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EXHIBIT 2.1
AMENDED
PLAN OF CONVERSION
FOR
SECURITY SAVINGS
ASSOCIATION OF HAZLETON
1. INTRODUCTION
This Amended Plan of Conversion ("Plan") provides for the conversion of
Security Savings Association of Hazleton ("ASSOCIATION") from a state-chartered
mutual savings association to a state-chartered capital stock savings
association. The Board of Directors of the ASSOCIATION currently contemplates
that all of the stock of the ASSOCIATION shall be held by a corporation (the
"Holding Company"). The Board of Directors has carefully considered the
alternatives available to the ASSOCIATION with respect to its corporate
structure and has determined that a mutual to stock conversion as described in
this Plan (the "Conversion") is in the best interests of the ASSOCIATION, its
depositors and the community served by the ASSOCIATION. The Board of Directors
believes that the decline in mutuality is placing mutual savings associations,
such as the ASSOCIATION, at a disadvantage to the increasing base of stock
thrift and commercial bank institutions. The restructuring of the ASSOCIATION
into the capital stock form of organization will enable the ASSOCIATION to
compete more effectively with commercial banks and other financial institutions
for new business opportunities, and, as a stock institution, to increase its
equity capital base and access the capital markets when needed and to enhance
the ASSOCIATION'S ability to expand its franchise and the products it offers.
The use
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of the Holding Company, if so utilized, would also provide greater
organizational and operating flexibility. Shares of capital stock of the
ASSOCIATION will be sold to the Holding Company and the Holding Company will
offer the Conversion Stock upon the terms and conditions set forth herein to the
Eligible Account Holders, the Employee Plans established by the ASSOCIATION or
Holding Company, the Supplemental Eligible Account Holders and the Other Members
in the respective priorities set forth in this Plan. Any shares of Conversion
Stock not subscribed for by the foregoing classes of persons will be offered for
sale to certain members of the public either directly by the ASSOCIATION and the
Holding Company through a Community Offering or a Syndicated Community Offering
or through an underwritten firm commitment public offering or through a
combination thereof. In the event that the ASSOCIATION decides not to utilize
the Holding Company in the Conversion, Conversion Stock of the ASSOCIATION, in
lieu of the Holding Company, will be sold as set forth above and in the
respective priorities set forth in this Plan. In addition to the foregoing, the
ASSOCIATION and the Holding Company, as part of this Plan, intend to implement
stock option plans and other stock benefit plans and will provide employment or
severance agreements to certain management employees and certain other
compensation to the directors, officers and employees of the ASSOCIATION as
described in the prospectus for the Conversion Stock.
In furtherance of the ASSOCIATION's long term commitment to its community,
this Plan provides for the establishment of a foundation (the "Foundation") as
part of the Conversion. The Foundation is intended to complement the
ASSOCIATION's existing community reinvestment activities in a manner that will
allow the communities in which the ASSOCIATION operates to share in the
potential growth and profitability of the Holding Company and the ASSOCIATION
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over the long term. Consistent with the ASSOCIATION's goal, the Holding Company
intends to donate to the Foundation from its authorized but unissued common
stock up to 8% of the number of shares sold in the Conversion. The establishment
of the Foundation is subject to the approval of the Voting Members of the
ASSOCIATION. In the event the Foundation is not approved, the ASSOCIATION may
determine to complete the Conversion without the Foundation.
This Plan, which has been unanimously approved by the Board of Directors
of the ASSOCIATION, must also be approved by the affirmative vote of a majority
of the total number of outstanding votes entitled to be cast by Voting Members
of the ASSOCIATION at a special meeting to be called for that purpose. Prior to
the submission of this Plan to the Voting Members for consideration, the Plan
must be approved by the Office of Thrift Supervision and the Pennsylvania
Department of Banking, to the extent required.
2. DEFINITIONS
For the purposes of this Plan, the following terms have the following
meanings:
Account Holder - The term Account Holder means any Person holding a
Savings Account in the ASSOCIATION.
Acting in Concert - The term "Acting in Concert" means (i) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement; (ii) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise; or
(iii) a person or company which acts in concert with another person or company
("other party") shall also be deemed to be acting in concert with any person or
company who is also acting in concert with that other party, except
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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.
Actual Purchase Price - The term Actual Purchase Price means the per share
price at which the Conversion Stock is ultimately sold in accordance with the
terms hereof.
Associate - The term Associate when used to indicate a relationship with
any person, means (i) any corporation or organization (other than the
ASSOCIATION or a majority-owned subsidiary of the ASSOCIATION) of which such
person is an officer or partner or is, directly or indirectly, the beneficial
owner of 10 percent or more of any class of equity securities, (ii) any trust or
other estate in which such person has a substantial beneficial interest or as to
which such person serves as trustee or in a similar fiduciary capacity except
that for the purposes of Sections 9 and 14 hereof, the term "Associate" does not
include any Non-Tax-Qualified Employee Stock Benefit Plan or any Tax-Qualified
Employee Stock Benefit Plan in which a person has a substantial beneficial
interest or serves as a trustee or in a similar fiduciary capacity, and except
that, for purposes of aggregating total shares that may be held by Officers and
Directors the term "Associate" does not include any Tax-Qualified Employee Stock
Benefit Plan, and (iii) any relative or spouse of such person, or any relative
of such spouse, who has the same home as such person or who is a Director or
Officer of the ASSOCIATION or the Holding Company, if utilized, or any of its
parents or subsidiaries.
ASSOCIATION - The term ASSOCIATION means Security Savings Association of
Hazleton, Hazleton, Pennsylvania.
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Community Offering - The term Community Offering means the offering for
sale to certain members of the general public directly by the ASSOCIATION or the
Holding Company, if utilized, of any shares of Conversion Stock not subscribed
for in the Subscription Offering.
Conversion - The term Conversion shall mean (a) the amendment of the
ASSOCIATION's Articles of Incorporation to authorize the issuance of capital
stock in accordance with the Rules and Regulations of the OTS and the
Pennsylvania Savings Association Code of 1967 and to otherwise conform to the
requirements of a Pennsylvania stock savings association and (b) the issuance of
the capital stock of the ASSOCIATION in accordance with this Plan, and the other
transactions effected as part of this Plan including, if utilized, the offer,
sale and issuance by the Holding Company of the Conversion Stock.
Conversion Stock - The term Conversion Stock means the common stock
offered and issued by the Holding Company or the $1.00 par value Common Stock
offered and issued by the ASSOCIATION, if the Holding Company form of
organization is not utilized, upon conversion.
Department - The term Department means the Pennsylvania Department of
Banking.
Director - The term Director means a member of the Board of Directors of
the ASSOCIATION and, where applicable, a member of the Board of Directors of the
Holding Company.
Eligible Account Holder - The term Eligible Account Holder means any
person holding a Qualifying Deposit on the Eligibility Record Date.
Eligibility Record Date - The term Eligibility Record Date means the date
for determining Eligible Account Holders in the ASSOCIATION and is March 31,
1997.
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Employees - The term Employees means all Persons who are employed by the
ASSOCIATION but does not include an Officer or Director.
Employee Plans - The term Employee Plans means the Tax-Qualified Employee
Stock Benefit Plans approved by the Board of Directors of the ASSOCIATION.
Estimated Price Range - The term Estimated Price Range means the range of
minimum and maximum aggregate values determined by the Board of Directors of the
ASSOCIATION within which the aggregate amount of Common Stock sold in the
Conversion will fall. The Estimated Price Range will be within the estimated pro
forma market value of the Conversion Stock as determined by the Independent
Appraiser prior to the Subscription Offering and as it may be amended from time
to time thereafter.
FDIC - The term FDIC means the Federal Deposit Insurance Corporation.
Holding Company - The term Holding Company means the corporation formed
for the purpose of acquiring all of the shares of capital stock of the
ASSOCIATION to be issued upon its conversion to stock form unless the Holding
Company form of organization is not utilized. Shares of common stock of the
Holding Company will be issued in the conversion to Participants and others in a
Subscription, Community, Syndicated Community, or underwritten firm commitment
public offering, or through a combination thereof.
Independent Appraiser - The term Independent Appraiser means an appraiser
retained by the ASSOCIATION to prepare an appraisal of the pro forma market
value of the Conversion Stock.
Local Community - The term Local Community means all counties in which the
ASSOCIATION has its home office or a branch office.
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Member - The term Member means any Person or entity who qualifies as a
member of the ASSOCIATION pursuant to its charter and bylaws.
OTS - The term OTS means Office of Thrift Supervision of the Department of
the Treasury and its successors.
Officer - The term Officer means an executive officer of the ASSOCIATION
which includes the Chief Executive Officer, President, Executive Vice President,
Senior Vice Presidents, Vice Presidents in charge of principal business
functions, Secretary, Treasurer and Controller and any person performing
functions similar to those performed by the foregoing persons.
Order Form - The term Order Form means any form together with attached
cover letter, sent by the ASSOCIATION to any Participant or Person containing
among other things a description of the alternatives available to such Person
under the Plan and by which any such Person may make elections regarding
subscriptions for Conversion Stock in the Subscription and Community Offerings.
Other Member - The term Other Member means any person who is a Member of
the ASSOCIATION (other than an Eligible Account Holder or Supplemental Eligible
Account Holder) at the close of business on the Voting Record Date.
Participants - The term Participants means the Eligible Account Holders,
Employee Plans, Supplemental Eligible Account Holders and Other Members.
Person - The term Person means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust (including
Individual Retirement Accounts and KEOGH Accounts), any unincorporated
organization, a government or political subdivision thereof or any other entity.
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Plan - The term Plan means this Plan of Conversion of the ASSOCIATION as
it exists on the date hereof and as it may hereafter be amended in accordance
with its terms.
Preferred Subscribers - The term Preferred Subscribers means those members
of the general public which are natural persons residing in the ASSOCIATION's
Local Community.
Qualifying Deposit - The term Qualifying Deposit means the balance of each
Savings Account of $50 or more in the ASSOCIATION at the close of business on
the Eligibility Record Date or the Supplemental Eligibility Record Date,
whichever may be the case. Savings Accounts with total deposit balances of less
than $50 shall not constitute a Qualifying Deposit.
SEC - The term SEC refers to the United States Securities and Exchange
Commission.
Savings Account - The term Savings Account has the same meaning as in
Section 561.42 of the Rules and Regulations of the OTS and includes certificates
of deposit.
Special Meeting of Members - The term Special Meeting of Members means the
special meeting and any adjournments thereof held to consider and vote upon this
Plan.
Subscription Offering - The term Subscription Offering means the offering
of Conversion Stock for purchase through Order Forms to Participants.
Subscription Price - The term Subscription Price means the amount per
share of Conversion Stock to be paid initially by Participants in the
Subscription Offering and persons in the Community Offering.
Supplemental Eligibility Record Date - The term Supplemental Eligibility
Record Date means the supplemental record date for determining Supplemental
Eligible Account Holders of the ASSOCIATION. The Supplemental Eligibility Record
Date shall be the last day of the calendar quarter preceding the OTS' approval
of the application for Conversion.
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Supplemental Eligible Account Holder - The term Supplemental Eligible
Account Holder means any person (other than an Eligible Account Holder) holding
a Qualifying Deposit, except officers, directors and their associates, as of the
Supplemental Eligibility Record Date.
Syndicated Community Offering - The term Syndicated Community Offering
means the offering of Conversion Stock following the Subscription and Community
Offerings through a syndicate of broker-dealers.
Tax-Qualified Employee Stock Benefit Plan - The term Tax-Qualified
Employee Stock Benefit Plan means any defined benefit plan or defined
contribution plan, such as an employee stock ownership plan, stock bonus plan,
profit-sharing plan or other plan, which, with its related trust, meets the
requirements to be "qualified" under Section 401 of the Internal Revenue Code. A
"Non-Tax-Qualified Employee Stock Benefit Plan" is any defined benefit plan or
defined contribution plan which is not so qualified.
Voting Members - The term Voting Members means those persons qualifying as
voting members of the ASSOCIATION pursuant to its charter and bylaws.
Voting Record Date - The term Voting Record Date means the date fixed by
the Directors in accordance with OTS regulations and the Pennsylvania Savings
Association Code of 1967 for determining eligibility to vote at the Special
Meeting of Members.
3. PROCEDURE FOR CONVERSION
After approval of the Plan by a vote of not less than two-thirds (2/3) of
the Board of Directors of the ASSOCIATION, the Plan shall be submitted together
with all other requisite material to the OTS and the Department for approval.
Notice of the adoption of the Plan by the Board of Directors of the ASSOCIATION
and the submission of the Plan to the OTS and the
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Department for approval will be published in a newspaper having general
circulation in each community in which an office of the ASSOCIATION is located
and in a legal newspaper published in the county in which the ASSOCIATION is
located. If there is no legal newspaper published in such county, the notice
shall be published in an additional newspaper of general circulation in the
county. In addition, copies of the Plan will be made available at each office of
the ASSOCIATION for inspection by the Members. Upon receipt of notice from the
OTS to do so, the ASSOCIATION also will cause to be published a notice of the
filing with the OTS of an application to convert in accordance with the
provisions of the Plan. Following approval by the OTS and the Department, to the
extent required, the Plan will be submitted to a vote of the Voting Members at
the Special Meeting of Members called for that purpose. Upon approval of the
Plan by a majority of the total outstanding votes of the Voting Members, the
ASSOCIATION will take all other necessary steps pursuant to applicable laws and
regulations to convert the ASSOCIATION to stock form. The Conversion must be
completed within 24 months of the approval of the Plan by the Voting Members,
unless a longer time period is permitted by governing laws and regulations.
The Board of Directors of the ASSOCIATION intends to take all necessary
steps to form the Holding Company, including the filing of an Application on
Form H-(e)1, or H-(e)1-S, if available to the Holding Company, with the OTS. In
the event that the Holding Company is utilized, upon Conversion the ASSOCIATION
will issue capital stock to the Holding Company and the Holding Company will
issue and sell the Conversion Stock in accordance with this Plan.
The Board of Directors of the ASSOCIATION may determine for any reason at
any time prior to the issuance of the Conversion Stock not to utilize a holding
company form of
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organization in the Conversion, in which case, the Holding Company's
Registration Statement under the Securities Act of 1933 filed with the SEC will
be withdrawn, the ASSOCIATION will take all steps necessary to complete the
Conversion from the mutual to the stock form of organization, including filing
any necessary documents with the OTS and the Department, and will issue and sell
the Conversion Stock in accordance with this Plan. In such event, any
subscriptions or orders received for Conversion Stock of the Holding Company
shall be deemed to be subscriptions or orders for Conversion Stock of the
ASSOCIATION without any further action by the ASSOCIATION or the subscribers for
the Conversion Stock, unless any such further action is required by the SEC, the
OTS or the Department, in which case the ASSOCIATION shall take such necessary
action to complete the Conversion. Any references to the Holding Company in this
Plan shall mean the ASSOCIATION in the event the Holding Company is eliminated
in the Conversion.
The Board of Directors of the ASSOCIATION also intend to take all
necessary steps to establish the Foundation, and to fund such Foundation in the
manner set forth in Section 7A hereof, subject to the approval of the Voting
Members.
The Conversion Stock will not be insured by the FDIC. The ASSOCIATION will
not knowingly lend funds or otherwise extend credit to any Person to purchase
shares of the Conversion Stock.
4. HOLDING COMPANY APPLICATIONS AND APPROVALS
The Holding Company shall make timely applications for any requisite
regulatory approvals, including an Application on Form H-(e)1 or an H-(e)1-S, if
available to the Holding Company, to be filed with the OTS and to the extent
applicable, the Department, and a
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Registration Statement to be filed with the SEC. The ASSOCIATION shall be a
wholly-owned subsidiary of the Holding Company unless the Holding Company is
eliminated in the Conversion.
5. SALE OF CONVERSION STOCK
The Conversion Stock will be offered simultaneously in the Subscription
Offering to the Eligible Account Holders, Employee Plans, Supplemental Eligible
Account Holders and Other Members in the respective priorities set forth in
Sections 8 through 11 of this Plan. The Subscription Offering may be commenced
as early as the mailing of the Proxy Statement for the Special Meeting of
Members and must be commenced in time to complete the Conversion within the time
period specified in Section 3.
Any shares of Conversion Stock not subscribed for in the Subscription
Offering will be offered for sale in the Community Offering as provided in
Section 12 of this Plan. The Subscription Offering may be commenced prior to the
Special Meeting of Members and, in that event, the Community Offering may also
be commenced prior to the Special Meeting of Members. The offer and sale of
Conversion Stock prior to the Special Meeting of Members shall, however, be
conditioned upon approval of the Plan by the Voting Members.
If feasible, any shares of Conversion Stock remaining after the
Subscription and Community Offerings may be sold in a Syndicated Community
Offering, as provided in Section 13 of this Plan in a manner that will achieve
the widest distribution of the Conversion Stock as determined by the
ASSOCIATION. The sale of all Conversion Stock subscribed for in the Subscription
and Community Offerings will be consummated simultaneously on the date the sale
of Conversion Stock in the Syndicated Community Offering is consummated and only
if all unsubscribed for Conversion Stock is sold.
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The ASSOCIATION may elect to offer to pay fees on a per share basis to
brokers who assist Persons in determining to purchase shares in the Subscription
and Community Offerings.
6. NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK
The total number of shares (or a range thereof) of Conversion Stock to be
issued and offered for sale will be determined jointly by the Board of Directors
of the ASSOCIATION and the Board of Directors of the Holding Company, if the
holding company form of organization is utilized, immediately prior to the
commencement of the Subscription and Community Offerings, subject to adjustment
thereafter if necessitated by market or financial conditions, with the approval
of the OTS and the Department, if necessary. In particular, the total number of
shares may be increased by up to 15% of the number of shares offered in the
Subscription and Community Offering if the Estimated Price Range is increased
subsequent to the commencement of the Subscription and Community Offering to
reflect changes in market and financial conditions.
All shares sold in the Conversion will be sold at a uniform price per
share referred to in this Plan as the Actual Purchase Price. The aggregate
purchase price for all shares of Conversion Stock will not be inconsistent with
the estimated consolidated pro forma market value of the ASSOCIATION or the
Holding Company, if utilized. The estimated consolidated pro forma market value
of the ASSOCIATION or the Holding Company, if utilized, will be determined for
such purpose by the Independent Appraiser. Prior to the commencement of the
Subscription and Community Offerings, an Estimated Price Range will be
established, which range will vary within 15% above to 15% below the midpoint of
such range. The number of shares of Conversion Stock to be issued and the
purchase price per share may be increased or decreased by the ASSOCIATION or the
Holding Company, if utilized. In the event that the aggregate purchase
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price of the Conversion Stock is below the minimum of the Estimated Price Range,
or materially above the maximum of the Estimated Price Range, resolicitation of
purchasers may be required, provided that up to a 15% increase above the maximum
of the Estimated Price Range will not be deemed material so as to require a
resolicitation. Up to a 15% increase in the number of shares to be issued which
is supported by an appropriate change in the estimated pro forma market value of
the ASSOCIATION or the Holding Company, if utilized, will not be deemed to be
material so as to require a resolicitation of subscriptions. In the event that
the aggregate purchase price of the Conversion Stock is below the minimum of the
Estimated Price Range or in excess of 15% above the maximum of the Estimated
Price Range, and a resolicitation is required, such resolicitation shall be
effected in such manner and within such time as the ASSOCIATION shall establish,
with the approval of the OTS and the Department, if required.
Based upon the independent valuation as updated prior to the commencement
of the Subscription and Community Offerings, the Board of Directors of the
Holding Company, (if a holding company form of organization is utilized) and the
Board of Directors of the ASSOCIATION will fix the Subscription Price and the
range of the number of shares to be offered. If upon completion of the
Subscription and Community Offerings all of the Conversion Stock is subscribed
for, or if because of a limited number of unsubscribed shares or otherwise a
Syndicated Community Offering cannot be effected, the total number of shares of
Conversion Stock to be issued and sold will be jointly determined by the
ASSOCIATION and Holding Company (if a holding company form of organization is
utilized) as follows: (a) the estimated aggregate pro forma market value of the
ASSOCIATION or the Holding Company, as the case may be, immediately after
Conversion as determined by the Independent Appraiser, expressed in
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terms of a specific aggregate dollar amount rather than as a range, upon
completion of the Subscription and Community Offerings or other sale of all of
the Conversion Stock shall be divided by (b) the Actual Purchase Price.
If there is a Syndicated Community Offering of shares of Conversion Stock
not subscribed for in the Subscription and Community Offerings, the price per
share at which the Conversion Stock is sold in such Syndicated Community
Offering shall be the Subscription Price.
Notwithstanding the foregoing, no sale of Conversion Stock may be
consummated unless, prior to such consummation, the Independent Appraiser
confirms to the ASSOCIATION and Holding Company, if utilized, and to the OTS
that, to the best knowledge of the Independent Appraiser, nothing of a material
nature has occurred which, taking into account all relevant factors, would cause
the Independent Appraiser to conclude that the aggregate value of the Conversion
Stock at the Actual Purchase Price is incompatible with its estimate of the
aggregate consolidated pro forma market value of the Holding Company or the
ASSOCIATION if no Holding Company is utilized. If such confirmation is not
received, the ASSOCIATION may cancel the Subscription and Community Offerings
and/or the Syndicated Community Offering, extend the Conversion, establish a new
Subscription Price Range and/or Estimated Price Range, extend, reopen or hold
new Subscription and Community Offerings and/or Syndicated Community Offering or
take such other action as the OTS and the Department may permit.
The Conversion Stock to be issued in the Conversion shall be fully paid
and nonassessable.
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7. PURCHASE BY THE HOLDING COMPANY OF THE STOCK OF THE
ASSOCIATION
Upon the consummation of the sale of all of the Conversion Stock, and in
the event that a holding company form of organization is utilized, the Holding
Company will purchase from the ASSOCIATION all of the capital stock of the
ASSOCIATION to be issued by the ASSOCIATION in the Conversion in exchange for
the Conversion proceeds that are not permitted to be retained by the Holding
Company.
The Holding Company will apply to the OTS to retain up to 50% of the
proceeds of the Conversion. Assuming the Holding Company is not eliminated, a
lesser percentage may be acceptable. The ASSOCIATION believes that the
Conversion proceeds will provide economic strength to the Holding Company and
the ASSOCIATION for the future in a highly competitive and regulated environment
and would facilitate expansion through acquisitions, diversification into other
related businesses and for other business and investment purposes, including the
payment of dividends and future repurchases of Conversion Stock, as permitted by
the OTS and the Department, to the extent required. If during the Conversion
process the Board of Directors of the ASSOCIATION determines not to complete the
Conversion utilizing a holding company form of organization, capital stock of
the ASSOCIATION will be issued and sold in accordance with the Plan. The above
activities may also be engaged in by the ASSOCIATION if the Holding Company is
eliminated.
7A. ESTABLISHMENT AND FUNDING OF FOUNDATION
As part of the Conversion, the Holding Company and the ASSOCIATION intend
to establish a Foundation that will qualify as an exempt organization under
Section 501(c)(3) of the
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Internal Revenue Code and to donate to the Foundation up to 8% of the number of
shares of Common Stock sold in the Conversion. The Foundation is being formed in
connection with the Conversion in order to complement the ASSOCIATION's existing
community reinvestment activities and to share with the communities in which the
ASSOCIATION operates a part of the ASSOCIATION's financial success as a
community-minded, financial services institution. The funding of the Foundation
with Common Stock of the Holding Company accomplishes this goal as it enables
such communities to share in the potential growth and profitability of the
Holding Company and the ASSOCIATION over the long-term.
The Foundation will be dedicated to the promotion of charitable purposes
within the communities in which the ASSOCIATION operates, including, but not
limited to, grants or donations to support housing assistance, scholarships,
local education, not-for-profit medical facilities, not-for-profit community
groups and other types of organizations or civic minded projects. The board of
directors of the Foundation will be responsible for establishing the polices of
the Foundation with respect to grants or donations, consistent with the stated
purposes of the Foundation. The Foundation will annually distribute total grants
to assist charitable organizations or to fund projects within its local
community of not less than 5% of the average fair value of Foundation assets
each year. In order to serve the purposes for which it was formed and maintain
its 501(c)(3) qualification, the Foundation may sell, on an annual basis, a
limited portion of the Common Stock contributed to it by the Holding Company.
The establishment and funding of the Foundation as part of the Conversion
is subject to the approval of the Voting Members by an affirmative vote of a
majority of the votes eligible to be cast by Voting Members in person or by
proxy at the Special Meeting. In the event that the
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ASSOCIATION's Voting Members approve this Plan, but not the Foundation, the
ASSOCIATION may determine to complete the Conversion without the establishment
of the Foundation and may do so without amending this Plan or obtaining any
further vote of the ASSOCIATION's Voting Members. Failure of the Voting Members
to approve the Foundation may materially affect the pro forma market value of
the ASSOCIATION. In such an event, the ASSOCIATION may establish a new Estimated
Price Range and commence a resolicitation of subscribers. For comparison
purposes, Voting Members will be provided with a projection of the pro forma
market value of the Conversion Stock, an Estimated Price Range and certain
selected pro forma financial data that would result if the Conversion were
consummated without establishment of the Foundation.
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS
(FIRST PRIORITY)
A. Each Eligible Account Holder shall receive, as first priority and
without payment, nontransferable subscription rights to subscribe for shares of
Conversion Stock equal to an amount up to the greater of: the amount permitted
to be subscribed for in the Community Offering which amount, pursuant to Section
12, currently is $150,000 of the Conversion Stock offered, but which may be
increased to 5% or decreased to less than $150,0000 without the further approval
of members or resolicitation of subscribers; one-tenth of one percent (.10%) of
the total offering of shares of Conversion Stock; or fifteen times the product
(rounded down to the next whole number) obtained by multiplying the total number
of shares of Conversion Stock to be issued by a fraction of which the numerator
is the amount of the Qualifying Deposit of the Eligible Account Holder and the
denominator is the total amount of Qualifying Deposits of all Eligible Account
Holders,
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in each case on the Eligibility Record Date, subject to the maximum purchase
limitation specified in Section 14A and the minimum purchase limitation
specified in Section 14C and exclusive of an increase in the total number of
shares issued due to an increase in the Estimated Price Range of up to 15%.
B. In the event that Eligible Account Holders exercise subscription rights
for a number of shares of Conversion Stock in excess of the total number of
shares eligible for subscription, the shares of Conversion Stock shall be
allocated among the subscribing Eligible Account Holders so as to permit each
subscribing Eligible Account Holder, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation of Conversion
Stock equal to the lesser of 100 shares or the number of shares subscribed for
by the Eligible Account Holders. Any shares remaining after that allocation will
be allocated among the subscribing Eligible Account Holders whose subscriptions
remain unsatisfied in the proportion that the amount of the Qualifying Deposit
of each Eligible Account Holder whose subscription remains unsatisfied bears to
the total amount of the Qualifying Deposits of all Eligible Account Holders
whose subscriptions remain unsatisfied. If the amount so allocated exceeds the
amount subscribed for by any one or more Eligible Account Holders, the excess
shall be reallocated (one or more times as necessary) among those Eligible
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.
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9. SUBSCRIPTION RIGHTS OF THE EMPLOYEE PLANS (SECOND PRIORITY)
The Employee Plans shall receive, without payment, as a second priority
after the filling of subscriptions of Eligible Account Holders, nontransferable
subscription rights to purchase in the Subscription Offering the number of
shares of Conversion Stock requested by such Employee Plans. If, after the
filling of subscriptions of Eligible Account Holders, a sufficient number of
shares are not available to fill the subscriptions by such Employee Plans, the
subscription by such Employee Plans shall be filled to the maximum extent
possible; provided, however, that in the event of an increase in the total
number of shares issued due to an increase in the Estimated Price Range of up to
15%, the additional shares may be sold to the Employee Plans subject to the
provisions of Section 14.
The Employee Plans shall not be deemed to be an associate or affiliate of
or Person Acting in Concert with any Director or Officer of the Holding Company
or the ASSOCIATION.
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS
(THIRD PRIORITY)
A. Each Supplemental Eligible Account Holder shall receive, as third
priority and without payment, nontransferable subscription rights to subscribe
for shares of Conversion Stock equal to an amount up to the greater of: the
amount permitted to be subscribed for in the Community Offering which amount,
pursuant to Section 12, currently is $150,000 of the Conversion Stock offered,
but which may be increased to 5% or decreased to less than $150,000 without the
further approval of members or resolicitation of subscribers; one-tenth of one
percent (.10%) of the total offering of Conversion Stock; or fifteen times the
product (rounded down to the next whole number) obtained by multiplying the
total number of shares of Conversion Stock
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to be issued by a fraction of which the numerator is the amount of the
Qualifying Deposit of the Supplemental Eligible Account Holder and the
denominator is the total amount of the Qualifying Deposits of all Supplemental
Eligible Account Holders in the ASSOCIATION on the Supplemental Eligibility
Record Date, subject to the maximum purchase limitation specified in Section 14A
and the minimum purchase limitation specified in Section 14C and exclusive of an
increase in the total number of shares issued due to an increase in the
Estimated Price Range of up to 15%.
B. In the event that Supplemental Eligible Account Holders exercise
subscription rights for a number of shares of Conversion Stock in excess of the
total number of shares eligible for subscription, the remaining shares of
Conversion Stock shall be allocated among the subscribing Supplemental Eligible
Account Holders so as to permit each subscribing Supplemental Eligible Account
Holder, to the extent possible, to purchase a number of shares sufficient to
make his or her total allocation of Conversion Stock equal to the lesser of 100
shares or the number of shares subscribed for by the Supplemental Eligible
Account Holder. Any shares remaining after that allocation will be allocated
among the subscribing Supplemental Eligible Account Holders whose subscriptions
remain unsatisfied in the proportion that the amount of the Qualifying Deposit
of each Supplemental Eligible Account Holder whose subscription remains
unsatisfied bears to the total amount of the Qualifying Deposits of all
Supplemental Eligible Account Holders whose subscriptions remain unsatisfied. If
the amount so allocated exceeds the amount subscribed for by any one or more
Supplemental Eligible Account Holders, the excess shall be reallocated (one or
more times as necessary) among those Supplemental Eligible Account Holders whose
subscriptions are still not fully satisfied on the same principle until all
available shares have been allocated or all subscriptions satisfied.
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C. Subscription rights received by an Eligible Account Holder pursuant to
Section 8 shall be applied in partial satisfaction of the subscription rights to
be received as a Supplemental Eligible Account Holder pursuant to this Section
10.
11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)
A. Each Other Member shall receive, without payment, as a fourth priority
after the filling of subscriptions of the Eligible Account Holders, the Employee
Plans, and the Supplemental Eligible Account Holders, nontransferable
subscription rights to subscribe for shares of Conversion Stock equal to an
amount up to the greater of: the amount permitted to be subscribed for in the
Community Offering which amount, pursuant to Section 12, currently is $150,000
of the Conversion Stock offered, but which may be increased to 5% or decreased
to less than $150,000 without the further approval of members or resolicitation
of subscribers; or one-tenth of one percent (.10%) of the total offering of
shares of Conversion Stock, subject to the maximum purchase limitation specified
in Section 14A and the minimum purchase limitation specified in Section 14C and
exclusive of an increase in the total number of shares issued due to an increase
in the Estimated Price Range of up to 15%.
B. In the event that Other Members exercise subscription rights for a
number of shares of Conversion Stock in excess of the total number of shares
eligible for subscription, the remaining shares of Conversion Stock shall be
allocated among the subscribing Other Members so as to permit each subscribing
Other Member, to the extent possible, to purchase a number of shares sufficient
to make his or her total allocation of Conversion Stock equal to the lesser of
100 shares or the number of shares subscribed for by the Other Member. Any
shares remaining after that allocation will be allocated among the subscribing
Other Members whose subscriptions remain
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unsatisfied pro rata in the same proportion that the number of votes of a
subscribing Other Member on the Voting Record Date bears to the total votes on
the Voting Record Date of all subscribing Other Members. If the amount so
allocated exceeds the amount subscribed for by any one or more remaining Other
Members, the excess shall be reallocated (one or more times as necessary) among
those remaining Other Members whose subscriptions are still not fully satisfied
on the same principle until all available shares have been allocated or all
subscriptions satisfied.
12. COMMUNITY OFFERING (FIFTH PRIORITY)
If less than the total number of shares of Conversion Stock to be
subscribed for in the Conversion are sold in the Subscription Offering, it is
expected that shares remaining unsubscribed for will be made available for
purchase in the Community Offering to certain members of the general public,
which may subscribe together with any Associate or group of persons Acting in
Concert for up to $150,000 of the shares of Conversion Stock offered subject to
the Maximum Overall Purchase Limitation as specified in Section 14A and the
minimum purchase limitation specified in Section 14C and exclusive of an
increase in the total number of shares issued due to an increase in the
Estimated Price Range of up to 15%; provided, however, that the amount permitted
to be purchased in the Community Offering may be increased to 5% of the
Conversion Stock; or decreased to less than $150,000 without the further
approval of members or resolicitation of subscribers. The shares may be made
available in the Community Offering through a direct community marketing program
which may provide for utilization of a broker, dealer, consultant or investment
banking firm, experienced and expert in the sale of savings institution
securities. Such entities may be compensated on a fixed fee basis or on a
commission basis, or a combination thereof. Shares may be made available in the
Community Offering with
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preference given to Preferred Subscribers. The ASSOCIATION shall make
distribution of the Conversion Stock to be sold in the Community Offering in
such a manner as to promote the widest distribution of Conversion Stock. The
ASSOCIATION reserves the right to reject any or all orders, in whole or in part,
which are received in the Community Offering.
If the subscribers in the Community Offering, whose orders would otherwise
be accepted, subscribe for more shares than are available for purchase, the
shares available to them will be allocated among the subscribers in the manner
which permits each such person to the extent possible, to purchase the number of
shares necessary to make his total allocation of Conversion Stock equal to the
lesser of 100 shares or the number of shares subscribed for by such persons.
Thereafter, unallocated shares will be allocated among the subscribers whose
subscriptions remain unsatisfied on a 100 shares per order basis until all such
orders have been filled or the remaining shares have been allocated. The
ASSOCIATION may establish all other terms and conditions of such offer. The
Community Offering may commence concurrently during or subsequent to the
Subscription Offering. The Community Offering must be completed within 45 days
after the completion of the Subscription Offering unless otherwise extended by
the OTS.
13. SYNDICATED COMMUNITY OFFERING
If feasible, all shares of Conversion Stock not subscribed for in the
Subscription and Community Offerings may be sold in a Syndicated Community
Offering, subject to such terms, conditions and procedures as may be determined
by the ASSOCIATION, in a manner that will achieve the widest distribution of the
Conversion Stock subject to the right of the ASSOCIATION to accept or reject in
whole or in part all subscriptions in the Syndicated Community Offering. In the
Syndicated Community Offering, any person together with any Associate or group
of
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persons Acting in Concert may purchase up to $150,000 of the shares of
Conversion Stock offered subject to the maximum purchase limitation specified in
Section 14A and the minimum purchase limitation specified in Section 14C and
exclusive of an increase in the total number of shares issued due to an increase
in the Estimated Price Range of up to 15%; provided, however, that this amount
may be increased to 5% or decreased to less than $150,000 without the further
approval of members or resolicitation of subscribers. The shares purchased by
any Person together with any Associate or group of persons Acting in Concert
pursuant to Section 12 shall be counted toward meeting the maximum percentage of
shares permitted to be purchased pursuant to this Section. Provided that the
Subscription Offering has commenced, the ASSOCIATION may commence the Syndicated
Community Offering at any time after the mailing to the Members of the Proxy
Statement to be used in connection with the Special Meeting of Members, provided
that the completion of the offer and sale of the Conversion Stock shall be
conditioned upon the approval of this Plan by the Voting Members. If the
Syndicated Community Offering is not sooner commenced pursuant to the provisions
of the preceding sentence, the Syndicated Community Offering will be commenced
as soon as practicable following the date upon which the Subscription and
Community Offerings terminate.
Alternatively, if a Syndicated Community Offering is not held, the
ASSOCIATION shall have the right to sell any shares of Conversion Stock
remaining following the Subscription and Community Offerings in an underwritten
firm commitment public offering. The provisions of Section 14 hereof shall not
be applicable to sales to underwriters for purposes of such an offering but
shall be applicable to the sales by the underwriters to the public. The price to
be paid by the underwriters in such an offering shall be equal to the Actual
Purchase Price less an underwriting
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discount to be negotiated among such underwriters and the ASSOCIATION, which
will in no event exceed an amount deemed to be acceptable by the OTS.
If for any reason a Syndicated Community Offering or an underwritten firm
commitment public offering of shares of Conversion Stock not sold in the
Subscription and Community Offerings can not be effected, or in the event that
any insignificant residue of shares of Conversion Stock is not sold in the
Subscription and Community Offerings or in the Syndicated Community Offering or
an underwritten firm commitment public offering, other purchase arrangements
will be made for the sale of unsubscribed shares by the ASSOCIATION, if
possible. Such other purchase arrangements will be subject to the approval of
the OTS.
14. LIMITATION ON PURCHASES
In addition to the maximum amount of Conversion Stock that may be
subscribed for as set forth in Sections 8, 10, 11, 12 and 13, the following
limitations shall apply to all purchases of shares of Conversion Stock:
A. The maximum number of shares of Conversion Stock which may be
subscribed for or purchased in all categories in the conversion by any Person or
Participant together with any Associate or group or persons Acting in Concert
shall not exceed the greater of (i) $150,000 or (ii) 1.0% of the Conversion
Stock offered (the "Maximum Overall Purchase Limitation"), except for the
Employee Plans which may subscribe for up to 10% of the Conversion Stock issued
and except for certain Eligible Account Holders and Supplemental Eligible
Account Holders which may subscribe for or purchase shares in accordance with
Sections 8 and 10 herein, respectively; provided, however, in the event that the
Maximum Overall Purchase Limitation is increased to more than 2.0% of the shares
of Conversion Stock offered, orders for Conversion Stock in the
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Community Offering and in the Syndicated Community Offering (or, alternatively
an underwritten firm commitment public offering), if any, shall, as determined
by the ASSOCIATION, first be filled to a maximum of 2.0% of the total number of
shares of Conversion Stock offered and thereafter remaining shares shall be
allocated on an equal number of shares basis per order until all orders have
been filled.
B. The maximum number of shares of Conversion Stock which may be purchased
in all categories in the Conversion by Officers and Directors of the ASSOCIATION
and their Associates in the aggregate shall not exceed 33% of the total number
of shares of Conversion Stock issued.
C. A minimum of 25 shares of Conversion Stock must be purchased by each
Person purchasing shares in the Conversion to the extent those shares are
available; provided, however, that in the event the minimum number of shares of
Conversion Stock purchased times the price per share exceeds $500, then such
minimum purchase requirement shall be reduced to such number of shares of
Conversion Stock which when multiplied by the price per share shall not exceed
$500, as determined by the Board.
If the number of shares of Conversion Stock otherwise allocable pursuant
to Sections 8, 10, 11, 12 and 13, to any Person or that Person's Associates
would be in excess of the maximum number of shares permitted as set forth above,
the number of shares of Conversion Stock allocated to each such person shall be
reduced to the lowest limitation applicable to that Person, and then the number
of shares allocated to each group consisting of a Person and that Person's
Associates shall be reduced so that the aggregate allocation to that Person and
his or her Associates complies with the above maximums, and such maximum number
of shares shall be reallocated among that
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Person and his or her 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).
Depending upon market or financial conditions, the Board of Directors of
the ASSOCIATION and the Holding Company, without further approval of the
Members, may decrease or increase the purchase limitations in this Plan,
provided that the maximum purchase limitations may not be increased to a
percentage in excess of 5%. Notwithstanding the foregoing, the Maximum Overall
Purchase Limitation may be increased up to 9.99% provided that orders for
Conversion Stock exceeding 5% of the shares being offered shall not exceed, in
the aggregate, 10% of the total offering. If the ASSOCIATION or the Holding
Company, as the case may be, increases the maximum purchase limitations, the
ASSOCIATION or the Holding Company, as the case may be, is only required to
resolicit Persons who subscribed for the maximum purchase amount and may, in the
sole discretion of the ASSOCIATION or the Holding Company, as the case may be,
resolicit certain other large subscribers.
In the event shares of Conversion stock are sold in excess of the maximum
of the Estimated Price Range, (the "Adjusted Maximum") such shares will be
allocated in the following order of priority: (i) to fill the Employee Plans'
subscription to the Adjusted Maximum; (ii) in the event that there is an over
subscription at the Eligible Account Holder level, to fill unfulfilled
subscriptions of Eligible Account Holders exclusive of the Adjusted Maximum in
accordance with Section 8; (iii) in the event there is an over subscription at
the Supplemental Eligible Account Holder level, to fill unfulfilled
subscriptions of Supplemental Eligible Account Holders exclusive of the Adjusted
Maximum in accordance with Section 10; (iv) in the event that there is an over
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subscription at the Other Member level, to fill unfulfilled subscriptions of
Other Members exclusive of the Adjusted Maximum in accordance with Section 11;
and (v) to fill unfulfilled Subscriptions in the Community Offering exclusive of
the Adjusted Maximum in accordance with Section 12.
For purposes of this Section 14, the Directors and Officers of the
ASSOCIATION and the Holding Company shall not be deemed to be Associates or a
group affiliated with each other or otherwise Acting in Concert solely as a
result of their being Directors or Officers of the ASSOCIATION or the Holding
Company.
Each Person purchasing Conversion Stock in the Conversion shall be deemed
to confirm that such purchase does not conflict with the above purchase
limitations contained in this Plan.
For a period of three years following the Conversion, no Officer, Director
or their Associates shall purchase, without the prior written approval of the
OTS, any outstanding shares of common stock of the ASSOCIATION or the Holding
Company, as the case may be, except from a broker-dealer registered with the
SEC. This provision shall not apply to negotiated transactions involving more
than one percent of the outstanding shares of common stock of the ASSOCIATION or
the Holding Company, as the case may be, the exercise of any options pursuant to
a stock option plan or purchases of common stock of the ASSOCIATION or the
Holding Company, as the case may be, made by or held by any Tax-Qualified
Employee Stock Benefit Plan or Non-Tax-Qualified Employee Stock Benefit Plan of
the ASSOCIATION or the Holding Company (including the Employee Plans) which may
be attributable to any Officer or Director. As used herein, the term "negotiated
transaction" means a transaction in which the securities are offered and the
terms and arrangements relating to any sale are arrived at through
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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.
15. PAYMENT FOR CONVERSION STOCK
All payments for Conversion Stock subscribed for in the Subscription,
Community and Syndicated Community Offerings must be delivered in full to the
ASSOCIATION, together with a properly completed and executed Order Form, or
purchase order in the case of the Syndicated Community Offering, on or prior to
the expiration date specified on the Order Form or purchase order, as the case
may be, unless such date is extended by the ASSOCIATION; provided, however, that
if the Employee Plans subscribe for shares during the Subscription Offering,
such plans will not be required to pay for the shares at the time they subscribe
but rather may pay for such shares of Conversion Stock subscribed for by such
plans at the Actual Purchase Price upon consummation of the Conversion, provided
that, in the case of the employee stock ownership plan ("ESOP") there is in
force from the time of its subscription until the consummation of the
Conversion, a loan commitment from the Holding Company or an unrelated financial
institution to lend to the ESOP, at such time, the aggregate Subscription Price
of the shares for which it subscribed. The ASSOCIATION may make scheduled
discretionary contributions to an Employee Plan provided such contributions do
not cause the ASSOCIATION to fail to meet its regulatory capital requirement.
Notwithstanding the foregoing, the ASSOCIATION and the Holding Company, if
utilized, shall have the right, in their sole discretion, to permit
institutional investors to submit contractually
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irrevocable orders in the Community Offering and to thereafter submit payment
for the Conversion Stock for which they are subscribing in the Community
Offering at any time prior to 48 hours before the completion of the Conversion,
unless such 48 hour period is waived by the ASSOCIATION and the Holding Company,
in their sole discretion.
Payment for Conversion Stock subscribed for shall be made either in cash
(if delivered in person), check or money order. Alternatively, subscribers in
the Subscription and Community Offerings may pay for the shares subscribed for
by authorizing the ASSOCIATION on the Order Form to make a withdrawal from the
subscriber's Savings Account at the ASSOCIATION in an amount equal to the
purchase price of such shares. Such authorized withdrawal, whether from a
savings passbook or certificate account, shall be without penalty as to
premature withdrawal. If the authorized withdrawal is from a certificate
account, and the remaining balance does not meet the applicable minimum balance
requirement, the certificate shall be cancelled at the time of withdrawal,
without penalty, and the remaining balance will earn interest at the passbook
rate. Funds for which a withdrawal is authorized will remain in the subscriber's
Savings Account but may not be used by the subscriber until the Conversion Stock
has been sold or the 45-day period (or such longer period as may be approved by
the OTS) following the Subscription and Community Offering has expired,
whichever occurs first. Thereafter, the withdrawal will be given effect only to
the extent necessary to satisfy the subscription (to the extent it can be
filled) at the purchase price per share. Interest will continue to be earned on
any amounts authorized for withdrawal until such withdrawal is given effect.
Interest will be paid by the ASSOCIATION at not less than the passbook annual
rate on payments for Conversion Stock received in cash or by check or money
order. Such interest will be paid from the date payment is received by the
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ASSOCIATION until consummation or termination of the Conversion. If for any
reason the Conversion is not consummated, all payments made by subscribers in
the Subscription, Community and Syndicated Community Offerings will be refunded
to them with interest. In case of amounts authorized for withdrawal from Savings
Accounts, refunds will be made by cancelling the authorization for withdrawal.
The ASSOCIATION is prohibited by regulation from knowingly making any loans or
granting any lines of credit for the purchase of stock in the Conversion, and
therefore, will not do so.
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER
FORMS
As soon as practicable after the Prospectus prepared by the Holding
Company and ASSOCIATION has been declared effective by the OTS, the Department
to the extent required, and the SEC if the holding company form of organization
is utilized, Order Forms will be distributed to all Eligible Account Holders,
the Employee Plans, the Supplemental Eligible Account Holders and Other Members
at their last known addresses appearing on the records of the ASSOCIATION for
the purpose of subscribing to shares of Conversion Stock in the Subscription
Offering and will be made available for use by those Persons entitled to
purchase in the Community Offering. Notwithstanding the foregoing, the
ASSOCIATION may elect to send Order Forms only to those Persons who request them
after such notice as is approved by the OTS and the Department to the extent
required and is adequate to apprize all Eligible Account Holders, the Employee
Plans, Supplemental Eligible Account Holders and Other Members of the pendency
of the Subscription Offering has been given. Such notice may be included with
the proxy statement for the Special Meeting of Members and may also be included
in a notice of the
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pendency of the Conversion and the Special Meeting of Members sent to all
Eligible Account Holders and Supplemental Eligible Account Holders in accordance
with regulations of the OTS.
Each Order Form will be preceded or accompanied by the Prospectus (if a
holding company form of organization is utilized) or the Offering Circular (if
the holding company form of organization is not utilized) describing the Holding
Company, if utilized, the ASSOCIATION, the Conversion Stock and the Subscription
and Community Offerings. Each Order Form will contain, among other things, the
following:
A. A specified date by which all Order Forms must be received by the
ASSOCIATION, which date shall be not less than twenty (20), nor more than
forty-five (45) days, following the date on which the Order Forms are mailed by
the ASSOCIATION, and which date will constitute the termination of the
Subscription Offering;
B. The Subscription Price per share for shares of Conversion Stock to be
sold in the Subscription and Community Offerings;
C. A description of the minimum and maximum number of shares of Conversion
Stock which may be subscribed for pursuant to the exercise of subscription
rights or otherwise purchased in the Community Offering;
D. Instructions as to how the recipient of the Order Form is to indicate
thereon the number of shares of Conversion Stock for which such person elects to
subscribe and the available alternative methods of payment therefor;
E. An acknowledgment that the recipient of the Order Form has received a
final copy of the Prospectus or Offering Circular, as the case may be, prior to
execution of the Order Form;
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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 Conversion Stock for which the recipient elects
to subscribe in the Subscription Offering (or by authorizing on the Order Form
that the ASSOCIATION withdraw said amount from the subscriber's Savings Account
at the ASSOCIATION) to the ASSOCIATION; and
G. A statement to the effect that the executed Order Form, once received
by the ASSOCIATION, may not be modified or amended by the subscriber without the
consent of the ASSOCIATION.
Notwithstanding the above, the ASSOCIATION and the Holding Company will
not accept orders received on photocopied or facsimilied order forms.
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORMS: INSUFFICIENT
PAYMENT
In the event Order Forms (a) are not delivered and are returned to the
ASSOCIATION by the United States Postal Service or the ASSOCIATION is unable to
locate the addressee, (b) are not received back by the ASSOCIATION or are
received by the ASSOCIATION after the expiration date specified thereon, (c) are
defectively filled out or executed, (d) are not accompanied by the full required
payment, except in the case of institutional investors in the Community
Offering, by delivering irrevocable orders together with a legally binding
commitment to pay in cash, check, money order or wire transfer the full amount
of the purchase price prior to
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48 hours before the completion of the Conversion for the shares of Conversion
Stock subscribed for (including cases in which savings accounts from which
withdrawals are authorized are insufficient to cover the amount of the required
payment), or (e) are not mailed pursuant to a "no mail" order placed in effect
by the account holder, the subscription rights of the person to whom such rights
have been granted will lapse as though such person failed to return the
contemplated Order Form within the time period specified thereon; provided,
however, that the ASSOCIATION may, but will not be required to, waive any
immaterial irregularity on any Order Form or require the submission of corrected
Order Forms or the remittance of full payment for subscribed shares by such date
as the ASSOCIATION may specify. The interpretation of the ASSOCIATION of terms
and conditions of the Plan and of the Order Forms will be final, subject to the
authority of the OTS.
18. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
A. All shares of Conversion Stock purchased by Directors or Officers of
the ASSOCIATION or the Holding Company in the Conversion shall be subject to the
restriction that, except as provided in Section 18B, below, or as may be
approved by the OTS, no interest in such shares may be sold or otherwise
disposed of for value for a period of one (l) year following the date of
purchase.
B. The restriction on disposition of shares of Conversion Stock set forth
in Section 18A above shall not apply to the following:
(i) Any exchange of such shares in connection with a merger or
acquisition involving the ASSOCIATION or the Holding Company, as the case may
be, which has been approved by the OTS and the Department; and
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(ii) Any disposition of such shares following the death of the person
to whom such shares were initially sold under the terms of the Plan.
C. With respect to all shares of Conversion Stock subject to restrictions
on resale or subsequent disposition, each of the following provisions shall
apply:
(i) Each certificate representing shares restricted within the meaning
of Section 18A, above, shall bear a legend prominently stamped on its face
giving notice of the restriction;
(ii) Instructions shall be issued to the stock transfer agent for the
ASSOCIATION or the Holding Company, as the case may be, not to recognize or
effect any transfer of any certificate or record of ownership of any such shares
in violation of the restriction on transfer; and
(iii) Any shares of capital stock of the ASSOCIATION or the Holding
Company, as the case may be, issued with respect to a stock dividend, stock
split, or otherwise with respect to ownership of outstanding shares of
Conversion Stock subject to the restriction on transfer hereunder shall be
subject to the same restriction as is applicable to such Conversion Stock.
19. VOTING RIGHTS OF STOCKHOLDERS
Upon conversion, the holders of the capital stock of the ASSOCIATION shall
have the exclusive voting rights with respect to the ASSOCIATION as specified in
its charter. The holders of the common stock of the Holding Company (if a
holding company form of organization is utilized) shall have the exclusive
voting rights with respect to the Holding Company.
20. ESTABLISHMENT OF LIQUIDATION ACCOUNT
The ASSOCIATION shall establish at the time of Conversion a liquidation
account in an amount equal to its net worth as of the latest practicable date
prior to Conversion ("Liquidation
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Account"). The Liquidation Account will be maintained by the ASSOCIATION for the
benefit of the Eligible Account Holders and Supplemental Eligible Account
Holders who continue to maintain their Savings Accounts at the ASSOCIATION. Each
Eligible Account Holder and Supplemental Eligible Account Holder shall, with
respect to his Savings Account, hold a related inchoate interest in a portion of
the Liquidation Account balance, in relation to his Savings Account balance at
the Eligibility Record Date and/or Supplemental Eligibility Record Date or to
such balance as it may be subsequently reduced, as hereinafter provided.
In the unlikely event of a complete liquidation of the ASSOCIATION (and
only in such event), following all liquidation payments to creditors (including
those to Account Holders to the extent of their Savings Accounts) each Eligible
Account Holder and Supplemental Eligible Account Holder shall be entitled to
receive a liquidating distribution from the Liquidation Account, in the amount
of the then adjusted subaccount balance for his Savings Account then held,
before any liquidation distribution may be made to any holders of the
ASSOCIATION's capital stock. No merger, consolidation, bulk purchase of assets
with assumption of Savings Accounts and other liabilities, or similar
transactions with an FDIC-insured institution, in which the ASSOCIATION is not
the surviving institution, shall be deemed to be a complete liquidation for this
purpose. In such transactions, the Liquidation Account shall be assumed by the
surviving institution.
The initial subaccount balance for a Savings Account held by an Eligible
Account Holder and Supplemental Eligible Account Holder shall be determined by
multiplying the opening balance in the Liquidation Account by a fraction, the
numerator of which is the amount of such Eligible Account Holder's and/or
Supplemental Eligible Account Holder's Qualifying Deposit and the
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denominator of which is the total amount of all Qualifying Deposits of all
Eligible Account Holders and Supplemental Eligible Account Holders in the
ASSOCIATION. Such initial subaccount balance shall not be increased, but shall
be subject to downward adjustment as described below. For Savings Accounts in
existence at both dates, separate subaccounts shall be determined on the basis
of the Qualifying Deposits in such Savings Account on such record dates. Such
initial subaccount balances shall not be increased but shall be subject to
downward adjustment as described below.
If, at the close of business on any annual closing date, commencing on or
after the effective date of Conversion, the deposit balance in the Savings
Account of an Eligible Account Holder or Supplemental Eligible Account Holder is
less than the lesser of (i) the balance in the Savings Account at the close of
business on any other annual closing date subsequent to the Eligibility Record
Date or Supplemental Eligibility Record Date, or (ii) the amount of the
Qualifying Deposit in such Savings Account, the subaccount balance for such
Savings Account shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of
such downward adjustment, the subaccount balance shall not be subsequently
increased, notwithstanding any subsequent increase in the deposit balance of the
related Savings Account. If any such Savings Account is closed, the related
subaccount shall be reduced to zero.
The creation and maintenance of the Liquidation Account shall not operate
to restrict the use or application of any of the net worth accounts of the
ASSOCIATION.
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21. TRANSFER OF SAVINGS ACCOUNTS AND CONTINUITY OF THE
ASSOCIATION
Upon Conversion, each Savings Account Holder having a Savings Account at
the ASSOCIATION prior to the Conversion will continue to have a Savings Account,
without payment therefor, in the same amount and subject to the same terms and
conditions (except for voting and liquidation rights) as in effect prior to the
Conversion.
After the Conversion, the ASSOCIATION will succeed to all the rights,
interests, duties and obligations of the ASSOCIATION before the Conversion,
including but not limited to all rights and interests of the ASSOCIATION in and
to its assets and properties, whether real, personal or mixed. The ASSOCIATION
will continue to be a member of the Federal Home Loan Bank System and all its
insured savings deposits will continue to be insured by the FDIC to the extent
provided by applicable law.
22. RESTRICTIONS ON ACQUISITION OF THE ASSOCIATION AND HOLDING
COMPANY
A. In accordance with OTS regulations, for a period of three years from
the date of consummation of the Conversion, no Person, other than the Holding
Company (if a holding company form of organization is utilized), shall directly
or indirectly offer to acquire or acquire the beneficial ownership of more than
10% of any class of an equity security of the ASSOCIATION without the prior
written consent of the OTS.
B. The Certificate of Incorporation of the Holding Company, if a holding
company form of organization is utilized, will contain a provision stipulating
that in no event shall any record owner of any outstanding shares of the Holding
Company's common stock which are
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beneficially owned, directly or indirectly, by a person who, as of any record
date for the determination of stockholders entitled to vote on any matter,
beneficially owns in excess of 10% of such outstanding shares, be entitled, or
permitted to any vote in respect to any shares to the extent the vote of such
shares would constitute the vote of shares of the beneficial owner in excess of
10%. In addition, the Certificate of Incorporation and Bylaws of the Holding
Company provide for staggered terms of the directors, noncumulative voting for
directors, limitations on the calling of special meetings, a fair price
provision for certain business combinations and certain notice requirements.
C. In addition, other regulatory approvals under federal law (see part 574
of the Rules and Regulations of the OTS) and state law may be required to
acquire shares of the ASSOCIATION or the Holding Company. For example, Section
212(b) of the Pennsylvania Savings Association Code of 1967 requires the
approval of the Department before any person acquires, or proposes to acquire,
shares of the ASSOCIATION or the Holding Company if the aggregate number of
shares held after such acquisition, whether or not any prior acquisition had
been approved by the Department, would total more than: (1) 10% of any class of
the outstanding shares of the ASSOCIATION; or (2) 5% of any such class, if the
ASSOCIATION or Holding Company had net operating loss carry forwards (as defined
in the Internal Revenue Code of 1986) in excess of 20% of its total
stockholders' equity, as reported in its most recent publicly available annual
financial statements.
D. For the purposes of this Section 22:
(i) The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint stock company, a
trust, an unincorporated
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organization or similar company, a syndicate or any other group formed for the
purpose of acquiring, holding or disposing of securities of an insured
institution;
(ii) The term "offer" includes every offer to buy or acquire,
solicitation of an offer to sell, tender offer for, or request or invitation for
tenders of, a security or interest in a security for value;
(iii) The term "acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise; and
(iv) The term "security" includes non-transferable subscription rights
issued pursuant to a plan of conversion as well as a "security" as defined in 15
U.S.C. Section78c(a)(10).
23. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
The ASSOCIATION shall not declare or pay a cash dividend on, or repurchase
any of, its capital stock if the effect thereof would cause its regulatory
capital to be reduced below (i) the amount required for the Liquidation Account
or (ii) the federal regulatory capital requirement in Section 567.2 of the Rules
and Regulations of the OTS or applicable rules or regulations of the Department.
Otherwise, the ASSOCIATION may declare dividends, make capital distributions or
repurchase its capital stock in accordance with applicable law and regulations.
24. AMENDMENT OF PLAN
If deemed necessary or desirable, the Plan may be substantively amended at
any time prior to the solicitation of proxies from Members to vote on the Plan
by a two-thirds vote of the ASSOCIATION's Board of Directors, and at any time
thereafter by such vote of such Board of Directors with the concurrence of the
OTS and, if applicable, the Department. Any amendment to the Plan made after
approval by the Members with the approval of the OTS and, if applicable,
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the Department, shall not necessitate further approval by the Members unless
otherwise required by the OTS and, if applicable, the Department. The Plan may
be terminated by majority vote of the ASSOCIATION's Board of Directors at any
time prior to the Special Meeting of Members to vote on the Plan, and at any
time thereafter with the concurrence of the OTS and, if applicable, the
Department.
By adoption of the Plan, the Members of the ASSOCIATION authorize the
Board of Directors to amend or terminate the Plan under the circumstances set
forth in this Section.
25. CHARTER AND BYLAWS
By voting to adopt the Plan, members of the ASSOCIATION will be voting to
adopt a Pennsylvania Stock Savings Articles of Incorporation and Bylaws for the
ASSOCIATION as a stock association attached as Exhibits I and II to this Plan.
The effective date of the ASSOCIATION's stock Articles of Incorporation and
Bylaws shall be the date of issuance and sale of the Conversion Stock as
specified by the OTS and the Department.
26. CONSUMMATION OF CONVERSION
The Conversion of the ASSOCIATION shall be deemed to take place and be
effective upon the filing of the Articles of Conversion in the Pennsylvania
Department of State and sale of all Conversion Stock.
27. REGISTRATION AND MARKETING
Within the time period required by applicable laws and regulations, the
ASSOCIATION or the Holding Company, as the case may be, will register the
securities issued in connection with the Conversion pursuant to the Securities
Exchange Act of 1934 and will not deregister such securities for a period of at
least three years thereafter, except that the maintenance of registration
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for three years requirement may be fulfilled by any successor to the ASSOCIATION
or any holding company of the ASSOCIATION. In addition, the ASSOCIATION or
Holding Company, as the case may be, will use its best efforts to encourage and
assist a market-maker to establish and maintain a market for the Conversion
Stock and to list those securities on a national or regional securities exchange
or the NASDAQ system.
28. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
The ASSOCIATION will make reasonable efforts to comply with the securities
laws of all States in the United States in which Persons entitled to subscribe
for shares of Conversion Stock pursuant to the Plan reside. However, no such
Person will be issued subscription rights or be permitted to purchase shares of
Conversion Stock in the Subscription Offering if such Person resides in a
foreign country or in a state of the United States with respect to which both of
the following apply: A. a small number of Persons otherwise eligible to
subscribe for shares under the Plan reside in such state and; B. the issuance of
subscription rights or the offer or sale of shares of Conversion Stock to such
Persons would require the ASSOCIATION or the Holding Company, as the case may
be, under the securities laws of such state, to register as a broker, dealer,
salesman or agent or to register or otherwise qualify its securities for sale in
such state and such registration or qualification would be impracticable for
reasons of cost or otherwise.
29. EXPENSES OF CONVERSION
The ASSOCIATION shall use its best efforts to assure that expenses
incurred by it in connection with the Conversion shall be reasonable.
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30. CONDITIONS TO CONVERSION
The Conversion of the ASSOCIATION pursuant to this Plan is expressly
conditioned upon the following:
(a) Prior receipt by the ASSOCIATION of rulings of the United States
Internal Revenue Service and any applicable state taxing authority, or opinions
of counsel or other appropriate tax advisor, substantially to the effect that
the Conversion will not result in any adverse federal or state tax consequences
to Eligible Account Holders or to the ASSOCIATION and the Holding Company before
or after the Conversion;
(b) The sale of all of the Conversion Stock offered in the Conversion; and
(c) The completion of the Conversion within the time period specified in
Section 3 of this Plan.
31. INTERPRETATION
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the
ASSOCIATION shall be final, subject to the authority of the OTS and the
Department.
32. RIGHTS OF DISSENTING MEMBERS
A Member who dissents from this Plan shall have the right to have his
savings paid to him in full together with any and all additions thereto which
have been credited to his account by way of earnings prior to the effective date
of the Conversion within thirty days of the receipt of notice by the Association
of his or her dissent.
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EXHIBIT I
STOCK ARTICLES OF INCORPORATION
FOR
SECURITY SAVINGS ASSOCIATION OF HAZLETON
Section 1. Corporate Title.
The full corporate title of the savings association is Security Savings
Association of Hazleton (the "Association").
Section 2. Office.
The home office shall be located in the City of Hazleton, in the County of
Luzerne, Commonwealth of Pennsylvania.
Section 3. Duration.
The duration of the Association is perpetual.
Section 4. Purpose and Powers.
The purpose of the Association is to pursue any or all of the lawful
objectives of a Pennsylvania savings association chartered under the
Pennsylvania Savings Association Code of 1967 and to exercise all the express,
implied, and incidental powers conferred thereby and by all acts amendatory
thereof and supplemental thereto, subject to the Constitution and laws of the
United States as they are now in effect, or as they may hereafter be amended,
and subject to all lawful and applicable rules, regulations, and orders of the
Pennsylvania Department of Banking (the "Department").
Section 5. Capital Stock.
The total number of shares of all classes of the capital stock which the
Association has the authority to issue is six million (6,000,000), of which
five million (5,000,000) shall be common stock, par value $1.00 per share and of
which one million (1,000,000) shall be preferred stock, par value $1.00 per
share. The shares may be issued from time to time as authorized by the board of
directors without further approval of shareholders except to the extent that
such approval is required by governing law, rule, or regulation. The
consideration for the issuance of the shares shall be paid in full before their
issuance and shall not be less than the par value. Neither promissory notes nor
future services shall constitute payment or part payment for the issuance of
shares of the Association. The consideration for the shares shall be cash,
tangible or intangible property (to the extent direct investment in such
property would be permitted), labor or services
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actually performed for the Association, or any combination of the foregoing. In
the absence of actual fraud in the transaction, the value of such property,
labor, or services, as determined by the board of directors of the Association,
shall be conclusive. In the case of a stock dividend, that part of the retained
earnings of the Association that is transferred to common stock or paid-in
capital accounts upon the issuance of shares as a stock dividend shall be deemed
to be the consideration for their issuance.
Nothing contained in this section 5 shall entitle the holders of any class
or series of capital stock to vote as a separate class or series or to more than
one vote per share: Provided, That this restriction on voting separately by
class or series shall not apply:
(i) To any provision which would authorize the holders of preferred
stock, voting as a class or series, to elect some members of the
board of directors, less than a majority thereof, in the event of
default in the payment of dividends on any class or series of
preferred stock;
(ii) To any provision that would require the holders of preferred stock,
voting as a class or series, to approve the merger or consolidation
of the Association with another corporation or the sale, lease, or
conveyance (other than by mortgage or pledge) of properties or
business in exchange for securities of a corporation other than the
Association if the preferred stock is exchanged for securities of
such other corporation: Provided, That no provision may require such
approval for transactions undertaken with the assistance or pursuant
to the direction of the Department or the Federal Deposit Insurance
Corporation;
(iii) To any amendment which would adversely change the specific terms of
any class or series of capital stock as set forth in this section 5
(or in any supplementary sections hereto), including any amendment
which would create or enlarge any class or series ranking prior
thereto in rights and preferences. An amendment which increases the
number of authorized shares of any class or series of capital stock,
or substitutes the surviving Association in a merger or
consolidation for the Association, shall not be considered to be
such an adverse change.
A description of the different classes and series (if any) of the
Association's capital stock and a statement of the designations, and the
relative rights, preferences, and limitations of the shares of each class of and
series (if any) of capital stock are as follows:
A. Common Stock. Except as provided in this section 5 the holders of
the common stock shall exclusively possess all voting power. Each
holder of shares of common stock shall be entitled to one vote for
each share held by each holder.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of
stock having preference over the common stock as to the payment of
dividends, the full amount of dividends and of
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sinking fund, or retirement fund, or other retirement payments, if
any, to which such holders are respectively entitled in preference
to the common stock, then dividends may be paid on the common stock
and on any class or series of stock entitled to participate
therewith as to dividends out of any assets legally available for
the payment of dividends.
In the event of any liquidation, dissolution, or winding up of the
Association, the holders of the common stock (and the holders of any
class or series of stock entitled to participate with the common
stock in the distribution of assets) shall be entitled to receive,
in cash or in kind, the assets of the Association available for
distribution remaining after: (i) payment or provision for payment
of the Association's debts and liabilities; (ii) distributions or
provision for distributions in settlement of its liquidation
account; and (iii) distributions or provision for distributions to
holders of any class or series of stock having preference over the
common stock in the liquidation, dissolution, or winding up of the
Association. Each share of common stock shall have the same relative
rights as and be identical in all respects with all the other shares
of common stock.
B. Preferred Stock. The Association may provide for one or more classes
of preferred stock, which shall be separately identified. The shares
of any class may be divided into and issued in series, with each
series separately designated and the terms set forth so as to
distinguish the shares thereof from the shares of all other series
and classes. All shares of the same class shall be identical except
as to the following relative rights and preferences, as to which
there may be variations between different series:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative
and, if so, from which date(s), the payment date(s) for
dividends, and the participating or other special rights, if
any, with respect to dividends;
(c) The voting powers, full or limited, if any, of the shares of
such series;
(d) Whether the shares of such series shall be redeemable and, if
so, the price(s) at which, and the terms and conditions on
which, such shares may be redeemed;
(e) The amount(s) payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution, or
winding up of the Association;
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(f) Whether the shares of such series shall be entitled to the
benefit of a sinking or retirement fund to be applied to the
purchase or redemption of such shares, and if so entitled, the
amount of such fund and the manner of its application,
including the price(s) at which such shares may be redeemed or
purchased through the application of such fund;
(g) Whether the shares of such series shall be convertible into,
or exchangeable for, shares of any other class or classes of
stock of the Association and, if so, the conversion price(s)
or the rate(s) of exchange, and the adjustments thereof, if
any, at which such conversion or exchange may be made, and any
other terms and conditions of such conversion or exchange;
(h) The price or other consideration for which the shares of such
series shall be issued; and
(i) Whether the shares of such series which are redeemed or
converted shall have the status of authorized but unissued
shares of serial preferred stock and whether such shares may
be reissued as shares of the same or any other series of
serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative rights as and be identical in all respects with all the other shares of
the same series.
The board of directors shall have authority to divide any authorized class
of preferred stock into series, and, within the limitations set forth in this
section and the remainder of these Articles of Incorporation, fix and determine
the relative rights and preferences of the shares of any series so established.
Prior to the issuance of any preferred shares of a series established by
resolution adopted by the board of directors, the Association shall file a
statement with respect to the shares executed by the Association with the
Department of State. Such statement shall include, among other things, the
resolution. Upon the filing of the statement with the Department of State or
upon an effective date otherwise specified in the statement, whichever is later,
the resolution shall become effective and shall operate as an amendment of the
Articles of Incorporation.
Section 6. Preemptive Rights.
Holders of the capital stock of the Association shall not be entitled to
preemptive rights with respect to any shares of the Association which may be
issued.
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Section 7. Liquidation Account.
Pursuant to the requirements of the regulations of the Office of Thrift
Supervision (the "Office") (12 C.F.R. 563b.3), the Association shall establish
and maintain a liquidation account for the benefit of its savings account
holders as of March 31, 1997 and [_________________] ("eligible savers"). In the
event of a complete liquidation of the Association, it shall comply with such
regulations with respect to the amount and the priorities on liquidation of each
of the Association's eligible saver's inchoate interest in the liquidation
account, to the extent it is still in existence: provided, that an eligible
saver's inchoate interest in the liquidation account shall not entitle such
eligible saver to any voting rights at meetings of the Association's
shareholders.
Section 8. Directors.
The Association shall be under the direction of a Board of Directors. The
authorized number of directors shall be not be less than five (5). The number of
directors shall consist of that number specified by resolution(s) adopted by the
Board of Directors from time to time and shall be divided into three classes as
nearly equal in number as possible.
Section 9. Cumulative Voting Limitation.
Shareholders shall not be permitted to cumulate their votes for the
election of directors.
Section 10. Call for Special Meetings.
Special meetings of shareholders relating to changes in control of the
Association or amendments to its Articles of Incorporation shall be called only
at the direction of the board of directors or as otherwise provided under
Pennsylvania law.
Section 11. Indemnification
(a) Scope of Indemnification. Except to the extent prohibited by
Pennsylvania Law, the Association shall indemnify each person made, or
threatened to be made, a party to any action or proceeding, whether criminal or
civil, by reason of the fact that such person or such person's testator or
intestate is or was a director or officer of the Association, or is or was
serving, in any capacity, at the request of the Association, any other
corporation, or any partnership, joint venture, trust, employee benefit plan or
other enterprise, against judgments, fines, penalties, amounts paid in
settlement and reasonable expenses, including attorneys' fees and expenses,
reasonably incurred in enforcing such person's right to indemnification,
incurred in connection with such action or proceeding, or any appeal therein,
provided that no such indemnification shall be made if a judgment or other final
adjudication adverse to such persons establishes that such person's acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that such person
personally gained in fact a financial profit or other advantage to which such
person was not legally entitled, and provided that no such indemnification
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shall be required with respect to any settlement or other nonadjudicated
disposition of any threatened or pending action or proceeding unless the
Association has given its prior consent to such settlement or other disposition.
(b) Reimbursement of Expenses. The Association shall advance or promptly
reimburse upon request any person entitled to indemnification hereunder for all
reasonable expenses, including attorneys' fees and expenses, reasonably incurred
in defending any action or proceeding in advance of the final disposition
thereof upon receipt of an undertaking by or on behalf of such person to repay
such amount if such person is ultimately found not to be entitled to
indemnification or, where indemnification is granted, to the extent the expenses
so advanced or reimbursed exceed the amount to which such person is entitled;
provided, however, that such person shall cooperate in good faith with any
request by the Association that common counsel be used by the parties to any
action or proceeding who are similarly situated unless to do so would be
inappropriate due to actual or potential differing interest between or among
parties.
(c) Additional Rights. Nothing herein shall limit or affect any right of
any director, officer, or other corporate personnel otherwise than hereunder to
indemnification or expenses, including attorneys' fees and expenses, under any
statute, rule, regulation, certificate of incorporation, bylaws, insurance
policy, contract, or otherwise; without affecting or limiting the rights of any
director, officer or other corporate personnel pursuant to this Section 11, the
Association is authorized to enter into agreements with any of its directors,
officers or other corporate personnel extending rights to indemnification and
advancement of expenses to the fullest extent permitted by applicable law.
(d) Notice of Amendments or Elimination. Anything in this Articles of
Incorporation to the contrary notwithstanding, no elimination or amendment of
this Section 11 adversely affecting the right of any person to indemnification
or advancement of expenses hereunder shall be effective until the 60th day
following notice to such person of such action, and no elimination of or
amendment to this Section 11 shall deprive any such person's rights hereunder
arising out of alleged or actual occurrences, act or failures to act prior to
such 60th day. Any amendments or eliminations made pursuant to this Section 11
are only effective with regard to acts occurring after such date.
(e) Amendment or Elimination. The Association shall not, except by
elimination or amendment of this Section 11 in a manner consistent with the
preceding subsection (d), take any corporate action or enter into any agreement
which prohibits, or otherwise limits the rights of any person to,
indemnification in accordance with the provisions of this Section 11. The
indemnification of any person provided by this Section 11 shall continue after
such person has ceased to be a director or officer of the Association and shall
inure to the benefit of such person's heirs, executors, administrators and legal
representatives.
(f) Severability of Provisions. In case any provision in this Section 11
shall be determined at any time to be unenforceable in any respect, the other
provisions of this Section 11 shall not in any way be affected or impaired
thereby, and the affected provision shall be given the fullest possible
enforcement in the circumstances, it being the intention of the Association to
afford
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indemnification and advancement of expenses to its directors or officers, acting
in such capacities or in the other capacities mentioned herein, to the fullest
extent permitted by law.
(g) Limitation. Notwithstanding the foregoing, no indenmification shall be
paid to the extent such indemnification is impermissible as a matter of state or
federal law.
SECURITY SAVINGS ASSOCIATION OF
HAZLETON
Attest: By:
---------------------------- ---------------------------
Richard C. Laubach
----------------- President and Chief Executive
Secretary Officer
PENNSYLVANIA DEPARTMENT OF
BANKING
Attest: By:
---------------------------- ---------------------------
Secretary to the Department Director
Declared effective on
the _____ day of __________, 199_
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EXHIBIT II
STOCK BYLAWS
FOR
SECURITY SAVINGS ASSOCIATION OF HAZLETON
ARTICLE I - HOME OFFICE
The home office of Security Savings Association of Hazleton (the
"Association") shall be at 31 W. Broad Street, Hazleton in the County of
Luzerne, in the Commonwealth of Pennsylvania.
ARTICLE II - SHAREHOLDERS
Section 1. Place of Meetings. All annual and special meetings of
shareholders shall be held at the home office of the Association or at such
other convenient place as the board of directors may determine.
Section 2. Annual Meeting. A meeting of the shareholders of the
Association for the election of directors and for the transaction of any other
business of the Association shall be held annually on the _________________ of
each year at 4:00 p.m., if not a legal holiday, and if a legal holiday, then on
the next day following which is not a legal holiday, or at such other date and
time as the board of directors may determine within 150 days after the end of
the Association's fiscal year. If required by Pennsylvania law, the time and
place of the annual meeting of shareholders shall be stated in a prominent place
on the cover or inside cover of each passbook or other evidence of membership.
Section 3. Special Meetings. Special meetings of the shareholders for any
purpose or purposes may be called at any time by the chairman of the board, the
president, or a majority of the board of directors, and shall be called by the
chairman of the board, the president, or the secretary upon the written request
of the holders of not less than one-fifth of all of the outstanding capital
stock of the Association entitled to vote at the meeting. Such written request
shall state the purpose or purposes of the meeting and shall be delivered to the
home office of the Association addressed to the chairman of the board, the
president, or the secretary. Upon the written request of a person or persons who
are entitled to call a special meeting, the secretary shall fix a date of such
meeting to be held not more than 60 days after the receipt of the request and
shall give due notice thereof. In the event of the secretary's failure within 30
days after the receipt of the request to fix the date or give the notice, the
person or persons making the request shall have the power to call upon the
Pennsylvania Department of Banking (the "Department") to issue an order to
compel the calling and holding of such meeting.
Section 4. Conduct of Meetings. Annual and special meetings shall be
conducted in accordance with any requirements prescribed by regulations of the
Department or these bylaws or adopted by the board of directors. The board of
directors shall designate, when present, either the chairman of the board or
president to preside at such meetings.
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Section 5. Notice of Meetings. Written notice stating the place, day, and
hour of the meeting and the purpose(s) for which the meeting is called shall be
delivered not fewer than 10 nor more than 50 days before the date of the
meeting, either personally or by mail, by or at the direction of the chairman of
the board, the president, or the secretary, or the directors calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the mail,
addressed to the shareholder at the address as it appears on the stock transfer
books or records of the Association as of the record date prescribed in section
6 of this article II with postage prepaid. When any shareholders' meeting,
either annual or special, is adjourned for 30 days or more, notice of the
adjourned meeting shall be given as in the case of an original meeting. It shall
not be necessary to give any notice of the time and place of any meeting
adjourned for less than 30 days or of the business to be transacted at the
meeting, other than an announcement at the meeting at which such adjournment is
taken.
Section 6. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment, or shareholders entitled to receive payment of any dividend, or
in order to make a determination of shareholders for any other proper purpose,
the board of directors shall fix in advance a date as the record date for any
such determination of shareholders. Such date in any case shall be not more than
60 days and, in case of a meeting of shareholders, not fewer than 10 days prior
to the date on which the particular action, requiring such determination of
shareholders, is to be taken. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment.
Section 7. Voting Lists. At least 10 days before each meeting of the
shareholders, the officer or agent having charge of the stock transfer books for
shares of the Association shall make a complete list of the shareholders of
record entitled to vote at such meeting, or any adjournment thereof, arranged in
alphabetical order, with the address and the number of shares held by each. This
list of shareholders shall be kept on file at the home office of the Association
and shall be subject to inspection by any shareholder of record or the
shareholder's agent at any time during usual business hours for a period of 10
days prior to such meeting. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to inspection by any
shareholder of record or any shareholder's agent during the entire time of the
meeting. The original stock transfer book shall constitute prima facie evidence
of the shareholders entitled to examine such list or transfer books or to vote
at any meeting of shareholders.
Section 8. Quorum. A majority of the outstanding shares of the Association
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
is represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to constitute less than a quorum. If a quorum is present, the
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affirmative vote of the majority of the shares represented at the meeting and
entitled to vote on the subject matter shall be the act of the shareholders,
unless the vote of a greater number of shareholders voting together or voting by
classes is required by law or the charter. Directors, however, are elected by a
plurality of the votes cast at an election of directors.
Section 9. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his or her duly
authorized attorney in fact and filed with the secretary of the Association. A
proxy shall be filed with the secretary of the Association prior to the meeting
to the extent required by Pennsylvania law. Proxies solicited on behalf of the
board of directors shall be voted as directed by the shareholder or, in the
absence of such direction, as determined by a person or persons acting as proxy
pursuant to the direction of the board of directors. A proxy, unless coupled
with an interest, shall be revocable at will notwithstanding any agreement to
the contrary, but the revocation of a proxy shall not be effective until written
notice thereof has been given to the Association. A proxy shall not be revoked
by the death or incompetency of the maker unless, before the vote is counted or
the authority exercised, written notice of such death or of an adjudication of
such incompetence is received by the secretary. No proxy shall be valid more
than eleven months from the date of its execution except for a proxy coupled
with an interest.
Section 10. Voting of Shares in the Name of Two or More Persons. When
ownership stands in the name of two or more persons, in the absence of written
directions to the Association to the contrary, at any meeting of the
shareholders of the Association any one or more of such shareholders may cast,
in person or by proxy, all votes to which such ownership is entitled. In the
event an attempt is made to cast conflicting votes, in person or by proxy, by
the several persons in whose names shares of stock stand, the vote or votes to
which those persons are entitled shall be cast as directed by a majority of
those holding such and present in person or by proxy at such meeting, but no
votes shall be cast for such stock if a majority cannot agree.
Section 11. Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by any officer, agent, or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian, or conservator may be voted by him or her,
either in person or by proxy, without a transfer of such shares into his or her
name. Shares outstanding in the name of a trustee may be voted by him or her,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him or her without a transfer of such shares into his or her name.
Shares held in trust in an IRA or Keogh Account, however, may by voted by the
Association if no other instructions are received. Shares outstanding in the
name of a receiver may be voted by such receiver, and shares held by or under
control of a receiver may be voted by such receiver without the transfer into
his or her name if authority to do so is consigned in an appropriate order of
the court or other public authority by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
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Neither treasury shares of its own stock held by the Association nor
shares held by another Corporation, if a majority of the shares entitled to vote
for the election of directors of such other corporation are held by the
Association, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
Section 12. Inspectors of Election. In advance of any meeting of
shareholders, the board of directors may appoint any person other than nominees
for office as inspectors of election to act at such meeting or any adjournment.
The number of inspectors shall be either one or three. Any such appointment
shall not be altered at the meeting. If inspectors of election are not so
appointed the chairman of the board or the president may, or on the request of
not fewer than 10% of the votes represented at the meeting shall, make such
appointment at the meeting. If appointed at the meeting, the majority of the
votes present shall determine whether one or three inspectors are to be
appointed. In case any person appointed as inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment by the board of
directors in advance of the meeting or at the meeting by the chairman of the
board or the president.
Unless otherwise prescribed by regulations of the Department, the duties
of such inspectors shall include: determining the number of shares and the
voting power of each share, the shares represented at the meeting, the existence
of a quorum, and the authenticity, validity and effect of proxies; receiving
votes, ballots, or consents; hearing and determining all challenges and
questions in any way arising in connection with the rights to vote; counting and
tabulating all votes or consents; determining the result; and such acts as may
be proper for conduct the election or vote with fairness to all shareholders.
Section 13. Nominating Committee. The board of directors shall act as a
nominating committee for selecting the management nominees for election as
directors. Except in the case of a nominee substituted as a result of the death
or other incapacity of a management nominee, the nominating committee shall
deliver written nominations to the secretary at least 10 days prior to the date
of the annual meeting. No nominations for directors except those made by the
nominating committee shall be voted upon at the annual meeting unless other
nominations by shareholders are made in writing and delivered to the secretary
of the Association at least 30 days prior to the date of the annual meeting.
Ballots bearing the names of all persons nominated by the nominating committee
and by shareholders shall be provided for use at the annual meeting. However, if
the nominating committee shall fail or refuse to act at least 10 days prior to
the annual meeting, nominations for directors may be made at the annual meeting
by any shareholder entitled to vote and shall be voted upon.
Section 14. New Business. Any new business to be taken up at the annual
meeting other than at the direction of the board of directors shall be stated in
writing and filed with the secretary of the Association at least 30 days before
the date of the annual meeting, and all business so stated, proposed, and filed
shall be considered at the annual meeting; but no other proposal other than at
the direction of the board of directors shall be acted upon at the annual
meeting. This provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, directors, and
committees.
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Section 15. Informal Action by Shareholders. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of shareholders, may be taken without a meeting if consent in
writing, setting forth the action so taken, shall be given by all of the
shareholders entitled to vote with respect to the subject matter.
Section 16. Adjournment. Any meeting may be adjourned for any period
except that a meeting at which directors are to be elected may be adjourned from
day to day until such directors have been elected.
ARTICLE III - BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Association
shall be under the direction of its board of directors. The board of directors
shall annually elect a chairman of the board and a president from among its
members and shall designate, when present, either the chairman of the board or
the president to preside at its meetings.
Section 2 . Number and Term. The board of directors shall consist of that
number of directors specified by resolution adopted by the board of directors
and shall be divided into three classes as nearly equal in number as possible.
The members of each class shall be elected for a term of three years and until
their successors are elected and qualified. One class shall be elected by ballot
annually.
Section 3. Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than this bylaw following the annual meeting
of shareholders. The board of directors shall meet regularly without notice at
least once per month to the extent required by the Department at a time and
place fixed by resolution of the board of directors. Directors may participate
in a meeting by means of a conference telephone or similar communications device
through which all persons participating can hear each other at the same time.
Participation by such means shall constitute presence in person for all
purposes.
Section 4. Qualification. Each director shall at all times be the
beneficial owner of not less than 100 shares of capital stock of the Association
unless the Association is a wholly owned subsidiary of a holding company. Each
director shall be a citizen of the United States.
Section 5. Special Meetings. Special meetings of the board of directors
may be called by or at the request of the chairman of the board, the president,
or one-third of the directors. The persons authorized to call special meetings
of the board of directors may fix any place, within the Association's normal
lending territory, as the place for holding any special meeting of the board of
directors called by such persons.
Members of the board of directors may participate in special meetings by
making use of conference telephone or similar communications equipment by which
all persons participating in the meeting can hear each other. Such participation
shall constitute presence in person for all purposes.
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Section 6. Notice. Written notice of any special meeting shall be given to
each director at least 24 hours prior thereto when delivered personally or by
telegram or at least five days prior thereto when delivered by mail at the
address at which the director is most likely to be reached. Such notice shall be
deemed to be delivered when deposited in the mail so addressed, with postage
prepaid if mailed, when delivered to the telegraph company if sent by telegram,
or when the Association receives notice of delivery if electronically
transmitted. Any director may waive notice of any meeting by a writing filed
with the secretary. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors need be
specified in the notice of waiver of notice of such meeting.
Section 7. Quorum. A majority of the number of directors fixed by section
2 of this article III shall constitute a quorum for the transaction of business
at any meeting of the board of directors; but if less than such majority is
present at a meeting, a majority of the directors present may adjourn the
meeting from time to time. Notice of any adjourned meeting shall be given in the
same manner as prescribed by section 5 of this article III.
Section 8. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by regulation of the Office
or by these bylaws.
Section 9. Action Without a Meeting. Any action required or permitted to
be taken by the board of directors at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the directors.
Section 10. Resignation. Any director may resign at any time by sending a
written notice of such resignation to the home office of the Association
addressed to the chairman of the board or the president. Unless otherwise
specified, such resignation shall take effect upon receipt by the chairman of
the board or the president. More than three consecutive absences from regular
meetings of the board of directors, unless excused by resolution of the board of
directors, shall automatically constitute a resignation, effective when such
resignation is accepted by the board of directors.
Section 11. Vacancies. Any vacancy occurring on the board of directors may
be filled by the affirmative vote of a majority of the remaining directors
although less than a quorum of the board of directors. A director elected to
fill a vacancy shall be elected to serve only until the next election of
directors by the shareholders. Any directorship to be filled by reason of an
increase in the number of directors may be filled by election by the board of
directors for a term of office continuing only until the next election of
directors by the shareholders.
Section 12. Compensation. Directors, as such, may receive a stated fee for
their services. By resolution of the board of directors, a reasonable fixed sum,
and reasonable expenses of attendance, if any, may be allowed for attendance at
each regular or special meeting of the board of directors.
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Members of either standing or special committees may be allowed such
compensation for attendance at committee meetings as the board of directors may
determine.
Section 13. Presumption of Assent. A director of the Association who is
present at a meeting of the board of directors at which action on any
association matter is taken shall be presumed to have assented to the action
taken unless his or her dissent or abstention shall be entered in the minutes of
the meeting or unless he or she shall file a written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the secretary of the
Association within five days after the date a copy of the minutes of the meeting
is received. Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 14. Removal of Directors. At a meeting of shareholders called
expressly for that purpose, any director may be removed only for cause by a vote
of the holders of a majority of the shares then entitled to vote at an election
of directors. Whenever the holders of the shares of any class are entitled to
elect one or more directors by the provisions of the charter or supplemental
sections thereto, the provisions of this section shall apply, in respect to the
removal of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class and not to the vote of the outstanding shares
as a whole.
Section 15. Age Limitation. No person of an age seventy-five (75) years of
age or older will be eligible for election, reelection, appointment, or
reappointment to the board of directors of the Association and no director shall
serve as such beyond the annual meeting of the Association immediately following
the attainment of seventy-five (75) years of age; provided that the age
limitations set forth in this section 15 of article III shall not apply to any
director of the Association who was a director of the Association as of December
31, 1988. Upon the attainment of seventy-five (75) years of age, such director
may be appointed as a director emeritus. The directors emeritus shall be
compensated for each meeting attended, at the same rate of compensation as the
directors, but may not vote at a meeting of the board of directors or advisory
committees or executive committee or be counted in determining a quorum. The
directors emeritus shall not have any responsibility or be subject to any
liability.
ARTICLE IV - EXECUTIVE AND OTHER COMMITTEES
Section 1. Appointment. The board of directors, by resolution adopted by a
majority of the full board, may designate the chief executive officer and two or
more of the other directors to constitute an executive committee. The
designation of any committee pursuant to this article IV and the delegation of
authority shall not operate to relieve the board of directors, or any director,
of any responsibility imposed by law or regulation.
Section 2. Authority. The executive committee, when the board of directors
is not in session, shall have and may exercise all of the authority of the board
of directors except to the extent, if any, that such authority shall be limited
by the resolution appointing the executive committee; and except
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also that the executive committee shall not have the authority of the board of
directors with reference to: the declaration of dividends; the amendment of the
articles of incorporation or bylaws of the Association, or recommending to the
shareholders a plan of merger, consolidation, or conversion; the sale, lease,
or other disposition of all or substantially all of the property and assets of
the Association otherwise than in the usual and regular course of its business;
a voluntary dissolution of the Association; a revocation of any of the
foregoing; or the approval of a transaction in which any member of the
executive committee, directly or indirectly, has any material beneficial
interest.
Section 3. Tenure. Subject to the provisions of section 8 of this article
IV, each member of the executive committee shall hold office until the next
regular annual meeting of the board of directors following his or her
designation and until a successor is designated as a member of the executive
committee.
Section 4. Meetings. Regular meetings of the executive committee may be
held without notice at such times and places as the executive committee may fix
from time to time by resolution. Special meetings of the executive committee may
be called by any member thereof upon not less than one day's notice stating the
place, date, and hour of the meeting, which notice may be written or oral. Any
member of the executive committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the executive committee need not state the business
proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the executive committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the executive committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
Section 6. Action Without a Meeting. Any action required or permitted to
be taken by the executive committee at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the members of the executive committee.
Section 7. Vacancies. Any vacancy in the executive committee may be filled
by a resolution adopted by a majority of the full board of directors.
Section 8. Resignations and Removal. Any member of the executive committee
may be removed at any time with or without cause by resolution adopted by a
majority of the full board of directors. Any member of the executive committee
may resign from the executive committee at any time by giving written notice to
the president or secretary of the Association. Unless otherwise specified, such
resignation shall take effect upon its receipt; the acceptance of such
resignation shall not be necessary to make it effective.
Section 9 Procedure. The executive committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these bylaws.
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It shall keep regular minutes of its proceedings and report the same to the
board of directors for its information at the meeting held next after the
proceedings shall have occurred.
Section 10. Other Committees. The board of directors may by resolution
establish an audit, loan, or other committee composed of directors as they may
determine to be necessary or appropriate for the conduct of the business of the
Association and may prescribe the duties, constitution, and procedures thereof.
ARTICLE V - OFFICERS
Section l . Positions. The officers of the Association shall be a
president, one or more vice presidents, a secretary, and a treasurer or
comptroller, each of whom shall be elected by the board of directors. The board
of directors may also designate the chairman of the board as an officer. The
offices of the secretary and treasurer or comptroller may be held by the same
person and a vice president may also be either the secretary or the treasurer or
comptroller. The president shall not hold any other office. The president shall
be a member of the board of directors. The board of directors may designate one
or more vice presidents as executive vice president or senior vice president.
The board of directors may also elect or authorize the appointment of such other
officers as the business of the Association may require. The officers shall have
such authority and perform such duties as the board of directors may from time
to time authorize or determine. In the absence of action by the board of
directors, the officers shall have such powers and duties as generally pertain
to their respective offices.
Section 2. Election and Term of Office. The officers of the Association
shall be elected annually at the first meeting of the board of directors held
after each annual meeting of the shareholders. If the election of officers is
not held at such meeting, such election shall be held as soon thereafter as
possible. Each officer shall hold office until a successor has been duly elected
and qualified or until the officer's death, resignation or removal in the manner
hereinafter provided. Election or appointment of an officer, employee, or agent
shall not of itself create contractual rights. The board of directors may
authorize the Association to enter into an employment contract with any officer
in accordance with regulations of the Department; but no such contract shall
impair the right of the board of directors to remove any officer at any time in
accordance with section 3 of this Article V.
Section 3. Removal. Any officer may be removed by the board of directors
whenever in its judgment the best interests of the Association will be served
thereby, but such removal, other than for cause, shall be without prejudice to
the contractual rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise may be filled by the board
of directors for the unexpired portion of the term.
Section 5. Remuneration. The remuneration of the officers shall be fixed
from time to time by the board of directors.
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ARTICLE VI - CONTRACTS, LOANS, CHECKS, AND DEPOSITS
Section 1. Contracts. To the extent permitted by regulations of the
Department, and except as otherwise prescribed by these bylaws with respect to
certificates for shares, the board of directors may authorize any officer,
employee, or agent of the Association to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Association. Such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
Association and no evidence of indebtedness shall be issued in its name unless
authorized by the board of directors. Such authority may be general or confined
to specific instances.
Section 3. Checks; Drafts. etc. All checks, drafts, or other orders for
the payment of money, notes, or other evidences of indebtedness issued in the
name of the Association shall be signed by one or more officers, employees or
agents of the Association in such manner as shall from time to time be
determined by the board of directors.
Section 4. Deposits. All funds of the Association not otherwise employed
shall be deposited from time to time to the credit of the Association in any
duly authorized depositories as the board of directors may select.
ARTICLE VII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares of
capital stock of the Association shall be in such form as shall be determined by
the board of directors and approved by the Department. Such certificates shall
be signed by the chief executive officer or by any other officer of the
Association authorized by the board of directors, attested by the secretary or
an assistant secretary, and sealed with the corporate seal or a facsimile
thereof. The signatures of such officers upon a certificate may be facsimiles
if the certificate is manually signed on behalf of a transfer agent or a
registrar other than the Association itself or one of its employees. Each
certificate for shares of capital stock shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares are
issued, with the owner of shares and date of issue, shall be entered on the
stock transfer books of the Association. All certificates surrendered to the
Association for transfer shall be cancelled and no new certificate shall be
issued until the former certificate for a like number of shares has been
surrendered and cancelled, except that in the case of a lost or destroyed
certificate, a new certificate may be issued upon such terms and indemnity to
the Association as the board of directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of capital stock of the
Association shall be made only on its stock transfer books. Authority for such
transfer shall be given only by the holder of record or by his or her legal
representative, who shall furnish proper evidence of such authority,
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or by his or her attorney authorized by a duly executed power of attorney and
filed with the Association. Such transfer shall be made only on surrender for
cancellation of the certificate for such shares. The person in whose name shares
of capital stock stand on the books of the Association shall be deemed by the
Association to be the owner for all purposes.
ARTICLE VIII - FISCAL YEAR
The fiscal year of the Association shall end on the thirtieth day of
June of each year. The appointment of accountants shall be subject to annual
ratification by the shareholders.
ARTICLE IX - DIVIDENDS
Subject to the terms of the Association's articles of incorporation and
the regulations and orders of the Department, the board of directors may, from
time to time, declare, and the Association may pay, dividends on its
outstanding shares of capital stock.
ARTICLE X - CORPORATE SEAL
The board of directors shall provide the Association seal which shall be
two concentric circles between which shall be the name of the Association. The
year of incorporation or an emblem may appear in the center.
ARTICLE XI - PENNSYLVANIA LAW
Any provision required by Pennsylvania law to be included in these bylaws
shall be deemed to be included herein and to the extent any other provision of
these bylaws is inconsistent with any such required provisions, the required
provisions shall govern.
ARTICLE XII - AMENDMENTS
These bylaws may be amended in a manner consistent with regulations of the
Department and shall be effective after: (i) approval of the amendment by a
two-thirds vote of the authorized board of directors, or by a majority vote of
the votes cast by the shareholders of the Association at any legal meeting, and
(ii) receipt of any applicable regulatory approval. When the Association fails
to meet its quorum requirements, solely due to vacancies on the board, then the
affirmative vote of a majority of the sitting board will be required to amend
the bylaws.
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