EXHIBIT 99.2
NINTH WARD SAVINGS BANK, FSB
400 Delaware Avenue
Wilmington, Delaware 19801
(302) 421-9090
NOTICE OF SPECIAL MEETING OF MEMBERS
Notice is hereby given that a Special Meeting of Members (the "Special
Meeting") of Ninth Ward Savings Bank, FSB (the "Bank") will be held at
_______________, ___________________, Wilmington, Delaware, on November _____,
1997 at __:__ _.m. Business to be taken up at the Special Meeting shall be:
(1) To consider and vote upon a Plan of Conversion, as amended, providing
for the conversion of the Bank from a federally chartered mutual
savings bank to a federally chartered stock savings bank (the
"Converted Bank") as a wholly owned subsidiary of Delaware First
Financial Corporation (the "Company"), a newly organized Delaware
corporation formed by the Bank for the purpose of becoming the holding
company for the Bank and the related transactions provided for in such
plan, including the adoption of an amended Federal Stock Charter and
Bylaws for the Converted Bank and the adoption of the Certificate of
Incorporation and Bylaws for the Company, pursuant to the laws of the
United States and the Rules and Regulations administered by the Office
of Thrift Supervision.
(2) To consider and vote upon any other matters that may lawfully come
before the Special Meeting.
Note: As of the date of mailing of this Notice of Special Meeting of
Members, the Board of Directors is not aware of any other matters that
may come before the Special Meeting.
The members entitled to vote at the Special Meeting shall be those members
of the Bank at the close of business on _____________, 1997, who continue as
members until the Special Meeting and, should the Special Meeting be, from time
to time, adjourned to a later time, until the final adjournment thereof
BY ORDER OF THE BOARD OF DIRECTORS
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Secretary
______________________, 1997
Wilmington, Delaware
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YOUR BOARD OF DIRECTORS URGES YOU TO CONSIDER CAREFULLY THIS PROXY MATERIAL
AND, WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE SPECIAL MEETING, TO
FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) AS SOON AS POSSIBLE TO
ASSURE THAT YOUR VOTES WILL BE COUNTED. THIS WILL NOT PREVENT YOU FROM VOTING IN
PERSON IF YOU ATTEND THE SPECIAL MEETING.
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NINTH WARD SAVINGS BANK, FSB
400 Delaware Avenue
Wilmington, Delaware 19801
(302) 421-9090
PROXY STATEMENT
YOUR PROXY, IN THE FORM ENCLOSED, IS SOLICITED BY THE BOARD OF DIRECTORS OF
NINTH WARD SAVINGS BANK, FSB FOR USE AT A SPECIAL MEETING OF ITS MEMBERS TO BE
HELD ON ____________________, 1997 AND ANY ADJOURNMENT OF THAT MEETING, FOR THE
PURPOSES SET FORTH IN THE FOREGOING NOTICE OF SPECIAL MEETING. YOUR BOARD OF
DIRECTORS URGES YOU TO VOTE FOR THE PLAN OF CONVERSION.
PURPOSE OF MEETING - SUMMARY
A Special Meeting of Members (the "Special Meeting") of Ninth Ward Savings
Bank, FSB (the "Bank") will be held at ____________________________________,
__________________, Wilmington, Delaware on ____________, _______________, 1997,
at _:_ _.m., Eastern Time, for the purpose of considering and voting upon a Plan
of Conversion (the "Plan"), which was unanimously adopted by the Bank's Board of
Directors and which, if approved by a majority of the total votes eligible to be
cast by the members, will permit the Bank to convert from a federal mutual
savings bank to a federal stock savings bank (the "Converted Bank") as a wholly
owned subsidiary of Delaware First Financial Corporation (the "Company"), a
Delaware corporation formed by the Bank for the purpose of becoming the holding
company for the Bank. The conversion of the Bank to the Converted Bank and the
acquisition of control of the Converted Bank by the Company are collectively
referred to herein as the "Conversion." The Conversion is contingent upon the
members' approval of the Plan at the Special Meeting or any adjournment thereof.
The Plan provides in part that after receiving final authorization from the
Office of Thrift Supervision ("OTS"), the Company will offer for sale shares of
its common stock, par value $.01 per share (the "Common Stock"), through the
issuance of nontransferable subscription rights, first to depositors as of
December 31, 1995 with $50.00 or more on deposit in the Bank on that date
("Eligible Account Holders"), second to the Company's Employee Stock Ownership
Plan (the "ESOP") (a tax-qualified employee stock benefit plan of the Company,
as defined in the Plan), third to depositors with $50.00 or more on deposit in
the Bank on September 30, 1997, the last day of the calendar quarter preceding
approval of the Plan by the OTS ("Supplemental Eligible Account Holders"), and
fourth to other members entitled to vote at the Special Meeting ("Other
Members") (the "Subscription Offering"). Subscription rights received in any of
the foregoing categories will be subordinated to the subscription rights of
those in a prior category, with the exception that any shares of Common Stock
sold in excess of the high end of the estimated value range as established in an
independent appraisal, as discussed below, may be first sold to the ESOP. The
Company may
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offer any shares remaining after the Subscription Offering to certain members of
the general public in a community offering (the "Community Offering"). In the
Community Offering, preference will be given to natural persons and trusts of
natural persons who are permanent residents of Delaware or the Pennsylvania
counties of Chester or Delaware, the Maryland county of Cecil or the New Jersey
county of Salem. Any shares of Common Stock not purchased in the Subscription
and Community Offerings may be sold as part of a community offering on a best
efforts basis by a selling group of selected broker-dealers to be managed by
Trident Securities, Inc. (the "Syndicated Community Offering"). The aggregate
price of the Common Stock to be issued by the Company under the Plan is
currently estimated to be between $7,440,000 and $10,060,000, subject to
adjustment, as determined by an independent appraisal of the Bank's estimated
pro forma market value as converted and as a wholly owned subsidiary of the
Company. See "THE CONVERSION -- Stock Pricing" in the accompanying Prospectus.
Adoption of the proposed Charter and Bylaws of the Converted Bank and the
proposed Certificate of Incorporation and Bylaws of the Company is an integral
part of the Plan. Copies of the Plan and the proposed Charter and Bylaws for the
Converted Bank are attached to this Proxy Statement as exhibits. These documents
provide, among other things, for the termination of voting rights of members as
well as their rights to receive any surplus remaining in the event of
liquidation of the Bank. These rights, except for the rights of Eligible Account
Holders and Supplemental Eligible Account Holders in the liquidation account
established for their benefit upon completion of the Conversion, will vest
exclusively in the Company as the sole holder of the Converted Bank's
outstanding capital stock. For further information, see "THE CONVERSION --
Effect of Conversion to Stock Form on Depositors and Borrowers of Ninth Ward
Savings Bank, FSB" in the accompanying Prospectus.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE BANK UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" APPROVAL OF THE PLAN OF CONVERSION. VOTING IN FAVOR OF THE PLAN OF
CONVERSION WILL NOT OBLIGATE ANY PERSON TO PURCHASE STOCK.
The Conversion will be accomplished through adoption of a new Charter and
Bylaws to authorize the issuance of capital stock by the Bank to the Company.
The Plan of Conversion provides that the Board of Directors has the ability to
elect, at any time, not to proceed with or to delay the Conversion. It is
presently the intent of the Bank's Board of Directors to proceed with the
Conversion. Under the Plan, shares of the Common Stock, subject to adjustment,
are being offered for sale by the Company. Upon completion of the Conversion,
the Converted Bank will issue all of its newly issued shares of capital stock to
the Company in exchange for at least 75% of the net proceeds of the Conversion.
None of the Bank's assets will be distributed in order to effect the Conversion
other than to pay expenses incident thereto.
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The net proceeds from the sale of Common Stock in the Conversion will
substantially increase the Bank's capital, which will increase the amount of
funds available for lending and investment, and support current operations and
the continued growth of the Bank's business. The holding company structure will
provide greater flexibility than the Bank alone would have for diversification
of business activities and geographic operations. Management believes that this
increase in capital and operating flexibility will enable the Bank to compete
more effectively with other savings institutions and other types of financial
service organizations. Management also believes that the Conversion will enhance
the future access of the Company to the capital markets.
DELAWARE FIRST FINANCIAL CORPORATION
Delaware First Financial Corporation was incorporated under the laws of the
State of Delaware in September 1997 at the direction of the Board of Directors
of the Bank for the purpose of serving as a savings institution holding company
of the Converted Bank upon the acquisition of all of the capital stock issued by
the Converted Bank in the Conversion. The Company has received approval from the
OTS to acquire control of the Converted Bank, subject to satisfaction of certain
conditions. Prior to the Conversion, the Company has not engaged and will not
engage in any material operations. Upon consummation of the Conversion, the
Company will have no significant assets other than the outstanding capital stock
of the Converted Bank, up to 25% of the net proceeds of the Conversion (after
deducting amounts infused into the Bank and before deducting amount used to fund
the ESOP) and a note receivable from the ESOP. Upon consummation of the
Conversion, the Company's principal business will be overseeing the business of
the Bank and investing the portion of the net Conversion proceeds retained by
it.
As a holding company, the Company will have greater flexibility than the
Bank to diversify its business activities through existing or newly formed
subsidiaries or through acquisition or merger with other financial institutions,
although the Company currently does not have any plans, agreements, arrangements
or understandings with respect to any such acquisitions or mergers. After the
Conversion, the Company will be classified as a unitary savings and loan holding
company and will be subject to regulation by the OTS.
The Company's executive offices are located at 400 Delaware Avenue,
Wilmington, Delaware 19801, and its main telephone number is (302) 421-9090.
NINTH WARD SAVINGS BANK, FSB
The Bank is a federal mutual savings bank operating through a single office
located in Wilmington, Delaware and serving Wilmington, Delaware and surrounding
areas of New Castle County. The Bank was chartered by the State of Delaware in
1922 under the name Ninth Ward Building and Loan Association. The Bank changed
its name to Ninth Ward Savings and Loan Association in 1954. The Bank adopted a
federal charter in 1992, at which
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time it adopted its present name of Ninth Ward Savings Bank, FSB. At June 30,
1997, the Bank had total assets of $112.5 million, total deposits of $78.4
million and retained earnings of $6.1 million.
The principal business of the Bank historically has consisted of attracting
deposits from the general public and investing these deposits in loans secured
by first mortgages on one- to four-family ("single-family") residences in the
Bank's market area. The Bank derives its income principally from interest earned
on loans and, to a lesser extent, interest earned on mortgage-backed securities
and investment securities and noninterest income. Funds for these activities are
provided principally by operating revenues, deposits, repayments of outstanding
loans, investment securities and mortgage-backed securities.
Historically, the Bank has operated as a traditional savings association,
emphasizing the origination of loans secured by single-family residences. At
June 30, 1997, $82.6 million, or 88.9% of the Bank's loan portfolio, consisted
of single-family residential mortgage loans in its market area. However, the
Bank's Board of Directors anticipates relatively slow growth in residential loan
demand within the Bank's market area. Further, the Board of Directors believes
that as a result of recent consolidations of financial institutions, there will
be increasing local demand for commercial business and consumer loans. As a
result, the Board of Directors has determined to refocus the Bank's strategy.
Pursuant to this new strategy, while continuing to pursue its existing business
of originating single-family residential mortgage loans, the Bank will also seek
to take advantage of the business opportunities identified by the Board of
Directors by gradually expanding into commercial real estate, small business and
consumer lending. The Board of Directors and management currently are developing
programs for commercial lending and expanding the Bank's existing home equity
lending program.
The Bank's executive offices are located at 400 Delaware Avenue,
Wilmington, Delaware 19801, and its main telephone number is (302) 421-9090.
INFORMATION RELATING TO VOTING AT THE SPECIAL MEETING
The Board of Directors of the Bank has fixed the close of business on
______________, 1997 as the record date (the "Voting Record Date') for the
determination of members entitled to notice of and to vote at the Special
Meeting. All holders of the Bank's deposit or other authorized accounts are
members of the Bank under its current mutual charter. Borrowers as of January 1,
1993, are members of the Bank for as long as such borrowings are in existence.
However, borrowers who had borrowings at such date who no longer have such
borrowings, as well as persons who became borrowers after such date, are not
members of the Bank. All members of record as of the close of business on the
Voting Record Date who continue as such until the date of the Special Meeting
will be entitled to vote at the Special Meeting or any adjournment thereof.
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Each depositor member will be entitled at the Special Meeting to cast one
vote for each $100, or fraction thereof, of the aggregate withdrawal value of
all of his savings accounts in the Bank as of the Voting Record Date. Borrower
members will be entitled to one vote at the Special Meeting in addition to any
votes such borrower member may have as a result of being a depositor in the
Bank. No member may cast more than 1,000 votes.
Approval of the Plan to be presented at the Special Meeting will require
the affirmative vote of at least a majority of the total outstanding votes of
the Bank's members eligible to be cast at the Special Meeting. As of the Voting
Record Date for the Special Meeting, there were approximately ____________ votes
eligible to be cast, of which ____________ votes constitute a majority.
Members may vote at the Special Meeting or any adjournment thereof in
person or by proxy. All properly executed proxies received by the Bank will be
voted in accordance with the instructions indicated thereon by the members
giving such proxies. If no contrary instructions are given, such proxies will be
voted in favor of the Plan of Conversion described herein. If any other matters
are properly presented before the Special Meeting and may properly be voted
upon, the proxies solicited hereby will be voted on such matters by the proxy
holders named therein as directed by the Board of Directors of the Bank. Valid,
previously executed general proxies, which typically are obtained from members
when they open their accounts at the Bank, will not be used to vote for approval
of the Plan of Conversion, even if the respective members do not execute another
proxy or attend the Special Meeting and vote in person.
Any member giving a proxy will have the right to revoke his proxy at any
time before it is voted by delivering written notice or a duly executed proxy
bearing a later date to the Secretary of the Bank, provided that such written
notice is received by the Secretary prior to the Special Meeting or any
adjournment thereof, or by attending the Special Meeting and voting in person.
FAILURE TO RETURN AN EXECUTED PROXY FOR THE SPECIAL MEETING OR TO ATTEND
THE SPECIAL MEETING AND VOTE IN PERSON WOULD HAVE THE SAME EFFECT AS VOTING
AGAINST THE CONVERSION.
Proxies may be solicited by officers, directors or other employees of the
Bank, in person, by telephone or through other forms of communication. Such
persons will be reimbursed by the Bank only for their expenses incurred in
connection with such solicitation.
The proxies solicited hereby will be used only at the Special Meeting and
at any adjournment thereof and will not be used at any other meeting.
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DESCRIPTION OF PLAN OF CONVERSION
The OTS has approved the Plan, subject to the Plan's approval by the
members of the Bank entitled to vote on the matter and subject to the
satisfaction of certain other conditions imposed by the OTS in its approval.
Approval by the OTS, however, does not constitute a recommendation or
endorsement of the Plan by the OTS.
Effect of Conversion to Stock Form on Depositors and Borrowers of the Bank
General Each depositor in a mutual savings institution such as the Bank has
both a deposit account and a pro rata ownership interest in the retained
earnings of that institution based upon the balance in his or her deposit
account. However, this ownership interest is tied to the depositor's account and
has no tangible market value separate from such deposit account. Any other
depositor who opens a deposit account obtains a pro rata interest in the
retained earnings of the institution without any additional payment beyond the
amount of the deposit. A depositor who reduces or closes his or her account
receives a portion or all of the balance in the account but nothing for his or
her ownership interest, which is lost to the extent that the balance in the
account is reduced.
Consequently, depositors normally do not have a way to realize the value of
their ownership, which has realizable value only in the unlikely event that the
mutual institution is liquidated. In such event, the depositors of record at
that time, as owners, would share pro rata in any residual retained earnings
after other claims are paid.
Upon consummation of the Conversion, permanent nonwithdrawable capital
stock will be created to represent the ownership of the institution. The capital
stock is separate and apart from deposit accounts and is not and cannot be
insured by the FDIC. Transferable certificates will be issued to evidence
ownership of the stock, which will enable the stock to be sold or traded, if a
purchaser is available, with no effect on any account held in the Bank. Under
the Plan, all of the capital stock of the Converted Bank will be acquired by the
Company in exchange for a portion of the net proceeds from the sale of the
Common Stock in the Conversion. The Common Stock will represent an ownership
interest in the Company and will be issued upon consummation of the Conversion
to persons who elect to participate in the Conversion by purchasing the shares
being offered.
Continuity During the Conversion process, the normal business of the Bank
of accepting deposits and making loans will continue without interruption. The
Converted Bank will continue to be subject to regulation by the OTS and the
FDIC, and FDIC insurance of accounts will continue without interruption. After
the Conversion, the Converted Bank will continue to provide services for
depositors and borrowers under current policies and by its present management
and staff.
The Board of Directors serving the Bank at the time of the Conversion will
serve as the Board of Directors of the Converted Bank after the Conversion. The
Board of Directors of the
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Company will consist of the individuals currently serving on the Board of
Directors of the Bank. All officers of the Bank at the time of the Conversion
will retain their positions with the Converted Bank after the Conversion.
Voting Rights. Upon the completion of the Conversion, depositor and
borrower members as such will have no voting rights in the Converted Bank, or
the Company and, therefore, will not be able to elect directors of the Converted
Bank, or the Company or to control their affairs. Currently these rights are
accorded to depositors of the Bank. Subsequent to the Conversion, voting rights
will be vested exclusively in the stockholders of the Company which, in turn,
will own all of the stock of the Converted Bank. Each holder of Common Stock
shall be entitled to vote on any matter to be considered by the stockholders of
the Company, subject to the provisions of the Company's Certificate of
Incorporation.
Deposit Accounts and Loans. The Bank's deposit accounts, the balances of
individual accounts and existing federal deposit insurance coverage will not be
affected by the Conversion. Deposit accounts will remain insured by the FDIC.
Furthermore, the Conversion will not affect the loan accounts, the balances of
these accounts and the obligations of the borrowers under their individual
contractual arrangements with the Bank.
Tax Effects. The Bank has received an opinion from its special counsel,
Peabody & Brown., Washington, D.C., as to the material federal income tax
consequences of the Conversion, and as to the generally applicable material
federal income tax consequences of the Conversion to the Bank's account holders
and to persons who purchase Common Stock in the Conversion. The opinion provides
that the Conversion will constitute one or more reorganizations for federal
income tax purposes under Section 368(a)(1)(F) of the Internal Revenue Code of
1986, as amended ("Internal Revenue Code"). Among other things, the opinion also
provides that: (i) no gain or loss will be recognized by the Bank in its mutual
or stock form by reason of the Conversion; (ii) no gain or loss will be
recognized by its account holders upon the issuance to them of accounts in the
Converted Bank in stock form immediately after the Conversion, in the same
dollar amounts and on the same terms and conditions as their accounts at the
Bank immediately prior to the Conversion; (iii) the tax basis of each account
holder's interest in the liquidation account will be equal to the value, if any,
of that interest; (iv) the tax basis of the Common Stock purchased in the
Conversion will be equal to the amount paid therefor increased, in the case of
Common Stock acquired pursuant to the exercise of Subscription Rights, by the
fair market value, if any, of the Subscription Rights exercised; (v) the holding
period for the Common Stock purchased in the Conversion will commence upon the
exercise of such holder's Subscription Rights and otherwise on the day following
the date of such purchase; and (vi) gain or loss will be recognized to account
holders upon the receipt of liquidation rights or the receipt or exercise of
Subscription Rights in the Conversion, to the extent such liquidation rights and
Subscription Rights are deemed to have value, as discussed below.
The opinion of Peabody & Brown is based in part upon, and subject to
the continuing validity in all material respects through the date of the
Conversion of, various representations
7
of the Bank and upon certain assumptions and qualifications, including that the
Conversion is consummated in the manner and according to the terms provided in
the Plan. Such opinion is also based upon the Internal Revenue Code, regulations
now in effect or proposed thereunder, current administrative rulings and
practice and judicial authority, all of which are subject to change and such
change may be made with retroactive effect. Unlike private letter rulings
received from the Internal Revenue Service ("IRS"), an opinion is not binding
upon the IRS and there can be no assurance that the IRS will not take a position
contrary to the positions reflected in such opinion, or that such opinion will
be upheld by the courts if challenged by the IRS.
Peabody & Brown has advised the Bank that an interest in a liquidation
account has been treated by the IRS, in a series of private letter rulings which
do not constitute formal precedent, as having nominal, if any, fair market value
and therefore it is likely that the interests in the liquidation account
established by the Bank as part of the Conversion will similarly be treated as
having nominal, if any, fair market value. Accordingly, it is likely that such
depositors of the Bank who receive an interest in such liquidation account
established by the Bank pursuant to the Conversion will not recognize any gain
or loss upon such receipt.
Peabody & Brown has further advised the Bank that the federal income tax
treatment of the receipt of Subscription Rights pursuant to the Conversion is
uncertain, and recent private letter rulings issued by the IRS have been in
conflict. For instance, the IRS adopted the position in one private ruling that
Subscription Rights will be deemed to have been received to the extent of the
minimum pro rata distribution of such rights, together with the rights actually
exercised in excess of such pro rata distribution, and with gain recognized to
the extent of the combined fair market value of the pro rata distribution of
Subscription Rights plus the Subscription Rights actually exercised. Persons who
do not exercise their Subscription Rights under this analysis would recognize
gain upon receipt of rights equal to the fair market value of such rights,
regardless of exercise, and would recognize a corresponding loss upon the
expiration of unexercised rights that may be available to offset the previously
recognized gain. Under another IRS private ruling, Subscription Rights were
deemed to have been received only to the extent actually exercised. This private
ruling required that gain be recognized only if the holder of such rights
exercised such rights, and that no loss be recognized if such rights were
allowed to expire unexercised. There is no authority that clearly resolves this
conflict among these private rulings, which may not be relied upon for
precedential effect. However, based upon express provisions of the Internal
Revenue Code and in the absence of contrary authoritative guidance, Peabody &
Brown has provided in its opinion that gain will be recognized upon the receipt
rather than the exercise of Subscription Rights. Further, also based upon a
published IRS ruling and consistent with recognition of gain upon receipt rather
than exercise of the Subscription Rights, Peabody & Brown has provided in its
opinion that the subsequent exercise of the Subscription Rights will not give
rise to gain or loss. Regardless of the position eventually adopted by the IRS,
the tax consequences of the receipt of the Subscription Rights will depend, in
part, upon their valuation for federal income tax purposes.
If the Subscription Rights are deemed to have a fair market value, the
receipt of such rights will be taxable to Eligible Account Holders, Supplemental
Eligible Account Holders and
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other eligible members who exercise their Subscription Rights, even though such
persons would have received no cash from which to pay taxes on such taxable
income. The Bank could also recognize a gain on the distribution of such
Subscription Rights in an amount equal to their aggregate value. In the opinion
of FinPro, Inc., an independent appraisal firm retained by the Bank to prepare
an appraisal of the Bank, whose opinion is not binding upon the IRS, the
Subscription Rights do not have any value, based on the fact that such fights
are acquired by the recipients without cost, are non-transferable and of short
duration and afford the recipients the fight only to purchase shares of the
Common Stock at a price equal to its estimated fair market value, which will be
the same price as the price paid by purchasers in the Community Offering for
unsubscribed shares of Common Stock. Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members are encouraged to consult with their
own tax advisors as to the tax consequences in the event that the Subscription
Rights are deemed to have a fair market value. Because the fair market value, if
any, of the Subscription Rights issued in the Conversion depends primarily upon
the existence of certain facts rather than the resolution of legal issues,
Peabody & Brown., has neither adopted the opinion of FinPro, Inc. as its own nor
incorporated such opinion of FinPro, Inc. in its opinion issued in connection
with Conversion.
THE FEDERAL AND STATE INCOME TAX DISCUSSION SET FORTH ABOVE DOES NOT
PURPORT TO CONSIDER ALL ASPECTS OF FEDERAL AND STATE INCOME TAXATION WHICH MAY
BE RELEVANT TO EACH ELIGIBLE ACCOUNT HOLDER, SUPPLEMENTAL ACCOUNT HOLDER AND
OTHER MEMBER ENTITLED TO SPECIAL TREATMENT UNDER THE INTERNAL REVENUE CODE, SUCH
AS TRUSTS, INDIVIDUAL RETIREMENT ACCOUNTS, OTHER EMPLOYEE BENEFIT PLANS,
INSURANCE COMPANIES AND ELIGIBLE ACCOUNT HOLDERS, SUPPLEMENTAL ELIGIBLE ACCOUNT
HOLDERS AND OTHER MEMBERS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES. DUE TO THE INDIVIDUAL NATURE OF TAX CONSEQUENCES, EACH ELIGIBLE ACCOUNT
HOLDER, SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER AND OTHER MEMBER IS URGED TO
CONSULT HIS OR HER OWN TAX AND FINANCIAL ADVISOR AS TO THE EFFECT OF SUCH
FEDERAL AND STATE INCOME TAX CONSEQUENCES ON HIS OR HER OWN PARTICULAR FACTS AND
CIRCUMSTANCES, INCLUDING THE RECEIPT AND EXERCISE OF SUBSCRIPTION RIGHTS, AND
ALSO AS TO ANY OTHER TAX CONSEQUENCES ARISING OUT OF THE CONVERSION.
Liquidation Account. In the unlikely event of a complete liquidation of the
Bank in its present mutual form, each holder of a deposit account in the Bank
would receive his pro rata share of any assets of the Bank remaining after
payment of claims of all creditors (including the claims of all depositors to
the withdrawal value of their accounts). His pro rata share of such remaining
assets would be the same proportion of such assets as the value of his deposit
account was to the total of the value of all deposit accounts in the Bank at the
time of liquidation.
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After the Conversion, each deposit account holder on a complete liquidation
would have a claim of the same general priority as the claims of all other
general creditors of the Bank. Therefore, except as described below, his claim
would be solely in the amount of the balance in his deposit account plus accrued
interest. He would have no interest in the value of the Bank above that amount.
The Plan provides for the establishment, upon the completion of the
Conversion, of a special "liquidation account" for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in an amount equal to
the net worth of the Bank as of the date of its latest statement of financial
condition contained in the final Prospectus. Each Eligible Account Holder (a
person with a qualifying deposit in the Bank on December 31, 1995) and each
Supplemental Eligible Account Holder (a person with a qualifying deposit in the
Bank on September 30, 1997) would be entitled, on a complete liquidation of the
Converted Bank after completion of the Conversion, to an interest in the
liquidation account. Each Eligible Account Holder would have an initial interest
in such liquidation account for each qualifying deposit held in the Bank on
December 31, 1995 and each Supplemental Eligible Account Holder would have an
initial interest in such liquidation account for each qualifying deposit held in
the Bank on September 30, 1997. The interest as to each qualifying deposit
account would be in the same proportion of the total liquidation account as the
balance of such qualifying deposit account was to the balance in all deposit
accounts of Eligible Account Holders and Supplemental Eligible Account Holders
on such date. However, if the amount in the qualifying deposit account on any
annual closing date (December 31) of the Bank subsequent to the relevant
eligibility date is less than the amount in such account on the relevant
eligibility date, or any subsequent closing date, then the Eligible Account
Holder's or Supplemental Eligible Account Holder's interest in the liquidation
account would be reduced from time to time by an amount proportionate to any
such reductions, and such interest would cease to exist if he ceases to maintain
an account at the Converted Bank that has the same Social Security number as
appeared on his account(s) at the relevant eligibility date. The interest in the
liquidation account would never be increased, notwithstanding any increase in
the related deposit account after the Conversion.
Any assets remaining after the above liquidation rights of Eligible Account
Holders and Supplemental Eligible Account Holders were satisfied would be
distributed to the entity or persons holding the Bank's capital stock at that
time.
A merger, consolidation, sale of bulk assets or similar combination or
transaction with an FDIC-insured institution in which the Bank is not the
surviving insured institution would not be considered to be a "liquidation"
under which distribution of the liquidation account could be made. In such a
transaction, the liquidation account would be assumed by the surviving
institution.
The creation and maintenance of the liquidation account will not restrict
the use or application of any of the capital accounts of the Bank, except that
the Bank may not declare or pay a cash dividend on, or repurchase any of, its
capital stock if the effect of such dividend or repurchase would be to cause its
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retained earnings to be reduced below the aggregate amount then required for the
liquidation account.
Interpretation and Amendment of the Plan
To the extent permitted by law, all interpretations of the Plan by the Bank
will be final. The Plan provides that the Bank's Board of Directors shall have
the sole discretion to interpret and apply the provisions of the Plan to
particular facts and circumstances and to make all determinations necessary or
desirable to implement such provisions, including but not limited to matters
with respect to giving preference in the Community Offering to natural persons
and trusts of natural persons who are permanent residents of the Local
Community, and any and all interpretations, applications and determinations made
by the Board of Directors in good faith and on the basis of such information and
assistance as was then reasonably available for such purpose shall be conclusive
and binding upon the Bank and its members and subscribers in the Subscription
and Community Offerings, subject to the authority of the OTS.
The Plan provides that, if deemed necessary or desirable by the Board of
Directors, the Plan may be substantively amended by a two-thirds vote of the
Board of Directors at any time prior to submission of the Plan and proxy
materials to the Bank's members. After submission of the Plan and proxy
materials to the members, the Plan may be amended by a two-thirds vote of the
Board of Directors at any time prior to the Special Meeting and at any time
following the Special Meeting with the concurrence of the OTS. In its
discretion, the Board of Directors may modify or terminate the Plan upon the
order of the regulatory authorities without a resolicitation of proxies or
another Special Meeting. However, any modification of the Plan resulting in a
material change in the terms of the Conversion would require a resolicitation of
proxies and another meeting of stockholders.
The Plan further provides that in the event that mandatory new regulations
pertaining to conversions are adopted by the OTS or any successor agency prior
to completion of the Conversion, the Plan will be amended to conform to such
regulations without a resolicitation of proxies or another Special Meeting. In
the event that such new conversion regulations contain optional provisions, the
Plan may be amended to utilize such optional provisions at the discretion of the
Board of Directors without a resolicitation of proxies or another Special
Meeting. By adoption of the Plan, the Bank's members will be deemed to have
authorized amendment of the Plan under the circumstances described above.
11
Conditions and Termination
Completion of the Conversion requires the approval of the Plan by the
affirmative vote of not less than a majority of the total outstanding votes of
the members of the Bank and the sale of all shares of the Common Stock within 24
months following approval of the Plan by the members. If these conditions are
not satisfied, the Plan will be terminated, and the Bank will continue its
business in the mutual form of organization. The Plan may be terminated by the
Board of Directors at any time prior to the Special Meeting and, with the
approval of the OTS, by the Board of Directors at any time thereafter.
Review By Administrative and Judicial Authorities
Federal law provides (i) that persons aggrieved by a final action of the
OTS which approves, with or without conditions, a plan of conversion may obtain
review of such final action only by filing a written petition in the United
States Court of Appeals for the circuit in which the principal office or
residence of such person is located, or in the United States Court of Appeals
for the District of Columbia Circuit, requesting that the final action of the
OTS be modified, terminated or set aside, and (ii) that such petition must be
filed within 30 days after publication of notice of such final action in the
Federal Register, or 30 days after the date of mailing of the notice and proxy
statement for the meeting of the converting institution's members at which the
conversion is to be voted on, whichever is later.
Other
All statements made in this Proxy Statement are hereby qualified by the
contents of the Plan which is attached hereto as Exhibit A and should be
consulted for further information. In addition, attention is directed to the
section entitled "THE CONVERSION" in the accompanying Prospectus for a more
detailed discussion of various aspects of the Plan. Adoption of the Plan by the
Bank's members shall be deemed approval of the authority of the Board of
Directors to amend or terminate the Plan in accordance with its terms.
CHARTER AND BYLAWS
The following is a summary of certain provisions of the Charter and Bylaws
which will become effective upon the conversion of the Bank into a federally
chartered stock savings bank Complete copies of the Charter and Bylaws of the
Converted Bank are attached as Exhibits B and C, respectively, to this Proxy
Statement.
The Converted Bank will be authorized to issue 3,000,000 shares of common
stock with a par value of $0.01 per share. The Converted Bank's common stock
will not be insured by the FDIC. All of the Converted Bank's outstanding common
stock will be owned by the Company. Accordingly, exclusive voting rights with
respect to the affairs of the Bank after the Conversion will be vested in the
Board of Directors of the Company.
12
The Converted Bank's Charter will provide that the number of Directors
shall be not fewer than five or more than 15, with the exact number to be fixed
in the Converted Bank's Bylaws. The proposed Bylaws provide that the number of
the Converted Bank's directors shall be 7. Directors generally will serve for
terms of three years, and the terms of Directors will be staggered so that
approximately one-third of the Board is elected each year.
In addition to the common stock, the Converted Bank will be authorized to
issue 500,000 shares of serial preferred stock, par value $0.01 per share. The
Board of Directors will be permitted, without further stockholder approval, to
authorize the issuance of preferred stock in series and to fix the voting
powers, designations, preferences and relative, participating, optional,
conversion and other special rights of the shares of each series of the
preferred stock and the qualifications, limitations and restrictions thereof.
Preferred stock may rank prior to common stock in dividend fights, liquidation
preferences, or both, and may have voting fights.
Neither the Charter nor the Bylaws of the Converted Bank provide for
indemnification of officers and directors. However, the Converted Bank will be
required by OTS regulations (as the Bank currently is) to indemnify its
Directors, officers and employees against legal and other expenses incurred in
defending lawsuits brought against them by reasons of the performance of their
official duties. Indemnification may be made to any such person only if final
judgment on the merits is in his favor or, in case of (i) settlement, (ii) final
judgment against him or (iii) final judgment in his favor, other than on the
merits, if a majority of the Directors of the Converted Bank determines that he
was acting in good faith within the scope of his employment or authority as he
could reasonably have perceived it under the circumstances and for a purpose he
could have reasonably believed under the circumstances was in the best interest
of the Converted Bank or its stockholders. If a majority of the Directors of the
Converted Bank concludes that in connection with an action any person ultimately
may become entitled to indemnification, the Directors may authorize payment of
reasonable costs and expenses arising from defense or settlement of such action.
HOW TO ORDER STOCK
The accompanying Prospectus contains information about the business and
financial condition of the Bank and additional information about the Conversion
and the Subscription Offering and the Community Offering. Enclosed is a Stock
Order Form to be used to subscribe for stock. You are not obligated to subscribe
for stock, and voting to approve the Conversion will not obligate you to
subscribe for stock.
All Subscription Rights are nontransferable and will expire if not
exercised by returning the accompanying stock Order Form with full payment (or
appropriate instructions authorizing withdrawal from a savings or certificate
account at the Bank) for all shares for which subscription is made to the
Company by 12:00 Noon, Eastern Time, on _________________ , 1997, unless
extended by the Bank. A postage-paid reply envelope is provided for this
purpose. Provided that not all of the shares are subscribed for in the
13
Subscription Offering by members of the Bank, the remaining shares may be
offered to certain members of the general public in the Community Offering with
preference given to natural persons and trusts of natural persons who reside in
the Local Community. Any shares of Common Stock not purchased in the
Subscription and Community Offerings may be offered, at the discretion of the
Company, to certain members of the general public as part of a community
offering on a best efforts basis by a selling group of broker-dealers to be
managed by Trident Securities, Inc.
The information contained in this Proxy Statement is limited in its scope
to use in the solicitation of proxies for the Special Meeting to vote on the
Plan of Conversion. It is not intended for use in the offering of the Common
Stock. Such offering is made only by the Prospectus.
ADDITIONAL INFORMATION
The information contained in the accompanying Prospectus, including a more
detailed description of the Plan, is intended to help you evaluate the
Conversion and is incorporated herein by reference.
All persons eligible to vote at the Special Meeting should review both this
Proxy Statement and the accompanying Prospectus.
YOUR BOARD OF DIRECTORS URGES YOU TO CONSIDER CAREFULLY THIS PROXY MATERIAL
AND, WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE SPECIAL MEETING, TO
FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) AS SOON AS POSSIBLE TO
ASSURE THAT YOUR VOTES WILL BE COUNTED. THIS WILL NOT PREVENT YOU FROM VOTING IN
PERSON IF YOU ATTEND THE SPECIAL MEETING. YOU MAY REVOKE YOUR PROXY BY WRITTEN
INSTRUMENT DELIVERED TO THE SECRETARY OF THE BANK AT ANY TIME PRIOR TO OR AT THE
SPECIAL MEETING OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
THIS PROXY STATEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY THE COMMON STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS.
BY ORDER OF THE BOARD OF DIRECTORS
----------------------------------
Secretary
________________, 1997
Wilmington, Delaware
14
AMENDED PLAN OF CONVERSION
DATED AS OF
SEPTEMBER 17, 1997
----------
NINTH WARD SAVINGS BANK, FSB
Wilmington, Delaware
TABLE OF CONTENTS
-----------------
SECTION PAGE
- ------- ----
II. Definitions............................................................. 2
III. Steps Prior to Submission of the Plan to the Members for Approval...... 7
IV. Meeting of Members...................................................... 8
V. Summary Proxy Statement.................................................. 8
VI. Offering Documents...................................................... 9
VII. Consummation of Conversion............................................. 9
VIII. Stock Offering........................................................ 10
A. General............................................................... 10
B. Independent Evaluation and Purchase Price of Shares................... 10
C. Subscription Offering................................................. 11
D. Community Offering.................................................... 15
E. Other Offering........................................................ 16
F. Limitations Upon Purchases of Shares of Conversion Stock.............. 16
G. Restrictions on and Other Characteristics of Stock Being Sold......... 18
H. Mailing of Offering Materials and Collation of Subscriptions.......... 20
I. Method of Payment..................................................... 20
J. Undelivered, Defective or Late Order Forms, Insufficient Payment...... 21
K. Members in Non-Qualified States or in Foreign Countries............... 22
L. Sales Commissions..................................................... 22
IX. Charter, Articles of Incorporation and Bylaws........................... 22
X. Registration and Market Making........................................... 23
i
XI. Status of Savings Accounts and Loans Subsequent to Conversion........... 23
XII. Effect of Conversion................................................... 23
XIII. Liquidation Account................................................... 24
XIV. Restrictions on Acquisition of Holding Company......................... 25
XV. Interpretation and Amendment or Termination of the Plan................. 26
XVI. Expenses of the Conversion............................................. 26
XVII. Contributions to Tax-Qualified Employee Stock Benefit Plans.......... 27
Exhibit A - Federal Stock Charter........................................... A-1
Exhibit B - Bylaws.......................................................... B-1
ii
NINTH WARD SAVINGS BANK, FSB
Wilmington, Delaware
Plan of Conversion
From Mutual to Stock Organization
and Holding Company Formation
I. General.
On June 30, 1997, the Board of Directors of Ninth Ward Savings Bank, FSB,
Wilmington, Delaware (the "Bank"), after careful study and consideration,
adopted by unanimous vote this Plan of Conversion (the "Plan"), which provides
for (i) the conversion of the Bank from a federally chartered mutual savings
bank to a federally chartered stock savings bank (the "Converted Bank"), and
(ii) the concurrent formation of a holding company for the Converted Bank (the
"Holding Company") The conversion of the Bank to the Converted Bank and the
acquisition of control of the Converted Bank by the Holding Company are
collectively referred to herein as the "Stock Conversion."
Now, pursuant to Section XV hereof, the Board of Directors Amends and
Restates the Plan as follows. Pursuant to the Plan, shares of Conversion Stock
in the Holding Company will be offered as part of the Stock Conversion in a
Subscription Offering pursuant to non-transferable Subscription Rights at a
predetermined and uniform price first to Eligible Account Holders of record as
of December 31, 1995 second to Tax-Qualified Employee Stock Benefit Plans, third
to Supplemental Eligible Account Holders of record as of the last day of the
calendar quarter preceding OTS approval of the Bank's application to convert to
stock form (September 30, 1997), and fourth to Other Members of the Bank.
Concurrently with the Subscription Offering, shares not subscribed for in the
Subscription Offering may be offered as part of the Stock Conversion to the
general public in a Community Offering, Shares remaining will then be offered to
the general public in an underwritten public offering or otherwise. The
aggregate Purchase Price of the Conversion Stock will be based upon an
independent appraisal of the Bank and will reflect the estimated pro forma
market value of the Converted Bank, as a subsidiary, of the Holding Company.
The Stock Conversion is subject to regulations of the Director of the
Office of Thrift Supervision of the United States Department of the Treasury
("OTS") pursuant to Section 5(i) of the Home Owners' Loan Act, and Part 563b of
the Rules and Regulations Applicable to All Savings Associations.
Consummation of the Conversion is subject to the approval of this Plan and
the Conversion by the OTS and by Members of the Bank at a special meeting of the
Members to be called to consider the Conversion by the greater of (i) the
affirmative vote of Members of the Bank holding not less than a majority of the
total votes eligible to be cast, or (ii) 51% of the votes cast at the special
meeting.
It is the desire of the Board of Directors to attract new capital to the
Bank to increase its net worth, to support future savings growth, to increase
the amount of funds available for other lending and investment, to provide
greater resources for the expansion of customer services and to facilitate
future expansion. In addition, the Board of Directors intends to implement stock
option plans and other stock benefit plans following the Conversion in order to
better attract and retain qualified directors and officers.
No change will be made in the Board of Directors or management of the Bank
as a result of the Conversion.
II. Definitions.
Acting in Concert: The term "Acting in Concert" means: (i) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement; 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, joint account, agreement or other arrangement, whether written or
otherwise. Any person (as defined by 12 C.F.R. ss 563b.2(a)(26)) Acting in
Concert with another person ("other party") shall also be deemed to be Acting in
Concert with any person who is also Acting in Concert with that other party,
except that any Tax-Qualified Employee Stock Benefit Plan will not be deemed to
be Acting in Concert with its trustee or a person who serves in a similar
capacity solely for the purpose of determining whether stock held by the trustee
and stock held by the Tax-Qualified Employee Benefit Plan will be aggregated.
Associate: The term "Associate," when used to indicate a relationship with
any person, means: (i) any corporation or organization (other than the Bank, the
Holding Company, or a majority-owned subsidiary of the Bank or Holding Company)
of which such person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10% or more of any class of equity securities; (ii) any
trust or other estate in which such person has a substantial beneficial interest
or as to which such person serves as trustee or in a similar fiduciary capacity,
except that, for purposes of Paragraphs VIII.F. and VIII.G.4. hereof, such term
shall not include a Tax-Qualified Employee Stock Benefit Plan in which a person
has a substantial beneficial interest or serves as a trustee in a similar
fiduciary capacity, and, for purposes of Paragraph VIII.G. and I. hereof, such
term shall not include any Tax-Qualified Employee Stock Benefit Plan; and (iii)
any relative or spouse of such person, or any relative of such spouse, who has
the same home as such person or who is a director of the Bank or the Holding
Company, or any of their subsidiaries.
Bank: The term "Bank" means Ninth Ward Savings Bank, FSB, in its form as a
federal mutual savings bank.
2
Capital Stock: The term "Capital Stock" means any and all authorized shares
of stock of the Converted Bank after the Stock Conversion.
Community Offering: The term "Community Offering" means the offering of
shares of Conversion Stock to the general public by the Holding Company
concurrently with the Subscription Offering, giving preference to natural
persons and trusts of natural persons (including individual retirement and Keogh
retirement accounts and personal trusts in which such natural persons have
substantial interests) who permanently reside in the Bank's Local Community.
Conversion: The term "Conversion" means the Stock Conversion.
Conversion Stock: The term "Conversion Stock" means the shares of common
stock to be issued and sold by the Holding Company pursuant to the Plan in
connection with the Stock Conversion.
Converted Bank: The term "Converted Bank" means Ninth Ward Savings Bank,
FSB in its form as a federal capital stock savings bank resulting from the
conversion of the Bank to the stock form of organization in connection with the
Stock Conversion.
Eligibility Record Date: The term "Eligibility Record Date" means the close
of business on December 31, 1995.
Eligible Account Holder: The term "Eligible Account Holder" means the
holder of a Qualifying Deposit in the Bank on the Eligibility Record Date.
FDIC: The term "FDIC" means the Federal Deposit Insurance Corporation or
any successor federal agency which insures deposit accounts held in savings
associations.
Form AC Application: The term "Form AC Application" means the application
submitted to the OTS for approval of the Stock Conversion.
H-(e)1 Application: The term "H-(e)1 Application" means the application to
the OTS on OTS Application H-(e)l, or OTS Application H-(e)1-S if applicable,
for approval of the Holding Company's acquisition of all of the Capital Stock.
Holding Company: The term "Holding Company" means a corporation to be
incorporated by the Bank under state law for the purpose of becoming a savings
and loan holding company for the Converted Bank through the issuance and sale of
Conversion Stock under the Plan and the concurrent acquisition of 100% of the
Capital Stock to be issued and sold pursuant to the Plan in connection with the
Stock Conversion.
Holding Company Stock: The term "Holding Company Stock" means any and all
authorized shares of stock of the Holding Company.
3
Independent Appraiser: The term "Independent Appraiser" means a person
independent of the Bank, experienced and expert in the area of corporate
appraisal, and acceptable to the OTS, retained by the Bank to prepare an
appraisal of the pro forma market value of the Converted Bank, as a subsidiary
of the Holding Company.
Local Community: The term "Local Community" means the State of Delaware and
the Pennsylvania counties of Chester and Delaware, the Maryland county of Cecil,
and the New Jersey county of Salem.
Market Maker: The term "Market Maker" means a dealer (i.e., any person who
engages, either for all or part of such person's time, directly or indirectly as
agent, broker or principal in the business of offering, buying, selling, or
otherwise dealing or trading in securities issued by another person) who, with
respect to a particular security: (i)(a) regularly publishes bona fide,
competitive bid and offer quotations in a recognized interdealer quotation
system or (b) furnishes bona fide competitive bid and offer quotations on
request; and (ii) is ready, willing and able to effect transactions in
reasonable quantities at its quoted prices with other brokers or dealers.
Member: The term "Member" means any person or entity who qualifies as a
member of the Bank under its federal mutual charter and bylaws prior to
Conversion.
Officer: The term "Officer" means an executive officer of the Holding
Company or the Bank (as applicable), including the Chairman of the Board, Vice
Chairman of the Board, [RAY] President, Executive Vice Presidents, Senior Vice
Presidents in charge of principal business functions, Secretary and Treasurer.
Order Form: The term "Order Form" means the order form or forms to be used
by Eligible Account Holders, Supplemental Eligible Account Holders and other
persons eligible to purchase Conversion Stock pursuant to the Plan.
Other Member: The term "Other Member" means any person, other than an
Eligible Account Holder or a Supplemental Eligible Account Holder, who is a
Member as of the Voting Record Date.
OTS: The term "OTS" means the Office of Thrift Supervision of the United
States Department of the Treasury or any successor agency having jurisdiction
over the Conversion.
OTS Notice: The term "OTS Notice" means the notice of intent to convert to
a federal stock bank submitted to the OTS.
Plan: The term "Plan" means this Plan of Conversion which provides for the
conversion of the Bank from a federally chartered mutual savings bank to a
federally chartered stock savings bank (i.e., the Converted Bank), and the
concurrent formation of a holding company for the Converted Bank.
4
Qualifying Deposit: The term "Qualifying Deposit" means a savings balance
in any Savings Account in the Bank as of the close of business on the
Eligibility Record Date or the Supplemental Eligibility Record Date, as
applicable, which is equal to or greater than $50.00.
Registration Statement: The term "Registration Statement" means the
Registration Statement on Form S-1 or SB-2 or other applicable form and any
amendments thereto filed by the Holding Company with the SEC pursuant to the
Securities Act of 1933, as amended, to register shares of Conversion Stock.
Resident: The term "Resident," as used in this Plan in relation to the
preference afforded natural persons and trusts of natural persons in the Local
Community, means any natural person who occupies a dwelling within the Local
Community, has an intention to remain within the Local Community for a period of
time (manifested by establishing a physical, ongoing, non-transitory presence
within the Local Community) and continues to reside therein at the time of the
Subscription and Community Offerings. The Bank may utilize deposit or loan
records or such other evidence provided to it to make the determination as to
whether a person is residing in the Local Community. To the extent the "person"
is a corporation or other business entity, the principal place of business or
headquarters shall be within the Local Community. To the extent the "person" is
a personal benefit plan, the circumstances of the beneficiary shall apply with
respect to this definition. In the case of all other benefit plans,
circumstances of the trustee shall be examined for purposes of this definition.
In all cases, such determination shall be in the sole discretion of the Bank.
Sale: The terms "sale" and "sell" mean every contract to sell or otherwise
dispose of a security or an interest in a security for value, but such terms do
not include an exchange of securities in connection with a merger or acquisition
approved by the OTS or any other federal agency having jurisdiction.
Savings Account: The term "Savings Account" means a withdrawable deposit in
the Bank, a withdrawable deposit in the Converted Bank after the Stock
Conversion.
SEC: The term "SEC" means the Securities and Exchange Commission or any
successor agency.
Special Meeting: The term "Special Meeting" means the Special Meeting of
Members to be called for the purpose of submitting the Plan to the Members for
their approval.
Stock Conversion: The term "Stock Conversion" means: (i) the amendment of
the Bank's federal mutual charter and bylaws to authorize issuance of shares of
Capital Stock by the Converted Bank and to conform to the requirements of a
federal capital stock savings bank under the laws of the United States and
applicable regulations; (ii) the issuance and sale of Conversion Stock by the
Holding Company in the Subscription and Community Offerings
5
and/or in an underwritten public offering or otherwise; and (iii) the purchase
by the Holding Company of all the Capital Stock of the Converted Bank to be
issued in the Stock Conversion immediately following or concurrently with the
close of the sale of the Conversion Stock.
Subscription Offering: The term "Subscription Offering" means the offering
of shares of Conversion Stock to the Eligible Account Holders, Tax-Qualified
Employee Stock Benefit Plans, Supplemental Eligible Account Holders and Other
Members under the Plan, giving preference to natural persons and trusts of
natural persons (including individual retirement and Keogh retirement accounts
and personal trusts in which such natural persons have substantial interests)
who are permanent Residents of the Bank's Local Community if permitted by
applicable law and approved by the Bank's Board of Directors in its sole
discretion.
Subscription and Community Prospectus: The term "Subscription and Community
Prospectus" means the final prospectus to be used in connection with the
Subscription and Community Offerings.
Subscription Rights: The term "Subscription Rights" means non-transferable,
non-negotiable, personal rights of Eligible Account Holders, Tax-Qualified
Employee Stock Benefit Plans, Supplemental Eligible Account Holders) and Other
Members to purchase Conversion Stock offered under the Plan in connection with
the Stock Conversion.
Supplemental Eligibility Record Date: The term "Supplemental Eligibility
Record Date" means the last day of the calendar quarter preceding the approval
of the Plan by the OTS.
Supplemental Eligible Account Holder: The term "Supplemental Eligible
Account Holder" means the holder of a Qualifying Deposit in the Bank (other than
Officers and directors and their Associates) on the Supplemental Eligibility
Record Date.
Tax-Qualified Employee Stock Benefit Plan: The term "Tax-Qualified Employee
Stock Benefit Plan" means any defined benefit plan or defined contribution plan
of the Bank or Holding Company, such as an employee stock ownership plan, stock
bonus plan, profit sharing plan or other plan, which, with its related trust,
meets the requirements to be "qualified" under section 401 of the Internal
Revenue Code of 1986, as amended. A "non tax qualified employee stock benefit
plan" means any defined benefit plan or defined contribution plan which is not
so qualified.
Voting Record Date: The term "Voting Record Date" means the date fixed by
the Board of Directors of the Bank to determine Members of the Bank entitled to
vote at the Special Meeting.
6
III. Steps Prior to Submission of the Plan to the Members for Approval.
Prior to submission of the Plan to its Members for approval, the Bank must
receive approvals from the appropriate regulatory authorities for consummation
of the Conversion in accordance with applicable laws and regulations. The
following steps must be taken prior to receipt of such regulatory approvals:
A. The Board of Directors shall adopt the Plan by not less than a
two-thirds vote.
B. Promptly after adoption of the Plan by the Board of Directors, the
Bank shall notify its Members of the adoption of the Plan by
publishing a statement in a newspaper having a general circulation in
each community in which the Bank maintains an office and/or by mailing
a letter to each of its Members.
C. A press release relating to the proposed Conversion may be submitted
to the local media.
D. Copies of the Plan adopted by the Board of Directors shall be made
available for inspection at the Bank's office.
E. The Bank shall cause the Holding Company to be incorporated under
state law, and the Board of Directors of the Holding Company shall
concur in the Plan by at least a two-thirds vote.
F. Also promptly following the adoption of this Plan, the Bank shall file
the OTS Notice and the Holding Company shall file an H-(e)1
Application.
G. As soon as practicable following the adoption of this Plan, the Bank
shall file the Form AC Application, and the Holding Company shall file
the Registration Statement and the H-(e)1 Application. Upon receipt of
notification from the OTS that the Form AC Application is properly
executed and not materially incomplete, the Bank shall publish notice
of the filing of the Form AC Application in a newspaper having a
general circulation in each community in which the Bank maintains an
office and/or by mailing a letter to each of its Members, and shall
publish such other notices of the Conversion as may be required in
connection with the H-(e)l Application and by the regulations and
policies of the OTS.
H. The Bank shall obtain an opinion of its tax advisors or a favorable
ruling from the United States Internal Revenue Service which shall
state that the Stock Conversion will not result in any gain or loss
for federal income tax purposes to the Bank. Receipt of a favorable
opinion or ruling, is a condition precedent to completion of the
Conversion.
7
IV. Meeting of Members.
Upon receipt of all regulatory approvals required for consummation of the
Stock Conversion, the Bank shall convene the Special Meeting scheduled in
accordance with the Bank's Bylaws to vote on the Plan. Promptly after receipt of
OTS approval of the Form AC Application and at least 30 days but not more than
45 days prior to the Special Meeting, the Bank will distribute proxy
solicitation materials to all voting Members as of the Voting Record Date
established for voting at the Special Meeting. Proxy materials will also be sent
to each beneficial holder of an Individual Retirement Account where the name of
the beneficial holder is disclosed on the Bank's records. The proxy solicitation
materials will include a copy of the Proxy Statement and other documents
authorized for use by the regulatory authorities and may also include a
Subscription and Community Prospectus as provided in Paragraph VI below. The
Bank will also advise each Eligible Account Holder and Supplemental Eligible
Account Holder not entitled to vote at the Special Meeting of the proposed
Conversion and the scheduled Special Meeting and provide a postage paid card on
which to indicate whether he or she wishes to receive the Subscription and
Community Prospectus, if the Subscription Offering is not held concurrently with
the proxy solicitation of Members for the Special Meeting.
Pursuant to applicable regulations, an affirmative vote of at least a
majority of the total outstanding votes of the Members will be required for
approval of the Plan. Voting may be in person or by proxy.
By voting in favor of the adoption of the Plan and the Conversion, the
Members will be voting in favor of (i) the Stock Conversion and the adoption by
the Bank of the Federal Stock Charter and Bylaws in the forms attached as
Exhibits A and B to this Plan.
The OTS shall be notified of the actions of the Members at the Special
Meeting promptly following the Special Meeting.
V. Summary Proxy Statement.
The Proxy Statement furnished to Members may be in summary form, provided
that a statement is made in bold-faced type that a more detailed description of
the proposed transaction may be obtained by returning an enclosed postage paid
card or other written communication requesting a supplemental information
statement. Without prior approval from the OTS, the Special Meeting shall not be
held fewer than 20 days after the last day on which the supplemental information
statement is mailed to Members requesting the same. The supplemental information
statement may be combined with the Subscription and Community Prospectus if the
Subscription Offering is commenced concurrently with the proxy solicitation of
Members for the Special Meeting.
8
VI. Offering Documents.
The Holding Company may commence the Subscription Offering and, provided
that the Subscription Offering has commenced, may commence the Community
Offering concurrently with or during the proxy solicitation of Members and may
close the Subscription and Community Offerings before the Special Meeting,
provided that the offer and sale of the Conversion Stock shall be conditioned
upon approval of the Plan by the Members at the Special Meeting.
The Bank may require Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members to return to the Bank by a reasonable date
certain a postage-paid written communication requesting receipt of a
Subscription and Community Prospectus in order to be entitled to receive a
Subscription and Community Prospectus, provided that the Subscription Offering
shall not be closed until the expiration of 30 days after mailing a proxy
solicitation materials to voting Members and a postage-pai written communication
to non-voting Eligible Account Holders and Supplemental Eligible Account
Holders. If the Subscription Offering is commenced within 45 days after the
Special Meeting, the Bank shall transmit, no more than 30 days prior to the
commencement of the Subscription Offering, to each voting Member who had been
furnished with proxy solicitation materials and to each non-voting Eligible
Account Holder and Supplemental Eligible Account Holder written notice of the
commencement of the Subscription Offering which shall state that the Bank is not
required to furnish a Subscription and Community Prospectus to them unless they
return by a reasonable date certain a postage-paid written communication
requesting the receipt of the Subscription and Community Prospectus.
Prior to commencement of the Subscription and Community Offerings, the
Holding Company shall file the Registration Statement with the SEC pursuant to
the Securities Act of 1933, as amended. The Holding Company shall not distribute
the Subscription and Community Prospectus until the Registration Statement
containing the same has been declared effective by the SEC and the
aforementioned documents have been declared effective by the OTS. The
Subscription and Community Prospectus may be combined with the Proxy Statement
for the Special Meeting.
VII. Consummation of Conversion.
The date of consummation of the Stock Conversion will be the effective date
of the amendment of the Bank's federal mutual charter to read in the form of a
federal stock charter, which shall be the date of the issuance and sale of the
Conversion Stock. After receipt of all orders for Conversion Stock, and
concurrently with the execution thereof, the amendment of the Bank's federal
mutual charter and bylaws to authorize the issuance of shares of Capital Stock
and to conform to the requirements of a federal capital stock savings and loan
association will be declared effective by the OTS, the amended bylaws approved
by the Members will become effective and the Bank will thereby be and become the
Converted Bank.
9
At such time, the Conversion Stock will be issued and sold by
the Holding Company, the Capital Stock to be issued in the Conversion will be
issued and sold to the Holding Company, and the Converted Bank will become a
wholly owned subsidiary of the Holding Company. The Converted Bank will issue to
the Holding Company 100 shares of its common stock, or such shares of common
stock as the Board of Directors shall determine, representing all of the shares
of Capital Stock to be issued by the Converted Bank in the Stock Conversion, and
the Holding Company will make payment to the Converted Bank of that portion of
the aggregate net proceeds realized by the Holding Company from the sale of the
Conversion Stock under the Plan as is necessary to increase the Converted Bank's
tangible capital to at least 10% of its adjusted total assets, or such other
portion of the aggregate net proceeds as may be authorized or required by the
OTS in excess of or less than 10% of its adjusted total assets.
VIII. Stock Offering.
A. General.
The aggregate purchase price of all shares of Conversion Stock which
will be offered and sold will be equal to the estimated pro forma market
value of the Converted Bank, as a subsidiary of the Holding Company, as
determined by an independent appraisal within the meaning of the
regulations of the OTS. The exact number of shares of Conversion Stock to
be offered will be determined by the Board of Directors of the Bank and the
Board of Directors of the Holding Company, or their respective designees,
in conjunction with the determination of the Purchase Price (as that term
is defined in Paragraph VIII.B. below). The number of shares to be offered
may be subsequently adjusted prior to completion of the Stock Conversion as
provided below.
B. Independent Evaluation and Purchase Price of Shares.
All shares of Conversion Stock sold in the Stock Conversion will be
sold at a uniform price per share referred to in this Plan as the "Purchase
Price." The Purchase Price and the total number of shares of Conversion
Stock to be offered in the Stock Conversion will be determined by the Board
of Directors of the Bank and the Board of Directors of the Holding Company,
or their respective designees, immediately prior to the simultaneous
completion of all such sales contemplated by this Plan on the basis of the
estimated pro forma market value of the Converted Bank, as a subsidiary of
the Holding Company, at such time. The estimated pro forma market value of
the Converted Bank, as a subsidiary of the Holding Company, will be
determined for such purpose by an Independent Appraiser on the basis of
such appropriate factors as are not inconsistent with applicable
regulations. Immediately prior to the Subscription and Community Offerings,
a subscription price range of shares for the offerings will be established
(the "Valuation Range"), which will vary from 15% above to 15% below the
midpoint of such range. The number of shares of Conversion Stock ultimately
issued and sold will be determined at the close of the Subscription and
Community
10
Offerings and any other offering. The subscription price range and the
number of shares to be offered may be changed subsequent to the
Subscription and Community Offerings as the result of any appraisal updates
prior to the completion of the Stock Conversion, without notifying eligible
purchasers in the Subscription and Community Offerings and without a
resolicitation of subscriptions, provided the aggregate Purchase Price is
not below the low end or more than 15 percent above the high end of the
Valuation Range previously approved by the OTS or if, in the opinion of the
Boards of Directors of the Bank and the Holding Company, the new Valuation
Range established by the appraisal update does not result in a materially
different capital position of the Converted Bank.
Notwithstanding the foregoing, no sale of Conversion Stock may be
consummated unless, prior to such consummation, the Independent Appraiser
confirms to the Bank and Holding Company and to the OTS that, to the best
knowledge of the Independent Appraiser, nothing, of a material nature has
occurred which, taking into account all relevant factors, would cause the
Independent Appraiser to conclude that the aggregate value of the
Conversion Stock at the Purchase Price is incompatible with its estimate of
the aggregate consolidated pro forma market value the Converted Bank, as a
subsidiary of the Holding Company. If such confirmation is not received,
the Bank may cancel the Subscription and Community Offerings and/or any
other offering, extend the Stock Conversion, establish a new Valuation
Range, extend, reopen or hold new Subscription and Community Offerings
and/or other offerings or take such other action as the OTS may permit.
C. Subscription Offering.
Non-transferable Subscription Rights to purchase shares of Conversion
Stock will be issued at no cost to Eligible Account Holders, Tax-Qualified
Employee Stock Benefit Plans, Supplemental Eligible Account Holders and
Other Members of the Bank pursuant to priorities established by applicable
regulations. All shares must be sold, and, to the extent that Conversion
Stock is available, no subscriber will be allowed to purchase fewer than 25
shares of Conversion Stock, provided that this number shall be decreased if
the aggregate purchase price exceeds $500. The priorities established by
applicable regulations for the purchase of shares are as follows:
1. Category No. 1: Eligible Account Holders.
a. Each Eligible Account Holder shall receive, without payment,
non-transferable Subscription Rights to purchase Conversion
Stock in an amount equal to the greater of the maximum
purchase limitation in the Community Offering, e.g. $100,000
for a single account whether held jointly or individually or
$200,000 when aggregated with purchases by an Associate of
that person or 15 times the product (rounded down to the
next whole number) obtained by multiplying the total number
11
of shares of Conversion Stock to be issued by a fraction of
which the numerator is the amount of the Qualifying Deposit
of the Eligible Account Holder and the denominator is the
total amount of Qualifying Deposits of all Eligible Account
Holders in the Bank in each case on the Eligibility Record
Date.
b. Non-transferable Subscription Rights to purchase Conversion
Stock received by Officers and directors of the Bank and
their Associates based on their increased deposits in the
Bank in the one year period preceding the Eligibility Record
Date shall be subordinated to all other subscriptions
involving the exercise of non-transferable Subscription
Rights to purchase shares pursuant to this Category.
c. In the event of an oversubscription for shares of Conversion
Stock pursuant to this Category, shares of Conversion Stock
shall be allocated among subscribing Eligible Account
Holders as follows:
(i) Shares of Conversion Stock 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 of Conversion
Stock sufficient to make its total allocation equal to
100 shares or the total amount of its subscription,
whichever is less.
(ii) Any shares not so allocated shall be allocated among
the subscribing Eligible Account Holders on an
equitable basis, related to the amounts of their
respective Qualifying Deposits, as compared to the
total Qualifying Deposits of all subscribing Eligible
Account Holders.
2. Category No. 2: Tax-Qualified Employee Stock Benefit Plans.
a. Tax-Qualified Employee Stock Benefit Plans of the Converted
Bank shall receive, without payment, non-transferable
Subscription Rights to purchase up to 10% of the shares of
Conversion Stock issued in the Stock Conversion.
b. Subscription rights received in this Category shall be
subordinated to the Subscription Rights received by Eligible
12
Account Holders pursuant to Category No. 1, provided that
any shares of Conversion Stock sold in excess of the high
end of the Valuation Range may be first sold to
Tax-Qualified Employee Stock Benefit Plans.
3. Category No. 3: Supplemental Eligible Account Holders.
a. In the event that the Eligibility Record Date is more than
15 months prior to the date of the latest amendment of the
Form AC Application filed prior to OTS approval, then each
Supplemental Eligible Account Holder shall receive, without
payment, non-transferable Subscription Rights to purchase
Conversion Stock in an amount equal to the greater of the
maximum purchase limitation in the Community Offering, e.g.
$100,000 for a single account whether held jointly or
individually or $200,000 when aggregated with purchases by
an Associate of that person or 15 times the product (rounded
down to the next whole number) obtained by multiplying the
total number of the shares of Conversion Stock to be issued
by a fraction of which the numerator is the amount of the
Qualifying Deposit of the Supplemental Eligible Account
Holder and the denominator is the total amount of the
Qualifying Deposits of all Supplemental Eligible Account
Holders on the Supplemental Eligibility Record Date.
b. Subscription Rights received pursuant to this Category shall
be subordinated to the Subscription Rights received by the
Eligible Account Holders and by Tax-Qualified Employee Stock
Benefit Plans pursuant to Category Nos. 1 and 2.
c. Any non-transferable Subscription Rights to purchase shares
received by an Eligible Account Holder in accordance with
Category No. I shall reduce to the extent thereof the
Subscription Rights to be distributed to such Eligible
Account Holder pursuant to this Category.
d. In the event of an oversubscription for shares of Conversion
Stock pursuant to this Category, shares of Conversion Stock
shall be allocated among the subscribing Supplemental
Eligible Account Holders as follows:
(i) Shares of Conversion Stock shall be allocated among
subscribing Supplemental Eligible Account Holders so as
13
to permit each such Supplemental Eligible Account
Holder, to the extent possible, to purchase a number of
shares of Conversion Stock sufficient to make its total
allocation (including the number of shares of
Conversion Stock, if any, allocated in accordance with
Category No. 1) equal to 100 shares of Conversion Stock
or the total amount of its subscription, whichever is
less.
(ii) Any shares of Conversion Stock not allocated in
accordance with subparagraph (1) above shall be
allocated among the subscribing Supplemental Eligible
Account Holders on an equitable basis, related to the
amounts of their respective Qualifying Deposits on the
Supplemental Eligibility Record Date as compared to the
total Qualifying Deposits of all subscribing,
Supplemental Eligible Account Holders in each case on
the Supplemental Eligibility Record Date.
4. Category No. 4: Other Members.
a. Each Other Member, other than those Members who are Eligible
Account Holders or Supplemental Eligible Account Holders,
shall receive, without payment, non-transferable
Subscription Rights to purchase Conversion Stock in an
amount equal to the greater of the maximum purchase
limitation in the Community Offering, e.g. $100,000 for a
single account whether held jointly or individually or
$200,000 when aggregated with purchases by an Associate of
that person or one-tenth of one percent of the total
offering of shares of Conversion Stock.
b. Subscription Rights received pursuant to this Category shall
be subordinated to the Subscription Rights received by
Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans and Supplemental Eligible Account Holders
pursuant to Category Nos. 1, 2 and 3.
c. In the event of an oversubscription for shares of Conversion
Stock pursuant to this Category, the shares of Conversion
Stock available shall be allocated among subscribing Other
Members as to permit each subscribing Other Member, to the
extent possible, to purchase a number of shares sufficient
to make his or her total allocation of Conversion Stock
equal to the lesser of 100 shares or the number of shares
14
subscribed for by the Other Member. The shares remaining
thereafter will be allocated among subscribing Other Members
whose subscriptions remain unsatisfied on an equitable basis
as determined by the Board of Directors in its sole
discretion.
Order Forms may provide that the maximum purchase limitation shall be based
on the midpoint of the Valuation Range. In the event the aggregate Purchase
Price of the Conversion Stock issued and sold is below the midpoint of the
Valuation Range, that portion of subscriptions in excess of the maximum purchase
limitation will be refunded. In the event the aggregate Purchase Price of
Conversion Stock issued and sold is above the midpoint of the Valuation Range,
persons who have subscribed for the maximum purchase limitation may be given the
opportunity to increase their subscriptions so as to purchase the maximum number
of shares subject to the availability of shares. The Bank will not otherwise
notify subscribers of any change in the number of shares of Conversion Stock
offered.
D. Community Offering.
1. Any shares of Conversion Stock not purchased through the
exercise of Subscription Rights in the Subscription Offering
may be sold in a Community Offering, which may commence
concurrently with the Subscription Offering. Shares of
Conversion Stock will be offered in the Community Offering
to the general public, giving preference to natural persons
and the trusts of natural persons (including individual
retirement and Keogh retirement accounts and personal trusts
in which such natural persons have substantial interests)
who are permanent Residents of the Local Community. The
Community Offering may commence concurrently with or as soon
as practicable after the completion of the Subscription
Offering and must be completed within 45 days after the last
day of the Subscription Offering, unless extended by the
Holding Company with the approval of the OTS. The offering
price of the Conversion Stock to the general public in the
Community Offering will be the same price paid for such
stock by Eligible Account Holders and other persons in the
Subscription Offering. If sufficient shares are not
available to satisfy all orders in the Community Offering,
the shares available will be allocated by the Holding
Company in its discretion. The Holding Company shall have
the right to accept or reject orders in the Community
Offering in whole or in part.
2. Notwithstanding the above, orders accepted in the Community
Offering shall be filled up to a maximum of 2% of the
Conversion Stock, and thereafter remaining shares shall be
allocated on an equal number of shares basis per order until
all orders have been filled.
15
3. The Conversion Stock to be offered in the Community Offering
will be offered and sold in a manner that will achieve the
widest distribution of the Conversion Stock.
E. Syndicated Community Offering.
Subject to such terms, conditions and procedures as may be
determined by the Bank, 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. Each order for conversion stock in
the Syndicated Community Offering shall be subject to the absolute
right of the Bank to accept or reject such order in whole or in part
either at the time of receipt of an order or as soon as practical
after the receipt of the Syndicated Community Offering. Orders for
conversion stock and Syndicated Community Offering shall first be
filled to a maximum of 2% of the total number of shares of conversion
stock sold in the offerings and thereafter any remaining shares shall
be allocated on an equal number of shares basis order until all orders
have been filled. The Bank 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 Bank with any required regulatory
approval. If for any reason a Syndicated Community Offering of shares
of conversion stock not sold in the Subscription Offering and the
Community Offering cannot be affected, or in the event any
insignificant residue of shares of conversion stock is not sold in a
Subscription Offering, Community Offering or Syndicated Community
Offering, the Bank shall use its best efforts to obtain other
purchases for such shares in such manner and upon such conditions as
may be satisfactory to the OTS.
F. Limitations Upon Purchases of Shares of Conversion Stock.
The following additional limitations and exceptions shall apply
to all purchases of Conversion Stock:
1. No Person may purchase fewer than 25 shares of Conversion
Stock in the Stock Conversion, to the extent such shares are
available, subject to the provisions of Paragraph VIII.C
herein.
2. Purchases of Conversion Stock in the Community Offering by
any person shall not exceed $100,000 for a single purchaser
or $200,000 when aggregated with purchases by an Associate
of that person, or a group of persons Acting in Concert,
except that Tax-Qualified Employee Stock Benefit Plans may
purchase up to 10% of the total shares of Conversion Stock
to be issued in the Stock Conversion, and shares to be held
16
by the Tax-Qualified Employee Stock Benefit Plans and
attributable to a participant thereunder shall not be
aggregated with shares of Conversion Stock purchased by such
participant or any other purchaser of Conversion Stock in
the Stock Conversion.
3. Officers and directors of the Bank and the Holding Company,
and Associates thereof, may not purchase in the aggregate
more than 33% of the shares of Conversion Stock issued in
the Conversion.
4. Directors of the Holding Company and the Bank shall not be
deemed to be Associates or a group Acting in Concert with
other directors solely as a result of membership on the
Board of Directors of the Holding Company or the Bank or any
of their subsidiaries.
5. Purchases of shares of Conversion Stock in the Stock
Conversion by any person shall not exceed $100,000 for a
single purchaser or $200,000 when aggregated with purchases
by an Associate of that person, or a group of persons Acting
in Concert, except that Tax Qualified Employee Stock Benefit
Plans may purchase up to 10% of the total shares of
Conversion Stock to be issued in the Stock Conversion, and
shares purchased by the Tax-Qualified Employee Stock Benefit
Plans and attributable to a participant thereunder shall not
be aggregated with shares purchased by such participant or
any other purchaser of Conversion Stock in the Stock
Conversion.
Subject to any required regulatory approval and the requirements of
applicable laws and regulations the Holding Company and the Bank may increase or
decrease any of the purchase limitations set forth herein at any time. In the
event that the individual purchase limitation is increased after commencement of
the Subscription and Community Offerings, the Holding Company and the Bank shall
permit any person who subscribed for the maximum number of shares of Conversion
Stock to purchase an additional number of shares, such 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 either the
individual purchase limitation or the number of shares of Conversion Stock to be
sold in the Stock Conversion is decreased after commencement of the Subscription
and Community Offerings, the orders of any person who subscribed for the maximum
number of shares of Conversion Stock 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.
Each person purchasing Conversion Stock in the Stock Conversion shall be
deemed to confirm that such purchase does not conflict with the purchase
limitations under the Plan or otherwise imposed by law, rule or regulation. In
the event that such purchase limitations are violated by any person (including,
any Associate or group of persons affiliated or otherwise
17
Acting in Concert with such person), the Holding Company shall have the right to
purchase from such person at the actual Purchase Price per share all shares
acquired by such person in excess of such purchase limitations or, if such
excess shares have been sold by such person, to receive the difference between
the actual Purchase Price per share paid for such excess shares and the price at
which such excess shares were sold by such person. This right of the Holding
Company to purchase such excess shares shall be assignable by the Holding
Company.
G. Restrictions on and Other Characteristics of Stock Being Sold.
1. Transferability.
Except as provided in Paragraph XIV below, Conversion Stock
purchased by persons other than directors and Officers of the
Bank and directors and Officers of the Holding Company will be
transferable without restriction. Conversion Stock purchased by
such directors or Officers shall not be sold or transferred for a
period of one year from the effective date of the Stock
Conversion except for any sale or transfer of such shares (i)
following the death of the original purchaser, or (ii) resulting
from an exchange of securities in a merger or acquisition
approved by the applicable regulatory authorities.
The Conversion Stock issued by the Holding Company to such
directors and Officers shall bear the following legend giving
appropriate notice of the one-year holding period 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 applicable regulations
of the Office of Thrift Supervision of the United States
Department of the Treasury. Except in the event of the death
of the registered holder, the shares represented by this
Certificate may not be sold prior thereto without a legal
opinion of counsel for the Holding Company that said sale is
permissible under the provisions of applicable laws and
regulations."
In addition, the Holding, Company shall give appropriate
instructions to the transfer agent for the Holding Company Stock
with respect to the applicable restrictions relating to the
transfer of restricted stock. Any shares of Holding Company Stock
subsequently issued as a stock dividend, stock split or
otherwise, with respect to any such restricted stock, shall be
subject to the same holding period restrictions for such
directors and Officers as may be then applicable to such
restricted stock.
2. Repurchase and Dividend Rights.
For a period of three years following the consummation of
the Conversion, any repurchases of Holding Company Stock by the
Holding Company from any Person shall be subject to the then
18
applicable rules and regulations and policies of the OTS. The
Converted Bank may not declare or pay a cash dividend on or
repurchase any of its Capital Stock if the result thereof would
be to reduce the category capital of the Converted Bank below the
amount required for the liquidation account described in
Paragraph XIII. Further, any dividend declared or paid on the
Capital Stock shall comply with the then applicable rules and
regulations of the OTS.
Present regulations also provide that the Converted Bank may
not declare or pay a cash dividend on or repurchase any of its
Capital Stock if the result thereof would be to reduce the
regulatory capital of the Converted Bank below the amount
required for the Liquidation Account. Further, any dividend
declared or paid on, or repurchase of, the Capital Stock shall be
in compliance with the Rules and Regulations of the OTS, or other
applicable regulations. The above limitations shall not preclude
payment of dividends on, or repurchases of, Holding Company Stock
in the event applicable federal regulatory limitations are
liberalized subsequent to the Stock Conversion.
3. Voting Rights.
After the Stock Conversion, holders of Savings Accounts in
and obligors on loans of the Bank will not have voting rights in
the Converted Bank. Exclusive voting rights with respect to the
Holding Company shall be vested in the holders of Holding Company
Stock. Holders of Savings Accounts in and obligors on loans of
the Converted Bank will not have voting rights in the Holding
Company except and to the extent that such persons become
stockholders of the Holding Company, and the Holding Company will
have exclusive voting rights with respect to the Converted Bank's
Capital Stock. Each stockholder of the Holding Company will be
entitled to vote on any matters coming before the stockholders of
the Holding Company for consideration and will be entitled to one
vote for each share of Holding Company Stock owned by said
stockholder.
4. Purchases by Officers. Directors and Associates Following,
Stock Conversion.
Without the prior written approval of the OTS, Officers and
directors of the Converted Bank and Officers and directors of the
Holding Company, and their Associates, shall be prohibited for a
period of three years following completion of the Stock
Conversion from purchasing outstanding shares of Holding Company
Stock, except from a broker or dealer registered with the SEC.
Notwithstanding the preceding sentence, this restriction shall
not apply to (i) negotiated transactions involving more than 1%
of the total outstanding shares of Holding Company Stock, and
(ii) purchases made and shares held by a Tax-Qualified Employee
Stock Benefit Plan or non-tax-qualified employee stock benefit
plans which may be attributable to Officers or directors may be
made without OTS permission or the use of a broker or dealer.
19
H. Mailing of Offering Materials and Collation of Subscriptions.
The sale of all shares of Conversion Stock offered pursuant to the
Plan must be completed within 24 months after approval of the Plan at the
Special Meeting. After approval of the Plan by the appropriate regulatory
authorities and the declaration of the effectiveness of the Subscription
and Community Prospectus by the SEC, the Holding Company shall distribute
such Subscription and Community Prospectus and Order Forms for the purchase
of shares in accordance with the terms of the Plan.
The recipient of an Order Form will be provided neither fewer than 20
days nor more than 45 days from the date of mailing, unless extended, to
complete, execute and return properly the Order Form to the Holding Company
or the Bank. Self-addressed, postage paid return envelopes will accompany
these forms when mailed. The Bank or Holding Company will collate the
returned executed Order Forms upon completion of the Subscription Offering.
Failure of any eligible subscriber to return a properly completed and
executed Order Form within the prescribed time limits shall be deemed a
waiver and a release by such person of any rights to purchase shares of
Conversion Stock hereunder.
The sale of all shares of Conversion Stock shall be completed within
45 days after the last day of the Subscription Offering unless extended by
the Holding Company and the Bank with the approval of the OTS.
I. Method of Payment.
Payment for all shares of Conversion Stock subscribed for in the
Subscription and Community Offerings must be received in full by the Bank
or the Holding Company, together with properly completed and executed Order
Forms, indicating thereon the number of shares being subscribed for and
such other information as may be required thereon. and, in the case of
orders submitted at an office of the Bank, executed Forms of Certification
as required by OTS regulations, on or prior to the expiration date
specified on the Order Form, unless such date is extended by the Holding
Company and the Bank; provided, however, that payment by Tax-Qualified
Employee Stock Benefit Plans for Conversion Stock may be made to the Bank
concurrently with the completion of the Stock Conversion.
Payment for all shares of Conversion Stock may be made in cash (if
delivered in person) or by check or money order, or, if the subscriber has
a Savings Account in the Bank (including a certificate of deposit), the
subscriber may authorize the Bank to charge the subscriber's Savings
Account for the purchase amount. The Bank shall pay interest at not less
than the passbook rate on all amounts paid in cash or by check or money
order to purchase shares of Conversion Stock in the Subscription and
20
Community Offerings from the date payment is received until the Stock
Conversion is completed or terminated. The Bank shall not knowingly loan
funds or otherwise extend credit to any person for the purpose of
purchasing Conversion Stock.
If a subscriber authorizes the Bank to charge its Savings Account, the
funds may remain in the subscriber's Savings Account and continue to earn
interest, but may not be used by the subscriber until all Conversion Stock
has been sold or the Stock Conversion is terminated, whichever is earlier.
The withdrawal will be given effect only concurrently with the sale of all
shares of Conversion Stock in the Stock Conversion and only to the extent
necessary to satisfy the subscription at a price equal to the Purchase
Price. The Bank will allow subscribers to purchase shares of Conversion
Stock by withdrawing funds from certificate accounts without the assessment
of early withdrawal penalties. In the case of early withdrawal of only a
portion of such account, the certificate evidencing such account shall be
cancelled if the remaining balance of the account is less than the
applicable minimum balance requirement. In that event, the remaining
balance will earn interest at the passbook rate. This waiver of the early
withdrawal penalty is applicable only to withdrawals made in connection
with the purchase of Conversion Stock under the Plan.
Tax-Qualified Employee Stock Benefit Plans may subscribe for shares by
submitting, an Order Form, and in the case of an employee stock ownership
plan together with evidence of a loan commitment from the Holding Company
or an unrelated financial institution for the purchase of the shares of the
Conversion Stock, during the Subscription Offering and by making payment
for the shares of Conversion Stock on the date of the closing of the Stock
Conversion.
J. Undelivered, Defective or Late Order Forms, Insufficient Payment.
In the event an Order Form: (i) is not delivered and is returned to
the Holding Company or the Bank by the United States Postal Service (or the
Holding Company or the Bank is unable to locate the addressee); (ii) is not
received by the Holding Company or the Bank, or is received by the Holding
Company or the Bank after termination of the date specified thereon; (iii)
is defectively completed or executed; (iv) is not accompanied by the total
required payment for the shares of Conversion Stock subscribed for
(including cases in which the subscribers' Savings Accounts are
insufficient to cover the authorized withdrawal for the required payment);
or (v) is delivered by facsimile or with payment by wire transfer the
Subscription Rights of the person to whom such rights have been granted
will not be honored and will be treated as though such person failed to
return the completed Order Form within the time period specified therein.
Alternatively, the Holding Company or the Bank may, but will not be
required to, waive any irregularity relating to any Order Form or require
the submission of a corrected Order Form or the remittance of full payment
for subscribed shares of Conversion Stock by such date as the Holding
Company or the Bank may specify. Subscription orders, once tendered, cannot
21
be revoked. The Holding Company's and Bank's interpretation of the terms
and conditions of this Plan and acceptability of the Order Forms will be
final and conclusive.
K. Members in Non-Qualified States or in Foreign Countries.
The Holding Company will make reasonable efforts to comply with the
securities laws of all states in the United States in which persons
entitled to subscribe for Conversion Stock pursuant to the Plan reside.
However, no such person will be offered or receive any Conversion Stock
under this Plan who resides in a foreign country or who resides in a state
of the United States with respect to which any or all of the following
apply: (i) a small number of persons otherwise eligible to subscribe for
shares of Conversion Stock under this Plan reside in such state or foreign
country; (ii) the granting of Subscription Rights or the offer or sale of
shares of Conversion Stock to such person would require the Holding Company
or the Bank or their employees to register, under the securities laws of
such state, as a broker, dealer, salesman or agent or to register or
otherwise qualify its securities for sale in such state or foreign country,
and (iii) such registration or qualification would be impracticable for
reasons of cost or otherwise. No payments will be made in lieu of the
granting of Subscription Rights to any such person.
L. Sales Commissions.
Sales commissions may be paid as determined by the Boards of Directors
of the Bank and the Holding, Company or their designees to securities
dealers assisting subscribers in making purchases of Conversion Stock in
the Subscription Offering or in the Community Offering, if the securities
dealer is named by the subscriber on the Order Form. In addition, a sales
commission may be paid to a securities dealer for advising and consulting
with respect to, or for managing the sale of Conversion Stock in, the
Subscription Offering, the Community Offering or any other offering.
IX. Charter, Articles of Incorporation and Bylaws.
As part of the Stock Conversion, a federal stock charter and bylaws will be
adopted to authorize the Converted Bank to operate as a federal capital stock
savings bank. By approving the Plan, the Members of the Bank will thereby
approve amending the Bank's federal mutual charter and bylaws to read in the
form of a federal stock charter and bylaws. Prior to completion of the Stock
Conversion, the proposed federal stock charter and bylaws may be amended in
accordance with the provisions and limitations for amending the Plan under
Paragraph XV below. The effective date of the amendment of the Bank's federal
mutual charter and bylaws to read in the form of a federal stock charter and
bylaws shall be the date of the issuance of the Conversion Stock, which shall be
the date of consummation of the Stock Conversion.
22
X. Registration and Market Making.
In connection and concurrently with the Stock Conversion, the Holding
Company shall register the Holding Company Stock with the SEC pursuant to the
Securities Exchange Act of 1934, as amended, and shall undertake not to
deregister the Holding Company Stock for a period of three years thereafter.
The Holding Company shall use its best efforts to encourage and assist
various Market Makers to establish and maintain a market for the Holding Company
Stock. The Holding Company shall also use its best efforts to have the Holding
Company Stock quoted on the National Association of Securities Dealers, Inc.
Automated Quotation System or listed on a national or regional securities
exchange.
XI. Status of Savings Accounts and Loans Subsequent to Conversion.
All Savings Accounts in the Bank will retain the same status after
Conversion as these accounts had prior to the Conversion. Subject to Paragraph
VIII.I. hereof, each holder of a Savings Account in the Bank shall retain,
without payment, a withdrawable Savings Account or Savings Accounts in the
Converted Bank, equal in dollar amount and on the same terms and conditions
(except with respect to voting and liquidation rights) as in effect prior to
consummation of the Stock Conversion. All Savings Accounts will continue to be
insured by the Savings Association Insurance Fund of the FDIC up to the
applicable limits of insurance coverage. All loans shall retain the same status
after the Conversion as these loans had prior to Conversion.
After the Stock Conversion, holders of Savings Accounts in and obligors on
loans of the Bank will not have voting rights in the Converted Bank. Exclusive
voting rights with respect to the Holding Company shall be vested in the holders
of the Conversion Stock. Holders of Savings Accounts in and obligors on loans of
the Converted Bank will not have any voting rights in the Holding Company except
and to the extent that such persons become stockholders of the Holding Company,
and the Holding Company will have exclusive voting rights with respect to the
Converted Bank's Capital Stock.
XII. Effect of Conversion.
Upon consummation of the Stock Conversion, the corporate existence of the
Bank shall not cease, but the Converted Bank shall be deemed to be a
continuation of the Bank, and shall succeed to all the rights, interests, duties
and obligations of the Bank as in existence as of immediately prior to the
consummation of the Stock Conversion as described in Paragraph VII.A. herein,
including but not limited to all rights and interests of the Bank in and to its
assets and properties, whether real, personal or mixed.
23
XIII. Liquidation Account.
After the Conversion, holders of Savings Accounts will not be entitled to
share in the residual assets after liquidation of the Converted Bank. However,
pursuant to applicable regulations, the Bank shall, at the time of the Stock
Conversion, establish a Liquidation Account in an amount equal to its net worth
as of the date of the latest statement of financial condition contained in the
final prospectus to be used in connection with the Stock Conversion. The
function of the Liquidation Account is to establish a priority on liquidation,
and, except as provided in Paragraph VIII.G.2. above, the existence of the
Liquidation Account shall not operate to restrict the use or application of any
of the net worth accounts of the Converted Bank.
The Liquidation Account shall be maintained by the Converted Bank
subsequent to the Stock Conversion for the benefit of Eligible Account Holders
and Supplemental Eligible Account Holders who retain their Savings Accounts in
the Converted Bank. Each Eligible Account Holder and Supplemental Eligible
Account Holder shall, with respect to each Savings Account held, have a related
inchoate interest in a portion of the Liquidation Account ("subaccount
balance").
The initial subaccount balance for a Savings Account held by an Eligible
Account Holder and/or a Supplemental Eligible Account Holder shall be determined
by multiplying the opening balance in the Liquidation Account by a fraction of
which the numerator is the amount of the qualifying deposit in the related
Savings Account and the denominator is the total amount of the qualifying
deposits of all Eligible Account Holders and Supplemental Eligible Account
Holders in the Bank. Such initial subaccount balance shall not be increased but
shall be subject to downward adjustment as provided below.
If the deposit balance in any Savings Account of an Eligible Account Holder
or Supplemental Eligible Account Holder to which the subaccount relates at the
close of business on any annual closing date subsequent to the Eligibility
Record Date or Supplemental Eligibility Record Date is less than the lesser of
(i) the deposit balance in such Savings Account at the close of business on any
annual closing date subsequent to the Eligibility Record Date or the
Supplemental Eligibility Record Date, or (ii) the amount of the Qualifying
Deposit in such Savings Account on the Eligibility Record Date or the
Supplemental Eligibility Record Date, then the subaccount balance for such
savings account shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of a
downward adjustment, the subaccount balance shall not be subsequently increased,
notwithstanding any increase in the deposit balance of the related Savings
Account. If any such Savings Account is closed, the related subaccount balance
shall be reduced to zero.
24
In the event of a complete liquidation of the Converted Bank (and only in
such event), each Eligible Account Holder and Supplemental Eligible Account
Holder shall be entitled to receive a liquidation distribution from the
Liquidation Account in the amount of the then-current adjusted subaccount
balances for Savings Accounts then held before any liquidation distribution may
be made to stockholders. No merger, consolidation, sale of bulk assets or
similar combination or transaction with another institution insured by the FDIC
shall be considered to be a complete liquidation for these purposes. In such
transactions, the Liquidation Account shall be assumed by the surviving
institution.
XIV. Restrictions on Acquisition of Holding Company.
A. Present regulations provide that for a period of three years
following completion of the Stock Conversion, no person (i.e., an
individual, a group Acting in Concert, a corporation, a partnership, an
association, a joint stock company, a trust or any unincorporated
organization or similar company, a syndicate or any other group formed for
the purpose of acquiring, holding or disposing of securities of an insured
institution or its holding company) shall directly, or indirectly, offer to
purchase or actually acquire the beneficial ownership of more than 10% of
any class of Holding Company Stock without the prior approval of the OTS.
However, approval is not required for purchases directly from the Holding
Company or underwriters or a selling group acting on their behalf with a
view towards public resale, for purchases not exceeding 1% per annum of the
shares outstanding or for the acquisition of securities by one or more
Tax-Qualified Employee Stock Benefit Plans of the Holding Company or the
Converted Bank, provided that the plan or plans do not have beneficial
ownership in the aggregate of more than 25% of any class of Holding Company
Stock. Civil penalties may be imposed by the OTS for willful violation or
assistance of any violation. Where any person, directly or indirectly,
acquires beneficial ownership of more than 10% of any class of Holding
Company Stock within such three-year period, without the prior approval of
the OTS, Holding Company Stock beneficially owned by such person in excess
of 10% shall not be counted as shares entitled to vote and shall not be
voted by any person or counted as voting shares in connection with any
matter submitted to the stockholders for a vote.
B. The Holding Company may provide in its articles of incorporation a
provision that, for a specified period of up to five years following the
date of the completion of the Stock Conversion, no person shall directly or
indirectly offer to acquire or actually acquire the beneficial ownership of
more than 10% of any class of Holding Company Stock except with respect to
purchases by one or more Tax-Qualified Employee Stock Benefit Plans of the
Holding Company or Converted Bank. The Holding Company may provide in its
articles of incorporation for such other provisions affecting the
acquisition of Holding Company Stock as shall be determined by its Board of
Directors.
25
XV. Interpretation and Amendment or Termination of the Plan.
The Bank's Board of Directors shall have the sole discretion to interpret
and apply the provisions of the Plan to particular facts and circumstances and
to make all determinations necessary or desirable to implement such provisions,
including but not limited to matters with respect to giving preference to
natural persons and trusts of natural persons who are permanent Residents of the
Bank's Local Community, and any and all interpretations, applications and
determinations made by the Board of Directors in good faith and on the basis of
such information and assistance as was then reasonably available for such
purpose shall be conclusive and binding upon the Bank and its Members and
subscribers in the Subscription and Community Offerings, subject to the
authority of the OTS.
If deemed necessary or desirable, the Plan may be substantively amended at
any time prior to submission of the Plan and proxy materials to the Members by a
two-thirds vote of the Bank's Board of Directors. After submission of the Plan
and proxy materials to the Members, the Plan may be amended by a two-thirds vote
of the Bank's Board of Directors at any time prior to the Special Meeting and at
any time following such Special Meeting with the concurrence of the OTS. In its
discretion, the Board of Directors may modify or terminate the Plan upon the
order of the regulatory authorities without a resolicitation of proxies or
another Special Meeting
In the event that mandatory new regulations pertaining to the Conversion
are adopted by the OTS, or any successor agency, prior to the completion of the
Conversion, the Plan will be amended to conform to the new mandatory regulations
without a resolicitation of proxies or another Special Meeting. In the event
that new conversion regulations adopted by the OTS, or any successor agency,
prior to completion of the Conversion contain optional provisions, the Plan may
be amended to utilize such optional provisions at the discretion of the Board of
Directors without a resolicitation of proxies or another Special Meeting.
By adoption of the Plan, the Bank's Members authorize the Board of
Directors to amend and/or terminate the Plan under the circumstances set forth
above.
XVI. Expenses of the Conversion.
The Holding Company and the Bank will use their best efforts to assure that
expenses incurred in connection with the Conversion shall be reasonable.
26
XVII. Contributions to Tax-Qualified Employee Stock Benefit Plans.
The Holding Company, the Converted Bank may make scheduled discretionary
contributions to their Tax-Qualified Employee Stock Benefit Plans, provided such
contributions does not cause the Converted Bank to fail to meet then-applicable
regulatory capital requirements.
27
Exhibit A
NINTH WARD SAVINGS BANK, FSB
FEDERAL STOCK CHARTER
Section 1. Corporate title. The full corporate title of the Bank is Ninth Ward
Savings Bank, FSB (the "Bank").
Section 2. Office. The home office shall be located in Wilmington, Delaware or
such other location in Delaware as the Board shall designate.
Section 3. Duration. The duration of the Bank is perpetual.
Section 4. Purpose and powers. The purpose of the Bank is to pursue any or all
of the lawful objectives of a Federal association chartered under section 5 of
the Home Owners' Loan Act and to exercise all of the express, implied, and
incidental powers conferred thereby and by ail acts amendatory thereof and
supplemental thereto, subject to the Constitution and laws of the United States
as they are now in effect, or as they may hereafter be amended, and subject to
all lawful and applicable rules, regulations, and orders of the Office of Thrift
Supervision ("Office").
Section 5. Capital stock. The total number of shares of all classes of the
capital stock which the Bank has authority to issue is 3,500,000, of which
3,000,000 shares shall be common stock of par value of $1.00 per share and of
which 500,000 shares shall be serial preferred stock of par value of $1.00 per
share. The shares may be issued from time to time as authorized by the board of
directors without further approval of shareholders, except as otherwise provided
in this Section 5 or to the extent that such approval is required by governing
law, rule, or regulation. The consideration for the issuance of the shares shall
be paid in full before their issuance and shall not be less than the par value.
Neither promissory notes nor future services shall constitute payment or part
payment for the issuance of shares of the Bank. The consideration for the shares
shall be cash, tangible or intangible property (to the extent direct investment
in such property would be permitted to the Bank), labor or services actually
performed for the Bank, or any combination of the foregoing. In the absence of
actual fraud in the transaction, the value of such property, labor, or services,
as determined by the board of directors of the Bank, shall be conclusive. Upon
payment of such consideration, such shares shall be deemed to be fully paid and
nonassessable. In the case of a stock dividend, that part of the surplus of the
Bank which is transferred to stated capital upon the issuance of shares as a
share dividend shall be deemed to be the consideration for their issuance.
Except for shares issuable in connection with the conversion of the Bank
from the mutual to the stock form of capitalization, no shares of capital stock
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(including shares issuable upon conversion, exchange or exercise of other
securities) shall be issued, directly or indirectly, to officers, directors, or
controlling persons of the Bank other than as part of a general public offering
or as qualifying shares to a director, unless the issuance or the plan under
which they would be issued has been approved by a majority of the total votes
eligible to be cast at a legal meeting.
Nothing contained in this Section 5 (or in any supplementary sections
hereto) shall entitle the holders of any class or series of capital stock to
vote as a separate class or series or to more than one vote per share, except as
to the cumulating of votes for the election of directors: Provided, that this
restriction on voting separately by class or series shall not apply:
(i) To any provision which would authorize the holders of preferred
stock, voting as a class or series, to elect some members of the board of
directors, less than a majority thereof, in the event of default in the
payment of dividends on any class or series of preferred stock;
(ii) To any provision which would require the holders of preferred
stock. voting as a class or series, to approve the merger or consolidation
of the Bank with another corporation or the sale, lease, or conveyance
(other than by mortgage or pledge) of properties or business in exchange
for securities of a corporation other than the Bank if the preferred stock
is exchanged for securities of such other corporation: Provided, That no
provision may require such approval for transactions undertaken with the
assistance or pursuant to the direction of the Office, the Federal Deposit
Insurance Corporation, or the Resolution Trust Corporation;
(iii) To any amendment which would adversely change the specific terms
of any class or series of capital stock as set forth in this Section 5 (or
in any supplementary sections hereto), including any amendment which would
create or enlarge any class or series ranking prior thereto in rights and
preferences. An amendment which increases the number of authorized shares
of any class or series of capital stock, or substitutes the surviving
association in a merger or consolidation for the Bank, shall not be
considered to be such an adverse change.
A description of the different classes and series (if any) of the Bank's
capital stock and a statement of the designations, and the relative rights,
preferences and limitations of the shares of each class of and series (if any)
of capital stock are as follows:
A. Common stock. Except as provided in this Section 5 (or in any
supplementary sections thereto), the holders of common stock shall exclusively
possess all voting power. Each holder of shares of common stock shall be
entitled to one vote for each share held by such holder, except as to the
cumulating of votes for the election of directors.
Whenever there shall have been paid, or declared and set aside for payment,
to the holders of the outstanding shares of any class of stock having preference
over the common stock as to the payment of dividends, the full amount of
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dividends and of sinking fund, retirement fund or other retirement payments, if
any, to which such holders are respectively entitled in preference to the common
stock, then dividends may be paid on the common stock and on any class or series
of stock entitled to participate therewith as to dividends out of any assets
legally available for the payment of dividends.
In the event of any liquidation, dissolution, or winding up of the Bank,
the holders of the common stock (and the holders of any class or series of stock
entitled to participate with the common stock in the distribution of assets)
shall be entitled to receive, in cash or in kind, the assets of the Bank
available for distribution remaining after: (i) payment or provision for payment
of the Bank's debts and liabilities; (ii) distributions or provision for
distributions in settlement of its liquidation account; and (iii) distributions
or provisions for distributions to holders of any class or series of stock
having preference over the common stock in the liquidation, dissolution, or
winding up of the Bank. Each share of common stock shall have the same relative
rights as and be identical in all respects with all the other shares of common
stock.
B. Preferred stock. The Bank may provide in supplementary sections to its
charter for one or more classes of preferred stock, which shall be separately
identified. The shares of any class may be divided into and issued in series,
with each series separately designated so as to distinguish the shares thereof
from the shares of all other series and classes. The terms of each series shall
be set forth in a supplementary section to the charter. All shares of the same
class shall be identical except as to the following relative rights and
preferences, as to which there may be variations between different series:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if so,
from which date(s) the payment date(s) for dividends, and the participating
or other special rights, if any, with respect to dividends;
(c) The voting powers, fall or limited, if any, of shares of such
series,
(d) Whether the shares of such series shall be redeemable and, if so,
the price(s) at which, and the terms and conditions on which, such shares
may be redeemed;
(e) The amount(s) payable upon the shares of such series in the event
of voluntary or involuntary liquidation, dissolution, or winding up of the
Bank;
(f) Whether the shares of such series shall be entitled to the benefit
of a sinking or retirement fund to be applied to the purchase or redemption
of such shares, and if so entitled, the amount of such fund and the manner
of its application, including the price(s) at which such shares may be
redeemed or purchased through the application of such fund;
A-3
(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock of the Bank
and, if so, the conversion price(s) or the rate(s) of exchange, and the
adjustments thereof, if any, at which such conversion or exchange may be
made, and any other terms and conditions of such conversion or exchange;
(h) The price or other consideration for which the shares of such
series shall be issued; and
(i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial preferred
stock and whether such shares may be reissued as shares of the same or any
other series of serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative rights as and be identical in all respects with all the other shares of
the same series.
The board of directors shall have authority to divide, by the adoption of
supplementary charter sections. any authorized class of preferred stock into
series, and, within the limitations set forth in this section and the remainder
of this charter, fix and determine the relative rights and preferences of the
shares of any series so established.
Prior to the issuance of any preferred shares of a series established by a
supplementary charter section adopted by the board of directors, the Bank shall
file with the Secretary to the Office a dated copy of that supplementary section
of this charter establishing and designating the series and fixing and
determining the relative rights and preferences thereof.
Section 6. Preemptive rights. Holders of the capital stock of the Bank shall not
be entitled to preemptive rights with respect to any shares of the Bank which
may be issued.
Section 7. Liquidation account. Pursuant to the requirements of the Office's
regulations (12 C.F.R. Subchapter D), the Bank shall establish and maintain a
liquidation account for the benefit of its savings account holders as of
December 31, 1996 and as of the last day of the calendar quarter preceding the
Office's approval of the Bank's Plan of Conversion dated as of June 30, 1997
(collectively, "eligible savers"). In the event of a complete liquidation of the
Bank, it shall comply with such regulations with respect to the amount and the
priorities on liquidation of each of the Bank's eligible savers' inchoate
interest in the liquidation account, to the extent it is still in existence;
Provided, that an eligible saver's inchoate interest in the liquidation account
shall not entitle such eligible saver to any voting rights at meetings of the
Bank's stockholders.
Section 8. Directors. The Bank shall be under the direction of a board of
directors. The authorized number of directors, as stated in the Bank's bylaws,
shall not be fewer than five nor more than fifteen except when a greater number
is approved by the Director of the Office.
A-4
Section 9. Amendment of charter. Except as provided in Section 5, no amendment,
addition, alteration. chance, or repeal of this charter shall be made, unless
such is first proposed by the board of directors of the Bank, then preliminarily
approved by the Office, which preliminary approval may be granted by the Office
pursuant to regulations specifying preapproved charter amendments and thereafter
approved by the stockholders by a majority of the total votes eligible to be
cast at a legal meeting. Any amendment, addition, alteration. change, or repeal
So acted upon shall be effective upon filing with the Office in accordance with
regulatory procedures or on such other date as the Office may specify in its
preliminary approval.
Ninth Ward Savings Bank, FSB
Attest: ____________________________ By: ____________________________
__________________ Ronald P. Crouch
Secretary President
Ninth Ward Savings Bank, FSB
Declared effective as of _______, 1997.
Director of the Office of Thrift
Supervision
Attest: ___________________________ By: ____________________________
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Exhibit B
BYLAWS
NINTH WARD SAVINGS BANK, FSB
ARTICLE I - HOME OFFICES
The home office of Ninth Ward Savings Bank, FSB (the "Bank") shall be 400
Delaware Avenue, Wilmington, Delaware or such location as designated by the
Board of Directors.
ARTICLE II - SHAREHOLDERS
Section 1. Place of Meetings. All annual and special meetings of
shareholders shall be held at the home office of the Bank or at such other place
in the State of Delaware in which the principal place of business of the Bank is
located as the board of directors may determine.
Section 2. Annual Meeting. A meeting of the shareholders of the Bank for
the election of directors and for the transaction of any other business of the
Bank shall be held annually within 120 days after the end of the Bank's fiscal
year on the third Wednesday of April, if not a legal holiday, and, if a legal
holiday, then on the next day following which is not a legal holiday, at 3:00
p.m., or at such other date and time within such 120 day period as the board of
directors may determine.
Section 3. Special Meetings. Special meetings of the shareholders for any
purpose or purposes, unless otherwise prescribed by the regulations of the
Office of Thrift Supervision ("Office") may be called at any time by the
chairman of the board, the president, or a majority of the board of directors,
and shall be called by the chairman of the board, the president, or the
secretary upon the written request of the holders of not less than one-tenth of
all of the outstanding capital stock of the Bank entitled to vote at the
meeting. Such written request shall state the purpose or purposes of the meeting
and shall be delivered to the home office of the Bank addressed to the chairman
of the board, the president, or the secretary.
Section 4. Conduct of Meetings. Annual and special meetings shall be
conducted in accordance with the most current edition of Robert's Rules of Order
or such other reasonable procedural process as the Chairman of the Board may
prescribe unless otherwise prescribed by regulations of the Office or these
bylaws. The board of directors shall designate, when present, either the
chairman of the board or president to preside at such meetings.
Section 5. Notice of Meetings. Written notice stating the place, day,
and hour of the meeting and the purpose(s) for which the meeting is called shall
be delivered not fewer
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than 10 nor more than 50 days before the date of the meeting, either personally
or by mail, by or at the direction of the chairman of the board, the president,
or the secretary, or the directors calling the meeting, to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the mail, addressed to the shareholder at the
address as it appears on the stock transfer books or records of the Bank as of
the record date prescribed in Section 6 of this Article II with postage prepaid.
When any shareholders' meeting, either annual or special. is adjourned for 30
days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting. It shall not be necessary to give any notice of the time
and place of any meeting adjourned for less than 30 days or of the business to
be transacted at the meeting, other than an announcement at the meeting at which
such adjournment is taken.
Section 6. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment, or shareholders entitled to receive payment of any dividend, or
in order to make a determination of shareholders for any other proper purpose,
the board of directors shall fix in advance a date as the record date for any
such determination of shareholders. Such date in any case shall be not more than
60 days and, in case of a meeting of shareholders. not fewer than 10 days prior
to the date on which the particular action, requiring such determination of
shareholders, is to be taken. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment.
Section 7. Voting Lists. At least 20 days before each meeting of the
shareholders, the officer or agent having charge of the stock transfer books for
shares of the Bank shall make a complete list of the shareholders entitled to
vote at such meeting, or any adjournment, arranged in alphabetical order, with
the address and the number of shares held by each. This list of shareholders
shall be kept on file at the home office of the Bank and shall be subject to
inspection by any shareholder at any time during usual business hours for a
period of 20 days prior to such meeting. Such list shall also be produced and
kept open at the time and place of the meeting, and shall be subject to
inspection by any shareholder during the entire time of the meeting. The
original stock transfer book shall constitute prima facie evidence of the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders. In lieu of making the shareholder list available for
inspection by shareholders as provided in the preceding paragraph, the board of
directors may elect to follow the procedures prescribed in ss.552.6(d) of the
Office's regulations as now or hereafter in effect.
Section 8. Quorum. A majority of the outstanding shares of the Bank
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
is represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting may continue to
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transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to constitute less than a quorum.
Section 9. Proxies. At all meetings of shareholders, a shareholder may vote
by proxy executed in writing by the shareholder or by his or her duly authorized
attorney in fact. Proxies solicited on behalf of the management shall be voted
as directed by the shareholder or, in the absence of such direction, as
determined by a majority of the board of directors. No proxy shall be valid more
than eleven months from the date of its execution except for a proxy coupled
with an interest.
Section 10. Voting of Shares in the Name of Two or More Persons. When
ownership stands in the name of two or more persons, in the absence of written
directions to the Bank to the contrary, at any meeting of the shareholders of
the Bank, any one or more of such shareholders may cast, in person or by proxy,
all votes to which such ownership is entitled. In the event an attempt is made
to cast conflicting votes, in person or by proxy, by the several persons in
whose names shares of stock stand, the vote or votes to which those persons are
entitled shall be cast as directed by a majority of those holding such and
present in person or by proxy at such meeting, but no votes shall be cast for
such stock if a majority cannot agree.
Section 11. Voting of Shares of Certain Holders. Shares standing in the
name of another corporation may be voted by any officer, agent, or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine. Shares held by an
administrator, executor, Guardian, or conservator may be voted by him or her,
either in person or by proxy, without a transfer of such shares into his or her
name. Shares standing in the name of a trustee may be voted by him or her,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him or her, without a transfer of such shares into his or her name.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer into his or her name if authority to do so is contained in
an appropriate order of the court or other public authority by which such
receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the Bank nor shares held
by another corporation. if a majority of the shares entitled to vote for the
election of directors of such other corporation are held by the Bank. shall be
voted at any meeting or counted in determining the total number of outstanding
shares at any given time for purposes of any meeting
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Section 12. Cumulative Voting. Unless otherwise provided in the Bank's
charter, every shareholder entitled to vote at an election for directors shall
have the right to vote, in person or by proxy, the number of shares owned by the
shareholder for as many persons as there are directors to be elected and for
whose election the shareholder has a right to vote, or to cumulate the votes by
giving one candidate as many votes as the number of such directors to be elected
multiplied by the number of shares shall equal or by distributing such votes on
the same principle among any number of candidates.
Section 13. Inspectors of Election. In advance of any meeting of
shareholders, the board of directors may appoint any persons other than nominees
for office as inspectors of election to act at such meeting or any adjournment.
The number of inspectors shall be either one or three. Any such appointment
shall not be altered at the meeting. If inspectors of election are not so
appointed, the chairman of the board or the president may, or on the request of
not fewer than 10 percent of the votes represented at the meeting shall, make
such appointment at the meeting. If appointed at the meeting, the majority of
the votes present shall determine whether one or three inspectors are to be
appointed. In case any person appointed as inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment by the board of
directors in advance of the meeting or at the meeting by the chairman of the
board or the president.
Unless otherwise prescribed by regulations of the Office, the duties of
such inspectors shall include: determining the number of shares and the voting
power of each share, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity and effect of proxies; receiving votes,
ballots, or consents; hearing and determining all challenges and questions in
any way arising in connection with the rights to vote: counting and tabulating
all votes or consents; determining the result; and such acts as may be proper to
conduct the election or vote with fairness to all shareholders.
Section 14. Nominating Committee. The board of directors shall act as a
nominating committee for selecting the management nominees for election as
directors. Except in the case of a nominee substituted as a result of the death
or other incapacity of a management nominee, the nominating committee shall
deliver written nominations to the secretary at least 20 days prior to the date
of the annual meeting. Upon delivery, such nominations shall be posted in a
conspicuous place in each office of the Bank. No nominations for directors
except those made by the nominating committee shall be voted upon at the annual
meeting unless other nominations by shareholders are made in writing and
delivered to the secretary of the Bank at least five days prior to the date of
the annual meeting. Upon delivery, such nominations shall be posted in a
conspicuous place in each office of the Bank. Ballots bearing the names of all
persons nominated by the nominating committee and by shareholders shall be
provided for use at the annual meeting. However, if the nominating committee
shall fail or refuse to act at least 20 days prior to the annual meeting,
nominations for directors may be made at the annual meeting by any shareholder
entitled to vote and shall be voted upon.
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Section 15. New Business. Any new business to be taken up at the annual
meeting shall be stated in writing and filed with the secretary of the Bank at
least five days before the date of the annual meeting, and all business so
stated, proposed, and filed shall be considered at the annual meeting; but no
other proposal shall be acted upon at the annual meeting. Any shareholder may
make any other proposal at the annual meeting and the same may be discussed and
considered, but unless stated in writing and filed with the secretary at least
five days before the meeting, such proposal shall be laid over for action at an
adjourned, special, or annual meeting of the shareholders taking place 30 days
or more thereafter. This provision shall not prevent the consideration and
approval or disapproval at the annual meeting of reports of officers, directors,
and committees; but in connection with such reports, no new business shall be
acted upon at such annual meeting unless stated and filed as herein provided.
Section 16. Informal Action by Shareholders. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of shareholders may be taken without a meeting if consent in
writing, setting a forth the action so taken, shall be given by all of the
shareholders entitled to vote with respect to the subject matter.
ARTICLE III - BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Bank shall be
under the direction of its board of directors. The board of directors shall
annually elect a chairman of the board and a president from among its members
and shall designate, when present, either the chairman of the board or the
president to preside at its meetings. The Board of Directors may at its
discretion designate any of its former members as Director Emeritus.
Section 2. Number and Term. The board of directors shall consist of eight
(8) members and shall be divided into three classes as nearly equal in number as
possible. The members of each class shall be elected for a term of three years
and until their successors are elected and qualified. One class shall be elected
by ballot annually.
Section 3. Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than this bylaw immediately after, and at the
same place as, the annual meeting of shareholders. The board of directors may
provide, by resolution, the time and place, within the Bank's normal lending
territory, for the holding of additional regular meetings without other notice
than such resolution.
Section 4. Qualification. Each director shall at all times be the
beneficial owner of not less than 100 shares of capital stock of the Bank unless
the Bank is a wholly owned subsidiary of a holding company.
Section 5. Special Meetings. Special meetings of the board of directors may
be called by or at the request of the chairman of the board, the president, or
one-third of the directors.
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The persons authorized to call special meetings of the board of directors may
fix any place, within the Bank's normal lending territory, as the place for
holding any special meeting of the board of directors called by such persons.
Members of the board of directors may participate in special meetings by
means of conference telephone or similar communications equipment by which all
persons participating in the meeting can hear each other. Such participation
shall constitute presence in person but shall not constitute attendance for the
purpose of compensation pursuant to Section 12 of this Article.
Section 6. Notice. Written notice of any special meeting shall be given to
each director at least 24 hours prior thereto when delivered personally or by
telegram or at least five days prior thereto when delivered by mail at the
address at which the director is most likely to be reached. Such notice shall be
deemed to be delivered when deposited in the mail so addressed, with postage
prepaid if mailed or when delivered to the telegraph company if sent by
telegram. Any director may waive notice of any meeting by a writing filed with
the secretary. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors need be
specified in the notice of waiver of notice of such-meeting.
Section 7. Quorum. A majority of the number of directors fixed by Section 2
of this Article III shall constitute a quorum for the transaction of business at
any meeting of the board of directors; but if less than such majority is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time. Notice of any adjourned meeting shall be given in the same manner
as prescribed by Section 6 of this Article III.
Section 8. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by regulation of the Office
or by these bylaws.
Section 9. Action Without a Meeting. Any action required or permitted to be
taken by the board of directors at a meeting may be taken without a meeting, if
a consent in writing, setting forth the action so taken. shall be signed by all
of the directors.
Section 10. Resignation. Any director may resign at any time by sending a
written notice of such resignation to the home office of the Bank addressed to
the chairman of the board or the president. Unless otherwise specified, such
resignation shall take effect upon receipt by the chairman of the board or the
president. More than three consecutive absences from regular meetings of the
board of directors, unless excused by resolution of the board of directors,
shall automatically constitute a resignation, effective when such resignation is
accepted by the board of directors.
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Section 11. Vacancies. Any vacancy occurring on the board of directors may
be filled by the affirmative vote of a majority of the remaining directors
although less than a quorum of the board of directors. A director elected to
fill a vacancy shall be elected to serve until the next election of directors by
the shareholders. Any directorship to be filled by reason of an increase in the
number of directors may be filled by election by the board of directors for a
term of office continuing only until the next election of directors by the
shareholders.
Section 12. Compensation. Directors, as such, may receive a stated salary
for their services. By resolution of the board of directors, a reasonable fixed
sum, and reasonable expenses of attendance, if any, may be allowed for actual
attendance at each regular or special meeting of the board of directors. Members
of either standing or special committees may be allowed such compensation for
actual attendance at committee meetings as the board of directors may determine.
Section 13. Presumption of Assent. A director of the Bank who is present at
a meeting of the board of directors at which action on any association matter is
taken shall be presumed to have assented to the action taken unless his or her
dissent or abstention shall be entered in the minutes of the meeting or unless
he or she shall file a written dissent to such action with the person acting as
the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the secretary of the Bank within five days
after the date a copy of the minutes of the meeting is received. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 14. Removal of Directors. At a meeting of shareholders called
expressly for that purpose. any director may be removed for cause by a vote of
the holders of a majority of the shares then entitled to vote at an election of
directors. If less than the entire board is to be removed, no one of the
directors may be removed if the votes cast against the removal would be
sufficient to elect a director if then cumulatively voted at an election of the
class of directors of which such director is a part. Whenever the holders of the
shares of any class are entitled to elect one or more directors by the
provisions of the charter or supplemental sections thereto, the provisions of
this section shall apply, in respect to the removal of a director or directors
so elected, to the vote of the holders of the outstanding shares of that class
and not to the vote of the outstanding shares as a whole.
Section 15. Age Limitation. No person (other than those directors serving
at the time of the adoption of these bylaws) shall be eligible for election,
reelection, appointment, or reappointment to the board of directors if such
person is then more than 72 years of age. No director shall serve beyond the
annual meeting of the Bank immediately following his attainment of 72 years of
age. This limitation may be waived by agreement of the directors.
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ARTICLE IV - EXECUTIVE AND OTHER COMMITTEES
Section 1. Appointment. The board of directors, by resolution adopted by a
majority of the full board. may designate the chief executive officer and two or
more of the other directors to constitute an executive committee. The
designation of any committee pursuant to this Article IV and the delegation of
authority shall not operate to relieve the board of directors, or any director,
of any responsibility imposed by law or regulation.
Section 2. Authority. The executive committee, when the board of directors
is not in session, shall have and may exercise all of the authority of the board
of directors except to the extent, if any, that such authority shall be limited
by the resolution appointing the executive committee; and except also that the
executive committee shall not have the authority of the board of directors with
reference to: the declaration of dividends; the amendment of the charter or
bylaws of the Bank, or recommending to the stockholders a plan of merger,
consolidation. or conversion; the sale, lease, or other disposition of all or
substantially all of the property and assets of the Bank otherwise than in the
usual and regular course of its business; a voluntary dissolution of the Bank; a
revocation of any of the foregoing; or the approval of a transaction in which
any member of the executive committee, directly or indirectly, has any material
beneficial interest.
Section 3. Tenure. Subject to the provisions of Section 8 of this Article
IV, each member of the executive committee shall hold office until the next
regular annual meeting of the board of directors following his or her
designation and until a successor is designated as a member of the executive
committee.
Section 4. Meetings. Regular meetings of the executive committee may be
held without notice at such times and places as the executive committee may fix
from time to time by resolution. Special meetings of the executive committee may
be called by any member thereof upon not less than one day's notice stating the
place, date, and hour of the meeting, which notice may be written or oral. Any
member of the executive committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the executive committee need not state the business
proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the executive committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the executive committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
Section 6. Action Without a Meeting. Any action required or permitted to be
taken by the executive committee at a meeting may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed by all
of the members of the executive committee.
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Section 7. Vacancies. Any vacancy in the executive committee may be filled
by a resolution adopted by a majority of the full board of directors.
Section 8. Resignations and Removal. Any member of the executive committee
may be removed at any time with or without cause by resolution adopted by a
majority of the full board of directors. Any member of the executive committee
may resign from the executive committee at any time by giving written notice to
the president or secretary of the Bank. Unless otherwise specified, such
resignation shall take effect upon its receipt; the acceptance of such
resignation shall not be necessary to make it effective.
Section 9. Procedure. The executive committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these bylaws. It shall keep regular minutes of its
proceedings and report the same to the board of directors for its information at
the meeting held next after the proceedings shall have occurred.
Section 10. Other Committees. The board of directors may by resolution
establish an audit. loan, or other committee composed of directors as they may
determine to be necessary or appropriate for the conduct of the business of the
Bank and may prescribe the duties. constitution, and procedures thereof.
ARTICLE V - OFFICERS
Section 1. Positions. The officers of the Bank shall be a president, one or
more vice presidents, a secretary, and a treasurer. each of whom shall be
elected by the board of directors. The board of directors may also designate the
chairman and vice chairman of the board as officers. The president shall be the
chief executive officer unless the board of directors designates the chairman of
the board as chief executive officer. The president shall be a director of the
Bank. The offices of the secretary and treasurer may be held by the same person
and a vice president may also be either the secretary or the treasurer. The
board of directors may designate one or more vice presidents as executive vice
president or senior vice president. The board of directors may also elect or
authorize the appointment of such other officers as the business of the Bank may
require. The officers shall have such authority and perform such duties as the
board of directors may from time to time authorize or determine. In the absence
of action by the board of directors. the officers shall have such powers and
duties as generally pertain to their respective offices.
Section 2. Election and Term of Office. The officers of the Bank shall be
elected annually at the first meeting of the board of directors held after each
annual meeting of the stockholders. If the election of officers is not held at
such meeting, such election shall be held as soon thereafter as possible. Each
officer shall hold office until a successor has been duly elected and qualified
or until the officer's death, resignation, or removal in the manner hereinafter
provided. Election or appointment of an officer, employee, or agent shall not of
itself create contractual rights. The board of directors may authorize the Bank
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to enter into an employment contract with any officer in accordance with
regulations of the Office, but no such contract shall impair the right of the
board of directors to remove any officer at any time in accordance with Section
3 of this Article V.
Section 3. Removal. Any officer may be removed by the board of directors
whenever in its judgment the best interests of the Bank will be served thereby,
but such removal, other than for cause, shall be without prejudice to any
contractual rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise may be filled by the board
of directors for the unexpired portion of the term.
Section 5. Remuneration. The remuneration of the officers shall be fixed
from time to time by the board of directors.
ARTICLE VI - CONTRACTS, LOANS, CHECKS, AND DEPOSITS
Section 1. Contracts. To the extent permitted by regulations of the Office,
and except as otherwise prescribed by these bylaws with respect to certificates
for shares, the board of directors may authorize any officer, employee, or agent
of the Bank to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Bank. Such authority may be general or confined
to specific instances.
Section 2. Loans. No loans shall be contacted on behalf of the Bank and no
evidence of indebtedness shall be issued in its name unless authorized by the
board of directors. Such authority may be general or confined to specific
instances.
Section 3. Checks, Drafts, etc. All checks, drafts, or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the Bank shall be signed by one or more officers, employees, or agents of the
Bank in such manner as shall from time to time be determined by the board of
directors.
Section 4. Deposits. All funds of the Bank not otherwise employed shall be
deposited from time to time to the credit of the Bank in any duly authorized
depositories as the board of directors may select.
ARTICLE VII- CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares of
capital stock of the Bank shall be in such form as shall be determined by the
board of directors and approved by the Office. Such certificates shall be signed
by the chief executive officer or by any other
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officer of the Bank authorized by the board of directors, attested by the
secretary or an assistant secretary, and sealed with the corporate seal or a
facsimile thereof. The signatures of such officers upon a certificate may be
facsimiles if the certificate is manually signed on behalf of a transfer agent
or a registrar other than the Bank itself or one of its employees. Each
certificate for shares of capital stock shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares are
issued, with the number of shares and date of issue, shall be entered on the
stock transfer books of the Bank. All certificates surrendered to the Bank for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares has been surrendered and
cancelled, except that in the case of a lost or destroyed certificate, a new
certificate may be issued upon such terms and indemnity to the Bank as the board
of directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of capital stock of the
Bank shall be made only on its stock transfer books. Authority for such transfer
shall be given only by the holder of record or by his or her legal
representative, who shall furnish proper evidence of such authority, or by his
attorney authorized by a duly executed power of attorney and filed with the
Bank. Such transfer shall be made only on surrender for cancellation of the
certificate for such shares. The person in whose name shares of capital stock
stand on the books of the Bank shall be deemed by the Bank to be the owner for
all purposes.
ARTICLE VIII - FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Bank shall end on the 31st day of December of each
year. The Bank shall be subject to an annual audit as of the end of its fiscal
year by independent public accountants appointed by and responsible to the board
of directors. The appointment of such independent accountants shall be subject
to annual ratification by the shareholders.
ARTICLE IX - DIVIDENDS
Subject to the terms of the Bank's charter and the regulations and orders
of the Office, the board of directors may, from time to time, declare, and the
Bank may pay, dividends on its outstanding shares of capital stock.
ARTICLE X - CORPORATE SEAL
The board of directors shall provide a association seal which shall be two
concentric circles between which shall be the name of the Bank. The year of
incorporation or an emblem may appear in the center.
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ARTICLE XI - AMENDMENTS
These bylaws may be amended in a manner consistent with regulations of the
Office at any time by a majority vote of the full board of directors or by a
majority of the votes cast by the stockholders of the Bank at any legal meeting.
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