Exhibit 2
Plan of Conversion
Cohoes Savings Bank
Cohoes, New York
PLAN OF CONVERSION
From Mutual to Stock Form of Organization
I. GENERAL
On May 21, 1998, the Board of Trustees of Cohoes Savings Bank (the
"Bank") unanimously adopted a Plan of Conversion whereby the Bank would convert
from a New York chartered mutual savings institution to a New York chartered
stock savings institution. The Bank was chartered by the State of New York by an
act of the State legislature on April 11, 1851, such Act having been amended and
supplemented from time to time thereafter. The Board of Trustees of Cohoes
Savings Bank has been continually monitoring developments in the banking
industry through its strategic planning process. It is the opinion of the Board
of Trustees that the stock form of ownership will provide the Bank with the
structure and capital necessary to meet the challenges of the market place, will
enhance the Bank's ability to grow and prosper during its second 150 years, will
assist the Bank to fulfill its dual role as a leader in the Capital District
Business Community, and will enable the Bank to continue as a people oriented
community Bank offering an ever increasing array of services to its customers.
The principal office of the Bank is located at 75 Remsen Street, in the city of
Cohoes, county of Albany, New York. The Plan includes, as part of the
conversion, the concurrent formation of a holding company, to be named in the
future. The Plan provides that non-transferable subscription rights to purchase
Holding Company Conversion Stock will be offered first to Eligible Account
Holders of record as of the Eligibility Record Date, then to the Holding Company
and the Bank's Tax-Qualified Employee Plans and then to Supplemental Eligible
Account Holders of record as of the Supplemental Eligibility Record Date.
Concurrently with, at any time during, or promptly after the Subscription
Offering, and on a lowest priority basis, an opportunity to subscribe may also
be offered to the general public in a Community Offering and/or a Public
Offering. The price of the Holding Company Conversion Stock will be based upon
an independent appraisal of the Bank and will reflect its estimated pro forma
market value, as converted. It is the desire of the Board of Trustees of the
Bank to attract new capital to the Bank in order to increase its capital,
support future savings growth and increase the amount of funds available for
residential and other mortgage lending. The Converted Bank is also expected to
benefit from its management and other personnel having a stock ownership in its
business, since stock ownership is viewed as an effective performance incentive
and a means of attracting, retaining and compensating management and other
personnel. No change will be made in the Board of Trustees or management as a
result of the Conversion.
In furtherance of the Bank's long term commitment to its community, the
Plan provides that, in connection with the Conversion, the Holding Company will
make a donation of an undetermined amount of its stock to a foundation ("The
Foundation"), the name of which will be determined, established by the Holding
Company.
This Plan has been unanimously approved by the Board of Trustees of the
Bank, based upon its determination that the Conversion is in the best interests
of the Bank, its depositors and the communities served by the Bank. This Plan
sets forth the terms and conditions of the Conversion, and the procedures for
effecting the same. This Plan must be approved by the Superintendent or his or
her designees, must not be objected to by the FDIC and certain waivers must be
granted by the Superintendent. This Plan must also be approved by the
affirmative vote of at least seventy-five percent (75%) in amount of deposit
liabilities of Voting Depositors represented in person or by proxy at the
Special Meeting, and the affirmative vote of at least a majority of the amount
of votes eligible to be cast at the Special Meeting.
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Upon the Conversion, each Person having a Deposit Account at the Bank
prior to the Conversion will continue to have a Deposit Account, without payment
therefor, in the same amount and subject to the same terms and conditions
(except for voting and liquidation rights) as in effect prior to the Conversion.
After the Conversion, the Bank will succeed to all the rights, interests, duties
and obligations of the Bank before the Conversion, including, but not limited
to, all rights and interests of the Bank in and to its assets and properties,
whether real, personal or mixed. The Bank will continue to be a member of the
Federal Home Loan Bank System. All of the Bank's insured Deposit Accounts will
continue to be insured by the Bank Insurance Fund of the FDIC to the extent
provided by applicable law.
II. DEFINITIONS
Acting in Concert: The term "acting in concert" shall have the same
meaning given it in ss.574.2(c) of the Rules and Regulations of the OTS as
applied by the FDIC.
Actual Subscription Price: The price per share, determined as provided
in Section V of the Plan, at which Holding Company Conversion Stock will be sold
in the Subscription Offering.
Affiliate: An "affiliate" of, or a Person "affiliated" with, a
specified Person, is a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by or is under common control with,
the Person specified.
Associate: The term "associate," when used to indicate a relationship
with any Person, means (i) any corporation or organization (other than the
Holding Company, the Bank or a majority-owned subsidiary of the Holding Company)
of which such Person is an officer or partner or is, directly or indirectly, the
beneficial owner of ten percent or more of any class of equity securities, (ii)
any trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar fiduciary
capacity, and (iii) any relative or spouse of such Person, or any relative of
such spouse, who has the same home as such Person or who is a director or
officer of the Holding Company or the Bank or any subsidiary of the Holding
Company; provided, however, that any Tax-Qualified or Non-Tax-Qualified Employee
Plan shall not be deemed to be an associate of any director or officer of the
Holding Company or the Bank, to the extent provided in Section V hereof.
Bank: Cohoes Savings Bank or such other name as the institution may
adopt.
Banking Board: The Banking Board of the State of New York.
BIF: Bank Insurance Fund.
Community Offering: The offering to the general public of any
unsubscribed shares which may be effected as provided in Section V hereof.
Conversion: Change of the Bank's mutual charter and bylaws to stock
charter and bylaws; sale by the Holding Company of Holding Company Conversion
Stock; and issuance and sale by the Converted Bank of Converted Bank Common
Stock to the Holding Company, all as provided for in the Plan.
Converted Bank: The stock savings institution resulting from the
Conversion of the Bank in accordance with the Plan.
Deposit Account: Any withdrawable or repurchasable account or deposit
in the Bank including Savings Accounts and demand accounts.
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Depositor: Any person or entity that qualifies as a depositor of the
Bank pursuant to its charter and bylaws.
Eligibility Record Date: The close of business on March 31, 1997.
Eligible Account Holder: Any Person holding a Qualifying Deposit in the
Bank on the Eligibility Record Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
FDIC. Federal Deposit Insurance Corporation.
Holding Company: A corporation which upon completion of the Conversion
will own all of the outstanding common stock of the Converted Bank, and the name
of which will be selected in the future.
Holding Company Conversion Stock: Shares of common stock, par value
$.01 per share, to be issued and sold by the Holding Company as a part of the
Conversion; provided, however, that for purposes of calculating Subscription
Rights and maximum purchase limitations under the Plan, references to the number
of shares of Holding Company Conversion Stock shall refer to the number of
shares offered in the Subscription Offering.
Local Community: The geographic area encompassing counties in which the
Bank has offices.
Market Maker: A dealer (i.e., any Person who engages 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) regularly publishes bona fide,
competitive bid and offer quotations in a recognized inter-dealer quotation
system; or (ii) furnishes bona fide competitive bid and offer quotations on
request; and (iii) is ready, willing, and able to effect transactions in
reasonable quantities at his quoted prices with other brokers or dealers.
Maximum Subscription Price: The price per share of Holding Company
Conversion Stock to be paid initially by subscribers in the Subscription
Offering.
Non-Tax-Qualified Employee Plan: Any defined benefit plan or defined
contribution plan of the Bank or the Holding Company, such as an employee stock
ownership plan, stock bonus plan, profit-sharing plan or other plan, which with
its related trust does not meet the requirements to be "qualified" under Section
401 of the Internal Revenue Code.
OTS: Office of Thrift Supervision, Department of the Treasury, and its
successors.
Officer: An executive officer of the Holding Company or the Bank,
including the President, Executive Vice Presidents, Senior Vice Presidents in
charge of principal business functions, Secretary and Treasurer.
Order Forms: Forms to be used in the Subscription Offering to exercise
Subscription Rights.
Person: An individual, a corporation, a partnership, an association, a
joint-stock company, a trust, any unincorporated organization, or a government
or political subdivision thereof.
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Plan: This Plan of Conversion of the Bank, including any amendment
approved as provided in this Plan.
Public Offering: The offering for sale through the Underwriters to
selected depositors or the general public of any shares of Holding Company
Conversion Stock not subscribed for in the Subscription Offering or the
Community Offering, if any.
Public Offering Price: The price per share at which any unsubscribed
shares of Holding Company Conversion Stock are initially offered for sale in the
Public Offering.
Qualifying Deposit: The aggregate balance of $100 or more of each
Deposit Account of an Eligible Account Holder as of the Eligibility Record Date
or of a Supplemental Eligible Account Holder as of the Supplemental Eligibility
Record Date.
Regulatory Authorities: The FDIC, the Superintendent and the OTS.
Savings Account: The term "Savings Account" means any withdrawable
account in the Bank except a demand account.
SEC: Securities and Exchange Commission.
Special Meeting: The Special Meeting of Depositors called for the
purpose of considering and voting upon the Plan of Conversion.
Subscription Offering: The offering of shares of Holding Company
Conversion Stock for subscription and purchase pursuant to Section V of the
Plan.
Subscription Rights: Non-transferable, non-negotiable, personal rights
of the Bank's Eligible Account Holders, Tax-Qualified Employee Plans and
Supplemental Eligible Account Holders to subscribe for shares of Holding Company
Conversion Stock in the Subscription Offering.
Superintendent: Superintendent of Banks of the State of New York.
Supplemental Eligibility Record Date: The last day of the calendar
quarter preceding approval of the Plan by the FDIC.
Supplemental Eligible Account Holder: Any person holding a Qualifying
Deposit in the Bank (other than an officer or director and their associates) on
the Supplemental Eligibility Record Date.
Tax-Qualified Employee Plans: Any defined benefit plan or defined
contribution plan of the Bank or the Holding Company, such as an employee stock
ownership plan, stock bonus plan, profit-sharing plan or other plan, which with
its related trust meets the requirements to be "qualified" under Section 401 of
the Internal Revenue Code.
Underwriters: The investment banking firm or firms agreeing to offer
and sell Holding Company Conversion Stock in the Public Offering.
Voting Depositor: Any person holding a Qualifying Deposit at the close
of business on September 30, 1998 for purposes of determining those Persons
entitled to vote on the Plan of Conversion at the Special Meeting.
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Voting Record Date: The date set by the Board of Trustees for
determining Depositors eligible to vote at the Special Meeting is March 31,
1998.
III. STEPS PRIOR TO SUBMISSION OF PLAN OF CONVERSION TO THE DEPOSITORS FOR
APPROVAL
Prior to submission of the Plan of Conversion to its Depositors for
approval, the Bank must receive from the appropriate Regulatory Authorities
prior written approval of the Application for Approval of Conversion to convert
to the stock form of organization. The following steps must be taken prior to
such regulatory approval:
A. The Board of Trustees shall adopt the Plan by not less than a
two-thirds vote.
B. The Bank shall notify its Depositors of the adoption of the Plan by
publishing a statement in a newspaper having a general circulation in
each community in which the Bank maintains an office.
C. Copies of the Plan adopted by the Board of Trustees shall be made
available for inspection at each office of the Bank.
D. The Bank will promptly cause an Application for Approval of Conversion
to be prepared and filed with the Superintendent for his/her approval,
and for the granting of any waivers, if necessary, and with the FDIC
(in the form of a notice for their non-objection). Additionally, a
Holding Company Application will be prepared and filed with the OTS
for its approval and a Registration Statement on Form S-1 will be
prepared and filed with the SEC.
Following (i) approval of the Bank's Application for Conversion by the
Superintendent, (ii) the non- objection of the FDIC and (iii) the receipt of all
necessary waivers from the Superintendent, the Bank shall submit the Plan to the
Bank's Voting Depositors for approval at the Special Meeting. The Bank shall
mail to each Voting Depositor, at his or her last known address appearing on the
records of the Bank, a copy of the Plan and the proposed Restated Organization
Certificate of the Bank and proposed By-Laws of the Bank, a Notice of Special
Meeting, Proxy Card and Subscription Order form and a long-form Proxy Statement
(which contains a detailed description of the Conversion and contains offering
material relating to the Subscription Offering) in the forms required by the
Conversion Regulations, describing the Plan and certain other matters relating
to the Bank and its Conversion. Separate and readily distinguishable
postage-paid envelopes shall be provided for the return of Proxy Cards and
Subscription Order Forms.
The Special Meeting shall be held upon written notice given no less than
20 days nor more than 45 days prior to the date of the Special Meeting. At the
Special Meeting, each Voting Depositor shall be entitled to cast one vote in
person or by proxy for every one hundred dollars ($100.00) such Voting Depositor
had on deposit with the Bank as of the Voting Record Date; provided, however,
that no Voting Depositor shall be eligible to cast more than one thousand
(1,000) votes. The Board of Trustees shall appoint an independent custodian and
tabulator to receive and hold proxies to be voted at the Special Meeting and
count the votes cast in favor of and in opposition to the Plan.
The Superintendent shall be notified of the results of the Special Meeting
by a certificate signed by the President and Secretary of the Bank within five
days after the conclusion of the Special Meeting. The Plan must be approved by
the affirmative vote of (i) at least seventy-five percent (75%) in amount of
deposit liabilities of the Voting Depositors represented in person or by proxy
at the Special Meeting and (ii) at least a majority of the amount of votes
entitled to be cast at the Special Meeting. If the Plan is so approved, the Bank
will take all other necessary steps to effect the Conversion subject to the
terms and conditions of the
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Plan. If the Plan is not so approved, upon conclusion of the Special Meeting and
any adjournment or postponement thereof, the Plan shall not be implemented
without further vote and all funds submitted in the Subscription Offering and
Community Offering will be returned to subscribers, with interest as provided
herein, and all withdrawal authorizations will be canceled.
IV. CONVERSION PROCEDURE
The Holding Company Conversion Stock will be offered for sale in the
Subscription Offering at the Subscription Price to Eligible Account Holders,
Tax-Qualified Employee Plans and Supplemental Eligible Account Holders prior to
or within 45 days after the date of the Special Meeting. The Bank may, either
concurrently with, at any time during, or promptly after the Subscription
Offering, also offer the Holding Company Conversion Stock to and accept
subscriptions from other Persons in a Community Offering and/or a Public
Offering; provided that the Bank's Eligible Account Holders, Tax-Qualified
Employee Plans and Supplemental Eligible Account Holders shall have the priority
rights to subscribe for Holding Company Conversion Stock set forth in Section V
of this Plan. However, the Holding Company and the Bank may delay commencing the
Subscription Offering beyond such 45-day period in the event there exist
unforeseen material adverse market or financial conditions. If the Subscription
Offering commences prior to the Special Meeting, subscriptions will be accepted
subject to the approval of the Plan at the Special Meeting. No offer for sale of
the Holding Company Conversion Stock will be made prior to the mailing of the
proxy statement for the Special Meeting.
The period for the Subscription Offering and Community Offering will be
not less than 20 days nor more than 45 days unless extended by the Bank. Upon
completion of the Subscription Offering and the Community Offering any
unsubscribed shares of Holding Company Conversion Stock may be sold through the
Underwriters to the general public in the Public Offering. If for any reason all
of the shares are not sold in the Subscription Offering, the Community Offering
and the Public Offering, if any, the Holding Company and the Bank will use their
best efforts to obtain other purchasers, subject to the prior written approval
of the appropriate Regulatory Authorities. Completion of the sale of all shares
of Holding Company Conversion Stock not sold in the Subscription Offering is
required within 45 days after termination of the Subscription Offering, subject
to extension of such 45-day period by the Holding Company and the Bank with the
prior written approval of the appropriate Regulatory Authorities. The Holding
Company and the Bank may jointly seek one or more extensions of such 45-day
period if necessary to complete the sale of all shares of Holding Company
Conversion Stock. In connection with such extensions, subscribers and other
purchasers will be permitted to increase, decrease or rescind their
subscriptions or purchase orders to the extent required by the prior written
approval of the appropriate Regulatory Authorities in approving the extensions.
Completion of the sale of all shares of Holding Company Conversion Stock is
required within 24 months after the date of the Special Meeting.
V. STOCK OFFERING
A. Total Number of Shares and Purchase Price of Conversion Stock
The total number of shares of Holding Company Conversion
Stock to be issued in the Conversion will be determined jointly
by the Board of Directors of the Holding Company and the Board
of Trustees of the Bank prior to the commencement of the
Subscription Offering, subject to adjustment if necessitated by
market or financial conditions prior to consummation of the
Conversion. The total number of shares of Holding Company
Conversion Stock shall also be subject to increase in connection
with any oversubscriptions in the Subscription Offering or
Community Offering.
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The aggregate price for which all shares of Holding Company
Conversion Stock will be issued will be based on an independent
appraisal of the estimated total pro forma market value of the
Holding Company and the Converted Bank. Such appraisal shall be
performed in accordance with the guidelines of the appropriate
Regulatory Authorities and will be updated as appropriate under
or required by applicable regulations.
The appraisal will be made by an independent investment
banking or financial consulting firm experienced in the area of
thrift institution appraisals. The appraisal will include, among
other things, an analysis of the historical and pro forma
operating results and net worth of the Converted Bank and a
comparison of the Holding Company, the Converted Bank and the
Conversion Stock with comparable thrift institutions and holding
companies and their respective outstanding capital stocks.
Based upon the independent appraisal, the Board of
Directors of the Holding Company and the Board of Trustees of
the Bank will jointly fix the Subscription Price.
If, following completion of the Subscription Offering and
Community Offering, a Public Offering is effected, the Actual
Subscription Price for each share of Holding Company Conversion
Stock will be the same as the Public Offering Price at which
unsubscribed shares of Holding Company Conversion Stock are
initially offered for sale by the Underwriters in the Public
Offering.
If, upon completion of the Subscription Offering, Community
Offering and Public Offering, if any, all of the Holding Company
Conversion Stock is subscribed for or only a limited number of
shares remain unsubscribed for, subject to Part VII hereof, the
Actual Subscription Price for each share of Holding Company
Conversion Stock will be determined by dividing the estimated
appraised aggregate pro forma market value of the Holding
Company and the Converted Bank, based on the independent
appraisal as updated upon completion of the Subscription
Offering or other sale of all of the Holding Company Conversion
Stock, by the total number of shares of Holding Company
Conversion Stock to be issued by the Holding Company upon
Conversion. Such appraisal will then be expressed in terms of a
specific aggregate dollar amount rather than as a range.
However, such shares must be sold at a uniform price pursuant to
ss.563(b)7 of the Rules and Regulations of the OTS as applied by
the FDIC.
B. Subscription Rights
Non-transferable Subscription Rights to purchase shares
will be issued without payment therefor to Eligible Account
Holders, Tax-Qualified Employee Plans and Supplemental Eligible
Account Holders of the Bank as set forth below.
1. Preference Category No.1: Eligible Account Holders
Each Eligible Account Holder shall receive
non-transferable Subscription Rights to subscribe for
shares of Holding Company Conversion Stock in an amount
equal to the greater of $250,000, or one-tenth of one
percent (.10%) of the total offering of shares, or 15 times
the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of
common stock to be issued by a fraction of which the
numerator is the amount of the qualifying deposit of the
Eligible Account Holder and the
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denominator is the total amount of qualifying deposits of
all Eligible Account Holders in the converting Bank in each
case on the Eligibility Record Date.
If sufficient shares are not available, shares shall
be allocated first to permit each subscribing Eligible
Account Holder to purchase to the extent possible 100
shares, and thereafter among each subscribing Eligible
Account Holder pro rata in the same proportion that his
Qualifying Deposit bears to the total Qualifying Deposits
of all subscribing Eligible Account Holders whose
subscriptions remain unsatisfied.
Non-transferable Subscription Rights to purchase
Holding Company Conversion Stock received by Trustees and
Officers of the Bank and their Associates, based on their
increased deposits in the Bank in the one-year period
preceding the Eligibility Record Date, shall be
subordinated to all other subscriptions involving the
exercise of non-transferable Subscription Rights of
Eligible Account Holders.
2. Preference Category No.2: Tax-Qualified Employee Plans
Each Tax-Qualified Employee Plan shall be entitled to
receive non-transferable Subscription Rights to purchase up
to 10% of the shares of Holding Company Conversion Stock,
provided that singly or in the aggregate such plans (other
than that portion of such plans which is self-directed)
shall not purchase more than 10% of the shares of the
Holding Company Conversion Stock. Subscription Rights
received pursuant to this Category shall be subordinated to
all rights received by Eligible Account Holders to purchase
shares pursuant to Category No. 1.
3. Preference Category No.3: Supplemental Eligible Account
Holders
Each Supplemental Eligible Account Holder shall
receive non-transferable Subscription Rights to subscribe
for shares of Holding Company Conversion Stock in an amount
equal to the greater of $250,000, or one-tenth of one
percent (.10%) of the total offering of shares, or 15 times
the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of
common stock to be issued by a fraction of which the
numerator is the amount of the qualifying deposit of the
Supplemental Eligible Account Holder and the denominator is
the total amount of qualifying deposits of all Supplemental
Eligible Account Holders in the converting Bank in each
case on the Supplemental Eligibility Record Date.
Subscription Rights received pursuant to this
category shall be subordinated to all Subscription Rights
received by Eligible Account Holders and Tax-Qualified
Employee Plans pursuant to Category Nos. 1 and 2 above.
Any non-transferable Subscription Rights to purchase
shares received by an Eligible Account Holder in accordance
with Category No. 1 shall reduce to the extent thereof the
Subscription Rights to be distributed to such person
pursuant to this Category.
In the event of an oversubscription for shares under
the provisions of this subparagraph, the shares available
shall be allocated first to permit each subscribing
Supplemental Eligible Account Holder, to the extent
possible, to purchase a number of shares sufficient to make
his total allocation (including the number of shares, if
any, allocated in accordance with Category No. 1) equal to
100 shares, and thereafter among
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each subscribing Supplemental Eligible Account Holder pro
rata in the same proportion that his Qualifying Deposit
bears to the total Qualifying Deposits of all subscribing
Supplemental Eligible Account Holders whose subscriptions
remain unsatisfied.
C. Community Offering and Public Offering
1. Any shares of Holding Company Conversion Stock not
subscribed for in the Subscription Offering will be offered
for sale in a Community Offering. This will involve an
offering of all unsubscribed shares directly to the general
public with a preference to those natural persons residing
in the Local Community. The Community Offering, if any,
shall be for a period of not less than 20 days nor more than
45 days unless extended by the Holding Company and the Bank,
and shall commence concurrently with, during or promptly
after the Subscription Offering. The purchase price per
share to the general public in a Community Offering shall be
the same as the Actual Subscription Price. The Holding
Company and the Bank shall use an investment banking firm or
firms on a best efforts basis to sell the unsubscribed
shares in the Subscription and Community Offering. The
Holding Company and the Bank shall pay a commission or other
fee to such investment banking firm or firms as to the
shares sold by such firm or firms in the Subscription and
Community Offering and may also reimburse such firm or firms
for expenses incurred in connection with the sale. The
Holding Company Conversion Stock will be offered and sold in
the Community Offering, if any, in accordance with the
regulations of the appropriate Regulatory Authorities, so as
to achieve the widest distribution of the Holding Company
Conversion Stock. No person, by himself or herself, or with
an Associate or group of Persons acting in concert, may
subscribe for or purchase more than $250,000 of Holding
Company Conversion Stock in the Community Offering, if any.
Further, the Bank may limit total subscriptions under this
Section V.C.1 so as to assure that the number of shares
available for the Public Offering may be up to a specified
percentage of the number of shares of Holding Company
Conversion Stock. Finally, the Bank may reserve shares
offered in the Community Offering for sales to institutional
investors.
In the event of an oversubscription for shares in the
Community Offering, shares may be allocated (to the extent
shares remain available) first to cover orders of natural
persons residing in the Local Community, then to cover the
orders of any other person subscribing for shares in the
Community Offering so that each such person may receive 2%
of the shares, and thereafter, on a pro rata basis to such
persons based on the amount of their respective
subscriptions.
The Bank and the Holding Company, in their sole discretion,
may reject subscriptions, in whole or in part, received
from any Person under this Section V.C. Further, the Bank
and the Holding Company may, at their sole discretion,
elect to forego a Community Offering and instead effect a
Public Offering as described below.
2. Any shares of Holding Company Conversion Stock not sold in
the Subscription Offering or in the Community Offering, if
any, may then be sold at a uniform price through the
Underwriters to selected Depositors or the general public
in the Public Offering. It is expected that the Public
Offering will commence as soon as practicable after
termination of the Subscription Offering and the Community
Offering, if any. The Bank and the Holding Company, in
their sole discretion, may reject any subscription, in
whole or in part, received in the Public Offering. The
Public Offering shall be completed within 45
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days after the termination of the Subscription Offering,
unless such period is extended as provided in Section IV
hereof. No person, by himself or herself, or with an
Associate or group of Persons acting in concert, may
purchase more than $250,000 in the Public Offering, if any.
3. If for any reason any shares remain unsold after the
Subscription Offering, the Community Offering and the
Public Offering, if any, the Board of Directors of the
Holding Company and the Board of Trustees of the Bank will
seek to make other arrangements for the sale of the
remaining shares. Such other arrangements will be subject
to the prior written approval of the appropriate Regulatory
Authorities and to compliance with applicable securities
laws.
D. Additional Limitations Upon Purchases of Shares of Holding
Company Conversion Stock
The following additional limitations shall be imposed on
all purchases of Holding Company Conversion Stock in the
Conversion:
1. No Person, by himself or herself, or with an Associate or
group of Persons acting in concert, may subscribe for or
purchase in the Conversion a number of shares of Holding
Company Conversion Stock which exceeds an amount of shares
equal to 1% of the total offering of shares sold in the
Conversion. For purposes of this paragraph, an Associate of
a Person does not include a Tax-Qualified or Non-Tax
Qualified Employee Plan in which the person has a
substantial beneficial interest or serves as a trustee or
in a similar fiduciary capacity. Moreover, for purposes of
this paragraph, shares held by one or more Tax-Qualified
or Non-Tax Qualified Employee Plans attributed to a Person
shall not be aggregated with shares purchased directly by
or otherwise attributable to that Person.
2. Trustees and Officers and their Associates may not purchase
in all categories in the Conversion an aggregate of more
than 25% of the Holding Company Conversion Stock. For
purposes of this paragraph, an Associate of a Person does
not include any Tax- Qualified Employee Plan. Moreover, any
shares attributable to the Officers and Trustees and their
Associates, but held by one or more Tax-Qualified Employee
Plans shall not be included in calculating the number of
shares which may be purchased under the limitation in this
paragraph.
3. The minimum purchase amount of Holding Company Conversion
Stock that may be purchased by any Person in the Conversion
is 25 shares.
4. The Board of Directors of the Holding Company and the Board
of Trustees of the Bank may, in their sole discretion,
increase the maximum purchase limitation referred to in
subparagraph 1. herein up to 9.99%, provided that orders
for shares exceeding 5% of the shares being offered in the
Conversion shall not exceed, in the aggregate, 10% of the
shares being offered in the Conversion. Requests to
purchase additional shares of Holding Company Conversion
Stock under this provision will be allocated by the Board
of Directors of the Holding Company and the Board of
Trustees of the Bank on a pro rata basis giving priority
in accordance with the priority rights set forth in this
Section V.
Depending upon market and financial conditions, the Board
of Directors of the Holding Company and the Board of Trustees of
the Bank, with the prior written approval of the appropriate
Regulatory Authorities and without further approval of the
Depositors, may
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increase or decrease any of the above purchase limitations.
However, no increase in the purchase limitations shall occur
without the prior written approval of the appropriate Regulatory
Authorities.
Each Person purchasing Conversion Stock in the Conversion
shall be deemed to confirm that such purchase does not conflict
with the above purchase limitations.
E. Restrictions and Other Characteristics of Holding Company
Conversion Stock Being Sold
1. Transferability. Holding Company Conversion Stock purchased
by Persons other than Trustees and Officers of the Holding
Company or the Bank will be transferable without
restriction. Shares purchased by Trustees or Officers shall
not be sold or otherwise disposed of for value for a period
of one year from the date of Conversion, except for any
disposition of such shares (i) following the death of the
original purchaser, or (ii) resulting from an exchange of
securities in a merger or acquisition approved by the
applicable regulatory authorities. Any transfers that could
result in a change of control of the Bank or the Holding
Company or result in the ownership by any Person or group
acting in concert of more than 10% of any class of the
Bank's or the Holding Company's equity securities are
subject to the prior written approval of the OTS and the
Superintendent.
The certificates representing shares of Holding Company
Conversion Stock issued to Trustees and Officers shall bear
a legend giving appropriate notice of the one-year holding
period restriction. Appropriate instructions shall be given
to the transfer agent for such stock with respect to the
applicable restrictions relating to the transfer of
restricted stock. Any shares of common stock of the Holding
Company subsequently issued as a stock dividend, stock
split, or otherwise, with respect to any such restricted
stock, shall be subject to the same holding period
restrictions for Holding Company or Bank Trustees and
Officers as may be then applicable to such restricted
stock.
No Trustee or Officer of the Holding Company or of the
Bank, or Associate of such a Trustee or Officer, shall
purchase any outstanding shares of capital stock of the
Holding Company for a period of three years following the
Conversion without the prior written approval of the
Superintendent and, as applicable, the FDIC, except through
a broker or dealer registered with the SEC.
2. Repurchase and Dividend Rights. Except as permitted by
applicable regulations, for a period of three years
following Conversion, the Converted Bank shall not
repurchase any shares of its capital stock, except with the
prior permission of the Superintendent.
Present regulations also provide that the Converted Bank
may not declare or pay a cash dividend on or repurchase any
of its stock (i) if the result thereof would be to reduce
the regulatory capital of the Converted Bank below the
amount required for the liquidation account to be
established pursuant to Section XIII hereof, and (ii)
except in compliance with requirements of the Rules and
Regulations of the appropriate Regulatory Authorities.
The above limitations are subject to the Rules and
Regulations of the appropriate Regulatory Authorities which
generally provide that the Holding Company of the Converted
Bank may repurchase its capital stock provided (i) no
repurchases occur within one year following conversion,
(ii) repurchases during the second and third year after
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conversion are part of an open market stock repurchase
program that does not allow for a repurchase of more than
5% of the Bank's outstanding capital stock during a
twelve-month period without the prior written approval of
the appropriate Regulatory Authorities, (iii) the
repurchases do not cause the Bank to become
undercapitalized. In addition, the above limitations shall
not preclude payments of dividends or repurchases of
capital stock by the Converted Bank in the event applicable
federal regulatory limitations are liberalized or waived
subsequent to regulatory approval of the Plan.
3. Voting Rights. After Conversion, exclusive voting rights as
to the Bank will be vested in the Holding Company, as the
sole stockholder of the Bank. Voting rights as to the
Holding Company will be held exclusively by its
stockholders. Presently all voting rights are vested in the
Board of Trustees.
F. Exercise of Subscription Rights; Order Forms
1. If the Subscription Offering occurs concurrently with the
solicitation of proxies for the Special Meeting, the
subscription prospectus and Order Form may be sent to each
Eligible Account Holder, Tax-Qualified Employee Plan and
Supplemental Eligible Account Holder at their last known
address as shown on the records of the Bank. However, the
Bank may, and if the Subscription Offering commences after
the Special Meeting the Bank shall, furnish a subscription
prospectus and Order Form only to Eligible Account Holders,
Tax-Qualified Employee Plans and Supplemental Eligible
Account Holders who have returned to the Bank by a
specified date prior to the commencement of the
Subscription Offering a post card or other written
communication requesting a subscription prospectus and
Order Form. In such event, the Bank shall provide a
postage-paid post card for this purpose and make
appropriate disclosure in its proxy statement for the
solicitation of proxies to be voted at the Special Meeting
and/or letter sent in lieu of the proxy statement to those
Eligible Account Holders, Tax-Qualified Employee Plans or
Supplemental Eligible Account Holders who are not
Depositors on the Voting Record Date.
2. Each Order Form will be preceded or accompanied by a
subscription prospectus describing the Holding Company and
the Converted Bank and the shares of Holding Company
Conversion Stock being offered for subscription and
containing all other information required by the
appropriate Regulatory Authorities or necessary to enable
Persons to make informed investment decisions regarding the
purchase of Holding Company Conversion Stock.
3. The Order Forms (or accompanying instructions) used for the
Subscription Offering will contain, among other things, the
following:
(i) A clear and intelligible explanation of the
Subscription Rights granted under the Plan to
Eligible Account Holders, Tax-Qualified Employee
Plans and Supplemental Eligible Account Holders;
(ii) A specified expiration date by which Order Forms
must be returned to and actually received by the
Bank or its representative for purposes of
exercising Subscription Rights, which date will be
not less than 20 days after the Order Forms are
mailed by the Bank;
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(iii) The Maximum Subscription Price to be paid for each
share subscribed for when the Order Form is
returned;
(iv) A statement that 25 shares is the minimum purchase
amount for Holding Company Conversion Stock that
may be subscribed for under the Plan;
(v) A specifically designated blank space for
indicating the number of shares being subscribed
for;
(vi) A set of detailed instructions as to how to
complete the Order Form including a statement as to
the available alternative methods of payment for
the shares being subscribed for;
(vii) Specifically designated blank spaces for dating and
signing the Order Form;
(viii) An acknowledgment that the subscriber has received
the subscription prospectus;
(ix) A statement of the consequences of failing to
properly complete and return the Order Form,
including a statement that the Subscription Rights
will expire on the expiration date specified on the
Order Form unless such expiration date is extended
by the Holding Company and the Bank, and that the
Subscription Rights may be exercised only by
delivering the Order Form, properly completed and
executed, to the Bank or its representative by the
expiration date, together with required payment of
the Maximum Subscription Price for all shares of
Holding Company Conversion Stock subscribed for;
(x) A statement that the Subscription Rights are
non-transferable and that all shares of Holding
Company Conversion Stock subscribed for upon
exercise of Subscription Rights must be purchased
on behalf of the Person exercising the Subscription
Rights for his own account; and
(xi) A statement that, after receipt by the Bank or its
representative, a subscription may not be modified,
withdrawn or canceled without the consent of the
Bank.
G. Method of Payment
Payment for all shares of Holding Company Conversion Stock
subscribed for, computed on the basis of the Maximum
Subscription Price, must accompany all completed Order Forms.
Payment may be made in cash (if presented in Person), by check,
or, if the subscriber has a Deposit Account in the Bank
(including a certificate of deposit), the subscriber may
authorize the Bank to charge the subscriber's account.
If a subscriber authorizes the Bank to charge his or her
account, the funds will continue to earn interest, but may not
be used by the subscriber until all Holding Company Conversion
Stock has been sold or the Plan of Conversion is terminated,
whichever is earlier. The Bank will allow subscribers to
purchase shares by withdrawing funds from certificate accounts
without the assessment of early withdrawal penalties with the
exception of prepaid interest in the form of promotional gifts.
In the case of early withdrawal of only a portion of such
account, the certificate evidencing such account shall be
canceled if the remaining balance of the account is less than
the applicable minimum balance requirement, in which event the
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remaining balance will earn interest at the passbook rate. This
waiver of the early withdrawal penalty is applicable only to
withdrawals made in connection with the purchase of Holding
Company Conversion Stock under the Plan of Conversion. Interest
will also be paid, at not less than the then-current passbook
rate, on all orders paid in cash, by check or money order, from
the date payment is received until consummation of the
Conversion. Payments made in cash, by check or money order will
be placed by the Bank in an escrow or other account established
specifically for this purpose.
In the event of an unfilled amount of any subscription
order, the Converted Bank will make an appropriate refund or
cancel an appropriate portion of the related withdrawal
authorization, after consummation of the Conversion, including
any difference between the Maximum Subscription Price and the
Actual Subscription Price (unless subscribers are afforded the
right to apply such difference to the purchase of additional
whole shares). If for any reason the Conversion is not
consummated, purchasers will have refunded to them all payments
made and all withdrawal authorizations will be canceled in the
case of subscription payments authorized from accounts at the
Bank.
If any Tax-Qualified Employee Plans or Non-Tax-Qualified
Employee Plans subscribe for shares during the Subscription
Offering, such plans will not be required to pay for the shares
subscribed for at the time they subscribe, but may pay for such
shares of Holding Company Conversion Stock subscribed for upon
consummation of the Conversion. In the event that, after the
completion of the Subscription Offering, the amount of shares to
be issued is increased above the maximum of the appraisal range
included in the Prospectus, the Tax Qualified and Non-Tax
Qualified Employee Plans shall be entitled to increase their
subscriptions by a percentage equal to the percentage increase
in the amount of shares to be issued above the maximum of the
appraisal range provided that such subscriptions shall continue
to be subject to applicable purchase limits and stock allocation
procedures.
H. Undelivered, Defective or Late Order Forms; Insufficient Payment
The Board of Directors of the Holding Company and the Board
of Trustees of the Bank shall have the absolute right, in their
sole discretion, to reject any Order Form, including but not
limited to, any Order Forms which (i) are not delivered or are
returned by the United States Postal Service (or the addressee
cannot be located); (ii) are not received back by the Bank or
its representative, or are received after the termination date
specified thereon; (iii) are defectively completed or executed;
(iv) are not accompanied by the total required payment for the
shares of Holding Company Conversion Stock subscribed for
(including cases in which the subscribers' Deposit Accounts or
certificate accounts are insufficient to cover the authorized
withdrawal for the required payment); or (v) are submitted by or
on behalf of a Person whose representations the Board of
Directors of the Holding Company and the Board of Trustees of
the Bank believe to be false or who they otherwise believe,
either alone or acting in concert with others, is violating,
evading or circumventing, or intends to violate, evade or
circumvent, the terms and conditions of this Plan. In such
event, the Subscription Rights of the Person to whom such rights
have been granted will not be honored and will be treated as
though such Person failed to return the completed Order Form
within the time period specified therein. The Bank may, but will
not be required to, waive any irregularity relating to any Order
Form or require submission of corrected Order Forms or the
remittance of full payment for subscribed shares by such date as
the Bank may specify. The interpretation of the Holding Company
and the Bank of the terms and conditions of this Plan
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and of the proper completion of the Order Form will be final,
subject to the authority of the appropriate Regulatory
Authorities.
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I. Member in Non-Qualified States or in Foreign Countries
The Holding Company and the Bank will make reasonable
efforts to comply with the securities laws of all states in the
United States in which Persons entitled to subscribe for Holding
Company Conversion Stock pursuant to the Plan reside. However,
the Bank and the Holding Company are not required to offer stock
in the Subscription Offering to any person who resides in a
foreign country.
VI. ORGANIZATION CERTIFICATE AND BYLAWS
A. As part of the Conversion, the Bank will take all appropriate
steps to amend its organization certificate to read in the form of
a stock savings institution organization certificate as prescribed
by the Regulatory Authorities. A copy of the proposed stock
organization certificate is available upon request. By their
approval of the Plan, the Depositors of the Bank will thereby
approve and adopt such organization certificate.
B. The Bank will also take appropriate steps to amend its bylaws to
read in the form prescribed by the appropriate Regulatory
Authorities for a stock savings institution. A copy of the
proposed stock bylaws is available upon request.
C. The effective date of the adoption of the Bank's restated
organization certificate and bylaws shall be the date of the
issuance and sale of the Holding Company Conversion Stock as
specified by the appropriate Regulatory Authorities.
VII. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION
As part of the Conversion, and notwithstanding any other statement
herein to the contrary, the Holding Company intends to issue an amount equal to
no more than 8% of the shares of its Common Stock from its authorized but
unissued shares to The Foundation, a charitable organization created under
Section 501(c)(3) of the Internal Revenue Code. Such issuance (the
"Contribution") shall be in the form of a direct contribution of stock by the
Holding Company. The Contribution is being made in connection with the
Conversion in order to complement the Bank's existing community reinvestment
activities and to support the communities in which the Bank operates. The
Contribution is expected to be completed not later than twelve months after the
completion of the Conversion.
The Foundation is dedicated to the promotion of charitable purposes
within the communities in which the Bank operates, including, but not limited
to, grants or donations to support not-for-profit medical facilities, cultural
activities, community groups and other types of organizations or projects. As a
private foundation, the Foundation is required to distribute annually in grants
or donations at least 5% of its net investment assets.
The authority for the affairs of the Foundation is vested in the Board of
Trustees of the Foundation, none of whom may vote as directors of the Bank or
the Holding Company on the Donation.
VIII. HOLDING COMPANY CERTIFICATE OF INCORPORATION
A copy of the proposed certificate of incorporation of the Holding
Company will be made available to depositors upon request.
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XI. DIRECTORS OF THE CONVERTED BANK
Each Person serving as a member of the Board of Trustees of the Bank at
the time of the Conversion will thereupon become a director of the Converted
Bank.
X. STOCK OPTION AND INCENTIVE PLAN AND RECOGNITION AND RETENTION PLAN
In order to provide an incentive for Directors, Officers and employees
of the Holding Company and its subsidiaries (including the Bank), the Board of
Directors of the Holding Company intends to adopt, subject to shareholder
approval, a stock option and incentive plan and a recognition and retention plan
sometime following the Conversion in accordance with such regulations as are
applicable to the plans at that time.
XI. CONTRIBUTIONS TO TAX-QUALIFIED EMPLOYEE PLANS
The Converted Bank and the Holding Company may in their discretion make
scheduled contributions to any Tax-Qualified Employee Plans, provided that any
such contributions which are for the acquisition of Holding Company Conversion
Stock, or the repayment of debt incurred for such an acquisition, do not cause
the Converted Bank to fail to meet its regulatory capital requirements.
XII. SECURITIES REGISTRATION AND MARKET MAKING
Promptly following the Conversion, the Holding Company will register
its stock with the SEC pursuant to the Exchange Act. In connection with the
registration, the Holding Company will undertake not to deregister such stock,
without the prior written approval of the appropriate Regulatory Authorities,
for a period of three years thereafter.
The Holding Company shall use its best efforts to encourage and assist
two or more market makers to establish and maintain a market for its common
stock promptly following Conversion. The Holding Company will also use its best
efforts to cause its common stock to be quoted on the National Association of
Securities Dealers, Inc. Automated Quotations System or to be listed on a
national or regional securities exchange.
XIII. STATUS OF DEPOSIT ACCOUNTS AND LOANS SUBSEQUENT TO CONVERSION
Each Deposit Account holder shall retain, without payment, a
withdrawable Deposit Account or Accounts in the Converted Bank, equal in amount
to the withdrawable value of such account holder's Deposit Account or Accounts
prior to Conversion. All Deposit Accounts will continue to be insured by the BIF
up to the applicable limits of insurance coverage, and shall be subject to the
same terms and conditions (except as to voting and liquidation rights) as such
Deposit Account in the Bank at the time of the Conversion. All loans shall
retain the same status after Conversion as these loans had prior to Conversion.
XIV. LIQUIDATION ACCOUNT
For purposes of granting to Eligible Account Holders and Supplemental
Eligible Account Holders who continue to maintain Deposit Accounts at the
Converted Bank a priority in the event of a complete liquidation of the
Converted Bank, the Converted Bank will, at the time of Conversion, establish a
liquidation account in an amount equal to the net worth of the Bank as shown on
its latest statement of financial condition contained in the final offering
circular (prospectus) used in connection with the Conversion. The creation and
maintenance of the liquidation account will not operate to restrict the use or
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application of any of the regulatory capital accounts of the Converted Bank;
provided, however, that such regulatory capital accounts will not be voluntarily
reduced below the required dollar amount of the liquidation account. Each
Eligible Account Holder and Supplemental Eligible Account Holder shall, with
respect to the Deposit Account held, have a related inchoate interest in a
portion of the liquidation account balance ("subaccount balance").
The initial subaccount balance of a Deposit Account held by an Eligible
Account Holder and/or Supplemental Eligible Account Holder shall be determined
by multiplying the opening balance in the liquidation account by a fraction of
which the numerator is the amount of the Qualifying Deposit in the Deposit
Account on the Eligibility Record Date and/or the Supplemental Eligibility
Record Date and the denominator is the total amount of the Qualifying Deposits
of all Eligible Account Holders and Supplemental Eligible Account Holders on
such record dates in the Bank. For Deposit Accounts in existence at both dates,
separate subaccounts shall be determined on the basis of the Qualifying Deposits
in such Deposit Accounts on such record dates. Such initial subaccount balance
shall not be increased, and it shall be subject to downward adjustment as
provided below.
If the deposit balance in any Deposit Account of an Eligible Account
Holder or Supplemental Eligible Account Holder at the close of business on any
annual closing date subsequent to the record date is less than the lesser of (i)
the deposit balance in such Deposit Account at the close of business on any
other annual closing date subsequent to the Eligibility Record Date or the
Supplemental Eligibility Record Date or (ii) the amount of the Qualifying
Deposit in such Deposit Account on the Eligibility Record Date or Supplemental
Eligibility Record Date, the subaccount balance shall be reduced in an amount
proportionate to the reduction in such deposit balance. In the event of a
downward adjustment, the subaccount balance shall not be subsequently increased,
notwithstanding any increase in the deposit balance of the related Deposit
Account. If all funds in such Deposit Account are withdrawn, the related
subaccount balance shall be reduced to zero.
In the event of a complete liquidation of the Bank (and only in such
event), each Eligible Account Holder and Supplemental Eligible Account Holder
shall be entitled to receive a liquidation distribution from the liquidation
account in the amount of the then-current adjusted subaccount balances for
Deposit Accounts then held before any liquidation distribution may be made to
stockholders. No merger, consolidation, bulk purchase of assets with assumptions
of Deposit Accounts and other liabilities, or similar transactions with another
institution the accounts of which are insured by the BIF, shall be considered to
be a complete liquidation. In such transactions, the liquidation account shall
be assumed by the surviving institution.
XV. RESTRICTIONS ON ACQUISITION OF CONVERTED BANK
Regulations of the Regulatory Authorities limit acquisitions, and
offers to acquire, direct or indirect beneficial ownership of more than 10% of
any class of an equity security of the Converted Bank or the Holding Company. In
addition, consistent with the regulations of the Regulatory Authorities, the
organization certificate of the Converted Bank shall provide that for a period
of three years following completion of the Conversion: (i) no Person (i.e., no
individual, group acting in concert, corporation, partnership, association,
joint stock company, trust, or unincorporated organization or similar company,
syndicate, or any other group formed for the purpose of acquiring, holding or
disposing of securities of an insured institution) shall directly or indirectly
offer to acquire or acquire beneficial ownership of more than 10% of any class
of the Bank's equity securities. Shares beneficially owned in violation of this
organization certificate provision shall not be counted as shares entitled to
vote and shall not be voted by any Person or counted as voting shares in
connection with any matter submitted to the shareholders for a vote. This
limitation shall not apply to any offer to acquire or acquisition of beneficial
ownership of more than 10% of the common stock of the Bank by a corporation
whose ownership is or will be substantially the same as
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the ownership of the Bank, provided that the offer or acquisition is made more
than one year following the date of completion of the Conversion; (ii)
shareholders shall not be permitted to cumulate their votes for elections of
trustees or directors; and (iii) special meetings of the shareholders relating
to changes in control or amendment of the organization certificate may only be
called by the Board of Directors, as appropriate.
XVI. AMENDMENT OR TERMINATION OF PLAN
If necessary or desirable, the Plan may be amended at any time prior to
submission of the Plan and proxy materials to the Voting Depositors by a
two-thirds vote of the Board of Directors of the Holding Company and the Board
of Trustees of the Bank. After submission of the Plan and proxy materials to the
Voting Depositors, the Plan may be amended by a two-thirds vote of the
respective Board of Directors of the Holding Company and the Board of Trustees
of the Bank only with the concurrence of the appropriate Regulatory Authorities.
In the event that the Bank determines that for tax purposes or otherwise it is
in the best interest of the Bank to convert from a mutual to a stock institution
without the concurrent formation of a holding company, the Plan may be
substantively amended, with the prior written approval of the appropriate
Regulatory Authorities, in such respects as the Board of Trustees of the Bank
deems appropriate to reflect such change from a holding company conversion to a
direct conversion. In the event the Plan is so amended, common stock of the Bank
will be substituted for Holding Company Conversion Stock in the Subscription,
Community or Public Offerings, and subscribers will be resolicited as described
in Section V hereof. Any amendments to the Plan (including amendments to reflect
the elimination of the concurrent holding company formation) made after approval
by the Voting Depositors with the concurrence of the appropriate regulatory
authorities shall not necessitate further approval by the Voting Depositors
unless otherwise required.
The Plan may be terminated by a two-thirds vote of the Bank's Board of
Trustees at any time prior to the Special Meeting of Voting Depositors, and at
any time following such Special Meeting with the concurrence of the appropriate
Regulatory Authorities. In its discretion, the Board of Trustees of the Bank may
modify or terminate the Plan upon the order or with the prior written approval
of the appropriate Regulatory Authorities and without further approval by Voting
Depositors. The Plan shall terminate if the sale of all shares of Conversion
Stock is not completed within 24 months of the date of the Special Meeting. A
specific resolution approved by a majority of the Board of Trustees of the Bank
is required in order for the Bank to terminate the Plan prior to the end of such
24-month period.
XVII. EXPENSES OF THE CONVERSION
The Holding Company and the Bank will assure that expenses incurred by
them in connection with the Conversion shall be reasonable.
XVIII. TAX RULING
Consummation of the Conversion is expressly conditioned upon prior
receipt of either a ruling of the United States Internal Revenue Service or an
opinion of tax counsel with respect to federal taxation, and either a ruling of
the New York taxation authorities or an opinion of tax counsel or other tax
advisor with respect to New York taxation, to the effect that consummation of
the transactions contemplated herein will not be taxable to the Holding Company
or the Bank.
XIX. EXTENSION OF CREDIT FOR PURCHASE OF STOCK
The Bank may not loan funds or otherwise extend credit to any Person to
purchase in the Conversion shares of Holding Company Conversion Stock.
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