EXHIBIT 2.1
PLAN OF REORGANIZATION
FROM MUTUAL SAVINGS BANK
TO MUTUAL HOLDING COMPANY
AND STOCK ISSUANCE PLAN
OF
REVERE FEDERAL
SAVINGS
TABLE OF CONTENTS
1. Introduction............................................................-2-
2. Definitions.............................................................-2-
3. Business Purposes for the Reorganization................................-8-
4. Certain Effects of the Reorganization...................................-9-
5. Conditions to Implementation of the Reorganization.....................-11-
6. Special Meeting of Members.............................................-12-
7. Charter and Bylaws.....................................................-13-
8. Rights of Owners of the MHC............................................-13-
9. Conversion of MHC to Stock Form........................................-13-
10. Timing of the Reorganization and Sale of Capital Stock.................-15-
11. Number of Shares to be Offered.........................................-15-
12. Independent Valuation and Purchase Price of Shares ....................-15-
13. Method of Offering Shares and Rights to Purchase Stocks................-16-
14. Additional Limitations on Purchases of Common Stock....................-19-
15. Payment for Stock......................................................-21-
16. Manner of Exercising Subscription Rights Through Order Forms...........-22-
17. Undelivered, Defective or Late Order Form; Insufficient Payment........-23-
18. Completion of the Stock Offering.......................................-23-
19. Market for Common Stock................................................-23-
20. Stock Purchase by Management Persons After the Offering................-24-
21. Resales of Stock by Management Persons.................................-24-
22. Restriction on Financing Stock Purchases...............................-24-
23. Stock Certificates.....................................................-24-
24. Stock Benefit Plans....................................................-24-
25. Post-Reorganization Filing and Market Making...........................-25-
26. Payment of Dividends and Repurchase of Stock...........................-25-
27. Reorganization and Stock Offering Expenses.............................-25-
28. Employment Agreements..................................................-26-
29. Interpretation.........................................................-26-
30. Amendment or Termination of the Plan...................................-26-
31. Severability...........................................................-27-
32. Miscellaneous..........................................................-27-
Exhibit A Charter and Bylaws of the Bank
Exhibit B Charter and Bylaws of the Holding Company
Exhibit C Charter and Bylaws of the Mutual Holding Company
1. INTRODUCTION
The Board of Directors of Revere Federal Savings (the "Bank") has adopted
this Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company
and Stock Issuance Plan (the "Plan") under which the Bank proposes to reorganize
from a federally chartered mutual savings association into a mutual holding
company (the "MHC") under the laws of the United States of America, and the
regulations of the Office of Thrift Supervision ("OTS"). As part of the
Reorganization and the Plan, the Bank will convert to a federal stock savings
bank (the "Stock Bank"), and will establish Revere, MHC (the "MHC") as a federal
corporation and RFS Bancorp, Inc. (the "Holding Company") also as a federal
corporation. The Holding Company will be a majority-owned subsidiary of the MHC
at all times so long as the MHC remains in existence, and the Stock Bank will be
a wholly-owned subsidiary of the Holding Company. Concurrently with the
Reorganization, the Holding Company intends to offer for sale up to 49.9% of its
Common Stock in the Stock Offering on a priority basis to qualifying depositors
and the Tax-Qualified Employee Plans of the Bank, with any remaining shares
offered to the public in a Community Offering.
2. DEFINITIONS
As used in this Plan, the terms set forth below have the following
meanings:
ACCOUNT(S): Withdrawable deposit(s) in the Bank, including
certificates of deposit.
ACTING IN CONCERT: The term "Acting in Concert" shall mean (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
understanding; or (ii) a combination or pooling of voting or other interests in
the securities of an issuer for a common purpose pursuant to any contract,
understanding, relationship, agreement or other arrangement, whether written or
otherwise. A person or company which acts in concert with another Person or
company ("other party") shall also be deemed to be acting in concert with any
Person who is also acting in concert with that other party, except that any
Tax-Qualified Employee Stock Benefit Plan will not be deemed to be acting in
concert with its trustee or a person who serves in a similar capacity solely for
the purpose of determining whether stock held by the trustee and stock held by
the plan will be aggregated and participants or beneficiaries of any such
Tax-Qualified Employee Stock Benefit Plan will not be deemed to be acting in
concert solely as a result of their common interests as participants or
beneficiaries.
AFFILIATE: A Person who directly or indirectly, through one or more
intermediaries controls, 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
Association or any majority-owned subsidiary thereof) of which such Person is an
officer or partner or is, directly or indirectly, either alone or with one or
more members of his or her immediate family, the beneficial
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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 (exclusive of
any tax-qualified employee stock benefit plan); or (iii) any relative or spouse
of such Person or any relative of such spouse, who has the same home as such
person or who is a director or officer of the Association or any affiliate
thereof.
The Holding Company, the MHC and the Bank may presume that certain Persons
are Acting in Concert based upon, among other things, joint account
relationships and the fact that such Persons have filed joint Schedules 13D with
the SEC with respect to other companies. When Persons act together for such a
common purpose, their group os deemed to have acquired their stock.
BANK: Revere Federal Savings
BYLAWS: The Bank's bylaws.
CAPITAL STOCK: Any and all authorized stock of the Stock Association.
CHARTER: The Bank's federal mutual savings and loan association
charter.
COMMON STOCK: All of the shares of common stock par value $.01 per
share, offered and issued by the Holding Company in the Reorganization pursuant
to the Plan. The Common Stock will not be insured by the Federal Deposit
Insurance Corporation.
COMMUNITY: The Massachusetts city of Revere.
COMMUNITY OFFERING: Offering for sale to certain residents of the
Community and thereafter members of the general public directly by the Bank, of
any shares of Common Stock not subscribed for in the Subscription Offering.
CONTROL: The possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether by
contract, through the ownership of voting securities of such Person, through the
ownership of voting securities of any company that possesses such power, or
otherwise. Control includes the terms "controlling," "controlled by" and "under
common control with".
ELIGIBLE ACCOUNT HOLDER: Any Person who had a Qualifying Deposit at
the Bank on the Eligibility Record Date.
EFFECTIVE DATE: The date upon which all necessary approvals have been
obtained to consummate the Reorganization, and the transfer of assets and
liabilities of the Bank to the Stock Bank is completed.
ELIGIBILITY RECORD DATE: December 31, 1996, the date established by
the Board of Directors of the Bank for determining Eligible Account Holders.
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EMPLOYEE: A person who is an Employee of the Bank at the date of the
Reorganization.
ESOP: The Stock Bank's employee stock ownership plan.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
HOLA: The Home Owners' Loan Act of 1933, as amended.
HOLDING COMPANY: The federal corporation, which will own 100% of the
capital stock of the Bank and which will issue and sell its Common Stock
pursuant to this Plan.
INDEPENDENT APPRAISER: The appraiser retained by the Bank to prepare
an appraisal of the pro forma market value of the Bank. Such appraiser shall be
experienced and expert in the area of corporate appraisal and acceptable to the
OTS.
IRS: Internal Revenue Service.
MANAGEMENT PERSON: Any Officer or director of the Bank or any
Affiliate of the Bank, and any person acting in concert with any such Officer or
director.
MARKETING AGENT: The broker-dealer responsible for organizing and
managing the Stock Offering and sale of the Common Stock.
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, (1) regularly publishes bona fide
competitive bid and offer quotations on request and (2) is ready, willing and
able to effect transactions in reasonable quantities at his quoted prices with
other brokers or dealers.
MEMBERS: Any depositor or borrower that is entitled under the charter
of the Bank to vote on matters affecting the Bank, and any depositor or borrower
that is entitled under the charter of the MHC to vote on matters affecting the
MHC.
MHC: The Mutual Holding Company resulting from the Reorganization.
MINORITY STOCK OFFERING: One or more offerings of less than 50% in the
aggregate of the outstanding Common Stock of the Holding Company to persons
other than the MHC.
MINORITY STOCK HOLDER: Aby owner of the H.C.'s Common Stock, other
than the MHC.
NON-TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN: Any stock option, bonus
stock, or restricted stock plan or other employee benefit plan that is not a
"Tax-Qualified Employee Stock Benefit Plan" and that is maintained by the
Holding Company or the Stock Bank for the benefit
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of officers, employees, or directors of the Holding Company, the Stock Bank, or
any Affiliate of either of them and that, by its terms, is authorized or
required to purchase Common Stock.
NON-VOTING STOCK: Non-Voting Stock means any Capital Stock other than
Voting Stock.
NOTICE: The Notice of Mutual Holding Company Reorganization to be
submitted by the Bank to the OTS to notify the OTS of the Reorganization and the
Stock Offering.
OFFICER: An executive officer of the Bank, which includes the Chief
Executive Officer, President, Executive Vice Presidents, Senior Vice Presidents,
Vice Presidents in charge of principal business functions or who otherwise have
a policy-making function, Secretary, Treasurer and any other person performing
similar functions.
ORDER FORM: The form provided by the Bank that subscribers must use to
order Common Stock in the Subscription Offering and Community Offering.
OTHER MEMBER: Any person who is a Member of the Bank at the close of
business on the Voting Record Date who is not an Eligible Account Holder or a
Supplemental Eligible Account Holder.
OTS: The Office of Thrift Supervision and any successor thereto.
PARENT: Any company which directly or indirectly controls any other
company or companies.
PARTICIPANTS: Eligible Account Holders, Tax Qualified Employee Stock
Benefit Plans, Supplemental Eligible Account Holders and Other Members.
PERSON: A natural person, corporation, partnership, Bank, trust
(including trusts or custodial arrangements under an Individual Retirement
Account or qualified retirement plan), unincorporated organization, joint-stock
company, government or political subdivision thereof, or any other entity.
PLAN: This Plan of Reorganization from Mutual Savings Bank to Mutual
Holding Company.
PREFERRED STOCK: Preferred stock issuable by the Stock Bank pursuant
to its stock charter.
PROSPECTUS: The Prospectus to be used in offering the Common Stock in
the Subscription Offering, the Community Offering and any Syndicated Community
Offering or public offering.
PROXY STATEMENT: The document to be used to solicit proxies from
Members to vote at the Special Meeting.
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QUALIFYING DEPOSIT: The aggregate balance of Accounts of $50 or more
in the Bank at the close of business on the Eligibility Record Date. Accounts
with aggregate balances of less than $50 shall not constitute a Qualifying
Deposit.
REGULATIONS: The regulations of the OTS regarding mutual holding
companies.
REORGANIZATION: The reorganization of the Bank into the MHC and the
organization of the Holding Company as a subsidiary of the MHC and the Stock
Bank as a subsidiary of the Holding Company pursuant to this Plan.
REORGANIZATION NOTICE: A notice of proposed MHC reorganization that is
in the OTS form and contains the information required by the OTS.
RESIDENT: Any person who occupies a dwelling within the Community, has
a present intent to remain within the Community for a period of time, and
manifests the genuineness of that intent by establishing an ongoing physical
presence within the Community together with an indication that such presence
within the Community is something other than merely transitory in nature. To the
extent the person is a corporation or other business entity, the principal place
of business or headquarters shall be in the Community. To the extent a person is
a personal benefit plan, the circumstances of the beneficiary shall apply with
respect to this definition. In the case of all other benefit plans,
circumstances of the trustee shall be examined for purposes of this definition.
The Bank may utilize deposit or loan records or such other evidence provided to
it to make a determination as to whether a person is a resident. In all cases,
however, such a determination shall be in the sole discretion of the Bank.
SAIF: The Savings Association Insurance Fund, which is administered by
the FDIC.
SEC: The United States Securities and Exchange Commission.
SPECIAL MEETING: The Special Meeting of Members called for the purpose
of voting on the Plan.
STOCK BANK: The newly organized federally-chartered stock savings bank
subsidiary of the MHC resulting from the Reorganization.
STOCK BENEFIT PLAN: Any Tax-Qualified Employee Stock Benefit Plan or
any Non- Tax-Qualified Employee Stock Benefit Plan.
STOCK OFFERING: The offering of Common Stock of the Holding Company to
Persons other than the MHC, on a priority basis as set forth in Section 15 of
the Stock Issuance Plan subject to the other provisions of the Plan, including
without limitation the limitations on purchases of Common Stock set forth in
Section 16 thereof.
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SUBSCRIPTION OFFERING: The Offering of Common Stock of the Holding
Company to Participants.
SUBSIDIARY: Any company which is owned or controlled directly or
indirectly by a person, including any service corporation owned in whole or in
part by a savings Bank, or a subsidiary of such service organization.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER: Any person holding a Qualifying
Deposit on the Supplemental Eligibility Record Date, who is not an Eligible
Account Holder, a Tax- Qualified Employee Plan or an Officer or Director of the
Bank.
SUPPLEMENTAL ELIGIBILITY RECORD DATE: The supplemental record date for
determining who qualifies as a Supplemental Eligible Account Holder. The
Supplemental Eligibility Record Date shall be the last day of the calendar
quarter preceding the OTS's approval of the Reorganization.
SYNDICATED COMMUNITY OFFERING: The offering of Common Stock at the
discretion of the Board of Directors following or contemporaneously with the
Stock Offering through a syndicate of broker-dealers only to the extent shares
remain available for purchase after filling all orders in the Stock Offering.
Any Syndicated Community Offering shall be conducted in accordance with this
Plan and other standards established by the Board of Directors consistent with
OTS regulations.
TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN: Any defined benefit plan or
defined contribution plan such as an employee stock ownership plan, stock bonus
plan, profit-sharing plan or other plan that is maintained by the Holding
Company or the Stock Bank for the benefit of the officers or employees of the
Holding Company or the Stock Bank, or any Affiliate of either; that by its terms
is authorized or required to purchase Common Stock; and that, with its related
trusts, meets the requirements to be "qualified" under Section 401 of the
Internal Revenue Code. The Stock Bank may make scheduled discretionary
contributions to a tax-qualified employee stock benefit plan provided such
contributions do not cause the Stock Bank to fail to meet its regulatory capital
requirements.
VOTING MEMBERS: Those Members of the Bank qualifying as voting members
of the Bank pursuant to its Charter and Bylaws.
VOTING RECORD DATE: The date established by the Board of Directors of
the Bank in accordance with OTS regulations for determining which Members are
entitled to vote at the Special Meeting.
VOTING STOCK: Voting Stock means Common Stock or Preferred Stock, or
similar interests if the shares by statute, charter or in any manner, entitle
the holder:
(i) To vote for or to select directors of the Bank or Holding
Company; and
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(ii) To vote on or to direct the conduct of the operations or other
significant policies of the Bank or Holding Company.
3. BUSINESS PURPOSES FOR THE REORGANIZATION
The Bank has several business purposes for effecting the proposed
Reorganization. The Reorganization will structure the Bank in stock form, which
is used by commercial banks, most major business corporations and an increasing
number of savings banks and savings Banks. Formation of the Stock Bank as a
capital stock savings bank and the Holding Company as subsidiaries of the MHC
will permit the Holding Company to issue Capital Stock, which is a source of
capital not available to mutual savings banks. At the same time, the Bank's
mutual form of ownership will be preserved in the MHC, and the MHC, as a mutual
corporation, will at all times control at least a majority of the Voting Stock
of the Holding Company and the Stock Bank so long as the MHC remains in
existence. The Reorganization will enable the Bank to achieve the benefits of a
stock company without a loss of control that often follows standard conversions
from mutual to stock form. The Bank is committed to being an independent
community-oriented institution, and the Board of Directors believes that the
mutual holding company structure is best suited for this purpose. The mutual
holding company structure also will give the Holding Company flexibility to
issue its Capital Stock at various times and in varying amounts as market
conditions permit, rather than in a single stock offering. The Reorganization
will not foreclose the opportunity of the MHC to convert from the
mutual-to-stock form of organization in the future. Formation of a mutual
holding company is also expected to facilitate acquisitions and the
diversification of the Bank's activities.
The sale of Common Stock will provide the Stock Bank with new equity
capital, which will support future deposit growth and expanded operations. The
Board of Directors believes that it is desirable for the Bank to increase its
capital position in view of the increasingly competitive and changing market and
regulatory conditions in which the Bank operates. The sale of Common Stock at
appropriate times, coupled with the accumulation of earnings (net of dividends)
from year to year, represents a means for the orderly preservation and expansion
of the Bank's capital base, and allows flexibility to respond to sudden and
unanticipated capital needs. The temporary investment of the net proceeds of a
stock offering will also provide additional income to further enhance the Stock
Bank's future capital position.
The ability of the Holding Company to issue Common Stock also will enable
the Stock Bank to establish in the future stock benefit plans for management and
employees, including incentive stock option plans, stock award plans, and
employee stock ownership plans.
The formation of the Holding Company will also allow the Holding Company to
borrow funds, on a secured and unsecured basis, and to issue debt to the public
or in a private placement. The proceeds of any such borrowings or debt issuance
may be contributed to the Stock Bank as core capital for regulatory capital
purposes. The Bank has not made a determination to borrow funds or issue debt at
the present time, and there can be no assurance when, if ever, any such
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borrowing or debt issuance would occur, or whether it would be consummated on
terms satisfactory to the MHC.
4. CERTAIN EFFECTS OF THE REORGANIZATION
A. Organization of the Holding Companies and the Bank
As part of the Reorganization, the Bank will convert to a federal stock
savings bank, and will establish the Holding Company and the MHC as federal
corporations. The Reorganization will be effected as follows, or in any manner
approved by the OTS that is consistent with the purposes of this Plan and
applicable laws and regulations.
As part of the Reorganization: (i) the Bank will organize an interim stock
savings bank as a wholly-owned subsidiary ("Interim One"); (ii) Interim One will
organize an interim stock savings bank as a wholly-owned subsidiary ("Interim
Two"); (iii) Interim One will organize the Holding Company as a wholly-owned
subsidiary; (iv) the Bank will exchange its charter for a federal stock savings
bank charter to become the Stock Bank and Interim One will exchange its charter
for a federal mutual holding company charter to become the MHC; (v)
simultaneously with step (iv), Interim Two will merge with and into the Stock
Bank with the Stock Bank as the resulting institution; (vi) all of the initially
issued stock of the Stock Bank will be transferred to the MHC in exchange for
membership interests in the MHC; and (vii) the MHC will contribute the capital
stock of the Stock Bank to the Holding Company and the Stock Bank will become a
wholly-owned subsidiary of the Holding Company. Contemporaneously with the
Reorganization, the Holding Company will offer for sale in the Stock Offering
shares of Common Stock representing up to 49.9% the pro forma market value of
the Holding Company and the Bank. Upon the consummation of the Reorganization,
the legal existence of the Bank will not terminate, but the Stock Bank will be a
continuation of the Bank, and all property of the Bank, including its right,
title, and interest in all to all property of whatsoever kind and nature,
interest and asset of every conceivable value or benefit then existing or
pertaining to the Bank, or which would inure to the Bank immediately by
operation of law and without the necessity of any conveyance or transfer and
without any further act or deed, will vest in the Stock Bank. The Stock Bank
will have, hold, and enjoy the same in its right and fully and to the same
extent as the same was possessed, held, and enjoyed by the Bank. The Stock Bank
will continue to have, succeed to, and be responsible for all the rights,
liabilities and obligations of the Bank and will maintain its headquarters and
operations at the Bank's present locations.
Upon consummation of the Reorganization, substantially all of the assets
and liabilities (including the savings accounts, demand accounts, tax and loan
accounts, United States Treasury general accounts, or United States Treasury
Time Deposit Accounts, as defined in the OTS regulations) of the Bank shall
become the assets and liabilities of the Stock Bank, which will thereupon become
an operating savings bank subsidiary of the Holding Company and of the MHC. The
Bank will apply to the OTS to have the Holding Company receive or retain (as the
case may be) up to 50% of the net proceeds of the Stock Offering, or such other
amount as may be determined by the Board of Directors. The Stock Bank may
distribute additional capital to the
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Holding Company following the Reorganization, subject to the OTS regulations
governing capital distributions.
B. Effect on Deposit Accounts and Borrowings
Each deposit account in the Bank on the Effective Date will remain a
deposit account in the Stock Bank in the same amount and upon the same terms and
conditions, and will continue to be federally insured up to the legal maximum by
the FDIC in the same manner as deposit account existed in the Bank immediately
prior to the Reorganization. Upon consummation of the Reorganization, all loans
and other borrowings from the Bank shall retain the same status with the Stock
Bank after from the Bank shall retain the same status with the Stock Bank after
the Reorganization as they had with the Bank immediately prior to the
Reorganization.
C. The Bank
Upon completion of the Reorganization, the Stock Bank will be authorized to
exercise any and all powers, rights and privileges of, and will be subject to
all limitations applicable to, capital stock savings banks under federal law. A
copy of the proposed Charter and Bylaws of the Stock Bank is attached hereto as
Exhibit A and made a part of this Plan. The Reorganization will not result in
any reduction of the amount of retained earnings and general loss reserves will
be accounted for by the MHC, the Holding Company and the Stock Bank on a
consolidated basis in accordance with generally accepted accounting principles.
The initial members of the Board of Directors of the Stock Bank will be the
members of the existing Board of Directors of the Bank. The Stock Bank will be
wholly-owned by the Holding Company. The Holding Company will be wholly-owned by
its stockholders who will consist of the MHC and, initially, the persons who
purchase Common Stock in the Stock Offering. Upon the Effective Date of the
Reorganization, the voting and membership rights of Members will be transferred
to the MHC, subject to the conditions specified below.
D. The Holding Company
The Holding Company will be authorized to exercise any and all powers,
rights and privileges, and will be subject to all limitations applicable to
savings and loan holding companies and mutual holding companies under federal
law and regulations. The initial members of the Board of Directors of the
Holding Company will be appointed by the Bank. Thereafter, the voting
stockholders of the Holding Company will elect approximately one-third of the
Holding Company's directors annually. A copy of the proposed Charter and Bylaws
of the Holding Company is attached as Exhibit B and are made part of this Plan.
The Holding Company will have the power to issue shares of Common Stock to
persons other than the MHC. However, so long as the MHC is in existence, the MHC
will be required to own at least a majority of the Voting Stock of the Holding
Company. The Holding Company may issue any amount of Non-Voting Stock to persons
other than the MHC. The Holding
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Company will be authorized to undertake one or more Minority Stock Offerings of
less than 50% in the aggregate of the total outstanding Common Stock of the
Holding Company, and the Holding Company intends to offer for sale up to 49.9%
of its Common Stock in the Stock Offering.
E. The Mutual Holding Company
As a mutual corporation, the MHC will have no stockholders. The members of
the MHC will have exclusive voting authority as to all matters requiring a vote
of members under the Charter of the MHC. Persons who have membership rights with
respect to the Bank under its existing Charter immediately prior to the
Reorganization shall continue to have such rights solely with respect to the MHC
after Reorganization so long as such persons remain depositors or borrowers, as
the case may be, of the Bank after the Reorganization. In addition, all persons
who become depositors of the Stock Bank following the Reorganization will have
membership right with respect to the MHC. The rights and powers of the MHC will
be defined by the MHC's Charter and Bylaws (a copy of which is attached to this
Plan as Exhibit C and made a part hereof) and by the statutory and regulatory
provisions applicable to savings and loan holding companies and mutual holding
companies. In particular, the MHC shall be subject to the limitations and
restrictions imposed on savings and loan holding companies by Section 10(o)(5)
of the HOLA.
The initial members of the Board of Directors of the MHC will be the
existing Board of Directors of the Bank and any additional persons as may be
appointed by the Bank. Thereafter, approximately one-third of the directors of
the MHC will be elected annually by the members of the MHC who will consist of
the former Members of the Bank and all persons who become depositors of the Bank
after the Reorganization.
5. CONDITIONS TO IMPLEMENTATION OF THE REORGANIZATION
Consummation of the Reorganization is expressly conditioned upon prior
occurrence of the following:
A. Approval of the Plan by a majority of the Board of Directors of the
Bank.
B. A Reorganization Notice filed with the OTS and either:
(i) The OTS has given written notice of its intent not to disapprove
the Reorganization; or
(ii) Sixty days have passed since the OTS received the Reorganization
Notice and deemed it sufficient under 516.2(c) of the OTS
regulations, and the OTS has not given written notice that the
Reorganization is disapproved or extended for an additional 30
days, the period during which disapproval may be issued.
C. The Plan is submitted to the Members pursuant to a Proxy Statement and
form of proxy approved in advance by the OTS, and such Plan is
approved by a majority
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of the total votes of the Members eligible to be cast at a meeting
held at the call of the directors in accordance with the procedures
prescribed by the Bank's Charter and Bylaws.
D. All necessary approvals have been obtained from the OTS in connection
with the charter and bylaws of the MHC and the Stock Bank, and the
transfer of assets and liabilities of the Bank to the Stock Bank; and
all conditions specified or otherwise imposed by the OTS in connection
with the issuance of a notice of intent not to disapprove the Notice
have been satisfied; and if applicable, the FDIC has approved the
insurance of accounts of the Stock Bank.
E. Receipt by the Bank of either a private letter ruling of the Internal
Revenue Service or an opinion of the Bank's counsel as to the federal
income tax consequences of the Reorganization to the MHC, the Stock
Bank, the Bank and to the Bank's depositor and borrower members.
F. Receipt by the Bank of either a private letter ruling of the
Massachusetts Department of Revenue or an opinion of counsel or the
Bank's of Independent Public Accountants as to the Massachusetts tax
consequences of the Reorganization to the MHC, the Stock Bank and to
the Bank's Members.
6. SPECIAL MEETING OF MEMBERS
Subsequent to the approval of the Plan by the OTS, the Special Meeting
shall be scheduled in accordance with the Bank's Bylaws. Promptly after receipt
of approval and at least 20 days but not more than 45 days prior to the Special
Meeting, the Bank shall distribute proxy solicitation materials to all Members
and beneficial owners of accounts held in a fiduciary capacity where the
beneficial owner possesses voting rights as of the Voting Record Date. The proxy
solicitation materials shall include a Proxy Statement, other documents
authorized for use by the regulatory authorities, and a copy of the Plan which
will be made available to Members upon request. Pursuant to the Regulations, an
affirmative vote of not less than a majority of the total outstanding votes of
the Members is required for approval of the Plan. Each Member shall be entitled
to cast one vote in person or by proxy for every one thousand dollars ($1,000)
or fraction thereof, that such Member had on deposit as of the Voting Record
Date; provided, however, that no Member may cast more than one thousand (1,000)
votes under any circumstance. Members who are borrowers from the Bank shall be
entitled to one vote plus any additional votes to which they may be entitled as
depositors of the Bank. Voting may be in person or by proxy. The OTS shall be
notified promptly of the actions of the Members.
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7. CHARTER AND BYLAWS
Copies of the proposed Charter and Bylaws of the Stock Bank, the Holding
Company and the MHC are attached hereto as Exhibits A, B and C, respectively,
and are made a part of this Plan. By their approval of this Plan, the Voting
Depositors shall have approved and adopted the Charter and Bylaws of the Bank,
the Holding Company and the MHC.
The total shares of Common Stock authorized under the Holding Company
Charter will exceed the shares of Common Stock to be issued to the MHC and the
minority stockholders in the Reorganization. In addition, the Charter of the
Holding Company will include provisions that: (i) eliminate cumulative voting
for the election of directors; (ii) prohibit any person or group acting in
concert (other than the MHC) from voting shares in excess of 10% of the Common
Stock of the Holding Company; and (iii) prohibit persons other than the Board of
Directors of the Stock Bank from calling special meetings of the stockholders of
the Holding Company.
8. RIGHTS OF OWNERS OF THE MHC
Following the Reorganization, all persons who had membership or liquidation
rights with respect to the Bank as of the date of the Reorganization will
continue to have such rights solely with respect to the MHC. All existing
proxies granted by members of the Bank to the Board of Directors of the Bank
shall automatically become proxies granted to the Board of Directors of the MHC,
provided, however, such proxies may not be voted by the Board of Directors at
the Special Meeting to approve the Plan. In addition, all persons who become
depositors of the Stock Bank subsequent to the Reorganization also will have
membership and liquidation rights with respect to the MHC. In each case, no
person who ceases to be the holder of a deposit account with the Stock Bank
shall have any membership or liquidation rights with respect to the MHC.
Borrowers of the Stock Bank who were borrower members of the Bank at the time of
Reorganization will have the same membership rights in the MHC as they had in
the Bank immediately prior to the Reorganization for so long as their
pre-Reorganization borrowings remain outstanding. Borrowers will not receive
membership rights in connection with any new borrowings made after the
Reorganization.
9. CONVERSION OF MHC TO STOCK FORM
Following the completion of the Reorganization, the MHC may elect to
convert to stock form in accordance with applicable law (a "Conversion
Transaction"). There can be no assurance when, if ever, a Conversion Transaction
will occur, and the Board of Directors has no present intent or plan to
undertake a Conversion Transaction. If the Conversion Transaction does not
occur, the MHC will always own a majority of the Common Stock of the Holding
Company.
In a Conversion Transaction, the MHC would merge with and into the Stock
Bank or the Holding Company (at the discretion of the MHC), and certain
depositors of the Stock Bank would receive the right to subscribe for a number
of shares of common stock of the new stock holding company formed in connection
with the Conversion Transaction, as determined by the formula
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set forth in the following paragraphs. The additional shares of Common Stock of
the New Stock Holding Company issued in the Conversion Transaction would be sold
at their aggregate pro forma market value determined by an independent
appraisal.
Any Conversion Transaction shall be fair and equitable to Minority
Stockholders. In any Conversion Transaction, Minority Stockholders, if any, will
be entitled to maintain the same percentage ownership interest in the New Stock
Holding Company after the Conversion Transaction as their ownership interest in
the Holding Company immediately prior to the Conversion Transaction (i.e., the
Minority Ownership Interest), subject only to the following adjustments (if
required by federal or state law, regulation, or regulatory policy) to reflect:
(i) the cumulative effect of the aggregate amount of dividends waived by the
MHC; and (ii) the market value of assets of the MHC (other than common stock of
the Holding Company).
The adjustment referred to in clause (i) of the preceding paragraph above
would require that the Minority Ownership Interest be adjusted by multiplying
the Minority Ownership Interest by the following fraction:
(Holding Company stockholders' equity immediately prior to Conversion
Transaction) - (aggregate amount of dividends waived by MHC)
- --------------------------------------------------------------------------------
Holding Company stockholders' equity immediately prior to Conversion Transaction
The adjustment referred to in clause (ii) above would further adjust the
Minority Ownership Interest by multiplying the adjusted Minority Ownership
Interest by the following fraction:
(pro forma market value of New Stock Holding Company) - (market value of assets
of MHC other than Holding Company common stock)
- --------------------------------------------------------------------------------
pro forma market value of New Stock Holding Company
At the sole discretion of the Board of Directors of the MHC and the Holding
Company, a Conversion Transaction may be effected in any other manner necessary
to qualify the Conversion Transaction as a tax-free reorganization under
applicable federal and state tax laws, provided such Conversion Transaction does
not diminish the rights and ownership interest of Minority Stockholders as set
forth in the preceding paragraphs. If a Conversion Transaction does not occur,
the MHC will always own a majority of the voting stock of the Holding Company.
Management of the Bank has no current intention to conduct a Conversion
Transaction.
A Conversion Transaction would require the approval of applicable federal
regulators, and would be presented to a vote of the members of the MHC. Federal
regulatory policy requires that in any Conversion Transaction the members of the
MHC will be accorded the same stock purchase priorities as if the MHC were a
mutual savings bank converting to stock form.
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10. TIMING OF THE REORGANIZATION AND SALE OF CAPITAL STOCK
The Bank intends to consummate the Reorganization as soon as feasible
following the receipt of all approvals referred to in Section 5 of the Plan. As
a stock subsidiary of the MHC, following the Reorganization the Holding Company
will be authorized to undertake one or more Minority Stock Offerings of less
than 50% in the aggregate of the total outstanding Common Stock of the Holding
Company. Subject to the approval of the OTS and the SEC, the Stock Bank intends
to commence the Stock Offering concurrently with the proxy solicitation of
Members.
The Bank may close the Stock Offering before the Special Meeting, provided
that the offer and sale of the Common Stock shall be conditioned upon approval
of the Plan by the Members at the Special Meeting. The Bank shall not distribute
the final stock Prospectus until such Prospectus has been declared effective by
the OTS.
The Stock Offering shall be conducted pursuant to the Stock Issuance Plan
in compliance with the OTS securities offering regulations contained at 12
C.F.R. ss.563g.
11. NUMBER OF SHARES TO BE OFFERED
The total number of shares (or range thereof) of Common Stock to be issued
and offered for sale pursuant to the Plan will be determined initially by the
Board of Directors of the Bank and the Board of Directors of the Holding Company
in conjunction with the determination of the Independent Appraiser. The number
of shares to be offered may be adjusted prior to completion of the Stock
Offering. The total number of shares of Common Stock that may be issued to
persons other than the MHC at the close of the Stock Offering must be no greater
than 49.9% of the issued and outstanding shares of Common Stock of the Holding
Company.
12. INDEPENDENT VALUATION AND PURCHASE PRICE OF SHARES
The total number of shares (and a range thereof) (the "Offering Range") of
Common Stock to be issued and offered for sale in the Stock Offering will be
determined jointly by the Board of Directors of the Bank and the Board of
Directors of the Holding Company immediately prior to the commencement of the
Subscription and Community Offerings, subject to adjustment thereafter if
necessitated by market or financial conditions, with the approval of the OTS. In
particular, the total number of shares may be increased by up to 15% of the
number of shares offered in the Subscription and Community Offerings if the
Estimated Valuation Range is increased subsequent to the commencement of the
Subscription and Community Offerings to reflect changes in market and financial
conditions.
All shares sold in the Stock Offering will be sold at a uniform price per
share referred to in this Plan as the Actual Subscription Price. The aggregate
purchase price for all shares of Common Stock will not be inconsistent with the
estimated consolidated pro forma market value of the Holding Company and the
Bank. The estimated consolidated pro forma market value of the Holding Company
and the Bank will be determined for such purpose by the Independent
-15-
Appraiser. Prior to the commencement of the Subscription and Community
Offerings, an Estimated Valuation Range will be established, which range will
vary within 15% above to 15% below the midpoint of such range. The shares of
Common Stock being sold in the Stock Offering will represent a minority
ownership interest in the outstanding Common Stock of the Holding Company equal
to up to 49.9% of the estimated pro forma market value of the Common Stock based
upon the Independent Valuation. The percentage of Common Stock offered for sale
in the Stock Offering and Offering Range shall be determined by the Board of
Directors of the Holding Company and the Board of Directors of the Bank prior to
commencement of the Subscription and Community Offerings, and will be confirmed
upon completion of the Stock Offering.
The number of shares of Common Stock to be issued in the Stock Offering and
the purchase price per share may be increased or decreased by the Holding
Company. In the event that the aggregate purchase price of the Common Stock is
below the minimum of the Estimated Valuation Range, or materially above the
maximum of the Estimated Valuation Range, resolicitation of purchasers may be
required, provided that up to a 15% increase above the maximum of the Estimated
Valuation Range will not be deemed material so as to require a resolicitation.
Any such resolicitation shall be effected in such manner and within such time as
the Bank shall establish, with the approval of the OTS, if required. Up to a 15%
increase in the number of shares to be issued which is supported by an
appropriate change in the estimated pro forma market value of the Holding
Company will not be deemed to be material so as to require a resolicitation of
subscriptions. Based upon the Independent Valuation as updated prior to the
commencement of the Subscription and Community Offerings, the Board of Directors
of the Holding Company will fix the Actual Subscription Price. If there is a
Syndicated Community Offering of shares of Common Stock not subscribed for in
the Subscription and Community Offerings, the price per share at which the
Common Stock is sold in such Syndicated Community Offering shall be equal to the
Actual Subscription Price.
13. METHOD OF OFFERING SHARES AND RIGHTS TO PURCHASE STOCK
In descending order of priority, the opportunity to purchase Common Stock
shall be given in the Subscription Offering to: (1) Eligible Account Holders;
(2) Tax-Qualified Employee Plans; (3) Supplemental Eligible Account Holders; and
(4) Other Members. Any shares of Common Stock that are not subscribed for in the
Subscription Offering may be offered for sale in a Direct Community Offering.
The minimum purchase by an Person shall be 25 shares. The Holding Company may
use its discretion in determining whether prospective purchasers are
"residents," "associates, or "acting in concert" as defined in the Plan, and in
interpreting any and all other provisions of the Plan. All such determinations
are in the sole discretion of the Holding Company, and may be based on whatever
evidence the Holding Company chooses to use in making any such determination.
-16-
A. SUBSCRIPTION OFFERING
PRIORITY 1: ELIGIBLE ACCOUNT HOLDERS. Each Eligible Account Holder shall be
given the opportunity to purchase up to $250,000 of Common Stock offered in the
Stock Offering; provided that the Holding Company may, in its sole discretion
and without further notice to or solicitation of subscribers or other
prospective purchasers, increase such maximum purchase limitation to 5% of the
maximum number of shares offered in the Stock Offering or decrease such maximum
purchase limitation to .5% of the maximum number of shares offered in the Stock
Offering, subject to the overall purchase limitation set forth in Section 16. If
there are insufficient shares available to satisfy all subscriptions of Eligible
Account Holders, shares will be allocated to Eligible Account Holders so as to
permit each such subscribing Eligible Account Holder to purchase a number of
shares sufficient to make his total allocation equal to the lesser of 100 shares
or the number of shares subscribed for. Thereafter, unallocated shares will be
allocated pro rata to remaining subscribing Eligible Account Holders whose
subscriptions remain unfilled in the same proportion that each such subscriber's
Qualifying Deposit bears to the total amount of Qualifying Deposits of all
subscribing Eligible Account Holders whose subscriptions remain unfilled. To
ensure proper allocation of stock, each Eligible Account Holder must list on his
subscription order form all accounts in which he had an ownership interest as of
the Eligibility Record Date.
In the event that the number of shares offered is increased as a result of
an increase in the Independent Valuation, the ESOP will have a priority right to
fill its subscription in whole or in part prior to all other subscriptions of
Eligible Account Holders.
PRIORITY 2: TAX-QUALIFIED EMPLOYEE PLANS. The Tax-Qualified Employee Plans
shall be given the opportunity to purchase in the aggregate up to 8% of the
Common Stock issued in the Stock Offering. In the event of an oversubscription
in the Stock Offering, subscriptions for shares by the Tax-Qualified Employee
Plans may be satisfied, in whole or in part, out of authorized but unissued
shares of the Holding Company subject to the maximum purchase limitations
applicable to such plans and set forth in Section 26, or may be satisfied, in
whole or in part, through open market purchases by the Tax-Qualified Employee
Plans subsequent to the closing of the Stock Offering.
PRIORITY 3: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. To the extent there are
sufficient shares remaining after satisfaction of subscriptions by Eligible
Account Holders and the Tax- Qualified Employee Plans, each Supplemental
Eligible Account Holder shall have the opportunity to purchase up to $250,000 of
Common Stock offered in the Stock Offering, provided that the Bank may, in its
sole discretion and without further notice to or solicitation of subscribers or
other prospective purchasers, increase such maximum purchase limitation to 5% of
the maximum number of shares offered in the Stock Offering or decrease such
maximum purchase limitation to 0.5% of the maximum number of shares offered in
the Stock Offering subject to the overall purchase limitations set forth in
Section 16. In the event Supplemental Eligible Account Holders subscribe for a
number of shares which, when added to the shares subscribed for by Eligible
Account Holders, and the Tax-Qualified Employee Plans, the shares of Common
Stock will be
-17-
allocated among subscribing Supplemental Eligible Account Holders so as to
permit each subscribing Supplemental Eligible Account Holder to purchase a
number of shares sufficient to make his total allocation equal to the lesser of
100 shares or the number of shares subscribed for. Thereafter, unallocated
shares will be allocated to each subscribing Supplemental Eligible Account
Holder whose subscription remains unfilled in the same proportion that such
subscriber's Qualifying Deposits on the Supplemental Eligibility Record Date
bear to the total amount of Qualifying Deposits of all subscribing Supplemental
Eligible Account Holders whose subscriptions remain unfilled.
PRIORITY 4: OTHER MEMBERS. To the extent that there are sufficient shares
remaining after satisfaction of subscriptions by Eligible Account Holders, the
Tax-Qualified Employee Plans and Supplemental Eligible Account Holders, each
Other Member shall have the opportunity to purchase up to $250,000 of Common
Stock offered in the Stock Offering, provided that the Bank may, in its sole
discretion and without further notice to or solicitation of subscribers or other
prospective purchasers, increase such maximum purchase limitation to 5% of the
maximum number of shares offered in the Stock Offering or decrease such maximum
purchase limitation to .5% of the maximum number of shares offered in the Stock
Offering, subject to the overall purchase limitations set forth in Section 26.
In the event Other Members subscribe for a number of shares which, when added to
the shares subscribed for by the Eligible Account Holders, Tax- Qualified
Employee Plans and Supplemental Eligible Account Holders is in excess of the
total number of shares offered in the Stock Offering, the subscriptions of such
Other Members will be allocated among subscribing Other Members on a pro rata
basis based on the size of such Other Members' orders.
B. COMMUNITY OFFERING/PUBLIC OFFERING
Any shares of Common Stock not subscribed for in the Subscription Offering
may be offered for sale in a Community Offering. This will involve an offering
of all unsubscribed shares directly to the general public with a preference to
those natural persons residing in the Community. The Community Offering, if any,
may be for a period of not more than 45 days unless extended by the Holding
Company and the Bank, and shall commence concurrently with, during or promptly
after the Subscription Offering. The Holding Company and the Bank may use an
investment banking firm or firms on a best efforts basis to sell the
unsubscribed shares in the Subscription and Community Offering. The Holding
Company and the Bank may pay a commission or other fee to such investment
banking firm or firms as to the shares old 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 Community Offering may
include a syndicated community offering managed by such investment banking firm
or firms. The Common Stock will be offered and sold in the Community Offering,
in accordance with OTS regulations, so as to achieve the widest distribution of
the Common 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 Common Stock offered in the Community Offering.
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In the event of an oversubscription for shares in the Community Offering,
shares may, at the sole discretion of the Bank, be allocated (to the extent
shares remain available) so that each such person may receive 1,000 shares, and
thereafter, on a pro rata basis to such persons based on the amount of their
respective subscriptions.
The Bank and the Holding Company, in their sole discretion, may reject
subscriptions, in whole or in part, received from any Person under this Section
16(B).
C. SYNDICATED COMMUNITY OFFERING
Any shares of Common Stock not sold in the Subscription Offering or in the
Community Offering, if any, may be offered for sale to the general public by a
selling group of broker-dealers in a Syndicated Community Offering, subject to
terms, conditions and procedures, including the timing of the offering, as may
be determined by the Bank and the Holding Company in a manner that is intended
to achieve the widest distribution of the Common Stock subject to the rights of
the Holding Company to accept or reject in whole or in part all orders in the
Syndicated Community Offering. It is expected that the Syndicated Community
Offering would commence as soon as practicable after termination of the
Subscription Offering and the Direct Community Offering, if any. The Syndicated
Community Offering shall be completed within 45 days after the termination of
the Subscription Offering, unless such period is extended as provided herein.
The Syndicated Community Offering price and the underwriting discount in the
Syndicated Community Offering shall be determined by an underwriting agreement
between the Holding Company, the Bank and the underwriters. Such underwriting
agreement shall be filed with the SEC.
If for any reason a Syndicated Community Offering of unsubscribed shares of
Common Stock cannot be effected and any shares remain unsold after the
Subscription Offering and the Direct Community Offering, if any, the Boards of
Directors of the Holding Company and the Bank will seek to make other
arrangements for the sale of the remaining shares. Such other arrangements will
be subject to the approval of the SEC and to compliance with applicable
securities laws.
14. ADDITIONAL LIMITATIONS ON PURCHASES OF COMMON STOCK
Purchases of Common Stock in the Stock Offering will be subject to the
following purchase limitations:
A. The aggregate amount of outstanding Common Stock of the Holding
Company owned or controlled by persons other than MHC at the close of
the Stock Offering shall be less than 50% of the Holding Company's
total outstanding Common Stock.
B. No Person, Associate thereof, or group of person acting in concert,
may purchase more than $250,000 of Common Stock offered in the Stock
Offering to persons other than the MHC, except that: (i) the Holding
Company may, in its sole discretion and without further notice to or
solicitation of subscribers or other
-19-
prospective purchasers, increase such maximum purchase limitation to
5% of the number of shares offered in the Stock Offering; (ii)
Tax-Qualified Employee Plans may purchase up to 8% of the shares
offered in the Stock Offering; and (iii) for purposes of this
subsection 17(B) shares to be held by any Tax-Qualified Employee Plan
and attributable to a person shall not be aggregated with other shares
purchased directly by or otherwise attributable to such person.
C. The aggregate amount of Common Stock acquired in the Stock Offering by
all Management Persons and their Associates, exclusive of any stock
acquired by such persons in the secondary market, shall not exceed 34%
of the outstanding shares of Common Stock of the Holding Company held
by persons other than the MHC at the close of the Stock Offering. In
calculating the number of shares held by Management Persons and their
Associates under this paragraph, shares held by any Tax-Qualified
Employee Benefit Plans of the Bank that are attributable to such
persons shall not be counted.
F. Notwithstanding any other provisions of this Plan, no person shall be
entitled to purchase any Common Stock to the extent such purchase
would be illegal under any federal law or state law or regulation or
would violate regulations or policies of the National Bank of
Securities Dealers, Inc., particularly those regarding free riding and
withholding. The Holding Company and/or its agents may ask for an
acceptable legal opinion from any purchaser as to the legality of such
purchase and may refuse to honor any purchase order if such opinion is
not timely furnished.
G. The Board of Directors of the Holding Company has the right in its
sole discretion to reject any order submitted by a person whose
representations the Board of Directors believes to be false or who it
otherwise believes, either alone or acting in concert with others, is
violating, circumventing, or intends to violate, evade or circumvent
the terms and conditions of this Plan.
Prior to the consummation of the Stock Offering, no person shall offer to
transfer, or enter into any agreement or understanding to transfer the legal or
beneficial ownership of any subscription rights or shares of Common Stock,
except pursuant to this Plan. Each person purchasing Common Stock shall be
deemed to confirm that such purchase does not conflict with the above purchase
limitations contained in this Plan.
EACH PERSON PURCHASING COMMON STOCK IN THE STOCK OFFERING WILL BE DEEMED TO
CONFIRM THAT PURCHASE DOES NOT CONFLICT WITH THE PURCHASE LIMITATIONS IN THIS
PLAN. ALL QUESTIONS CONCERNING WHETHER ANY PERSONS ARE ASSOCIATES OR A GROUP
ACTING IN CONCERT OR WHETHER ANY PURCHASE CONFLICTS WITH THE PURCHASE
LIMITATIONS IN THIS PLAN OR OTHERWISE VIOLATES ANY PROVISION OF THIS PLAN SHALL
BE DETERMINED BY THE BANK IN ITS SOLE DISCRETION. SUCH DETERMINATION SHALL BE
CONCLUSIVE, FINAL AND BINDING ON ALL PERSONS AND THE BANK MAY TAKE
-20-
ANY REMEDIAL ACTION, INCLUDING WITHOUT LIMITATION REJECTING THE PURCHASE OR
REFERRING THE MATTER TO THE OTS FOR ACTION, AS IN ITS SOLE DISCRETION THE BANK
MAY DEEM APPROPRIATE.
15. PAYMENT FOR STOCK
All payments for Common Stock subscribed for or ordered in the Stock
Offering must be delivered in full to the Bank, together with a properly
completed and executed order form, faxes of the order forms will not be accepted
as properly completed and executed order forms or purchase order in the case of
the Syndicated Community Offering, on or prior to the expiration date specified
on the order form or purchase order, as the case may be, unless such date is
extended by the Bank; provided, that if the Employee Plans subscribe for shares
during the Subscription Offering, such plans will not be required to pay for the
shares at the time they subscribe but rather may pay for such shares of Common
Stock subscribed for by such plans at the Subscription Price upon consummation
of the Stock Offering, provided that, in the case of the ESOP there is in force
from the time of its subscription until the consummation of the Stock Offering,
a loan commitment to lend to the ESOP, at such time, the aggregated price of the
shares for which it subscribed. The Holding Company or the Bank may make
scheduled discretionary contributions to an Employee Plan provided such
contributions from the Bank, if any, do not cause the Bank to fail to meet its
regulatory capital requirement.
Payment for Common Stock will be permitted to be made in any of the
following manners: (i) by check, bank draft or money order; (ii) or such
purchaser may pay for the shares subscribed for by authorizing the Bank to make
a withdrawal from the purchaser's passbook, money market or certificate account
at the Bank in an amount equal to the purchase price of such shares. Such
authorized withdrawal, whether from a savings, passbook or certificate account,
shall be without penalty as to premature withdrawal; (iii) if the authorized
withdrawal is from a certificate account, and the remaining balance does not
meet the applicable minimum balance requirements, the certificate may, at the
Bank's discretion, be canceled at the time of withdrawal, without penalty, and
the remaining balance will earn interest at the passbook rate or be returned to
the depositor. Funds for which a withdrawal is authorized will remain in the
purchaser's Account but may not be used by the purchaser until the Common Stock
has been sold or the 45-day period (or such longer period as may be approved by
the applicable regulatory authorities) following the Stock Offering has expired,
whichever occurs first. Thereafter, the withdrawal will be given effect only to
the extent necessary to satisfy the subscription (to the extent it can be
filled) at the purchase price per share. Interest will continue to be earned on
any amounts authorized for withdrawal until such withdrawal is given effect. If
for any reason the Stock Offering is not consummated, all payments made by
subscribers in the Stock Offering will be refunded to them with interest. In
case of amounts authorized for withdrawal from Deposit Accounts, refunds will be
made by canceling the authorization for withdrawal; (iv) Wire transfers as
payment for common stock will not be permitted or accepted as proper payment.
-21-
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the Prospectus prepared by the Holding Company
and the Bank has been declared effective by the SEC, copies of the Prospectus
and the order forms will be distributed to all Eligible Account Holders,
Supplemental Eligible Account Holders, the Employee Plans and Other Members at
their last known addresses appearing on the records of the Bank for the purposes
of subscribing for shares of Common Stock in the Subscription Offering and at
the discretion of the Board of the Bank will be made available for use by those
persons entitled to purchase in the Community Offering.
Each order form will be preceded or accompanied by the Prospectus
describing the Holding Company, the Bank, the Common Stock and the Subscription
and Community Offerings. Each order form will contain, among other things, the
following:
A. A specified date by which all order forms must be received by the
Bank, which date shall be not less than 20, nor more than 45 days,
following the date on which the order forms are mailed by the Bank,
and which date will constitute the termination of the Subscription
Offering;
B. The purchase price per share for shares of Common Stock to be sold in
the Subscription and Community Offerings;
C. A description of the minimum and maximum number of shares of Common
Stock that may be subscribed for pursuant to the exercise of
Subscription Rights or otherwise purchased in the Community Offering;
D. Instructions as to how the recipient of the order form is to indicate
thereon the number of shares of Common Stock for which such Person
elect to subscribe and the available alternative methods of payment
therefor;
E. An acknowledgment that the recipient of the order form has received a
final copy of the Prospectus prior to execution of the order form;
F. A statement indicating the consequences of failing to properly
complete and return the order form, including a statement to the
effect that all subscription rights are nontransferable, will be void
at the end of the Subscription Offering, and can only be exercised by
delivering to the Bank within the subscription period such properly
completed and executed order form, together with cash (if delivered in
person), check or money order in the full amount of the purchase price
as specified in the order form for the shares of Common Stock for
which the recipient elects to subscribe in the Subscription Offering
(or by authoring on the order form that the Bank withdraw said amount
from the subscriber's Deposit Account at the Bank); the subscription
rights of Eligible Account Holders, Supplemental Eligible Account
Holders and the ESOP are nontransferable. Certificates representing
shares of
-22-
Common Stock purchased in the Subscription Offering must be registered
in the name of the Eligible Account Holder or Supplemental Eligible
Account Holder, as the case may be. Joint stock registration will be
allowed only in the qualifying deposit account is so registered; and
G. A statement to the effect that the executed order form, once received
by the Bank, may not be modified or amended by the subscriber without
the consent of the Bank.
Notwithstanding the above, the Bank and the Holding Company reserve the
right in their sole discretion to accept or reject orders received on
photocopied or facsimilied order forms.
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT
In the event order forms (a) are not delivered and are returned to the Bank
by the United States Postal Service or the Bank is unable to locate the
addressee, (b) are not received back by the Bank or are received by the Bank
after the expiration date specified thereon, (c) are defectively filled out or
executed, (d) are not accompanied by the full required payment for the shares of
Common Stock subscribed for (including cases in which Accounts from which
withdrawals are authorized are insufficient to cover the amount of the required
payment), or (e) are not mailed pursuant to a "no mail" order placed in effect
by the account holder, the subscription rights of the Person to whom such rights
have been granted will lapse as though such Person failed to return the
contemplated order form within the time period specified thereon; provided, that
the Bank may, but will not be required to, waive any immaterial irregularity on
any order form or require the submission of corrected order forms or the
remittance of full payment for subscribed shares by such date as the Bank may
specify. The interpretation by the Bank of terms and conditions of this Plan and
of the order forms will be final, subject to the authority of the OTS.
18. COMPLETION OF THE STOCK OFFERING
The Stock Offering will be terminated if not completed within 90 days from
the date of approval by the OTS, unless an extension is approved by the OTS.
19. MARKET FOR COMMON STOCK
If at the close of the Stock Offering the Holding Company has more than 100
shareholders of any class of stock, the Holding Company shall use its best
efforts to:
(i) encourage and assist a market maker to establish and maintain a market
for that class of stock; and
(ii) list that class of stock on a national or regional securities
exchange, or on the Nasdaq system.
-23-
20. STOCK PURCHASES BY MANAGEMENT PERSONS AFTER THE OFFERING
For a period of three years after the proposed Stock Offering, no
Management Person or his or her Associates may purchase, without the prior
written approval of the OTS, any Common Stock of the Holding Company, except
from a broker-dealer registered with the SEC, except that the foregoing shall
not apply to:
A. Negotiated transactions involving more than 1% of the outstanding
stock in the class of stock; or
B. Purchases of stock made by and held by any Tax-Qualified or Non-Tax
Qualified Employee Plan of the Stock Bank or the Holding Company even
if such stock is attributable to Management Persons or their
Associates.
21. RESALES OF STOCK BY MANAGEMENT PERSONS
Common Stock purchased by Management Persons and their Associates in the
Stock Offering may not be resold for a period of at least one year following the
date of purchase, except in the case of death of the Management Person or
Associate.
22. RESTRICTION ON FINANCING STOCK PURCHASES
The Holding Company will not offer or sell any of the Common Stock proposed
to be issued to any person whose purchase would be financed by funds loaned to
the person by the Holding Company, the Bank or any of their affiliates.
23. STOCK CERTIFICATES
Each stock certificate shall bear a legend giving appropriate notice of the
restrictions set forth in Section 21 above. Appropriate instructions shall be
issued to the Holding Company's transfer agent with respect to applicable
restrictions on transfers of such stock. Any shares of stock issued as a stock
dividend, stock split or otherwise with respect to such restricted stock, shall
be subject to the same restrictions as apply to the restricted stock.
24. STOCK BENEFIT PLANS
The Board of Directors of the Bank and/or the Holding Company intend to
adopt one or more stock benefit plans for its employees, officers and directors,
including ESOP, stock award plans and stock option plans, which will be
authorized to purchase Common Stock and grant options for Common Stock. However,
only the Tax-Qualified Employee Plans will be permitted to purchase Common Stock
in the Stock Offering subject to the purchase priorities set forth in this Plan.
The Board of Directors of the Bank intends to establish the ESOP and authorize
the ESOP and any other Tax-Qualified Employee Plans to purchase in the aggregate
up to 8% of the Common Stock issued in the Stock Offering. The Stock Bank or the
Holding Company may make scheduled discretionary contributions to one or more
Tax-Qualified Employee Plans to purchase
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Common Stock issued in the Stock Offering or to purchase issued and outstanding
shares of Common Stock or authorized but unissued shares of Common Stock
subsequent to the completion of the Stock Offering, provided such contributions
do not cause the Stock Bank to fail to meet any of its regulatory capital
requirements. This Plan specifically authorizes the grant and issuance by the
Holding Company of the following: (i) awards of Common Stock after the Stock
Offering pursuant to one or more stock recognition and award plans (the
"Recognition Plans") in an amount equal to up to 4% of the number of shares of
Common Stock issued in the Stock Offering; (ii) option to purchase a number of
shares of the Holding Company's Common Stock in an amount equal to up to 10% of
the number of shares of Common Stock issued in the Stock Offering, provided that
any forfeited option may be reissued, (iii) shares of Common Stock issued upon
exercise of such options, and (iv) Common Stock to one or more Tax-Qualified
Employee Plans, including the ESOP, at the closing of the Stock Offering or at
any time thereafter, in an amount equal to up to 8% of the number of shares of
Common Stock issued in the Stock Offering. Shares awarded to the Tax-Qualified
Employee Plans or pursuant to the Recognition Plans, and shares issued upon
exercise of options may be authorized but unissued shares of Common Stock, or
shares of Common Stock purchased by the Holding Company or such plans on the
open market. Any awards of Common Stock under the Recognition Plans and the
stock option plans will be subject to prior stockholder approval.
25. POST-REORGANIZATION FILING AND MARKET MAKING
It is likely that there will be a limited market for the Common Stock sold
in the Stock Offering, and purchasers must be prepared to hold the Common Stock
for an indefinite period of time. If the Holding Company has more than 35
stockholders of any class of stock, the Holding Company shall register its
Common Stock with the SEC pursuant to the Exchange Act, and shall undertake not
to deregister such Common Stock for a period of three years thereafter.
26. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
The Holding Company may not declare or pay a cash dividend on, or
repurchase any of, its Common Stock if the effect thereof would cause the
regulatory capital of the Bank to be reduced below the amount required under
(ss.567.2 of the OTS rules and regulations. Otherwise, the Holding Company may
declare dividends or make other capital contributions in accordance with
applicable laws and regulations. The MHC may from time to time purchase shares
of Common Stock on the open market. Subject to the approval of the OTS, the MHC
may waive its right to receive dividends declared by the Holding Company.
27. REORGANIZATION AND STOCK OFFERING EXPENSES
OTS regulations require that the expenses of any Stock Offering must be
reasonable. The Bank will use its best efforts to assure that the expenses
incurred by the Bank and the Holding Company in effecting the Reorganization and
the Stock Offering will be reasonable.
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28. EMPLOYMENT AGREEMENTS
Following or contemporaneously with the Reorganization, the Bank and/or the
Holding Company may enter into employment arrangements with one or more
executive officers of the Bank and/or the Holding Company. It is anticipated
that any employment contracts entered into by the Bank and/or the Holding
Company will be for terms not exceeding three years and that such contracts will
provide for annual renewals of the term of the contracts, subject to approval by
the Board of Directors. The terms of such employment arrangements have not been
determined as of this time, but will be described in any Prospectus circulated
in connection with the Stock Offering and will be subject to and comply with all
regulations of the OTS.
29. INTERPRETATION
All interpretation of this Plan and application of its provision to
particular circumstances by a majority of the Board of Directors of the Bank
shall be final, subject to the authority of the OTS.
30. AMENDMENT OR TERMINATION OF THE PLAN
If necessary or desirable, the terms of the Plan may be substantially
amended by a majority vote of the Bank's Board of Directors as a result of
comments from regulatory authorities or otherwise, at any time prior to
submission of the Plan and proxy materials to the Members. At any time after
submission of the Plan and proxy materials to the Members, the terms of the Plan
that relate to the Reorganization may be amended by a majority vote of the Board
of Directors only with the concurrence of the OTS. Any and all terms of the Plan
relating to the Stock Offering may be amended by a majority vote of the Bank's
Board of Directors as a result of comments from regulatory authorities or
otherwise at any time prior to the approval of the Plan by the OTS and at any
time thereafter with the concurrence of the OTS. The Plan may be terminated by a
majority vote of the Board of Directors at any time prior to the earlier of
approval of the Plan by the OTS and the date of the Special Meeting, and may be
terminated by a majority vote of the Board of Directors at any time thereafter
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 meeting of the Members; however,
any material amendment of the terms of the Plan that relate to the
Reorganization which occur after the Special Meeting shall require a
resolicitation of Members.
The Plan shall be terminated if the Reorganization is not completed within
24 months from the date upon which the Members of the Bank approve the Plan, and
may not be extended by the Bank or the OTS.
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31. SEVERABILITY
If any term, provision, covenant or restriction contained in this Plan is
held by a court or a federal or state regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions contained in this Plan shall remain in
full force and effect, and shall in no way be affected, impaired or invalidated.
32. MISCELLANEOUS
This Plan is to be governed by and construed in accordance with the laws of
the United States. None of the cover page, the table of contents, or the section
headings are to be considered a part of this Plan, but are included solely for
convenience of reference and shall in no way define, limit, extend, or describe
the scope or intent of any of the provisions hereof. Words in the singular
include the plural, and words in the plural include the singular. Except for
such rights as are set forth herein for Members, this Plan shall create no
rights in any Person.
Dated: January 21, 1998.
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