Exhibit 2.1
PLAN OF CONVERSION and stock issuance
of
WESTFIELD MUTUAL HOLDING COMPANY,
WESTFIELD FINANCIAL, INC.
and
WESTFIELD BANK
TABLE OF CONTENTS
Section
Number Page
- ------ ----
1. Introduction ...........................................................1
2. Definitions ............................................................3
3. General Procedure For Conversion .......................................9
4. Total Number Of Shares And Purchase Price Of Conversion Stock .........12
5. Method Of Offering Shares And Rights To Purchase Stock ................13
6. Additional Limitations On Purchases Of Conversion Stock ...............18
7. Timing Of Subscription Offering, Manner Of Exercising Subscription
Rights And Order Forms ................................................20
8. Payment For Conversion Stock ..........................................23
9. Account Holders In Nonqualified States Or Foreign Countries ...........23
10. Voting Rights Of Shareholders .........................................24
11. Liquidation Account ...................................................24
12. Requirements Following Conversion For Registration, Market Making
And Stock Exchange Listing ............................................26
13. Directors And Officers ................................................26
14. Restrictions On Stock Purchases By Management .........................26
15. Restrictions On Transfer Of Stock .....................................26
16. Restrictions On Acquisition Of Stock Of The Holding Company ...........27
17. Tax Rulings Or Opinions ...............................................28
18. Stock Compensation Plans ..............................................28
19. Dividend And Repurchase Restictions On Stock ..........................29
20. Payment Of Fees To Brokers ............................................28
21. Expenses ..............................................................28
22. Effective Date Of Conversion ..........................................29
23. Amendment Or Termination Of The Plan ..................................29
24. Interpretation Of The Plan ............................................29
25. Severability ..........................................................29
26. Miscellaneous .........................................................30
ii
1. INTRODUCTION.
For purposes of this section, all capitalized terms have the meanings
ascribed to them in Section 2. In 1995, Westfield Bank (the "Bank"), a
Massachusetts-chartered stock savings bank, reorganized into a mutual holding
company form, pursuant to which it formed Westfield Mutual Holding Company (the
"Mutual Holding Company"), a Massachusetts-chartered mutual holding company and
parent company of the Bank. On December 27, 2001, the Mutual Holding Company
organized a mid-tier stock holding company, Westfield Financial, Inc. (the
"Mid-Tier Holding Company"), a Massachusetts corporation. Simultaneously
therewith, the Mid-Tier Holding Company sold 4,972,600 shares of its common
stock, representing 47% of the Mid-Tier Holding Company's total shares of
common stock outstanding, to the Bank's eligible depositors and to the Employee
Stock Ownership Plan of Westfield Financial, Inc. (the "ESOP"), and issued the
remaining 53% of its shares of common stock to the Mutual Holding Company. On
July 23, 2004, the Bank converted to a federal savings bank and the Mutual
Holding Company converted to a federal mutual holding company. As of the date
of adoption of this Plan, the Mutual Holding Company held 5,607,400, or 57.9%,
of the 9,689,757 shares of outstanding Mid-Tier Company common stock.
A. Business Purposes for the Conversion
The Boards of Directors of the Mutual Holding Company, the Mid-Tier
Holding Company and the Bank believe that a conversion of the Mutual Holding
Company to stock form is in the best interests of the Mutual Holding Company,
the Mid-Tier Holding Company and the Bank, as well as the best interests of
their respective Members and Shareholders. The Boards of Directors determined
that this Plan of Conversion equitably provides for the interests of Members
through the granting of subscription rights and the establishment of a
liquidation account. The Conversion will result in the raising of additional
capital for the Bank and the Holding Company and is expected to result in a
more active and liquid market for the Holding Company Common Stock than
currently exists for the Mid-Tier Holding Company Common Stock. In addition,
the Conversion have been structured to re-unite the accumulated earnings and
profits retained by the Mutual Holding Company with the retained earnings of
the Bank through a tax-free reorganization.
The Conversion are intended to provide an additional source of capital
not now available in order to allow the Bank and Holding Company to better
serve the needs of the community by means of the following: (a) increased
lending to support continued growth in the Bank's commercial loan portfolio;
(b) financing acquisitions of other financial institutions or other businesses
related to banking, although no mergers or acquisitions are planned at the
present time; (c) expanding the financial products and services currently
offered by the Bank; and (d) opening or acquiring additional branch offices.
The Conversion are also intended to provide additional capital to the Holding
Company in order to pay dividends to shareholders; to repurchase shares of
Conversion Stock; to finance acquisitions of other financial institutions or
other businesses related to banking, although no mergers or acquisitions are
planned at the present time; and for use in other general corporate purposes.
In addition, increased stock ownership by officers and other employees of the
Bank and the Holding Company has proven to be an effective performance
incentive and an effective means of attracting and retaining qualified
personnel.
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The Boards of Directors and senior management also believe that the
Conversion will be beneficial to the population within the Bank's primary
market area. The Boards and management believe that, through increased stock
liquidity and expanded local stock ownership, current local customers and
non-customers who purchase Holding Company Common Stock will seek to enhance
the financial success of the Bank through consolidation of their banking
business and increased referrals to the Bank.
The Bank and the Mid-Tier Holding Company have gained experience as
public companies complying with of the Securities Exchange Act of 1934, as
amended, and in conducting shareholder meetings and addressing other
shareholder matters, such as communications, press releases and dividend
payments. In light of the foregoing, the Boards of Directors of the Mutual
Holding Company, the Mid-Tier Holding Company and the Bank believe that it is
in the best interests of such companies and their respective Members and
Shareholders to raise additional capital at this time.
B. Organization of Holding Company and Steps for Conversion and
Reorganization
The Conversion will be effected as follows, or in any manner approved by
the OTS that is consistent with the purposes of this Plan and applicable laws
and regulations, including a merger of the Mutual Holding Company into the
Mid-Tier Holding Company followed immediately by the Offerings. The choice of
which method to use to effect the Conversion will be made by the Board of
Directors of the Mutual Holding Company immediately prior to the closing of the
Conversion.
In connection with the Conversion:
1. The Mid-Tier Holding Company will convert into or exchange its
charter for that of a federal corporation, which will immediately
exchange its charter for that of an interim federal stock savings bank
and then merge with and into the Bank with the Bank as the surviving
entity pursuant to the Plan of Merger attached as Annex A hereto.
2. As described in more detail in Section 3, the Mutual Holding
Company will convert to an interim federal stock savings bank and then
merge with and into the Bank pursuant to the Plan of Merger included as
Annex B hereto, pursuant to which the Mutual Holding Company will cease
to exist and a liquidation account will be established by the Bank for
the benefit of depositor Members as of specified dates.
3. The Bank will form a wholly-owned subsidiary to be known as New
Westfield Financial, Inc., a Massachusetts corporation, which will become
the Holding Company upon consummation of the Conversion.
4. The Holding Company will in turn form an interim federal stock
savings bank ("Interim") as a wholly owned subsidiary.
5. Immediately following the formation of Interim, Interim will
then merge with and into the Bank pursuant to the Plan of Merger included
as Annex C hereto, pursuant to which the Bank will become a wholly owned
subsidiary of the Holding Company. In connection therewith,
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each share of Mid-Tier Holding Company Common Stock outstanding
immediately prior to the effective time thereof shall be automatically
converted, without further action by the holder thereof, into and become
the right to receive shares of Holding Company Common Stock based on the
Exchange Ratio, plus cash in lieu of any fractional share interest.
6. In connection with the Conversion, the Holding Company will
offer shares of Conversion Stock in the Offerings as provided herein.
2. DEFINITIONS.
As used in this Plan, the terms set forth below have the following
meaning:
"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; or (ii) a combination or pooling of
voting or other interests in the securities of an issuer for a common purpose
pursuant to any contract, understanding, relationship, agreement or other
arrangement, whether written or otherwise. A person 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 who is also acting in concert with that
other party, except that any Tax-Qualified Employee Stock Benefit Plan will not
be deemed to be acting in concert with its trustee or a person who serves in a
similar capacity solely for the purpose of determining whether stock held by
the trustee and stock held by the plan will be aggregated and participants or
beneficiaries of any such Tax-Qualified Employee Stock Benefit Plan will not be
deemed to be acting in concert solely as a result of their common interests as
participants or beneficiaries. When Persons act together for such purpose,
their group is deemed to have acquired their stock. The determination of
whether a group is Acting in Concert shall be made solely by the Board of
Directors of the Bank or Officers delegated by such Board and may be based on
any evidence upon which the Board or such delegatee chooses to rely, including,
without limitation, joint account relationships or the fact that such Persons
have filed joint Schedules 13D or Schedules 13G with the SEC with respect to
other companies. Directors of the Holding Company, the Bank, and the Mutual
Holding Company shall not be deemed to be Acting in Concert solely as a result
of their membership on any such board or boards. Persons living at the same
address, and persons exercising subscription rights through Qualifying Deposits
registered at the same address, whether or not related, will be deemed to be
Acting in Concert, unless the Board of Directors, or Officers delegated by such
Board, determine otherwise.
"Actual Purchase Price" means the price per share at which the Conversion
Stock is ultimately sold by the Holding Company in the Offerings in accordance
with the terms hereof.
"Affiliate" means a Person who, directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common control
with the Person specified.
"Associate," when used to indicate a relationship with any Person, means
(i) a corporation or organization (other than the Mutual Holding Company, the
Mid-Tier Holding Company, the Bank, or a majority-owned subsidiary of the Bank
or the Holding Company), if the Person is a senior officer or partner, or
beneficially owns, directly or indirectly, 10% or more of any class of equity
securities of the corporation or organization, (ii) any trust or other estate,
if
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the Person has a substantial beneficial interest in the trust or estate or is a
trustee or fiduciary of the trust or estate; provided, however, that such term
shall not include any Tax-Qualified Employee Stock Benefit Plan of the Holding
Company or the Bank in which such Person has a substantial beneficial interest
or serves as a trustee or fiduciary of such plan, and (iii) any Person who is
related by blood or marriage to such Person and (A) who lives in the same home
as the Person; or (B) who is a director or senior officer of the Holding
Company or the Bank or any of the subsidiaries of the foregoing.
"Bank" means Westfield Bank, a federal savings association.
"Bank Common Stock" means the common stock of the Bank, par value $0.10
per share.
"Bank Merger" means the merger of Interim with and into the Bank pursuant
to the Plan of Merger included as Annex C hereto.
"Code" means the Internal Revenue Code of 1986, as amended.
"Community" means cities and towns located in the Bank's Community
Reinvestment Act assessment area designated by the MHC and the Mid-Tier Holding
Company with the approval of the OTS before the commencement of the Offerings.
"Community Offering" means the offering for sale to certain residents of
the Community, and thereafter members of the general public directly by the
Holding Company of any shares of Conversion Stock not subscribed for in the
Subscription Offering.
"Control" (including the terms "controlling," "controlled by," and "under
common control with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Conversion" means (i) the conversion of the Mid-Tier Holding Company
from a Massachusetts corporation to a federally chartered stock corporation and
then immediately to an interim federal stock savings bank and the subsequent
Mid-Tier Holding Company Merger pursuant to which the Mid-Tier Holding Company
will cease to exist, (ii) the conversion of the Mutual Holding Company from
mutual form to an interim federal stock savings bank and the subsequent Mutual
Holding Company Merger, pursuant to which the Mutual Holding Company will cease
to exist, (iii) the Bank Merger, pursuant to which the Bank will become a
wholly owned subsidiary of the Holding Company and, in connection therewith,
each share of Mid-Tier Holding Company Common Stock outstanding immediately
prior to the effective time thereof shall automatically be converted, without
further action by the holder thereof, into and become the right to receive
shares of Holding Company Common Stock based on the Exchange Ratio, plus cash
in lieu of any fractional share interest, and (iv) the issuance of Conversion
Stock by the Holding Company in the Offerings as provided herein, which will
increase the number of shares of Holding Company Common Stock outstanding and
the capitalization of the Holding Company.
"Conversion Stock" means the Holding Company Common Stock to be issued
and sold in the Offerings pursuant to this Plan of Conversion.
"Deposit Account" means withdrawable or repurchasable shares, investment
certificates or deposits or other savings accounts, including money market
deposit accounts, negotiable order of withdrawal accounts and demand accounts,
held by an account holder of the Bank.
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"Director, Officer and Employee" means the terms as applied respectively
to any person who is a director, officer or employee of the Mutual Holding
Company, the Mid-Tier Holding Company, the Bank or any subsidiary thereof.
"Eligible Account Holder" means any Person holding a Qualifying Deposit
on the Eligibility Record Date for purposes of determining Subscription Rights
and establishing subaccount balances in the liquidation account to be
established.
"Eligibility Record Date" means the date for determining Qualifying
Deposits of Eligible Account Holders and is the close of business on March 31,
2005.
"ESOP" means the Employee Stock Ownership Plan.
"Estimated Price Range" means the range of the estimated aggregate pro
forma market value of the total number of shares of Conversion Stock to be
issued in the Offerings, as determined by the Independent Appraiser in
accordance with Section 4 hereof.
"Exchange Ratio" means the rate at which shares of Holding Company Common
Stock will be exchanged for shares of Mid-Tier Holding Common Stock held by the
Public Shareholders in connection with the Bank Merger. The exact rate shall be
determined by the Mutual Holding Company, the Mid-Tier Holding Company and the
Bank in order to ensure that upon consummation of the Conversion, the Public
Shareholders will own in the aggregate approximately the same percentage of the
Holding Company Common Stock to be outstanding upon completion of the
Conversion as the percentage of Mid-Tier Holding Company Common Stock owned by
them in the aggregate immediately prior to consummation of the Conversion,
before giving effect to (a) cash paid in lieu of any fractional interests of
Holding Company Common Stock and (b) any shares of Conversion Stock purchased
by the Public Shareholders in the Offerings.
"Exchange Shares" mean the shares of Holding Company Common Stock to be
issued to the Public Shareholders in connection with the Bank Merger.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
thereto.
"Holding Company" means New Westfield Financial, Inc., a newly formed
stock corporation to be organized under the laws of the Commonwealth of
Massachusetts. Such corporation will be initially formed as a first-tier,
wholly owned subsidiary of the Bank. Upon completion of the Conversion, the
Holding Company shall hold all of the outstanding capital stock of the Bank and
be renamed Westfield Financial, Inc.
"Holding Company Common Stock" means the common stock of the Holding
Company, par value $.01 per share, which stock cannot and will not be insured
by the FDIC or any other governmental authority.
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"Independent Appraiser" means the independent financial consulting firm
retained by the Holding Company, the Mid-Tier Holding Company and the Bank to
prepare an appraisal of the estimated pro forma market value of the Conversion
Stock.
"Initial Purchase Price" means the price per share to be paid initially
by Participants for shares of Conversion Stock subscribed for in the
Subscription Offering and by Persons for shares of Conversion Stock ordered in
the Community Offering and/or Syndicated Community Offering. The Initial
Purchase Price shall be shall be a uniform price determined in accordance with
applicable OTS rules and regulations, but in no case shall the Initial Purchase
Price be less than $5 or more than $50. The Initial Purchase Price and the
total number of shares of Conversion Stock to be issued in the Offerings shall
be determined by the Boards of Directors of the Holding Company and the Bank in
consultation with the Independent Appraiser and any financial advisor or
investment banker retained by the Holding Company and the Bank in connection
with such Offerings.
"Interim" means Westfield Interim Savings Bank I, which will be formed as
an interim federal stock savings bank and a wholly owned subsidiary of the
Holding Company to facilitate the Bank Merger.
"Member" means any Person qualifying as a member of the Mutual Holding
Company in accordance with its mutual charter and bylaws and the laws of the
United States.
"Mid-Tier Holding Company" means Westfield Financial, Inc., an existing
Massachusetts corporation.
"Mid-Tier Holding Company Common Stock" means the common stock of the
Mid-Tier Holding Company, par value $.01 per share.
"Mid-Tier Holding Company Merger" means the Merger of the Mid-Tier
Holding Company (following its conversion to a federal corporation and then to
an interim federal stock savings bank) with and into the Bank pursuant to the
Plan of Merger included as Annex A hereto.
"Mutual Holding Company" means Westfield Mutual Holding Company, a
federal mutual holding company.
"Mutual Holding Company Merger" means the merger of the Mutual Holding
Company (following its conversion into an interim federal stock savings bank)
with and into the Bank pursuant to the Plan of Merger included as Annex B
hereto.
"Offerings" mean the Subscription Offering, the Community Offering, the
Syndicated Community Offering and the Public Offering.
"Officer" means the chairman of the board of directors, president, chief
executive officer, vice-president, secretary, treasurer or principal financial
officer, comptroller or principal accounting officer and any other person
performing similar functions with respect to any organization whether
incorporated or unincorporated.
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"Order Form" means the form(s) to be provided by the Holding Company,
containing all such terms and provisions as set forth in Section 7.C hereof, to
a Participant or other Person by which Conversion Stock may be ordered in the
Subscription and Community Offerings.
"Other Member" means a Voting Member who is not an Eligible Account
Holder or a Supplemental Eligible Account Holder.
"OTS" means the Office of Thrift Supervision or any successor thereto.
"Participant" means any Eligible Account Holder, Tax-Qualified Employee
Stock Benefit Plan, Supplemental Eligible Account Holder and Other Member.
"Person" means an individual, a corporation, a limited liability company,
a partnership, a limited liability partnership, an association, a joint stock
company, a trust, an unincorporated organization or a government or any
political subdivision thereof.
"Plan" and "Plan of Conversion" mean this Plan of Conversion and Stock
Issuance as adopted by the Boards of Directors of the Mutual Holding Company,
the Mid-Tier Holding Company and the Bank and any amendment hereto approved as
provided herein. The Board of Directors of the Holding Company shall adopt this
Plan as soon as practicable following its organization, and the Board of
Directors of Interim shall adopt the Plan of Merger included as Annex C hereto
as soon as practicable following its organization.
"Primary Parties" mean the Mutual Holding Company, the Mid-Tier Holding
Company, the Bank and the Holding Company.
"Prospectus" means the one or more documents to be used in offering the
Conversion Stock in the Offerings.
"Public Offering" means the public offering of Holding Company Stock by
or through an Underwriter following or concurrently with the Subscription
Offering.
"Public Shareholders" mean those Persons who own shares of Mid-Tier
Holding Company Common Stock, excluding the Mutual Holding Company, as of the
Voting Record Date.
"Qualifying Deposit" means the aggregate balance of all Deposit Accounts
in the Bank of (i) an Eligible Account Holder at the close of business on the
Eligibility Record Date, provided such aggregate balance is not less than $50,
and (ii) a Supplemental Eligible Account Holder at the close of business on the
Supplemental Eligibility Record Date, provided such aggregate balance is not
less than $50.
"Resident" means any person who occupies a dwelling within the Community,
has a present intent to remain within the Community for a period of time, and
manifests the genuineness of that intent by establishing an ongoing physical
presence within the Community together with an indication that such presence
within the Community is something other than merely transitory in nature. To
the extent the person is a
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corporation or other business entity, the principal place of business or
headquarters shall be in the Community. To the extent a person is a personal
benefit plan, the circumstances of the beneficiary shall apply with respect to
this definition. In the case of all other benefit plans, circumstances of the
trustee shall be examined for purposes of this definition. The Primary Parties
may utilize deposit or loan records or such other evidence provided to it to
make a determination as to whether a person is a resident. In all cases,
however, such a determination shall be in the sole discretion of the Primary
Parties.
"SEC" means the U.S. Securities and Exchange Commission.
"Special Meeting" means the Special Meeting of Members of the Mutual
Holding Company called for the purpose of submitting this Plan to the Members
for their approval, including any adjournments of such meeting.
"Shareholders" mean those Persons who own shares of Mid-Tier Holding
Company Common Stock.
"Shareholders' Meeting" means the annual or special meeting of
Shareholders of the Mid-Tier Holding Company, called for the purpose of
submitting this Plan to the Shareholders for their approval, including any
adjournments of such meeting.
"Subscription Offering" means the offering of the Conversion Stock to
Participants.
"Subscription Rights" mean nontransferable rights to subscribe for
Conversion Stock granted to Participants pursuant to the terms of this Plan.
"Supplemental Eligible Account Holder" means any Person, except Directors
and Officers of the Bank and their Associates, holding a Qualifying Deposit at
the close of business on the Supplemental Eligibility Record Date.
"Supplemental Eligibility Record Date", if applicable, means the date for
determining Qualifying Deposits of Supplemental Eligible Account Holders and
shall be required if the Eligibility Record Date is more than 15 months prior
to the date of the latest amendment to the Application for Conversion filed by
the Mutual Holding Company prior to approval of such application by the OTS. If
applicable, the Supplemental Eligibility Record Date shall be the last day of
the calendar quarter preceding OTS approval of the Application for Conversion
submitted by the Mutual Holding Company pursuant to this Plan of Conversion.
"Syndicated Community Offering" means the offering for sale by a
syndicate of broker-dealers to the general public of shares of Conversion Stock
not purchased in the Subscription Offering and the Community Offering.
"Tax-Qualified Employee Stock Benefit Plan" means the employee stock
ownership plan of the Mid-Tier Holding Company and the Holding Company.
"Underwriter" means any investment banking firm or firms purchasing or
distributing the Holding Company Common Stock in a Public Offering, if any.
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"Underwriting Agreement" means the agreement between the Holding Company
and an Underwriter pursuant to which the Underwriter agrees to purchase or
distribute certain shares of the Holding Company Common Stock for offering in
any Public Offering.
"Voting Member" means a Person who at the close of business on the Voting
Record Date is entitled to vote as a Member of the Mutual Holding Company in
accordance with its mutual charter and bylaws.
"Voting Record Date" means the date or dates for determining the
eligibility of Members to vote at the Special Meeting and of Shareholders to
vote at the Shareholders' Meeting, as applicable.
3. GENERAL PROCEDURE FOR CONVERSION.
A. Steps for Conversion; Regulatory Filings
1. After the Bank's organization of the Holding Company and the receipt
of all requisite regulatory approvals, the Holding Company will form Interim as
a wholly-owned subsidiary of the Holding Company, and the Board of Directors of
Interim shall adopt the Plan of Merger included as Annex C hereto by at least a
two-thirds vote. The Holding Company shall approve such Plan of Merger in its
capacity as the sole shareholder of Interim and the Mid-Tier Holding Company
shall approve the Plan and the Plan of Merger in its capacity as the sole
shareholder of the Bank.
2. An application for the Conversion, including the Plan and all other
requisite material (the "Application for Conversion"), shall be submitted to
the OTS for approval. The Mutual Holding Company, the Mid-Tier Holding Company
and the Bank also will cause notice of the adoption of the Plan by the Boards
of Directors of the Mutual Holding Company, the Mid-Tier Holding Company and
the Bank to be given by publication in a newspaper having general circulation
in each community in which an office of the Bank is located and will cause
copies of the Plan to be made available at each office of the Mutual Holding
Company, the Mid-Tier Holding Company and the Bank for inspection by Members
and Shareholders. The Mutual Holding Company, the Mid-Tier Holding Company and
the Bank will again cause to be published, in accordance with the requirements
of applicable regulations of the OTS, a notice of the filing with the OTS of an
application to convert the Mutual Holding Company from mutual to stock form and
will post the notice of the filing for the Application for Conversion in each
of their offices.
3. Promptly following receipt of requisite approval of the OTS, this Plan
will be submitted to the Voting Members for their consideration and approval at
the Special Meeting. The Mutual Holding Company may, at its option, mail to all
Members as of the Voting Record Date, at their last known address appearing on
the records of the Mutual Holding Company and the Bank, a proxy statement
describing the Plan which will be submitted to a vote of the Members at the
Special Meeting. The Holding Company also shall mail to all such Members (as
well as other Participants) a Prospectus and Order Form for the purchase of
Conversion Stock, subject to the provisions of Section 7 hereof. In addition,
all such Members will receive, or be given the opportunity to request by
returning a postage-prepaid card which will be distributed
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with the proxy statement, letter or other written communication, a copy of the
Articles of Organization and bylaws of the Holding Company.
4. Subscription Rights to purchase shares of Conversion Stock will be
issued without payment therefor to Eligible Account Holders, the Tax-Qualified
Employee Stock Benefit Plan, Supplemental Eligible Account Holders and Other
Members, as set forth in Section 5 hereof.
5. The Mid-Tier Holding Company shall file preliminary proxy materials
with the OTS and the SEC in order to seek the approval of the Plan by its
Shareholders. Promptly following clearance of such proxy materials and the
receipt of any other requisite approval of the OTS, the Mid-Tier Holding
Company will mail definitive proxy materials to all Shareholders as of the
Voting Record Date, at their last known address appearing on the records of the
Mid-Tier Holding Company, for their consideration and approval of this Plan at
the Shareholders' Meeting.
6. The Holding Company shall submit or cause to be submitted a holding
company application to the OTS for approval of the acquisition of the Bank.
Such application also shall include an application to form Interim. In
addition, an application to merge the Mutual Holding Company (following its
conversion into an interim federal stock savings bank) and the Bank, an
application to merge the Mid-Tier Holding Company (following its conversion
into a federal corporation and then into an interim federal stock savings bank)
and the Bank and an application to merge Interim and the Bank shall be filed
with the OTS, either as exhibits to the holding company application or
separately. All notices required to be published in connection with such
applications shall be published at the times required.
7. The Holding Company shall file a Registration Statement with the SEC
to register the Holding Company Common Stock to be issued in the Conversion
under the Securities Act of 1933, as amended, and shall register such Holding
Company Common Stock under any applicable state securities laws. Upon
registration and after the receipt of all required regulatory approvals, the
Conversion Stock shall be first offered for sale in a Subscription Offering to
Eligible Account Holders, the Tax-Qualified Employee Stock Benefit Plan,
Supplemental Eligible Account Holders, if any, Other Members, Directors,
Officers and Employees and Public Shareholders as of the Voting Record Date. It
is anticipated that any shares of Conversion Stock remaining unsold after the
Subscription Offering will be sold through a Community Offering, a Syndicated
Community Offering and/or a Public Offering. The purchase price per share for
the Conversion Stock shall be a uniform price determined in accordance with
Section 4 hereof and shall be set forth in the Prospectus. The Holding Company
shall contribute to the Bank at least fifty percent (50%) of the net proceeds
received by the Holding Company from the sale of Conversion Stock.
8. All assets, rights, interests, privileges, powers, franchises and
property (real, personal and mixed) of the Mid-Tier Holding Company shall be
automatically transferred to and vested in the Holding Company by virtue of the
Conversion without any deed or other document of transfer. The Holding Company,
without any order or action on the part of any court or otherwise and without
any document of assumption or assignment, shall hold and enjoy all of the
properties, franchises and interests, including appointments, powers,
designations, nominations
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and all other rights and interests as the agent or fiduciary in the same manner
and to the same extent as such rights, franchises interests and powers were
held or enjoyed by the Mid-Tier Holding Company. The Holding Company shall be
responsible for all of the liabilities, restrictions and duties of every kind
and description of the Mid-Tier Holding Company immediately prior to the
Conversion, including liabilities for all debts, obligations and contracts of
the Mid-Tier Holding Company, matured or unmatured, whether accrued, absolute,
contingent or otherwise and whether or not reflected or reserved against on
balance sheets, book or accounts or records of the Mid-Tier Holding Company.
9. The Articles of Organization of the Holding Company shall read in the
form of Annex D.
10. The home office and branch offices of the Bank shall be unaffected by
the Conversion. The executive offices of the Holding Company shall be located
at the current offices of the Mutual Holding Company and the Mid-Tier Holding
Company.
11. Each Deposit Account of the Bank at the Effective Date shall remain a
Deposit Account in the Bank for the same amount and subject to the same terms
and conditions applicable to such Deposit Account prior to the Conversion.
B. Votes Required for Consummation of Conversion
This Plan was adopted by the Boards of Directors of the Mutual Holding
Company, the Mid-Tier Holding Company and the Bank on June 20, 2006.
This Plan is subject to the approval of the OTS and must be adopted by
(1) at least a majority of the total number of votes eligible to be cast by
Voting Members of the Mutual Holding Company at the Special Meeting, (2)
holders of the greater of (i) the holders of a majority of the outstanding
Mid-Tier Holding Company Common Stock, other than the Mutual Holding Company,
or (ii) two-thirds of the outstanding Mid-Tier Holding Company Common Stock, at
the Shareholders' Meeting, and (3) the Mid-Tier Holding Company in its capacity
as the sole shareholder of the Bank.
C. Consummation of Conversion
The effective date of the Conversion shall be the date set forth in
Section 23 hereof.
Upon the effective date, the following transactions shall occur:
1. The Mutual Holding Company shall convert from a mutual holding
company to an interim federal stock savings bank. The Mid-Tier Holding
Company shall convert into a federal corporation and then immediately to
an interim federal stock savings bank and simultaneously merge with and
into the Bank in the Mid-Tier Holding Company Merger, with the Bank being
the surviving institution. Immediately thereafter, the Mutual Holding
Company, as converted, shall merge with and into the Bank in the Mutual
Holding Company Merger, with the Bank being the surviving institution. As
a result of the Mutual Holding Company Merger and the Mid-Tier Holding
Company Merger, (x) the shares of Mid-Tier Holding Company Common Stock
held by the Mutual Holding Company (following its conversion to an
interim
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federal stock savings bank) shall be extinguished and (y) Members of the
Mutual Holding Company will be granted interests in the liquidation
account to be established by the Bank pursuant to Section 11 hereof.
2. Interim shall merge with and into the Bank pursuant to the Bank
Merger, with the Bank being the surviving institution. As a result of the
Bank Merger, (x) the shares of Holding Company Common Stock held by the
Bank shall be extinguished; (y) the shares of Mid-Tier Holding Company
Common Stock held by the Public Shareholders shall be converted into the
right to receive shares of Holding Company Common Stock based upon the
Exchange Ratio, plus cash in lieu of any fractional share interest based
upon the Actual Purchase Price; and (z) the shares of common stock of
Interim held by the Holding Company shall be converted into shares of
Bank Common Stock on a one-for-one basis, with the result that the Bank
shall become a wholly owned subsidiary of the Holding Company. In
addition, as a result of the Bank Merger, options to purchase shares of
Mid-Tier Holding Company Common Stock which are outstanding immediately
prior to consummation of the Conversion shall be converted into options
to purchase shares of Holding Company Common Stock, with the number of
shares subject to the option and the exercise price per share to be
adjusted based upon the Exchange Ratio so that the aggregate exercise
price remains unchanged, and with the duration of the option remaining
unchanged.
3. The Holding Company shall sell the Conversion Stock in the
Offerings, as provided herein.
4. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK.
All shares sold in the Conversion will be sold at a uniform price per
share. The aggregate price at which the Conversion Stock shall be sold shall
not be inconsistent with the estimated pro forma market value of such
Conversion Stock, based upon an independent valuation as provided for in this
Section 4. The Mutual Holding Company shall cause the Independent Appraiser to
prepare a pro forma valuation of the aggregate market value of the Common Stock
and of the aggregate market value of the Conversion Stock (which shall be equal
to the aggregate market value of the Common Stock multiplied by the Mutual
Holding Company's percentage ownership interest in the Bank), which shall be
submitted to the OTS as part of the Mutual Holding Company's Application for
Conversion. The valuation shall be prepared in accordance with 12 CFR 563b.7.
Prior to the commencement of the Subscription and Community Offerings, the
Estimated Price Range will be established, the maximum of which shall be no
more than fifteen percent (15%) above the average of the minimum and maximum of
such price range and the minimum of which shall be no more than fifteen percent
(15%) below such average. From time to time, as appropriate or as required by
the conversion regulations or the OTS, the Mutual Holding Company shall cause
the Independent Appraiser to review developments subsequent to its valuation to
determine whether the Estimated Price Range should be revised.
Based on the valuation by the Independent Appraiser pursuant to this
Section 4, the Board of Directors of the Bank and the Board of Directors of the
Holding Company shall fix the Initial Purchase Price and the number of shares
of Conversion Stock to be offered. The total number of shares of Conversion
Stock offered and the purchase price per share shall be subject to increase or
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decrease at any time during the Offerings to reflect changes in market and
financial conditions. In the event that the aggregate purchase 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 fifteen percent (15%)
increase above the maximum of the Estimated Price Range will not be deemed
material so as to require a resolicitation. Up to a fifteen percent (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 Conversion
Stock 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 fifteen
percent (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 Holding Company or the Bank shall establish,
with the approval of the OTS, if required.
Notwithstanding the foregoing, shares of Conversion Stock will not be
issued unless, prior to the consummation of the Conversion, the Independent
Appraiser confirms to the Bank, the Mutual Holding Company, the Holding Company
and 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 number of
shares of Conversion Stock issued in the Conversion multiplied by the Initial
Purchase Price is incompatible with the estimate of the aggregate consolidated
pro forma market value of the Holding Company. If such confirmation is not
received, the Holding Company may cancel the Offerings, extend the Conversion
and establish a new Initial Purchase Price, extend, reopen or hold new
Offerings, or take such other action as the OTS may permit.
The Holding Company Common Stock to be issued pursuant to this Plan shall
upon issuance be fully paid and nonassessable.
5. METHOD OF OFFERING SHARES AND RIGHTS TO PURCHASE STOCK.
A. Subscription Offering
Priority 1: Eligible Account Holders. Each Eligible Account Holder shall
receive, without payment, Subscription Rights to purchase up to the greater of
(i) $300,000 of Conversion Stock (or such maximum purchase limitation as may be
established for the Community Offering and/or Syndicated Community Offering),
(ii) one-tenth of 1% of the total offering of shares in the Subscription
Offering or (iii) 15 times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Conversion Stock offered
in the Subscription Offering by a fraction, of which the numerator is the
amount of the Qualifying Deposits of the Eligible Account Holder and the
denominator is the total amount of all Qualifying Deposits of all Eligible
Account Holders, in each case subject to Sections 6 and 9 hereof.
In the event of an oversubscription for shares of Conversion Stock by
Eligible Account Holders, available shares shall be allocated among subscribing
Eligible Account Holders so as to permit each such Eligible Account Holder, to
the extent possible, to purchase a number of shares which will make his or her
total allocation equal to the lesser of the number of shares subscribed
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for or 100 shares. Any available shares remaining after each subscribing
Eligible Account Holder has been allocated the lesser of the number of shares
subscribed for or 100 shares shall be allocated among the subscribing Eligible
Account Holders in the proportion which the Qualifying Deposit of each such
subscribing Eligible Account Holder bears to the total Qualifying Deposits of
all such subscribing Eligible Account Holders whose orders are unfilled,
provided that no fractional shares shall be issued. Subscription Rights of
Eligible Account Holders who are also Directors or Officers and their
Associates shall be subordinated to those of other Eligible Account Holders to
the extent that they are attributable to increased deposits during the one-year
period preceding the Eligibility Record Date.
Priority 2: Tax-Qualified Employee Stock Ownership Plan. The Tax
Qualified Employee Stock Benefit Plan shall receive, without payment,
Subscription Rights to purchase up to ten percent of the total offering of
shares in the Subscription Offering. A Tax-Qualified Employee Stock Benefit
Plan shall not be deemed to be an Associate or Affiliate of, or a Person Acting
in Concert with, any Director or Officer of the Holding Company or the Bank.
Notwithstanding any provision contained herein to the contrary, the Bank may
make scheduled discretionary contributions to a Tax-Qualified Employee Stock
Benefit Plan; provided, that such contributions do not cause the Bank to fail
to meet its regulatory capital requirements.
Priority 3: Supplemental Eligible Account Holders. In the event that the
Eligibility Record Date is more than 15 months prior to the date of the latest
amendment to the Application for Conversion filed prior to OTS approval, then,
and only in that event, a Supplemental Eligibility Record Date shall be set and
each Supplemental Eligible Account Holder shall receive, without payment,
Subscription Rights to purchase up to the greater of (i) $300,000 of Conversion
Stock in the Subscription Offering (or such maximum purchase limitation as may
be established for the Community Offering and/or Syndicated Community
Offering), (ii) one-tenth of 1% of the total offering of shares in the
Subscription Offering, and (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of Conversion
Stock offered in the Subscription Offering by a fraction, of which the
numerator is the amount of the Qualifying Deposits of the Supplemental Eligible
Account Holder and the denominator is the total amount of all Qualifying
Deposits of all Supplemental Eligible Account Holders, in each case subject to
Sections 6 and 9 hereof and the availability of shares of Conversion Stock for
purchase after taking into account the shares of Conversion Stock purchased by
Eligible Account Holders through the exercise of Subscription Rights under
Section 5 hereof.
In the event of an oversubscription for shares of Conversion Stock by
Supplemental Eligible Account Holders, available shares shall be allocated
among subscribing Supplemental Eligible Account Holders so as to permit each
such Supplemental Eligible Account Holder, to the extent possible, to purchase
a number of shares sufficient to make his or her total allocation (including
the number of shares, if any, allocated to Eligible Account Holders) equal to
the lesser of the number of shares subscribed for or 100 shares. Any remaining
available shares shall be allocated among subscribing Supplemental Eligible
Account Holders in the proportion that the amount of their respective
Qualifying Deposits bears to the total amount of the Qualifying Deposits of all
such subscribing Supplemental Eligible Account Holders whose orders are
unfilled, provided that no fractional shares shall be issued.
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Priority 4: Other Members. Each Other Member shall receive, without
payment, Subscription Rights to purchase up to the greater of (i) $300,000 of
Conversion Stock in the Subscription Offering (or such maximum purchase
limitation as may be established for the Community Offering and/or Syndicated
Community Offering) and (ii) one-tenth of 1% of the total offering of shares in
the Subscription Offering, subject to Sections 6 and 9 hereof and the
availability of shares of Conversion Stock for purchase after taking into
account the shares of Conversion Stock purchased by Eligible Account Holders,
the Tax Qualified Employee Stock Benefit Plan and Supplemental Eligible Account
Holders, if any, through the exercise of Subscription Rights under Section 5
hereof.
If Other Members subscribe for a number of shares of Conversion Stock in
excess of the total number of shares of Conversion Stock remaining, available
shares shall be allocated among subscribing Other Members so as to permit each
such Other Member, to the extent possible, to purchase a number of shares which
will make his or her total allocation equal to the lesser of the number of
shares subscribed for or 100 shares. Any remaining shares shall be allocated
among subscribing Other Members on a pro rata basis in the same proportion as
each such Other Member's subscription bears to the total subscriptions of all
such subscribing Other Members, provided that no fractional shares shall be
issued.
B. Community Offering
Any shares of Common Stock not subscribed for in the Subscription
Offering may be offered for sale in a Community Offering. This will involve an
offering of all unsubscribed shares directly to the general public with a
preference first to the stockholders of record of the Mid-Tier Holding Company
as of the Voting Record Date and then to those natural persons residing in the
Community. Subject to the requirements set forth herein, the manner in which
the Conversion Stock is sold in the Community Offering shall have as the
objective the widest possible distribution of such stock.
In the event of a Community Offering, all shares of Conversion Stock
which are not subscribed for in the Subscription Offering shall be offered for
sale by means of a direct community marketing program, which may provide for
the use of brokers, dealers or investment banking firms experienced in the sale
of financial institution securities.
Each order for Conversion Stock in the Community Offering shall be
subject to the absolute right of the Primary Parties to accept or reject any
such order in whole or in part either at the time of receipt of an order or as
soon as practicable following completion of the Community Offering. Available
shares will be allocated first to each Person whose order is accepted in an
amount equal to the lesser of 100 shares or the number of shares subscribed for
by each such Person, if possible. Thereafter, unallocated shares shall be
allocated among the Persons whose accepted orders remain unsatisfied in the
same proportion that the unfilled order of each bears to the total unfilled
orders of all Persons whose accepted orders remain unsatisfied, provided that
no fractional shares shall be issued.
The amount of Conversion Stock that any Person may purchase in the
Community Offering shall not exceed the greater of $300,000 of Conversion Stock
or up to 5% of the total offering, provided, however, that this amount may be
increased to up to 5% of the total offering
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of shares of Conversion Stock, subject to any required regulatory approval but
without the further approval of Members of the Mutual Holding Company or the
Shareholders of the Mid-Tier Holding Company; and provided further that, to the
extent applicable, and subject to the preferences set forth and the limitations
on purchases of Conversion Stock set forth in this section and Section 6 of
this Plan, orders for Conversion Stock in the Community Offering shall first be
filled to a maximum of 2% of the total number of shares of Conversion Stock
sold in the Offerings. Thereafter, unallocated shares shall be allocated among
the Persons whose accepted orders remain unsatisfied in the same proportion
that the unfilled order of each bears to the total unfilled orders of all
Persons whose accepted orders remain unsatisfied, provided that no fractional
shares shall be issued. The Primary Parties may commence the Community Offering
concurrently with, at any time during, or as soon as practicable after the end
of, the Subscription Offering, and the Community Offering must be completed
within 45 days after the completion of the Subscription Offering, unless
extended by the Primary Parties with any required regulatory approval.
C. Syndicated Community Offering
Subject to such terms, conditions and procedures as may be determined by
the Primary Parties, all shares of Conversion Stock not subscribed for in the
Subscription Offering or ordered in the Community Offering may be sold by a
syndicate of broker-dealers to the general public in a Syndicated Community
Offering. Subject to the requirements set forth herein, the manner in which the
Conversion Stock is sold in the Syndicated Community Offering shall have as the
objective the achievement of a wide distribution of such stock. Each order for
Conversion Stock in the Syndicated Community Offering shall be subject to the
absolute right of the Primary Parties to accept or reject any such order in
whole or in part either at the time of receipt of an order or as soon as
practicable after completion of the Syndicated Community Offering. The amount
of Conversion Stock that any Person may purchase in the Syndicated Community
Offering shall not exceed $300,000 of Conversion Stock, provided, however, that
this amount may be increased to up to 5% of the total offering of shares of
Conversion Stock, subject to any required regulatory approval but without the
further approval of Members of the Mutual Holding Company or the Shareholders
of the Mid-Tier Holding Company; and subject to the limitations on purchases of
Conversion Stock set forth in this section and Section 6 of this Plan. The
Primary Parties may commence the Syndicated Community Offering concurrently
with, at any time during, or as soon as practicable after the end of, the
Subscription Offering and/or Community Offering, and the Syndicated Community
Offering must be completed within 45 days after the completion of the
Subscription Offering, unless extended by the Primary Parties with any required
regulatory approval.
D. Public Offering Alternative
Subject to such terms, conditions and procedures as may be determined by
the Primary Parties, any shares of Conversion Stock not sold in the
Subscription Offering or the Community Offering may, as an alternative to or
along with a Syndicated Community Offering, be offered for sale by the Holding
Company to or through Underwriters. The limitations on purchases of Conversion
Stock set forth in Section 6 of this Plan shall not be applicable to sales to
Underwriters for purposes of such a Public Offering. Any such Underwriter shall
agree to (a) purchase such shares from the Holding Company with a view to
reoffering them to the general public; (b) use their
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best efforts, or make a firm commitment, to sell, for the account of the
Holding Company, such shares to the general public; or (c) a combination of (a)
and (b), subject to the following terms and conditions:
(1) Any Underwriting Agreement shall provide that the Underwriter
shall agree to purchase all shares of the Conversion Stock not sold in
the Subscription Offering or the Community Offering, if any such shares
are purchased.
(2) The price paid to the Holding Company by or through the
Underwriter for the Conversion Stock shall be the aggregate price at
which such shares were offered in the Subscription Offering, less the
amount of an underwriting discount as negotiated between the Bank, the
Holding Company, and the Underwriters and approved by the OTS and the
National Association of Securities Dealers, Inc.
(3) The Underwriting Agreement shall be subject to the following
conditions and such other conditions as may be acceptable to the Bank,
the Company and the OTS: (i) purchases in the Public Offering by Persons
(other than Underwriters) shall be subject to the limitations of Section
6 of this Plan; and (ii) the Holding Company and its Underwriters shall
use reasonable efforts to assure that the stock to be offered and sold in
the Public Offering shall be offered and sold in a manner that, to the
extent practicable, will achieve a wide distribution of such stock.
The amount of Conversion Stock that any Person may purchase in the Public
Offering shall not exceed $300,000 of Conversion Stock, provided, however, that
this amount may be increased to up to 5% of the total offering of shares of
Conversion Stock, subject to any required regulatory approval but without the
further approval of Members of the Mutual Holding Company or the Shareholders
of the Mid-Tier Holding Company; and subject to the limitations on purchases of
Conversion Stock set forth in this section and Section 6 of this Plan. The
Primary Parties may commence the Public Offering concurrently with, at any time
during, or as soon as practicable after the end of, the Subscription Offering
and/or Community Offering and Syndicated Community Offering and the Public
Offering must be completed within 45 days after the completion of the
Subscription Offering, unless extended by the Primary Parties with any required
regulatory approval.
If for any reason a Syndicated Community Offering or a Public Offering of
shares of Holding Company Common Stock not sold in the Subscription and
Community Offerings cannot be effected, or if any insignificant residue of
shares of Conversion Stock is not sold in the Subscription and Community
Offerings or in the Syndicated Community or Public Offering, other arrangements
will be made for the disposition of unsubscribed shares by the Bank, if
possible. Such other purchase arrangements will be subject to the approval of
the OTS.
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6. ADDITIONAL LIMITATIONS ON PURCHASES OF CONVERSION STOCK.
The following limitations apply to the Offerings, in addition to those
set forth in Section 5:
1. In addition to the other restrictions and limitations set forth
herein, the maximum amount of Holding Company Common Stock which any
Person together with any Associate or group of Persons Acting in Concert
may, directly or indirectly, subscribe for or purchase in the Conversion
shall not exceed $500,000.
2. The number of shares of Conversion Stock which Directors and
Officers and their Associates may purchase in the aggregate in the
Offerings shall not exceed 25% of the total number of shares of
Conversion Stock sold in the Offerings, including any shares which may be
issued in the event of an increase in the maximum of the Estimated Price
Range to reflect changes in market, financial and economic conditions
after commencement of the Subscription Offering and prior to completion
of the Offerings, excluding shares held by tax-qualified employee stock
benefit plans attributable to Directors, Officers and their Associates.
3. No Person may purchase fewer than 25 shares of Conversion Stock
in the Offerings, to the extent such shares are available; provided,
however, that if the Actual Purchase Price is greater than $20.00 per
share, such minimum number of shares shall be adjusted so that the
aggregate Actual Purchase Price for such minimum shares will not exceed
$500.00. No Person(s) exercising subscription rights through a single
Qualifying Account held jointly may purchase fewer than 25 shares or more
than 30,000 shares.
4. For purposes of the foregoing limitations and the determination
of Subscription Rights, (i) Directors, Officers and Employees shall not
be deemed to be Associates or a group Acting in Concert solely as a
result of their capacities as such and (ii) Exchange Shares shall be
valued at the Actual Purchase Price.
5. Subject to any required regulatory approval and the requirements
of applicable laws and regulations, but without further approval of the
Members of the Mutual Holding Company or the Shareholders of the Mid-Tier
Holding Company, the Primary Parties may increase or decrease any of the
individual or aggregate purchase limitations set forth herein to a
percentage which does not exceed 5% of the total offering of shares of
Holding Company Common Stock in the Conversion whether prior to, during
or after the Subscription Offering, Community Offering, Syndicated
Community Offering and/or Public Offering. In the event that a purchase
limitation is increased after commencement of the Subscription Offering
or any other offering, the Primary Parties shall permit any Person who
subscribed for the maximum number of shares of Conversion Stock to
purchase an additional number of shares, so that such Person shall be
permitted to subscribe for the then maximum number of shares permitted to
be subscribed for by such Person, subject to the rights and preferences
of any Person who has priority Subscription Rights. In the event that any
of the individual or aggregate purchase limitations are decreased after
commencement of the Subscription Offering or any other offering, the
orders of any Person who subscribed for more than the new purchase
limitation shall be decreased by the minimum amount necessary so that
such Person shall be in compliance with the then maximum number of shares
permitted to be subscribed for by such Person.
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6. The Primary Parties shall have the right to take all such action
as they may, in their sole discretion, deem necessary, appropriate or
advisable in order to monitor and enforce the terms, conditions,
limitations and restrictions contained in this section and elsewhere in
this Plan and the terms, conditions and representations contained in the
Order Form, including, but not limited to, the absolute right (subject
only to any necessary regulatory approvals or concurrences) to reject,
limit or revoke acceptance of any subscription or order and to delay,
terminate or refuse to consummate any sale of Conversion Stock which they
believe might violate, or is designed to, or is any part of a plan to,
evade or circumvent such terms, conditions, limitations, restrictions and
representations. Any such action shall be final, conclusive and binding
on all persons, and the Primary Parties and their respective Boards shall
be free from any liability to any Person on account of any such action.
7. Notwithstanding anything to the contrary contained in this Plan
and except as may otherwise be required by the OTS, the Public
Shareholders will not have to sell any Mid-Tier Holding Company Common
Stock or be limited in receiving Exchange Shares even if their ownership
of Mid-Tier Holding Company Common Stock when converted into Exchange
Shares would exceed an applicable purchase limitation; provided, however,
that a Public Shareholder who would exceed an applicable purchase
limitation may be precluded from purchasing Conversion Stock in the
Offerings.
8. Notwithstanding any other provisions of this Plan, no person
shall be entitled to purchase any Conversion Stock to the extent such
purchase would be illegal under any federal law or state law or
regulation or would violate regulations or policies of the National
Association of Securities Dealers, Inc., particularly those regarding
free riding and withholding. The Holding Company and/or its agents may
ask for an acceptable legal opinion from any purchaser as to the legality
of such purchase and may refuse to honor any purchase order if such
opinion is not timely furnished.
Prior to the consummation of the Offerings, no Person shall offer to
transfer, or enter into any agreement or understanding to transfer the legal or
beneficial ownership of any subscription rights or shares of Conversion Stock,
except pursuant to this Plan. Each person purchasing Conversion Stock shall be
deemed to confirm that such purchase does not conflict with the above purchase
limitations contained in this Plan.
EACH PERSON PURCHASING CONVERSION STOCK IN THE OFFERINGS WILL BE DEEMED
TO CONFIRM THAT PURCHASE DOES NOT CONFLICT WITH THE PURCHASE LIMITATIONS IN
THIS PLAN. ALL QUESTIONS CONCERNING WHETHER ANY PERSONS ARE ASSOCIATES OR A
GROUP ACTING IN CONCERT OR WHETHER ANY PURCHASE CONFLICTS WITH THE PURCHASE
LIMITATIONS IN THIS PLAN OR OTHERWISE VIOLATES ANY PROVISION OF THIS PLAN SHALL
BE DETERMINED BY THE PRIMARY PARTIES IN THEIR SOLE DISCRETION. SUCH
DETERMINATION SHALL BE CONCLUSIVE, FINAL AND BINDING ON ALL PERSONS AND THE
PRIMARY PARTIES MAY TAKE ANY REMEDIAL ACTION, INCLUDING WITHOUT LIMITATION
REJECTING THE PURCHASE OR REFERRING THE MATTER TO THE OTS FOR ACTION, AS IN
THEIR SOLE DISCRETION THE PRIMARY PARTIES MAY DEEM APPROPRIATE.
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7. TIMING OF SUBSCRIPTION OFFERING, MANNER OF EXERCISING SUBSCRIPTION
RIGHTS AND ORDER FORMS.
A. Timing of Subscription Offering.
The Subscription Offering may be commenced concurrently with or at any
time after the mailing to Voting Members of the Mutual Holding Company and
Shareholders of the Mid-Tier Holding Company of the proxy statement(s) to be
used in connection with the Special Meeting and the Shareholders' Meeting. The
Subscription Offering may be closed before the Special Meeting and the
Shareholders' Meeting, provided that the offer and sale of the Conversion Stock
shall be conditioned upon the approval of the Plan by the Voting Members of the
Mutual Holding Company and the Shareholders of the Mid-Tier Holding Company at
the Special Meeting and the Shareholders' Meeting, respectively.
The exact timing of the commencement of the Subscription Offering shall
be determined by the Primary Parties in consultation with the Independent
Appraiser and any financial or advisory or investment banking firm retained by
them in connection with the Conversion. The Primary Parties may consider a
number of factors, including, but not limited to, their current and projected
future earnings, local and national economic conditions, and the prevailing
market for stocks in general and stocks of financial institutions in
particular. The Primary Parties shall have the right to withdraw, terminate,
suspend, delay, revoke or modify any such Subscription Offering, at any time
and from time to time, as they in their sole discretion may determine, without
liability to any Person, subject to compliance with applicable securities laws
and any necessary regulatory approval or concurrence.
The Primary Parties shall, promptly after the SEC has declared the
Registration Statement, which includes the Prospectus, effective and all
required regulatory approvals have been obtained, distribute or make available
the Prospectus, together with Order Forms for the purchase of Conversion Stock,
to all Participants at their last known addresses appearing on the records of
the Bank for the purpose of enabling them to exercise their respective
Subscription Rights, subject to this section, and at the discretion of the
Board of the Holding Company will be made available for use by those persons
entitled to purchase in the Community Offering.
B. Order Forms; Return of Order Forms
A single Order Form for all Deposit Accounts maintained with the Bank by
an Eligible Account Holder and any Supplemental Eligible Account Holder may be
furnished, irrespective of the number of Deposit Accounts maintained with the
Bank on the Eligibility Record Date and Supplemental Eligibility Record Date,
respectively. No person holding a subscription right may exceed any otherwise
applicable purchase limitation by submitting multiple orders for Conversion
Stock. Multiple orders are subject to adjustment, as appropriate, on a pro rata
basis and deposit balances will be divided equally among such orders in
allocating shares in the event of an oversubscription.
The recipient of an Order Form shall have no less than 20 days and no
more than 45 days from the date of mailing of the Order Form (with the exact
termination date to be set forth on the Order Form) to properly complete and
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execute the Order Form and deliver it to the Primary Parties. The Primary
Parties may extend such period by such amount of time as they determine is
appropriate. Failure of any Participant to deliver a properly executed Order
Form to the Primary Parties, along with payment (or authorization for payment
by withdrawal) for the shares of Conversion Stock subscribed for, within the
time limits prescribed, shall be deemed a waiver and release by such person of
any rights to subscribe for shares of Conversion Stock. Each Participant shall
be required to confirm to the Primary Parties by executing an Order Form that
such Person has fully complied with all of the terms, conditions, limitations
and restrictions in the Plan.
C. Requirements for Order Form
Each Order Form shall contain:
1. A specified date by which all order forms must be received by
the Holding Company, which date shall be not less than 20, nor more than
45 days, as stated in subsection (b) above, following the date on which
the order forms are mailed by the Holding Company, and which date will
constitute the termination of the Subscription Offering;
2. The Initial Purchase Price per share for shares of Conversion
Stock to be sold in the Offerings;
3. An explanation of the rights and privileges granted under this
Plan to each class of persons granted subscription rights pursuant to
this Plan with respect to the purchase of Conversion Stock;
4. Specifically designated blank spaces for dating and signing the
order form;
5. A description of the minimum and maximum number of shares of
Conversion Stock that may be subscribed for pursuant to the exercise of
subscription rights or otherwise purchased in the Community Offering;
6. The amount which must be returned with the order form to
subscribe for Conversion Stock. Such amount will be equal to the purchase
price multiplied by the number of shares of Conversion Stock subscribed
for in accordance with the terms of this Plan;
7. Instructions concerning how to indicate on such order form the
extent to which the recipient elects to exercise subscription rights
under this Plan, the name or names in which the shares of Conversion
Stock subscribed for are to be registered, the address to which
certificates representing such shares of Conversion Stock are to be sent
and the alternative methods of payment for Conversion Stock which will be
permitted;
8. An acknowledgment that the recipient of the order form has
received a final copy of the Prospectus prior to execution of the order
form;
9. A statement indicating the consequences of failing to properly
complete and return the order form, including 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 to
the Holding Company within the subscription period such properly
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completed and executed order form, together with the full required
payment 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 authoring on the order form that the Holding Company withdraw said
amount from the subscriber's Deposit Account at the Bank); the
subscription rights of Eligible Account Holders, Supplemental Eligible
Account Holders, and Other Members are nontransferable. A statement that
when registering stock purchases on the order form, a recipient should
not add the name(s) of Person(s) who do not have subscription rights or
who qualify on a lower purchase priority than the receipt to their order
form;
10. Provision for certification to be executed by the recipient of
the order form to the effect that, as to any shares of Conversion Stock
which the recipient elects to purchase, such recipient is purchasing such
shares of Conversion Stock for his own account only and has no present
agreement or understanding regarding any subsequent sale or transfer of
such shares of Conversion Stock; and
11. A statement to the effect that the executed order form, once
received by the Holding Company, may not be modified or amended by the
subscriber without the consent of the Holding Company; notwithstanding
the above, the Bank and the Holding Company reserve the right in their
sole discretion to accept or reject orders received on photocopied or
facsimilied order forms.
D. Rejection of Order Forms; Interpretation of Order Forms
The Primary Parties shall have the absolute right, in their sole
discretion and without liability to any Participant or other Person, to reject
any Order Form, including, but not limited to, any Order Form that is (i)
improperly completed or executed; (ii) not timely received; (iii) not
accompanied by the proper payment (or authorization of withdrawal for payment)
or, in the case of institutional investors in the Community Offering, not
accompanied by an irrevocable order together with a legally binding commitment
to pay the full amount of the purchase price prior to 48 hours before the
completion of the Offerings; or (iv) submitted by a Person whose
representations the Primary Parties believe to be false or who they otherwise
believe, either alone, or Acting in Concert with others, is violating, evading
or circumventing, or intends to violate, evade or circumvent, the terms and
conditions of the Plan. Furthermore, in the event Order Forms (i) are not
delivered or are returned to the Bank, the Mid-Tier Holding Company or the
Mutual Holding Company by the United States Postal Service, or (ii) are not
mailed pursuant to a "no mail" order placed in effect by the account holder,
the subscription rights of the person to which such rights have been granted
will lapse as though such person failed to return the contemplated Order Form
within the time period specified thereon. The Primary Parties may, but will not
be required to, waive any irregularity on any Order Form or may require the
submission of corrected Order Forms or the remittance of full payment for
shares of Conversion Stock by such date as they may specify. The interpretation
of the Primary Parties of the terms and conditions of the Order Forms shall be
final and conclusive.
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8. PAYMENT FOR CONVERSION STOCK.
All payments for Conversion Stock subscribed for or ordered in the
Subscription and Community Offerings must be delivered in full to the Bank
along with a properly completed and executed Order Form on or prior to the
expiration date specified on the Order Form unless such date is extended by the
Holding Company. A properly completed original stock Order Form must be used to
subscribe for Conversion Stock. Copies of an order form are not required to be
accepted. The Bank shall not knowingly loan funds or otherwise extend credit to
any Participant or other Person to purchase Conversion Stock. Each share of
Conversion Stock shall be non-assessable upon payment in full of the Actual
Purchase Price.
Payment for Conversion Stock will be permitted to be made in any of the
following manners:
1. By personal check, bank check or money order, provided that
checks will only be accepted subject to collection. Interest will be paid
by the Bank at not less than the rate per annum being paid by the Bank on
its passbook accounts at the time the Offerings commence, on payments for
Conversion Stock received in the Offerings by check, or money order from
the date payment is received until consummation or termination of the
Conversion. The Bank shall be entitled to invest all amounts paid for
subscriptions in the Offerings for its own account until completion or
termination of the Conversion.
2. By appropriate authorization of withdrawal from designated types
of deposit accounts in the Bank. The order forms will contain appropriate
means by which authorization of such withdrawals may be made. For
purposes of determining the withdrawable balance of such accounts, such
withdrawals will be deemed to have been made upon receipt of appropriate
authorization therefor, but interest at the rates applicable to the
accounts from which the withdrawals have been deemed to have been made
will be paid by the Bank on the amounts deemed to have been withdrawn
until the date on which the Conversion is consummated, at which date the
authorized withdrawal will actually be made. Such withdrawals may be made
upon receipt of order forms authorizing such withdrawals, but interest
will be paid by the Bank on the amounts withdrawn as if such amounts had
remained in the accounts from which they were withdrawn until the date
upon which the sales of Conversion Stock pursuant to exercise of
subscription rights are actually consummated.
3. Payments for the purchase of Conversion Stock in the Offerings
will be permitted through authorization of withdrawals from certificate
accounts at the Bank without early withdrawal penalties. If the remaining
balances of the certificate accounts after such withdrawals are less than
the minimum qualifying balances under applicable regulations, the
certificates evidencing the accounts will be canceled upon consummation
of the Conversion, and the remaining balances will thereafter earn
interest at the passbook rate.
9. ACCOUNT HOLDERS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES.
The Primary Parties shall make reasonable efforts to comply with the
securities laws of all jurisdictions in the United States in which Participants
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reside. However, no Participant will be offered or receive any Conversion Stock
under the Plan if such Participant resides in a foreign country or resides in a
jurisdiction of the United States with respect to which all of the following
apply: (a) there are few Participants otherwise eligible to subscribe for
shares under this Plan who reside in such jurisdiction; (b) the granting of
Subscription Rights or the offer or sale of shares of Conversion Stock to such
Participants would require any of the Primary Parties or their respective
Directors and Officers, under the laws of such jurisdiction, to register as a
broker-dealer, salesman or selling agent or to register or otherwise qualify
the Conversion Stock for sale in such jurisdiction, or any of the Primary
Parties would be required to qualify as a foreign corporation or file a consent
to service of process in such jurisdiction; and (c) such registration,
qualification or filing in the judgment of the Primary Parties would be
impracticable or unduly burdensome for reasons of cost or otherwise.
10. VOTING RIGHTS OF SHAREHOLDERS.
Following consummation of the Conversion, voting rights with respect to
the Bank shall be held and exercised exclusively by the Holding Company as
holder of all of the Bank's outstanding voting capital stock, and voting rights
with respect to the Holding Company shall be held and exercised exclusively by
the holders of the Holding Company's voting capital stock.
11. LIQUIDATION ACCOUNT.
At the time of the Mutual Holding Company Merger, the Bank shall
establish a liquidation account in an amount equal to the greater of (i) the
Bank's net worth as of the date of the latest statement of financial condition
contained in the final Prospectus utilized in the initial formation of the
Mutual Holding Company and related minority stock offering, or (ii) the
percentage of the outstanding shares of the common stock of the Mid-Tier
Holding Company owned by the Mutual Holding Company prior to the Mid-Tier
Holding Company Merger, multiplied by the Mid-Tier Holding Company's total
shareholders' equity as reflected in its latest statement of financial
condition contained in the final Prospectus utilized in the Conversion. The
function of the liquidation account will be to preserve the rights of certain
holders of Deposit Accounts in the Bank who maintain such accounts in the Bank
following the Conversion to a priority to distributions in the unlikely event
of a liquidation of the Bank subsequent to the Conversion.
The liquidation account shall be maintained for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders, if any, who maintain
their Deposit Accounts in the Bank after the Conversion. Each such account
holder will, with respect to each Deposit Account held, have a related inchoate
interest in a portion of the liquidation account balance, which interest will
be referred to in this Section 11 as the "subaccount balance." Account holders
will not retain any voting rights based on their liquidation sub-accounts. All
Deposit Accounts having the same social security number will be aggregated for
purposes of determining the initial subaccount balance with respect to such
Deposit Accounts, except as set forth below.
In the event of a complete liquidation of the Bank subsequent to the
Conversion (and only in such event), each Eligible Account Holder and
Supplemental Eligible Account Holder, if any, shall be entitled to receive a
liquidation distribution from the liquidation account in the amount of the then
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current subaccount balances for Deposit Accounts then held (adjusted as
described below) before any liquidation distribution may be made with respect
to the capital stock of the Bank. No merger, consolidation, sale of bulk assets
or similar combination transaction with another FDIC-insured institution in
which the Bank is not the surviving entity shall be considered a complete
liquidation for this purpose. In any such transaction, the liquidation account
shall be assumed by the surviving entity.
The initial subaccount balance for a Deposit Account held by an Eligible
Account Holder and Supplemental Eligible Account Holder, if any, shall be
determined by multiplying the opening balance in the liquidation account by a
fraction, of which the numerator is the amount of the Qualifying Deposits of
such account holder and the denominator is the total amount of Qualifying
Deposits of all Eligible Account Holders and Supplemental Eligible Account
Holders, if any. For Deposit Accounts in existence at both the Eligibility
Record Date and the Supplemental Eligibility Record Date, if any, separate
initial subaccount balances shall be determined on the basis of the Qualifying
Deposits in such Deposit Accounts on each such record date. Initial subaccount
balances shall not be increased, and shall be subject to downward adjustment as
provided below.
If the aggregate deposit balance in the Deposit Account(s) of any
Eligible Account Holder or Supplemental Eligible Account Holder, if any, at the
close of business on any December 31 annual closing date, commencing on or
after the effective date of the Conversion, is less than the lesser of (a) the
aggregate deposit balance in such Deposit Account(s) at the close of business
on any other annual closing date subsequent to such record dates or (b) the
aggregate deposit balance in such Deposit Account(s) as of the Eligibility
Record Date or the Supplemental Eligibility Record Date, if any, the subaccount
balance for such Deposit Account(s) shall be adjusted by reducing such
subaccount balance in an amount proportionate to the reduction in such deposit
balance. In the event of such a downward adjustment, the subaccount balance
shall not be subsequently increased, notwithstanding any subsequent increase in
the deposit balance of the related Deposit Account(s). The subaccount balance
of an Eligible Account Holder or Supplemental Eligible Account Holder, if any,
will be reduced to zero if the Account Holder ceases to maintain a Deposit
Account at the Bank that has the same social security number as appeared on his
Deposit Account(s) at the Eligibility Record Date or, if applicable, the
Supplemental Eligibility Record Date.
Subsequent to the Conversion, the Bank may not pay cash dividends
generally on deposit accounts and/or capital stock of the Bank, or repurchase
any of the capital stock of the Bank, if such dividend or repurchase would
reduce the Bank's regulatory capital below the aggregate amount of the then
current subaccount balances for Deposit Accounts then held; otherwise, the
existence of the liquidation account shall not operate to restrict the use or
application of any of the net worth accounts of the Bank.
For purposes of this Section 11, a Deposit Account includes a predecessor
or successor account which is held by an Account Holder with the same social
security number.
In connection with the initial mutual holding company reorganization of
the Bank, the Bank established a liquidation account for the benefit of
eligible account holders as of December 31, 1999 and December 31, 2000. This
previously established liquidation account shall be terminated by the Board of
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the Bank at the Effective Time and it shall be superseded by the liquidation
account established as described above in this Section 11. No Member will have
a liquidation preference over the new liquidation account.
12. REQUIREMENTS FOLLOWING CONVERSION FOR REGISTRATION, MARKET MAKING AND
STOCK EXCHANGE LISTING.
In connection with the Conversion, the Holding Company shall register the
Holding Company Common Stock pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended, and shall undertake not to deregister such stock for a
period of three years thereafter. The Holding Company also shall use its best
efforts to (i) encourage and assist a market maker to establish and maintain a
market for the Holding Company Common Stock and (ii) list the Holding Company
Common Stock on a national or regional securities exchange or to have
quotations for such stock disseminated on the American Stock Exchange.
13. DIRECTORS AND OFFICERS.
Each person serving as a Director or Officer of the Mid-Tier Holding
Company and the Bank at the time of the Conversion shall continue to serve as a
Director or Officer of the Bank and shall become a Director or Officer of the
Holding Company for the balance of the term for which the person was elected
prior to the Conversion, and until a successor is elected and qualified. The
number, names, business addresses and terms of the Directors of the Bank are
set forth in the Plans of Merger included as Annex A, Annex B, and Annex C
hereto.
14. RESTRICTIONS ON STOCK PURCHASES BY MANAGEMENT.
For a period of three years following the Conversion, the Directors and
Officers of the Holding Company and the Bank and their Associates may not
purchase, without the prior written approval of the OTS, Holding Company Common
Stock except from a broker-dealer registered with the SEC. This provision shall
be enforced by the applicable regulatory authority provided the applicable
regulatory authority agrees in writing to enforce this OTS requirement. This
prohibition shall not apply, however, to (i) a negotiated transaction arrived
at by direct negotiation between buyer and seller and involving more than 1% of
the outstanding Holding Company Common Stock and (ii) purchases of stock made
by and held by any Tax-Qualified Employee Stock Benefit Plan (and purchases of
stock made by and held by any Non-Tax-Qualified Employee Stock Benefit Plan
following the receipt of shareholder approval of such plan) which may be
attributable to individual officers or directors.
The foregoing restriction on purchases of Holding Company Common Stock
shall be in addition to any restrictions that may be imposed by federal and
state securities laws.
15. RESTRICTIONS ON TRANSFER OF STOCK.
All shares of Conversion Stock which are purchased by Persons other than
Directors and Officers shall be transferable without restriction, except in
connection with a transaction proscribed by Section 16 of this Plan. Shares of
Conversion Stock purchased by Directors and Officers of the Holding Company and
the Bank on original issue from the Holding Company (by subscription or
otherwise) shall be subject to the restriction that such shares shall not be
sold or otherwise disposed of for value for a period of one year following the
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date of purchase, except for any disposition of such shares following the death
of the original purchaser or pursuant to any merger or similar transaction
approved by the OTS. The shares of Conversion Stock issued by the Holding
Company to Directors and Officers shall bear the following legend giving
appropriate notice of such one-year restriction:
"The shares of stock evidenced by this Certificate are restricted
as to transfer for a period of one year from the date of this Certificate
pursuant to Part 563b of the Rules and Regulations of the Office of
Thrift Supervision. These shares may not be transferred during such
one-year period without a legal opinion of counsel for the Company that
said transfer is permissible under the provisions of applicable law and
regulation. This restrictive legend shall be deemed null and void after
one year from the date of this Certificate."
In addition, the Holding Company shall give appropriate instructions to
the transfer agent for the Holding Company Common Stock with respect to the
applicable restrictions relating to the transfer of restricted stock. Any
shares issued at a later date as a stock dividend, stock split or otherwise
with respect to any such restricted stock shall be subject to the same holding
period restrictions as may then be applicable to such restricted stock.
The foregoing restriction on transfer shall be in addition to any
restrictions on transfer that may be imposed by federal and state securities
laws.
16. RESTRICTIONS ON ACQUISITION OF STOCK OF THE HOLDING COMPANY.
The Articles of Organization of the Holding Company shall prohibit any
Person together with Associates or group of Persons Acting in Concert from
offering to acquire or acquiring, directly or indirectly, beneficial ownership
of more than 10% of any class of equity securities of the Holding Company, or
of securities convertible into more than 10% of any such class, for a period of
five (5) years following completion of the Conversion. The Articles of
Organization of the Holding Company also shall provide that all equity
securities beneficially owned by any Person in excess of 10% of any class of
equity securities shall be considered "excess shares," and that excess shares
shall not be counted as shares entitled to vote and shall not be voted by any
Person or counted as voting shares in connection with any matters submitted to
the shareholders for a vote. The foregoing restrictions shall not apply to (i)
any offer with a view toward public resale made exclusively to the Holding
Company by underwriters or a selling group acting on its behalf, (ii) the
purchase of shares by a Tax-Qualified Employee Stock Benefit Plan established
for the benefit of the employees of the Holding Company and its subsidiaries
which is exempt from approval requirements under 12 C.F.R. ss. 574.3(c)(1)(vi)
or any successor thereto, and (iii) any offer or acquisition approved in
advance by the affirmative vote of two-thirds of the entire Board of Directors
of the Holding Company. Directors, Officers or Employees of the Holding Company
or the Bank or any subsidiary thereof shall not be deemed to be Associates or a
group Acting in Concert with respect to their individual acquisitions of any
class of equity securities of the Holding Company solely as a result of their
capacities as such.
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17. TAX RULINGS OR OPINIONS.
Consummation of the Conversion is conditioned upon prior receipt by the
Primary Parties of either a ruling or an opinion of counsel with respect to
federal tax laws, and either a ruling or an opinion with respect to
Massachusetts tax laws, to the effect that consummation of the transactions
contemplated hereby qualify as a tax-free transaction for federal income tax
purposes and will not result in any adverse tax consequences to the Primary
Parties or to account holders receiving Subscription Rights before or after the
Conversion, except in each case to the extent, if any, that Subscription Rights
are deemed to have fair market value on the date such rights are issued.
18. STOCK COMPENSATION PLANS.
The Holding Company and the Bank are authorized to adopt stock option
plans, restricted stock grant plans and other Non-Tax-Qualified Employee Stock
Benefit Plans, provided that no stock options shall be granted, and no shares
of Conversion Stock shall be purchased, pursuant to any of such plans prior to
the earlier of (i) the one-year anniversary of the consummation of the
Conversion or (ii) the receipt of shareholder approval of such plans at either
an annual or special meeting of shareholders of the Holding Company held no
earlier than six months following the Conversion.
The Holding Company and the Bank are authorized to enter into employment
or severance agreements with their executive officers.
19. DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK.
Following consummation of the Conversion, any repurchases of shares of
capital stock by the Holding Company will be made in accordance with then
applicable laws and regulations.
The Bank may not declare or pay a cash dividend on, or repurchase any of,
its capital stock if the effect thereof would cause the regulatory capital of
the Bank to be reduced below the amount required for the liquidation account.
Any dividend declared or paid on, or repurchase of, the Bank's capital stock
also shall be in compliance with applicable laws and regulations.
20. PAYMENT OF FEES TO BROKERS.
The Primary Parties may elect to offer to pay fees on a per share basis
to securities brokers who assist purchasers of Conversion Stock in the
Offerings.
21. EXPENSES.
The Holding Company and the Bank may retain and pay for the services of
financial and other advisors and investment bankers to assist in connection
with any or all aspects of the Conversion, including in connection with the
Offerings. All fees and expenses incurred in connection with the Conversion and
the Offerings must be reasonable, in accordance with OTS regulations.
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22. EFFECTIVE DATE OF CONVERSION.
The effective date of the Conversion shall be the date upon which the
last of the following actions occurs: (i) the filing of Articles of Combination
with the OTS with respect to the Mid-Tier Holding Company Merger, (ii) the
filing of Articles of Combination with the OTS with respect to the Mutual
Holding Company Merger, (iii) the filing of Articles of Combination with the
OTS with respect to the Bank Merger, or (iv) the closing of the issuance of the
shares of Conversion Stock in the Offerings. The filing of Articles of
Combination relating to the Mutual Holding Company Merger, the Mid-Tier Holding
Company Merger and the Bank Merger and the closing of the issuance of shares of
Conversion Stock in the Offerings shall not occur until all requisite
regulatory, Member and Shareholder approvals have been obtained, all applicable
waiting periods have expired and sufficient subscriptions and orders for the
Conversion Stock have been received. It is intended that the closing of the
Mutual Holding Company Merger, the Mid-Tier Holding Company Merger, the Bank
Merger, the sale of shares of Conversion Stock in the Offerings shall occur
consecutively and substantially simultaneously.
23. AMENDMENT OR TERMINATION OF THE PLAN.
If deemed necessary or desirable by the Boards of Directors of the
Primary Parties, this Plan may be substantively amended, as a result of
comments from regulatory authorities or otherwise, at any time prior to the
solicitation of proxies from Members and Shareholders to vote on the Plan and
at any time thereafter with the concurrence of the OTS. Any amendment to this
Plan made after approval by the Members and Shareholders with the concurrence
of the OTS shall not necessitate further approval by the Members or
Shareholders unless otherwise required by the OTS. This Plan shall terminate if
the sale of all shares of Conversion Stock is not completed within 24 months
from the date of the Special Meeting. Prior to the earlier of the Special
Meeting and the Shareholders' Meeting, this Plan may be terminated by the
Boards of Directors of the Primary Parties without approval of the OTS; after
the Special Meeting or the Shareholders' Meeting, the Boards of Directors may
terminate this Plan only with the approval of the OTS.
24. INTERPRETATION OF THE PLAN.
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of each of the Boards of Directors of
the Primary Parties shall be final, subject to the authority of the OTS.
25. SEVERABILITY.
If any term, provision, covenant or restriction contained in this Plan is
held by a court or a federal or state regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions contained in this Plan shall remain in
full force and effect, and shall in no way be affected, impaired or
invalidated.
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26. MISCELLANEOUS.
This Plan is to be governed by and construed in accordance with the laws
of the United States. None of the cover page, the table of contents, or the
section headings are to be considered a part of this Plan, but are included
solely for convenience of reference and shall in no way define, limit, extend,
or describe the scope or intent of any of the provisions hereof. Words in the
singular include the plural, and words in the plural include the singular.
Except for such rights as are set forth herein for Members, this Plan shall
create no rights in any Person.
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