be allocated by the Boards of Directors on a pro rata
basis giving priority in accordance with the priority rights set forth in
this Section V.
Depending upon market and financial conditions, the Boards of Directors
of the Holding Company and the Bank, with the approval of the OTS and without
further approval of the Members, may increase or decrease any of the above
purchase limitations.
For purposes of this Section V, the directors of the Holding Company and
the Bank shall not be deemed to be Associates or a group acting in concert
solely as a result of their serving in such capacities.
Each Person purchasing Conversion Stock in the Conversion shall be deemed
to confirm that such purchase does not conflict with the above purchase
limitations.
E. Restrictions and Other Characteristics of Holding Company Conversion
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Stock Being Sold
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1. Transferability. Holding Company Conversion Stock purchased by
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Persons other than directors and Officers of the Holding Company or the
Bank will be transferable without restriction. Shares purchased by
directors or Officers shall not be sold or otherwise disposed of for
value for a period of one year from the date of Conversion, except for
any disposition of such shares (i) following the death of the original
purchaser, or (ii) resulting from an exchange of securities in a merger
or acquisition approved by the applicable regulatory authorities. Any
transfers that could result in a change of control of the Bank or the
Holding Company or result in the ownership by any Person or group acting
in concert of more than 10% of any class of the Bank's or the Holding
Company's equity securities are subject to the prior approval of the OTS.
The certificates representing shares of Holding Company Conversion
Stock issued to directors and Officers shall bear a legend giving
appropriate notice of the one year holding period restriction.
Appropriate instructions shall be given to the transfer agent for such
stock with respect to the applicable restrictions relating to the
transfer of restricted stock. Any shares of common stock of the Holding
Company subsequently issued as a stock dividend, stock split, or
otherwise, with respect to any such restricted stock, shall be subject to
the same holding period restrictions for Holding Company or Bank
directors and Officers as may be then applicable to such restricted
stock.
No director or Officer of the Holding Company or of the Bank, or
Associate of such a director or Officer, shall purchase any outstanding
shares of capital stock of the Holding Company for a period of three
years following the Conversion without the prior written approval of the
OTS, except through a broker or dealer registered with the SEC or in a
"negotiated transaction" involving more than one percent of the then-
outstanding shares of common stock of the Holding Company. As used
herein, the term "negotiated
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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.
2. Repurchase and Dividend Rights. For a period of three years
------------------------------
following Conversion, the Converted Bank shall not repurchase any shares
of its capital stock, except in the case of an offer to repurchase on a
pro rata basis made to all holders of capital stock of the Converted
Bank. Any such offer shall be subject to the prior non-objection of the
OTS. A repurchase of qualifying shares of a director shall not be deemed
to be a repurchase for purposes of this Section V.E.2.
Present regulations also provide that the Converted Bank may not
declare or pay a cash dividend on or repurchase any of its stock (i) if
the result thereof would be to reduce the regulatory capital of the
Converted Bank below the amount required for the liquidation account to
be established pursuant to Section XII hereof, and (ii) except in
compliance with requirements of Section 563.134 of the Rules and
Regulations of the OTS.
The above limitations are subject to Section 563b.3 (g)(3) of the
Rules and Regulations of the OTS, which generally provides that the
Converted Bank may repurchase its capital stock provided (i) no
repurchases occur within one year following conversion, (ii) repurchases
during the second and third year after conversion are part of an open
market stock repurchase program that does not allow for a repurchase of
more than 5% of the Bank's outstanding capital stock during a twelve-
month period without OTS approval, (iii) the repurchases do not cause the
Bank to become undercapitalized, and (iv) the Bank provides notice to the
OTS at least 10 days prior to the commencement of a repurchase program
and the OTS does not object. In addition, the above limitations shall not
preclude payments of dividends or repurchases of capital stock by the
Converted Bank in the event applicable federal regulatory limitations are
liberalized subsequent to OTS approval of the Plan or as otherwise
permitted by the OTS.
3. Voting Rights. After Conversion, holders of deposit accounts
-------------
will not have voting rights in the Bank or the Holding Company. Exclusive
voting rights as to the Bank will be vested in the Holding Company, as
the sole stockholder of the Bank. Voting rights as to the Holding Company
will be held exclusively by its stockholders.
F. Exercise of Subscription Rights; Order Forms
--------------------------------------------
1. If the Subscription Offering occurs concurrently with the
solicitation of proxies for the Special Meeting, the subscription
prospectus and Order Form may be sent to each Eligible Account Holder,
Tax-Qualified Employee Plan, Supplemental Eligible Account Holder, Other
Member, and director, Officer and employee at their last known address
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as shown on the records of the Bank. However, the Bank may, and if the
Subscription Offering commences after the Special Meeting the Bank shall,
furnish a subscription prospectus and Order Form only to Eligible Account
Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account
Holders, Other Members, and directors, Officers and employees who have
returned to the Bank by a specified date prior to the commencement of the
Subscription Offering a post card or other written communication
requesting a subscription prospectus and Order Form. In such event, the
Bank shall provide a postage-paid post card for this purpose and make
appropriate disclosure in its proxy statement for the solicitation of
proxies to be voted at the Special Meeting and/or letter sent in lieu of
the proxy statement to those Eligible Account Holders, Tax-Qualified
Employee Plans or Supplemental Eligible Account Holders who are not
Members on the Voting Record Date.
2. Each Order Form will be preceded or accompanied by a
subscription prospectus describing the Holding Company and the Converted
Bank and the shares of Holding Company Conversion Stock being offered for
subscription and containing all other information required by the OTS or
the SEC or necessary to enable Persons to make informed investment
decisions regarding the purchase of Holding Company Conversion Stock.
3. The Order Forms (or accompanying instructions) used for the
Subscription Offering will contain, among other things, the following:
(i) A clear and intelligible explanation of the Subscription
Rights granted under the Plan to Eligible Account Holders, Tax-
Qualified Employee Plans, Supplemental Eligible Account Holders,
Other Members, and directors, Officers and employees;
(ii) A specified expiration date by which Order Forms must be
returned to and actually received by the Bank or its representative
for purposes of exercising Subscription Rights, which date will be
not less than 20 days after the Order Forms are mailed by the Bank;
(iii) The Maximum Subscription Price to be paid for each share
subscribed for when the Order Form is returned;
(iv) A statement that 25 shares is the minimum number of
shares of Holding Company Conversion Stock that may be subscribed for
under the Plan;
(v) A specifically designated blank space for indicating the
number of shares being subscribed for;
(vi) A set of detailed instructions as to how to complete the
Order Form including a statement as to the available alternative
methods of payment for the shares being subscribed for;
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(vii) Specifically designated blank spaces for dating and
signing the Order Form;
(viii) An acknowledgment that the subscriber has received the
subscription prospectus;
(ix) A statement of the consequences of failing to properly
complete and return the Order Form, including a statement that the
Subscription Rights will expire on the expiration date specified on
the Order Form unless such expiration date is extended by the Holding
Company and the Bank, and that the Subscription Rights may be
exercised only by delivering the Order Form, properly completed and
executed, to the Bank or its representative by the expiration date,
together with required payment of the Maximum Subscription Price for
all shares of Holding Company Conversion Stock subscribed for;
(x) A statement that the Subscription Rights are non-
transferable and that all shares of Holding Company Conversion Stock
subscribed for upon exercise of Subscription Rights must be purchased
on behalf of the Person exercising the Subscription Rights for his
own account; and
(xi) A statement that, after receipt by the Bank or its
representative, a Subscription may not be modified, withdrawn or
canceled without the consent of the Bank.
G. Method of Payment
-----------------
Payment for all shares of Holding Company Conversion Stock subscribed
for, computed on the basis of the Maximum Subscription Price, must accompany all
completed Order Forms. Payment may be made in cash (if presented in Person), by
check, or, if the subscriber has a Deposit Account in the Bank (including a
certificate of deposit), the subscriber may authorize the Bank to charge the
subscriber's account.
If a subscriber authorizes the Bank to charge his or her account, the
funds will continue to earn interest, but may not be used by the subscriber
until all Holding Company Conversion Stock has been sold or the Plan of
Conversion is terminated, whichever is earlier. The Bank will allow subscribers
to purchase shares by withdrawing funds from certificate accounts without the
assessment of early withdrawal penalties with the exception of prepaid interest
in the form of promotional gifts. In the case of early withdrawal of only a
portion of such account, the certificate evidencing such account shall be
canceled if the remaining balance of the account is less than the applicable
minimum balance requirement, in which event the remaining balance will earn
interest at the passbook rate. This waiver of the early withdrawal penalty is
applicable only to withdrawals made in connection with the purchase of Holding
Company Conversion Stock under the Plan of Conversion. Interest will also be
paid, at not less than the then-current passbook rate, on all orders paid in
cash, by check or money order, from the date payment is received until
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consummation of the Conversion. Payments made in cash, by check or money order
will be placed by the Bank in an escrow or other account established
specifically for this purpose.
In the event of an unfilled amount of any subscription order, the
Converted Bank will make an appropriate refund or cancel an appropriate portion
of the related withdrawal authorization, after consummation of the Conversion,
including any difference between the Maximum Subscription Price and the Actual
Subscription Price (unless subscribers are afforded the right to apply such
difference to the purchase of additional whole shares). If for any reason the
Conversion is not consummated, purchasers will have refunded to them all
payments made and all withdrawal authorizations will be canceled in the case of
subscription payments authorized from accounts at the Bank.
If any Tax-Qualified Employee Plans or Non-Tax-Qualified Employee Plans
subscribe for shares during the Subscription Offering, such plans will not be
required to pay for the shares subscribed for at the time they subscribe, but
may pay for such shares of Holding Company Conversion Stock subscribed for upon
consummation of the Conversion. In the event that, after the completion of the
Subscription Offering, the amount of shares to be issued is increased above the
maximum of the appraisal range included in the Prospectus, the Tax Qualified and
Non-Tax Qualified Employee Plans shall be entitled to increase their
subscriptions by a percentage equal to the percentage increase in the amount of
shares to be issued above the maximum of the appraisal range provided that such
subscriptions shall continue to be subject to applicable purchase limits and
stock allocation procedures.
H. Undelivered, Defective or Late Order Forms; Insufficient Payment
----------------------------------------------------------------
The Boards of Directors of the Holding Company and the Bank shall have
the absolute right, in their sole discretion, to reject any Order Form,
including but not limited to, any Order Forms which (i) are not delivered or are
returned by the United States Postal Service (or the addressee cannot be
located); (ii) are not received back by the Bank or its representative, or are
received after the termination date specified thereon; (iii) are defectively
completed or executed; (iv) are not accompanied by the total required payment
for the shares of Holding Company Conversion Stock subscribed for (including
cases in which the subscribers' Deposit Accounts or certificate accounts are
insufficient to cover the authorized withdrawal for the required payment); or
(v) are submitted by or on behalf of a Person whose representations the Boards
of Directors of the Holding Company and the Bank 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 this Plan. In such event, the Subscription Rights of the
Person to whom such rights have been granted will not be honored and will be
treated as though such Person failed to return the completed Order Form within
the time period specified therein. The Bank may, but will not be required to,
waive any irregularity relating to any Order Form or require 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 Holding Company and
the Bank of the terms and conditions of this Plan and of the proper completion
of the Order Form will be final, subject to the authority of the OTS.
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I. Member in Non-Qualified States or in Foreign Countries
------------------------------------------------------
The Holding Company and the Bank will make reasonable efforts to comply
with the securities laws of all states in the United States in which Persons
entitled to subscribe for Holding Company Conversion Stock pursuant to the Plan
reside. However, no shares will be offered or sold under the Plan of Conversion
to any such Person who (1) resides in a foreign country or (2) resides in a
state of the United States in which a small number of Persons otherwise eligible
to subscribe for shares under the Plan of Conversion reside or as to which the
Holding Company and the Bank determine that compliance with the securities laws
of such state would be impracticable for reasons of cost or otherwise,
including, but not limited to, a requirement that the Holding Company or the
Bank or any of their officers, directors or employees register, under the
securities laws of such state, as a broker, dealer, salesman or agent. No
payments will be made in lieu of the granting of Subscription Rights to any such
Person.
VI. FEDERAL STOCK CHARTER AND BYLAWS
--------------------------------
A. As part of the Conversion, the Bank will take all appropriate steps
to amend its charter to read in the form of federal stock savings institution
charter as prescribed by the OTS. A copy of the proposed stock charter is
available upon request. By their approval of the Plan, the Members of the Bank
will thereby approve and adopt such charter.
B. The Bank will also take appropriate steps to amend its bylaws to read
in the form prescribed by the OTS for a federal stock savings institution. A
copy of the proposed federal stock bylaws is available upon request.
C. The effective date of the adoption of the Bank's federal stock
charter and bylaws shall be the date of the issuance and sale of the Holding
Company Conversion Stock as specified by the OTS.
VII. HOLDING COMPANY CERTIFICATE OF INCORPORATION
--------------------------------------------
A copy of the proposed certificate of incorporation of the Holding
Company will be made available from the Bank upon request.
VIII. DIRECTORS OF THE CONVERTED BANK
-------------------------------
Each Person serving as a member of the Board of Directors of the Bank at
the time of the Conversion will thereupon become a director of the Converted
Bank.
IX. STOCK OPTION AND INCENTIVE PLAN AND RECOGNITION AND RETENTION PLAN
------------------------------------------------------------------
In order to provide an incentive for directors, Officers and employees of
the Holding Company and its subsidiaries (including the Bank), the Board of
Directors of the Holding
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Company intends to adopt, subject to shareholder approval, a Stock option and
incentive plan and a recognition and retention plan as soon as permitted by
applicable regulation.
X. CONTRIBUTIONS TO TAX-QUALIFIED EMPLOYEE PLANS
---------------------------------------------
The Converted Bank and the Holding Company may in their discretion make
scheduled contributions to any Tax-Qualified Employee Plans, provided that any
such contributions which are for the acquisition of Holding Company Conversion
Stock, or the repayment of debt incurred for such an acquisition, do not cause
the Converted Bank to fail to meet its regulatory capital requirements.
XI. SECURITIES REGISTRATION AND MARKET MAKING
-----------------------------------------
Promptly following the Conversion, the Holding Company will register its
common stock with the SEC pursuant to the Exchange Act. In connection with the
registration, the Holding Company will undertake not to deregister such common
stock, without the approval of the OTS, for a period of three years thereafter.
The Holding Company shall use its best efforts to encourage and assist
two or more market makers to establish and maintain a market for its common
stock promptly following Conversion. The Holding Company will also use its best
efforts to cause its common stock to be quoted on the Nasdaq System or to be
listed on a national or regional securities exchange.
XII. STATUS OF SAVINGS ACCOUNTS AND LOANS SUBSEQUENT TO CONVERSION
-------------------------------------------------------------
Each Deposit Account holder shall retain, without payment, a withdrawable
Deposit Account or Accounts in the Converted Bank, equal in amount to the
withdrawable value of such account holder's Deposit Account or Accounts prior to
Conversion. All Deposit Accounts will continue to be insured by the Federal
Deposit Insurance Corporation up to the applicable limits of insurance coverage,
and shall be subject to the same terms and conditions (except as to voting and
liquidation rights) as such Deposit Account in the Bank at the time of the
Conversion. All loans shall retain the same status after Conversion as these
loans had prior to Conversion.
XIII. LIQUIDATION ACCOUNT
-------------------
For purposes of granting to Eligible Account Holders and Supplemental
Eligible Account Holders who continue to maintain Deposit Accounts at the
Converted Bank a priority in the event of a complete liquidation of the
Converted Bank, the Converted Bank will, at the time of Conversion, establish a
liquidation account in an amount equal to the net worth of the Bank as shown on
its latest statement of financial condition contained in the final offering
circular used in connection with the Conversion. The creation and maintenance of
the liquidation account will not operate to restrict the use or application of
any of the regulatory capital accounts of the Converted Bank; provided, however,
that such regulatory capital accounts will not be voluntarily reduced below the
required dollar amount of the liquidation account. Each Eligible Account Holder
and
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Supplemental Eligible Account Holder shall, with respect to the Deposit Account
held, have a related inchoate interest in a portion of the liquidation account
balance ("subaccount balance").
The initial subaccount balance of a Deposit Account held by an Eligible
Account Holder or Supplemental Eligible Account Holder shall be determined by
multiplying the opening balance in the liquidation account by a fraction of
which the numerator is the amount of the Qualifying Deposit in the Deposit
Account on the Eligibility Record Date or the Supplemental Eligibility Record
Date and the denominator is the total amount of the Qualifying Deposits of all
Eligible Account Holders and Supplemental Eligible Account Holders on such
record dates in the Bank. Such initial subaccount balance shall not be
increased, and it shall be subject to downward adjustment as provided below.
If the deposit balance in any Deposit Account of an Eligible Account
Holder or Supplemental Eligible Account Holder at the close of business on any
annual closing date subsequent to the record date is less than the lesser of (i)
the deposit balance in such Deposit Account at the close of business on any
other annual closing date subsequent to the Eligibility Record Date or the
Supplemental Eligibility Record Date or (ii) the amount of the Qualifying
Deposit in such Deposit Account on the Eligibility Record Date or Supplemental
Eligibility Record Date, the subaccount balance shall be reduced in an amount
proportionate to the reduction in such deposit balance. In the event of a
downward adjustment, the subaccount balance shall not be subsequently increased,
notwithstanding any increase in the deposit balance of the related Deposit
Account. If all funds in such Deposit Account are withdrawn, the related
subaccount balance shall be reduced to zero.
In the event of a complete liquidation of the Bank (and only in such
event), each Eligible Account Holder and Supplemental Eligible Account Holder
shall be entitled to receive a liquidation distribution from the liquidation
account in the amount of the then-current adjusted subaccount balances for
Deposit Accounts then held before any liquidation distribution may be made to
stockholders. No merger, consolidation, bulk purchase of assets with assumptions
of Deposit Accounts and other liabilities, or similar transactions with another
institution the accounts of which are insured by the Federal Deposit Insurance
Corporation, shall be considered to be a complete liquidation. In such
transactions, the liquidation account shall be assumed by the surviving
institution.
XIV. RESTRICTIONS ON ACQUISITION OF CONVERTED BANK
---------------------------------------------
Regulations of the OTS limit acquisitions, and offers to acquire, direct
or indirect beneficial ownership of more than 10% of any class of an equity
security of the Converted Bank or the Holding Company. In addition, consistent
with the regulations of the OTS, the charter of the Converted Bank shall provide
that for a period of five years following completion of the Conversion: (i) no
Person (i.e., no individual, group acting in concert, corporation, partnership,
Bank, joint stock company, trust, or unincorporated organization or similar
company, syndicate, or any other group formed for the purpose of acquiring,
holding or disposing of securities of an insured institution) shall directly or
indirectly offer to acquire or acquire beneficial ownership of more than 10% of
any class of the Bank's equity securities. Shares beneficially owned in
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violation of this charter provision shall not be counted as shares entitled to
vote and shall not be voted by any Person or counted as voting shares in
connection with any matter submitted to the shareholders for a vote. This
limitation shall not apply to any offer to acquire or acquisition of beneficial
ownership of more than 10% of the common stock of the Bank by a corporation
whose ownership is or will be substantially the same as the ownership of the
Bank, provided that the offer or acquisition is made more than one year
following the date of completion of the Conversion; (ii) shareholders shall not
be permitted to cumulate their votes for elections of directors; and (iii)
special meetings of the shareholders relating to changes in control or amendment
of the charter may only be called by the Board of Directors.
XV. AMENDMENT OR TERMINATION OF PLAN
--------------------------------
If necessary or desirable, the Plan may be amended at any time prior to
submission of the Plan and proxy materials to the Members by a two-thirds vote
of the respective Boards of Directors of the Holding Company and the Bank. After
submission of the Plan and proxy materials to the Members, the Plan may be
amended by a two-thirds vote of the respective Boards of Directors of the
Holding Company and the Bank only with the concurrence of the OTS. Any
amendments to the Plan made after approval by the Members with the concurrence
of the OTS shall not necessitate further approval by the Members unless
otherwise required.
The Plan may be terminated by a two-thirds vote of the Bank's Board of
Directors at any time prior to the Special Meeting of Members, and at any time
following such Special Meeting with the concurrence of the OTS. In its
discretion, the Board of Directors of the Bank may modify or terminate the Plan
upon the order or with the approval of the OTS and without further approval by
Members. The Plan shall terminate if the sale of all shares of Conversion Stock
is not completed within 24 months of the date of the Special Meeting. A specific
resolution approved by a majority of the Board of Directors of the Bank is
required in order for the Bank to terminate the Plan prior to the end of such 24
month period.
XVI. EXPENSES OF THE CONVERSION
--------------------------
The Holding Company and the Bank shall use their best efforts to assure
that expenses incurred by them in connection with the Conversion shall be
reasonable.
XVII. TAX RULING
----------
Consummation of the Conversion is expressly conditioned upon prior
receipt of either a ruling of the United States Internal Revenue Service or an
opinion of tax counsel with respect to federal taxation, and either a ruling of
the Missouri taxation authorities or an opinion of tax counsel or other tax
advisor with respect to Missouri taxation, to the effect that consummation of
the transactions contemplated herein will not be taxable to the Holding Company
or the Bank.
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XVIII. EXTENSION OF CREDIT FOR PURCHASE OF COMMON STOCK
------------------------------------------------
The Bank may not knowingly loan funds or otherwise extend credit to any
Person to purchase in the Conversion shares of Holding Company Conversion Stock.
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