PLAN OF CONVERSION
AS AMENDED
of
COMFED, M. H. C.
and
AGREEMENT AND PLAN OF REORGANIZATION
between
COMFED, M. H. C.,
COMMUNITY SAVINGS BANKSHARES, INC.
(A Federal Corporation)
COMMUNITY SAVINGS BANKSHARES, INC.
(A Delaware Corporation)
and
COMMUNITY SAVINGS, F. A.
TABLE OF CONTENTS
SECTION
NUMBER PAGE
1. Introduction....................................................... 1
2. Definitions........................................................ 3
3. General Procedure for Conversion and Reorganization................ 9
4. Total Number of Shares and Purchase Price of
Conversion Stock................................................. 12
5. Subscription Rights of Eligible Account Holders.................... 13
6. Subscription Rights of Tax-Qualified Employee
Stock Benefit Plans.............................................. 14
7. Subscription Rights of Supplemental Eligible Account Holders....... 14
8. Subscription Rights of Other Members............................... 15
9. Subscription Rights of Directors, Officers and Employees........... 16
10. Public Shareholders Offering....................................... 16
11. Community Offering, Syndicated Community Offering and
Other Offerings.................................................. 17
12. Limitations on Subscriptions and Purchases of Conversion Stock..... 19
13. Timing of Subscription Offering; Manner of Exercising
Subscription Rights and Order Forms.............................. 21
14. Payment for Conversion Stock....................................... 23
15. Account Holders in Nonqualified States or in Foreign Countries..... 24
16. Voting Rights of Shareholders...................................... 24
17. Liquidation Account................................................ 24
18. Transfer of Deposit Accounts....................................... 26
19. Requirements Following Conversion and Reorganization for
Registration, Market Making and Stock Exchange Listing........... 26
20. Directors and Officers of the Association.......................... 27
21. Requirements for Stock Purchases by Directors
and Officers Following the Conversion and Reorganization......... 27
22. Restrictions on Transfer of Stock.................................. 27
23. Restrictions on Acquisition of Stock of the Holding Company........ 28
24. Tax Rulings or Opinions............................................ 28
25. Stock Compensation Plans........................................... 29
26. Dividend and Repurchase Restrictions on Stock...................... 29
27. Payment of Fees to Brokers......................................... 30
28. Effective Date..................................................... 30
29. Amendment or Termination of the Plan............................... 30
30. Interpretation of the Plan......................................... 31
Annex A - Plan of Merger between the Mid-Tier Holding Company and the
Association
Annex B - Plan of Merger between the Mutual Holding Company and the Association
Annex C - Plan of Merger between the Association, the Holding Company and
Interim
1. INTRODUCTION.
For purposes of this section, all capitalized terms have the meanings
ascribed to them in Section 2.
On October 24, 1994, Community Savings, F. A., a federally chartered
mutual savings association ("Community Savings"), reorganized into the mutual
holding company form of organization. To accomplish this transaction, Community
Savings organized a federally chartered, stock savings association known as
Community Savings, F. A. (the "Association") as a wholly owned subsidiary.
Community Savings then transferred substantially all of its assets and
liabilities to the Association in exchange for 2,620,144 shares of Association
Common Stock, and reorganized itself into a federally chartered mutual holding
company known as ComFed, M. H. C. (the "Mutual Holding Company"). The
Association simultaneously sold 2,379,856 shares of Association Common Stock to
depositors of the Association, employee stock benefit plans of the Association,
directors, officers and employees of the Association and members of the general
public. On September 30, 1997, the Association completed a reorganization in
which the Association became a wholly owned subsidiary of a federally chartered
stock mid-tier holding company known as "Community Savings Bankshares, Inc."
(the "Mid-Tier Holding Company"). Shareholders of the Association became
shareholders of the Mid-Tier Holding Company, exchanging their shares of
Association Common Stock on a one-for-one basis for shares of Mid-Tier Holding
Company Common Stock. As of the date hereof, after taking into account the
issuance of 103,960 shares pursuant to stock benefit plans, the Mutual Holding
Company and the other Shareholders own an aggregate of 51.34% and 48.66% of the
outstanding Mid-Tier Holding Company Common Stock, respectively.
The Boards of Directors of the Mutual Holding Company, the Mid-Tier
Holding Company and the Association believe that a conversion of the Mutual
Holding Company to stock form and reorganization of the Association pursuant to
this Plan of Conversion is in the best interests of the Mutual Holding Company,
the Mid-Tier Holding Company and the Association, as well as the best interests
of their respective Members and Shareholders. The Boards of Directors determined
that this Plan of Conversion equitably provides for the interests of Members
through the granting of subscription rights and the establishment of a
liquidation account. The Conversion and Reorganization will result in the
raising of additional capital for the Association and the Holding Company and
should result in a more active and liquid market for the Holding Company Common
Stock than currently exists for the Mid-Tier Holding Company Common Stock,
although there can be no assurances that this will be the case. In addition, the
Conversion and Reorganization have been structured to re-unite the accumulated
earnings and profits tax attribute retained by the Mutual Holding Company with
the retained earnings of the Association through a tax-free reorganization.
Finally, the Conversion and Reorganization is designed to enable the Association
and the Holding Company to more effectively compete in the financial services
marketplace.
If the Association had undertaken a standard conversion involving the
formation of a stock holding company in 1994, applicable OTS regulations would
have required a greater amount of Association Common Stock to be sold than the
$34.0 million of net proceeds raised in connection with the formation of the
Mutual Holding Company. In addition, if a standard conversion had been
conducted in 1994, management of the Association believed that its ability to
generate sufficient loan volume, particularly in its market area, would have
made it difficult to prudently invest in a timely manner the significantly
larger amount of capital that would have been raised, when compared to the net
proceeds raised in connection with the formation of the Mutual Holding Company.
A standard conversion in 1994 also would have immediately eliminated all aspects
of the mutual form of organization.
Subsequent to the formation of the Mutual Holding Company, there have
been certain changes in the policies of the OTS relating to mutual holding
companies. In addition, market conditions for the stocks of savings institutions
and their holding companies have improved. The Association and the Mid-Tier
Holding Company have also gained experience in being companies required to meet
the filing requirements of the Securities Exchange Act of 1934 and in conducting
shareholder meetings and other shareholder matters, such as communications,
press releases, NASD matters and dividend payments. In light of the foregoing,
the Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding
Company and the Association believe that it is in the best interests of such
companies and their respective Members and Shareholders to raise additional
capital at this time, and that the most feasible way to do so is through the
Conversion and Reorganization.
In connection with the Conversion and Reorganization, the Association
will form a new first-tier, wholly-owned subsidiary known as Community Savings
Bankshares, Inc., which will become the Holding Company upon consummation of the
Conversion and Reorganization. The Holding Company will in turn form a federally
chartered interim savings association ("Interim") as a wholly-owned subsidiary.
The Association formed the Mid-Tier Holding Company which became the holding
company for the Association pursuant to a reorganization completed on September
30, 1997. As described in more detail in Section 3, the Mutual Holding Company
will convert from the mutual form to a federal interim stock savings association
and simultaneously merge with and into the Association pursuant to the Plan of
Merger included as Annex B hereto, pursuant to which the Mutual Holding Company
will cease to exist and a liquidation account will be established by the
Association for the benefit of depositor Members as of specified dates, and
Interim will then merge with and into the Association pursuant to the Plan of
Merger included as Annex C hereto, pursuant to which the Association will become
a wholly owned subsidiary of the Holding Company. In connection therewith, each
share of Mid-Tier Holding Company Common Stock outstanding immediately prior to
the effective time thereof shall be automatically converted, without further
action by the holder thereof, into and become the right to receive shares of
Holding Company Common Stock based on the Exchange Ratio, plus cash in lieu of
any fractional share interest. Preceding these transactions the Mid-Tier Holding
Company will convert to an interim federal stock savings association and merge
with and into the Association with the Association as the surviving entity.
Annex A hereto describes this transaction.
In connection with the Conversion and Reorganization, the Holding
Company will offer shares of Conversion Stock in the Offerings as provided
herein. Shares of Conversion Stock will be offered in a Subscription Offering in
descending order of priority to Eligible Account Holders,
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Tax-Qualified Employee Stock Benefit Plans, Supplemental Eligible Account
Holders, Other Members and Directors, Officers and Employees. The Subscription
Rights granted in connection with the Subscription Offering are
non-transferrable. Any shares of Conversion Stock remaining unsold after the
Subscription Offering will be offered for sale initially to Public Shareholders
in the Public Shareholders Offering. Any shares of conversion stock remaining
unsold after the Subscription Offering and the Public Shareholders Offering will
be offered for sale to the public through a Community Offering and/or Syndicated
Community Offering, as determined by the Boards of Directors of the Holding
Company, the Mid-Tier Holding Company and the Association in their sole
discretion.
The Conversion and Reorganization is intended to provide a larger
capital base to support the Association's lending and investment activities and
thereby enhance the Association's capabilities to serve the borrowing and other
financial needs of the communities it serves. The use of the Holding Company
will provide greater organizational flexibility and possible diversification.
This Plan was adopted by the Boards of Directors of the Mutual Holding
Company, the Mid-Tier Holding Company and the Association on July 28, 1998 and
amended August 13, 1998.
This Plan is subject to the approval of the OTS and must be adopted by
(1) at least a majority of the total number of votes eligible to be cast by
Voting Members of the Mutual Holding Company at the Special Meeting and (2)
holders of at least two-thirds of the outstanding Mid-Tier Common Stock at the
Shareholders' Meeting. In addition, the Primary Parties have conditioned the
consummation of the Conversion and Reorganization on the approval of the Plan by
at least a majority of the votes cast, in person or by proxy, by the Public
Shareholders at the Shareholders' Meeting.
After the Conversion and Reorganization, the Association will continue
to be regulated by the OTS, as its chartering authority, and by the FDIC, which
insures the Association's deposits. In addition, the Association will continue
to be a member of the Federal Home Loan Bank System and all insured savings
deposits will continue to be insured by the FDIC up to the maximum provided by
law.
2. DEFINITIONS.
As used in this Plan, the terms set forth below have the following
meaning:
2.1 ACTUAL PURCHASE PRICE means the price per share at which the
Conversion Stock is ultimately sold by the Holding Company in the Offerings in
accordance with the terms hereof.
2.2 AFFILIATE means a Person who, directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified.
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2.3 ASSOCIATE, when used to indicate a relationship with any Person,
means (i) a corporation or organization (other than the Mutual Holding Company,
the Mid-Tier Holding Company, the Association, a majority-owned subsidiary of
the Association or the Holding Company) of which such Person is a director,
officer or partner or is, directly or indirectly, the beneficial owner of 10% or
more of any class of equity securities, (ii) any trust or other estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity, provided, however, that
such term shall not include any Tax-Qualified Employee Stock Benefit Plan of the
Holding Company or the Association in which such Person has a substantial
beneficial interest or serves as a 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 Association or any of the subsidiaries of the foregoing.
2.4 ASSOCIATION means Community Savings, F. A., a federally chartered
savings and loan association.
2.5 ASSOCIATION MERGER means the merger of Interim with and into the
Association pursuant to the Plan of Merger included as Annex C hereto.
2.6 ASSOCIATION COMMON STOCK means the common stock of the
Association, par value $1.00 per share, which stock is not and will not be
insured by the FDIC or any other governmental authority, all of which is
currently held by the Mid-Tier Holding Company and subsequent to the Conversion
and Reorganization, all of which will be held by the Holding Company.
2.7 CODE means the Internal Revenue Code of 1986, as amended.
2.8 COMMUNITY OFFERING means the offering for sale by the Holding
Company of any shares of Conversion Stock not subscribed for in the Subscription
Offering or the Public Shareholders Offering to such Persons within or without
the State of Florida as may be selected by the Holding Company, the Mid-Tier
Holding Company and the Association in their sole discretion and to whom a copy
of the Prospectus and an Order Form are delivered by or on behalf of the Holding
Company.
2.9 CONTROL (including the terms "controlling," "controlled by," and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
2.10 CONVERSION AND REORGANIZATION means (i) the conversion of the
Mid-Tier Holding Company from a federally chartered stock corporation to a
federal interim savings association and the subsequent Mid-Tier Holding Company
Merger pursuant to which the Mid-Tier Holding Company will cease to exist, (ii)
the conversion of the Mutual Holding Company from mutual form to a federal
interim stock savings association and the subsequent Mutual Holding Company
Merger,
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pursuant to which the Mutual Holding Company will cease to exist, (iii) the
Association Merger, pursuant to which the Association will become a wholly owned
subsidiary of the Holding Company and, in connection therewith, each share of
Mid-Tier Holding Company Common Stock outstanding immediately prior to the
effective time thereof shall automatically be converted, without further action
by the holder thereof, into and become the right to receive shares of Holding
Company Common Stock based on the Exchange Ratio, plus cash in lieu of any
fractional share interest, and (iv) the issuance of Conversion Stock by the
Holding Company in the Offerings as provided herein, which will increase the
number of shares of Holding Company Common Stock outstanding and the
capitalization of the Holding Company and the Association. All such transactions
shall occur substantially simultaneously.
2.11 CONVERSION STOCK means the Holding Company Common Stock to be
issued and sold in the Offerings pursuant to the Plan of Conversion.
2.12 DEPOSIT ACCOUNT means withdrawable or repurchasable shares,
investment certificates or deposits or other savings accounts, including money
market deposit accounts, negotiable order of withdrawal accounts and demand
accounts, held by an account holder of the Association.
2.13 DIRECTOR, OFFICER AND EMPLOYEE means the terms as applied
respectively to any person who is a director, officer or employee of the Mutual
Holding Company, the Mid-Tier Holding Company, the Association or any subsidiary
thereof.
2.14 ELIGIBLE ACCOUNT HOLDER means any Person holding a Qualifying
Deposit on the Eligibility Record Date for purposes of determining Subscription
Rights and establishing subaccount balances in the liquidation account to be
established pursuant to Section 17 hereof.
2.15 ELIGIBILITY RECORD DATE means the date for determining Qualifying
Deposits of Eligible Account Holders and is the close of business on June 30,
1997.
2.16 ESTIMATED PRICE RANGE means the range of the estimated aggregate
pro forma market value of the total number of shares of Conversion Stock to be
issued in the Offerings, as determined by the Independent Appraiser in
accordance with Section 4 hereof.
2.17 EXCHANGE RATIO means the rate at which shares of Holding Company
Common Stock will be exchanged for shares of Mid-Tier Holding Common Stock held
by the Public Shareholders in connection with the Association Merger. The exact
rate shall be determined by the Mutual Holding Company, the Mid-Tier Holding
Company and the Association in order to ensure that upon consummation of the
Conversion and Reorganization the Public Shareholders will own in the aggregate
approximately the same percentage of the Holding Company Common Stock to be
outstanding upon completion of the Conversion and Reorganization as the
percentage of Mid-Tier Holding Company Common Stock owned by them in the
aggregate immediately prior to consummation of the Conversion and
Reorganization, before giving effect to (a) cash paid in lieu of any fractional
interests of Holding Company Common Stock and (b) any shares of Conversion
5
Stock purchased by the Public Shareholders or Tax-Qualified Employee Stock
Benefit Plans in the Offerings.
2.18 EXCHANGE SHARES mean the shares of Holding Company Common Stock to
be issued to the Public Shareholders in connection with the Association Merger.
2.19 FDIC means the Federal Deposit Insurance Corporation or any
successor thereto.
2.20 HOLDING COMPANY means Community Savings Bankshares, Inc., a stock
corporation to be organized under the laws of the State of Delaware. Such
corporation will be initially formed as a first-tier, wholly owned subsidiary of
the Association. Upon completion of the Conversion and Reorganization, the
Holding Company shall hold all of the outstanding capital stock of the
Association.
2.21 HOLDING COMPANY COMMON STOCK means the common stock of the Holding
Company, par value $1.00 per share, which stock cannot and will not be insured
by the FDIC or any other governmental authority.
2.22 INDEPENDENT APPRAISER means the independent investment banking or
financial consulting firm retained by the Holding Company, the Mid-Tier Holding
Company and the Association to prepare an appraisal of the estimated pro forma
market value of the Conversion Stock.
2.23 INITIAL PURCHASE PRICE means the price per share to be paid
initially by Participants for shares of Conversion Stock subscribed for in the
Subscription Offering and by Persons for shares of Conversion Stock ordered in
the Community Offering and/or Syndicated Community Offering.
2.24 INTERIM means Community Interim Federal Savings Association, which
will be formed as a first-tier, wholly-owned subsidiary of the Holding Company
to facilitate the Association Merger.
2.25 MEMBER means any Person qualifying as a member of the Mutual
Holding Company in accordance with its mutual charter and bylaws and the laws of
the United States.
2.26 MID-TIER HOLDING COMPANY means Community Savings Bankshares, Inc.,
an existing federally chartered stock corporation.
2.27 MID-TIER HOLDING COMMON STOCK means the common stock of the
Mid-Tier Holding Company, par value $1.00 per share, which stock is not insured
by the FDIC or any other governmental entity.
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2.28 MID-TIER HOLDING COMPANY MERGER means the Merger of the Mid-Tier
Mutual Holding Company (following its conversion to a federal interim stock
savings association) with and into the Association pursuant to the Plan of
Merger included as Annex A hereto
2.29 MUTUAL HOLDING COMPANY means ComFed, M. H. C.
2.30 MUTUAL HOLDING COMPANY MERGER means the merger of the Mutual
Holding Company (following its conversion into a federal interim stock savings
association) with and into the Association pursuant to the Plan of Merger
included as Annex B hereto.
2.31 OFFERINGS mean the Subscription Offering, the Public Shareholders
Offering, the Community Offering and the Syndicated Community Offering.
2.32 OFFICER means the chairman of the board of directors, president,
chief executive officer, vice-president, secretary, treasurer or principal
financial officer, comptroller or principal accounting officer and any other
person performing similar functions with respect to any organization whether
incorporated or unincorporated.
2.33 ORDER FORM means the form or forms to be provided by the Holding
Company, containing all such terms and provisions as set forth in Section 13
hereof, to a Participant or other Person by which Conversion Stock may be
ordered in the Offerings.
2.34 OTHER MEMBER means a Voting Member who is not an Eligible Account
Holder or a Supplemental Eligible Account Holder.
2.35 OTS means the Office of Thrift Supervision or any successor
thereto.
2.36 PARTICIPANT means any Eligible Account Holder, Tax-Qualified
Employee Stock Benefit Plan, Supplemental Eligible Account Holder, Other Member
and Director, Officer and Employee.
2.37 PERSON means an individual, a corporation, a limited liability
company, a partnership, a limited liability partnership, an association, a joint
stock company, a trust, an unincorporated organization or a government or any
political subdivision thereof.
2.38 PLAN and PLAN OF CONVERSION mean this Plan of Conversion and
Agreement and Plan of Reorganization as adopted by the Boards of Directors of
the Mutual Holding Company, the Mid-Tier Holding Company and the Association and
any amendment hereto approved as provided herein. The Board of Directors of the
Holding Company shall adopt this Plan as soon as practicable following its
organization, and the Board of Directors of Interim shall adopt the Plan of
Merger included as Annex C hereto as soon as practicable following its
organization.
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2.39 PRIMARY PARTIES mean the Mutual Holding Company, the Mid-Tier
Holding Company, the Association and the Holding Company.
2.40 PROSPECTUS means the one or more documents to be used in offering
the Conversion Stock in the Offerings.
2.41 PUBLIC OFFERING means an underwritten firm commitment offering to
the public through one or more underwriters.
2.42 PUBLIC SHAREHOLDERS mean those Persons who own shares of Mid-Tier
Holding Company Common Stock, excluding the Mutual Holding Company, as of the
Voting Record Date.
2.43 PUBLIC SHAREHOLDERS OFFERING means the offering for sale by the
Holding Company of any shares of Conversion Stock not subscribed for in the
Subscription Offering to Public Shareholders in the sole discretion of the
Holding Company, the Mid-Tier Holding Company and the Association.
2.44 QUALIFYING DEPOSIT means the aggregate balance of all Deposit
Accounts in the Association of (i) an Eligible Account Holder at the close of
business on the Eligibility Record Date, provided such aggregate balance is not
less than $50, and (ii) a Supplemental Eligible Account Holder at the close of
business on the Supplemental Eligibility Record Date, provided such aggregate
balance is not less than $50.
2.45 SEC means the Securities and Exchange Commission.
2.46 SPECIAL MEETING means the Special Meeting of Members of the Mutual
Holding Company called for the purpose of submitting this Plan to the Members
for their approval, including any adjournments of such meeting.
2.47 SHAREHOLDERS mean those Persons who own shares of Mid-Tier Holding
Company Common Stock.
2.48 SHAREHOLDERS' MEETING means the annual or special meeting of
Shareholders of the Mid-Tier Holding Company called for the purpose of
submitting this Plan to the Shareholders for their approval, including any
adjournments of such meeting.
2.49 SUBSCRIPTION OFFERING means the offering of the Conversion Stock
to Participants.
2.50 SUBSCRIPTION RIGHTS mean nontransferable rights to subscribe for
Conversion Stock granted to Participants pursuant to the terms of this Plan.
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2.51 SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER means any Person, except
Directors and Officers of the Association and their Associates, holding a
Qualifying Deposit at the close of business on the Supplemental Eligibility
Record Date.
2.52 SUPPLEMENTAL ELIGIBILITY RECORD DATE, if applicable, means the
date for determining Qualifying Deposits of Supplemental Eligible Account
Holders and shall be required if the Eligibility Record Date is more than 15
months prior to the date of the latest amendment to the Application for
Conversion filed by the Mutual Holding Company prior to approval of such
application by the OTS. If applicable, the Supplemental Eligibility Record Date
shall be the last day of the calendar quarter preceding OTS approval of the
Application for Conversion submitted by the Mutual Holding Company pursuant to
this Plan of Conversion.
2.53 SYNDICATED COMMUNITY OFFERING means the offering for sale by a
syndicate of broker-dealers to the general public of shares of Conversion Stock
not purchased in the Subscription Offering and the Community Offering.
2.54 TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN means any defined
benefit plan or defined contribution plan, such as an employee stock ownership
plan, stock bonus plan, profit-sharing plan or other plan, which is established
for the benefit of the employees of the Holding Company and/or the Association
and which, with its related trust, meets the requirements to be "qualified"
under Section 401 of the Code as from time to time in effect. A
"Non-Tax-Qualified Employee Stock Benefit Plan" is any defined benefit plan or
defined contribution stock benefit plan which is not so qualified.
2.55 VOTING MEMBER means a Person who at the close of business on the
Voting Record Date is entitled to vote as a Member of the Mutual Holding Company
in accordance with its mutual charter and bylaws.
2.56 VOTING RECORD DATE means the date or dates for determining the
eligibility of Members to vote at the Special Meeting and of Shareholders to
vote at the Shareholders' Meeting, as applicable.
3. GENERAL PROCEDURE FOR CONVERSION AND REORGANIZATION.
(a) After the Association's organization of the Holding Company and the
receipt of all requisite regulatory approvals, the Holding Company will form
Interim as a first-tier, wholly owned subsidiary of the Holding Company, and the
Board of Directors of Interim shall adopt the Plan of Merger included as Annex C
hereto by at least a two-thirds vote. In addition, the Holding Company shall
approve such Plan of Merger in its capacity as the sole shareholder of Interim.
Furthermore, the Mid-Tier Holding Company shall approve the Plan and the Plan of
Merger in its capacity as the sole shareholder of the Association.
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(b) An application for the Conversion and Reorganization, including the
Plan and all other requisite material (the "Application for Conversion"), shall
be submitted to the OTS for approval. The Mutual Holding Company, the Mid-Tier
Holding Company and the Association also will cause notice of the adoption of
the Plan by the Boards of Directors of the Mutual Holding Company, the Mid-Tier
Holding Company and the Association to be given by publication in a newspaper
having general circulation in each community in which an office of the
Association is located and will cause copies of the Plan to be made available at
each office of the Mutual Holding Company, the Mid-Tier Holding Company and the
Association for inspection by Members and Shareholders. The Mutual Holding
Company, the Mid-Tier Holding Company and the Association will again cause to be
published, in accordance with the requirements of applicable regulations of the
OTS, a notice of the filing with the OTS of an application to convert the Mutual
Holding Company from mutual to stock form and will post the notice of the filing
for the Application for Conversion in each of their offices.
(c) Promptly following receipt of requisite approval of the OTS, this
Plan will be submitted to the Members for their consideration and approval at
the Special Meeting. The Mutual Holding Company may, at its option, mail to all
Members as of the Voting Record Date, at their last known address appearing on
the records of the Mutual Holding Company and the Association, a proxy statement
in either long or, to the extent permitted by applicable law and regulation,
summary form describing the Plan which will be submitted to a vote of the
Members at the Special Meeting. The Holding Company also shall mail to all such
Members (as well as other Participants) either a Prospectus and Order Form for
the purchase of Conversion Stock or, to the extent permitted by applicable law
and regulation, a letter informing them of their right to receive a Prospectus
and Order Form and a postage prepaid card to request such materials, subject to
the provisions of Section 15 hereof. In addition, all such Members will receive,
or be given the opportunity to request by returning a postage-prepaid card which
will be distributed with the proxy statement, letter or other written
communication, a copy of the certificate of incorporation and bylaws of the
Holding Company. The Plan must be approved by the affirmative vote of at least a
majority of the total number of votes eligible to be cast by Voting Members at
the Special Meeting.
(d) Subscription Rights to purchase shares of Conversion Stock will be
issued without payment therefor to Eligible Account Holders, Tax-Qualified
Employee Stock Benefit Plans, Supplemental Eligible Account Holders, if any,
Other Members and Directors, Officers and Employees as set forth in Sections 5,
6, 7, 8 and 9 hereof.
(e) The Mid-Tier Holding Company shall file preliminary proxy materials
with the OTS and the SEC in order to seek the approval of the Plan by its
Shareholders. Promptly following clearance of such proxy materials and the
receipt of any other requisite approval of the OTS, the Mid-Tier Holding Company
will mail definitive proxy materials to all Shareholders as of the Voting Record
Date, at their last known address appearing on the records of the Mid-Tier
Holding Company, for their consideration and approval of this Plan at the
Shareholders' Meeting. The Plan must be approved by the holders of at least
two-thirds of the outstanding Mid-Tier Holding Company Common Stock as of the
Voting Record Date. In addition, the Primary Parties have
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conditioned the consummation of the Conversion and Reorganization on the
approval of the Plan by at least a majority of the votes cast, in person or by
proxy, by the Public Shareholders at the Shareholders' Meeting.
(f) The Holding Company shall submit or cause to be submitted an
Application H-(e)1 or H-(e)1-S to the OTS for approval of the acquisition of the
Association. Such application also shall include an application to form Interim.
In addition, an application to merge the Mutual Holding Company (following its
conversion into a federal interim stock savings association) and the
Association, an application to merge the Mid-Tier Holding Company (following its
conversion into a federal interim stock savings association and the Association)
and an application to merge Interim and the Association shall be filed with the
OTS, either as exhibits to the Application H-(e)1 or H-(e)1-S or separately. All
notices required to be published in connection with such applications shall be
published at the times required.
(g) The Holding Company shall file a Registration Statement with the
SEC to register the Holding Company Common Stock to be issued in the Conversion
and Reorganization under the Securities Act of 1933, as amended, and shall
register such Holding Company Common Stock under any applicable state securities
laws. Upon registration and after the receipt of all required regulatory
approvals, the Conversion Stock shall be first offered for sale in a
Subscription Offering to Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans, Supplemental Eligible Account Holders, if any, Other Members and
Directors, Officers and Employees. It is anticipated that any shares of
Conversion Stock remaining unsold after the Subscription Offering will be sold
(i) initially to Public Shareholders as of the Voting Record Date in the Public
Shareholders Offering and (ii) to the extent any shares of Conversion Stock
remain available after filling orders submitted in the Public Shareholders
Offering through a Community Offering and/or a Syndicated Community Offering.
The purchase price per share for the Conversion Stock shall be a uniform price
determined in accordance with Section 4 hereof. The Holding Company shall
contribute to the Association an amount of the net proceeds received by the
Holding Company from the sale of Conversion Stock as shall be determined by the
Boards of Directors of the Holding Company and the Association and as shall be
approved by the OTS.
(h) The effective date of the Conversion and Reorganization shall be
the date set forth in Section 28 hereof. Upon the effective date, the following
transactions shall occur:
(i) The Mutual Holding Company shall convert from a mutual
holding company to a federal interim stock savings association. The
Mid-Tier Holding Company shall convert into a federal interim stock
savings association and simultaneously merge with and into the
Association in the Mid-Tier Holding Company Merger, with the
Association being the surviving institution. Immediately thereafter,
the Mutual Holding Company, as converted, shall merge with and into the
Association in the Mutual Holding Company Merger, with the Association
being the surviving institution. As a result of the Mutual Holding
Company Merger and the Mid-Tier Holding Company Merger, (x) the shares
of Mid-Tier Holding Company
11
Common Stock held by the Mutual Holding Company (following its
conversion to a federal interim stock savings association) shall be
extinguished and (y) Members of the Mutual Holding Company will be
granted interests in the liquidation account to be established by the
Association pursuant to Section 17 hereof.
(ii) Interim shall merge with and into the Association pursuant
to the Association Merger, with the Association being the surviving
institution. As a result of the Association Merger, (x) the shares of
Holding Company Common Stock held by the Association shall be
extinguished; (y) the shares of Mid-Tier Holding Company Common Stock
held by the Public Shareholders shall be converted into the right to
receive shares of Holding Company Common Stock based upon the Exchange
Ratio, plus cash in lieu of any fractional share interest based upon
the Actual Purchase Price; and (z) the shares of common stock of
Interim held by the Holding Company shall be converted into shares of
Association Common Stock on a one-for-one basis, with the result that
the Association shall become a wholly owned subsidiary of the Holding
Company. In addition, as a result of the Association Merger, options to
purchase shares of Mid-Tier Holding Company Common Stock which are
outstanding immediately prior to consummation of the Conversion and
Reorganization shall be converted into options to purchase shares of
Holding Company Common Stock, with the number of shares subject to the
option and the exercise price per share to be adjusted based upon the
Exchange Ratio so that the aggregate exercise price remains unchanged,
and with the duration of the option remaining unchanged.
(iii) The Holding Company shall sell the Conversion Stock in the
Offerings, as provided herein.
(i) The Primary Parties may retain and pay for the services of
financial and other advisors and investment bankers to assist in connection with
any or all aspects of the Conversion and Reorganization, including in connection
with the Offerings the payment of fees to brokers and investment bankers for
assisting Persons in completing and/or submitting Order Forms. All fees,
expenses, retainers and similar items shall be reasonable.
4. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION
STOCK.
(a) The aggregate price at which shares of Conversion Stock shall be
sold in the Offerings shall be based on a pro forma valuation of the aggregate
market value of the Conversion Stock prepared by the Independent Appraiser. The
valuation shall be based on financial information relating to the Primary
Parties, market, financial and economic conditions, a comparison of the Primary
Parties with selected publicly-held financial institutions and holding companies
and with comparable financial institutions and holding companies and such other
factors as the Independent Appraiser may deem to be important. The valuation
shall be stated in terms of an Estimated Price
12
Range, the maximum of which shall generally be no more than 15% above the
average of the minimum and maximum of such price range and the minimum of which
shall generally be no more than 15% below such average. The valuation shall be
updated during the Conversion and Reorganization as market and financial
conditions warrant and as may be required by the OTS.
(b) Based upon the independent valuation, the Boards of Directors of
the Primary Parties shall fix the Initial Purchase Price and the number (or
range) of shares of Conversion Stock to be offered in the Subscription Offering,
Public Shareholders Offering, Community Offering and/or Syndicated Community
Offering. The Actual Purchase Price and the total number of shares of Conversion
Stock to be issued in the Offerings shall be determined by the Boards of
Directors of the Primary Parties upon conclusion of the Offerings in
consultation with the Independent Appraiser and any financial advisor or
investment banker retained by the Primary Parties in connection therewith.
(c) Subject to the approval of the OTS, the Estimated Price Range may
be increased or decreased to reflect market, financial and economic conditions
prior to completion of the Conversion and Reorganization, and under such
circumstances the Primary Parties may increase or decrease the total number of
shares of Conversion Stock to be issued in the Conversion and Reorganization to
reflect any such change. Notwithstanding anything to the contrary contained in
this Plan, no resolicitation of subscribers shall be required and subscribers
shall not be permitted to modify or cancel their subscriptions unless the gross
proceeds from the sale of the Conversion Stock issued in the Conversion and
Reorganization are less than the minimum or more than 15% above the maximum of
the Estimated Price Range set forth in the Prospectus. In the event of an
increase in the total number of shares offered in the Conversion and
Reorganization due to an increase in the Estimated Price Range, the priority of
share allocation shall be as set forth in this Plan.
5. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS.
(a) Each Eligible Account Holder shall receive, without payment,
Subscription Rights to purchase up to the greater of (i) $250,000 of Conversion
Stock (or such maximum purchase limitation as may be established for the
Community Offering and/or Syndicated Community Offering), (ii) one-tenth of 1%
of the total offering of shares in the Subscription Offering and (iii) 15 times
the product (rounded down to the next whole number) obtained by multiplying the
total number of shares of Conversion Stock offered in the Subscription Offering
by a fraction, of which the numerator is the amount of the Qualifying Deposits
of the Eligible Account Holder and the denominator is the total amount of all
Qualifying Deposits of all Eligible Account Holders, in each case subject to
Sections 12 and 15 hereof.
(b) In the event of an oversubscription for shares of Conversion Stock
pursuant to Section 5(a), available shares shall be allocated among subscribing
Eligible Account Holders so as to permit each such Eligible Account Holder, to
the extent possible, to purchase a number of shares which will make his or her
total allocation equal to the lesser of the number of shares subscribed for or
100 shares. Any available shares remaining after each subscribing Eligible
Account Holder has
13
been allocated the lesser of the number of shares subscribed for or 100 shares
shall be allocated among the subscribing Eligible Account Holders in the
proportion which the Qualifying Deposit of each such subscribing Eligible
Account Holder bears to the total Qualifying Deposits of all such subscribing
Eligible Account Holders whose orders are unfilled, provided that no fractional
shares shall be issued. Subscription Rights of Eligible Account Holders who are
also Directors or Officers and their Associates shall be subordinated to those
of other Eligible Account Holders to the extent that they are attributable to
increased deposits during the one-year period preceding the Eligibility Record
Date.
6. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT
PLANS.
Tax-Qualified Employee Stock Benefit Plans shall receive, without
payment, Subscription Rights to purchase in the aggregate up to 10% of the
Conversion Stock, including any shares of Conversion Stock to be issued in the
Conversion and Reorganization as a result of an increase in the Estimated Price
Range after commencement of the Subscription Offering and prior to completion of
the Conversion and Reorganization. The subscription rights granted to
Tax-Qualified Employee Stock Benefit Plans shall be subject to the availability
of shares of Conversion Stock after taking into account the shares of Conversion
Stock purchased by Eligible Account Holders; provided, however, that in the
event that the total number of shares of Conversion is increased to any amount
greater than the number of shares representing the maximum of the Estimated
Price Range as set forth in the Prospectus ("Maximum Shares"), the ESOP shall
have a priority right to purchase any such shares exceeding the Maximum Shares
up to an aggregate of 8% of Conversion Stock. Shares of Conversion Stock
purchased by any individual participant ("Plan Participant") in a Tax-Qualified
Employee Stock Benefit Plan using funds therein pursuant to the exercise of
subscription rights granted to such Participant in his individual capacity as a
Participant and/or purchases by such Plan Participant in the Community Offering
shall not be deemed to be purchases by a Tax-Qualified Employee Stock Benefit
Plan for purposes of calculating the maximum amount of Conversion Stock that
Tax-Qualified Employee Stock Benefit Plans may purchase pursuant to the first
sentence of this Section 6 if the individual Plan Participant controls or
directs the investment authority with respect to such account or subaccount.
Consistent with applicable laws and regulations and policies and practices of
the OTS, the Tax-Qualified Employee Stock Benefit Plans may use funds
contributed by the Holding Company or the Association and/or borrowed from an
independent financial institution to exercise such Subscription Rights, and the
Holding Company and the Association may make scheduled discretionary
contributions thereto, provided that such contributions do not cause the Holding
Company or the Association to fail to meet any applicable regulatory capital
requirement.
7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT
HOLDERS.
(a) In the event that the Eligibility Record Date is more than 15
months prior to the date of the latest amendment to the Application for
Conversion filed prior to OTS approval, then, and
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only in that event, a Supplemental Eligibility Record Date shall be set and each
Supplemental Eligible Account Holder shall receive, without payment,
Subscription Rights to purchase up to the greater of (i) $250,000 of Conversion
Stock in the Subscription Offering (or such maximum purchase limitation as may
be established for the Community Offering and/or Syndicated Community Offering),
(ii) one-tenth of 1% of the total offering of shares in the Subscription
Offering and (iii) 15 times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Conversion Stock offered
in the Subscription Offering by a fraction, of which the numerator is the amount
of the Qualifying Deposits of the Supplemental Eligible Account Holder and the
denominator is the total amount of all Qualifying Deposits of all Supplemental
Eligible Account Holders, in each case subject to Sections 12 and 15 hereof and
the availability of shares of Conversion Stock for purchase after taking into
account the shares of Conversion Stock purchased by Eligible Account Holders and
Tax-Qualified Employee Stock Benefit Plans through the exercise of Subscription
Rights under Sections 5 and 6 hereof.
(b) In the event of an oversubscription for shares of Conversion Stock
pursuant to Section 7(a), available shares shall be allocated among subscribing
Supplemental Eligible Account Holders so as to permit each such Supplemental
Eligible Account Holder, to the extent possible, to purchase a number of shares
sufficient to make his or her total allocation (including the number of shares,
if any, allocated in accordance with Section 5(a)) equal to the lesser of the
number of shares subscribed for or 100 shares. Any remaining available shares
shall be allocated among subscribing Supplemental Eligible Account Holders in
the proportion that the amount of their respective Qualifying Deposits bears to
the total amount of the Qualifying Deposits of all such subscribing Supplemental
Eligible Account Holders whose orders are unfilled, provided that no fractional
shares shall be issued.
8. SUBSCRIPTION RIGHTS OF OTHER MEMBERS.
(a) Each Other Member shall receive, without payment, Subscription
Rights to purchase up to the greater of (i) $250,000 of Conversion Stock in the
Subscription Offering (or such maximum purchase limitation as may be established
for the Community Offering and/or Syndicated Community Offering) and (ii)
one-tenth of 1% of the total offering of shares in the Subscription Offering,
subject to Sections 12 and 15 hereof and the availability of shares of
Conversion Stock for purchase after taking into account the shares of Conversion
Stock purchased by Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans and Supplemental Eligible Account Holders, if any, through the
exercise of Subscription Rights under Sections 5, 6 and 7 hereof.
(b) If, pursuant to this Section 8, Other Members subscribe for a
number of shares of Conversion Stock in excess of the total number of shares of
Conversion Stock remaining, available shares shall be allocated among
subscribing Other Members so as to permit each such Other Member, to the extent
possible, to purchase a number of shares which will make his or her total
allocation equal to the lesser of the number of shares subscribed for or 100
shares. Any remaining shares shall be allocated among subscribing Other Members
on a pro rata basis in the same
15
proportion as each such Other Member's subscription bears to the total
subscriptions of all such subscribing Other Members, provided that no fractional
shares shall be issued.
9. SUBSCRIPTION RIGHTS OF DIRECTORS, OFFICERS AND EMPLOYEES.
(a) To the extent that there are sufficient shares remaining after
satisfaction of all subscriptions under the above categories, Directors,
Officers and Employees of the Association shall receive, without payment,
Subscription Rights to purchase in this category up to an aggregate of 15.0% of
the shares of Conversion Stock offered in the Subscription Offering.
(b) In the event of an oversubscription for shares of Conversion Stock
pursuant to Section 9(a), Subscription Rights for the purchase of such shares
shall be allocated among the individual Directors, Officers and Employees on a
point system basis, whereby a point will be assigned for each year of employment
and for each salary increment of $5,000 per annum and five points for each
office held in the Mutual Holding Company and the Association, including a
directorship. If any such Director, Officer or Employee does not subscribe for
his or her full allocation of shares, any shares not subscribed for may be
purchased by other Directors, Officers and Employees in proportion to their
respective subscriptions, provided that no fractional shares shall be issued.
10. PUBLIC SHAREHOLDERS OFFERING.
(a) If less than the total number of shares of Conversion Stock are
sold in the Subscription Offering, all remaining shares will be offered for sale
to Public Shareholders as of the Voting Record Date. The amount of Conversion
Stock that any Public Shareholder may purchase in the Public Shareholders
Offering shall not exceed the greater of (i) $250,000 of Conversion Stock in the
Subscription Offering (or such maximum purchase limitation as may be established
for the Community Offering and/or Syndicated Community Offering) and (ii)
one-tenth of 1% of the total offering of shares in the Subscription Offering,
subject to Sections 12 and 15 hereof and the availability of shares of
Conversion Stock for purchase after taking into account the shares of Conversion
Stock purchased by Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans, Supplemental Eligible Account Holders, if any, Other Members and
Directors, Officers and Employees. Each order for Conversion Stock in the Public
Shareholders Offering shall be subject to the absolute right of the Primary
Parties to accept or reject any such order in whole or in part either at the
time of receipt of an order or as soon as practicable following completion of
the Public Shareholders Offering. The Primary Parties may commence the Public
Shareholders Offering concurrently with, at any time during, or as soon as
practicable after the end of the Subscription Offering and the Public
Shareholders Offering must be completed within 45 days of the completion of the
Subscription Offering, unless extended by the Primary Parties with any required
regulatory approval.
(b) If, pursuant to this Section 10, Public Shareholders submit orders
for a number of shares of Conversion Stock in excess of the total number of
shares of Conversion Stock remaining,
16
available shares shall be allocated among subscribing Public Shareholders as of
the Voting Record Date on a pro rata basis in the same proportion as each such
Public Shareholder's order bears to the total orders of all such subscribing
Public Shareholders, provided that no fractional shares shall be issued.
11. COMMUNITY OFFERING, SYNDICATED COMMUNITY OFFERING AND
OTHER OFFERINGS.
(a) If less than the total number of shares of Conversion Stock are
sold in the Subscription Offering, it is anticipated that all remaining shares
of Conversion Stock shall, if practicable, be sold in a Community Offering.
Subject to the requirements set forth herein, the manner in which the Conversion
Stock is sold in the Community Offering shall have as the objective the
achievement of the widest possible distribution of such stock.
(b) In the event of a Community Offering, all shares of Conversion
Stock which are not subscribed for in the Subscription Offering or ordered in
the Public Shareholders Offering shall be offered for sale by means of a direct
community marketing program, which may provide for the use of brokers, dealers
or investment banking firms experienced in the sale of financial institution
securities. Any available shares in excess of those not subscribed for in the
Subscription Offering will be available for purchase by members of the general
public to whom a Prospectus and an Order Form is delivered by the Holding
Company or on its behalf, with preference given to natural persons residing in
counties in Florida in which the Association has a branch office ("Preferred
Subscribers").
(c) A Prospectus and Order Form shall be furnished to such Persons as
the Primary Parties may select in connection with the Community Offering, and
each order for Conversion Stock in the Community Offering shall be subject to
the absolute right of the Primary Parties to accept or reject any such order in
whole or in part either at the time of receipt of an order or as soon as
practicable following completion of the Community Offering. Available shares
will be allocated first to each Preferred Subscriber whose order is accepted in
an amount equal to the lesser of 100 shares or the number of shares subscribed
for by each such Preferred Subscriber, if possible. Thereafter, unallocated
shares shall be allocated among the Preferred Subscribers whose accepted orders
remain unsatisfied in the same proportion that the unfilled order of each bears
to the total unfilled orders of all Preferred Subscribers whose accepted orders
remain unsatisfied, provided that no fractional shares shall be issued. If there
are any shares remaining after all accepted orders by Preferred Subscribers have
been satisfied, such remaining shares shall be allocated to other members of the
general public who purchase in the Community Offering, applying the same
allocation described above for Preferred Subscribers.
17
(d) The amount of Conversion Stock that any Person may purchase in the
Community Offering shall not exceed the greater of (i) $250,000 of Conversion
Stock in the Subscription Offering or (ii) one-tenth of 1% of the total offering
in the Subscription Offering, provided, however, that this amount may be
increased to up to 5% of the total offering of shares of Conversion Stock,
subject to any required regulatory approval but without the further approval of
Members of the Mutual Holding Company or the Shareholders of the Mid-Tier
Holding Company; and provided further that, to the extent applicable, and
subject to the preferences set forth in Section 11(b) and (c) of this Plan and
the limitations on purchases of Conversion Stock set forth in this Section 11(d)
and Section 12 of this Plan, orders for Conversion Stock in the Community
Offering shall first be filled to a maximum of 2% of the total number of shares
of Conversion Stock sold in the Offerings and thereafter any remaining shares
shall be allocated on an equal number of shares basis per order until all orders
have been filled. The Primary Parties may commence the Community Offering
concurrently with, at any time during, or as soon as practicable after the end
of, the Subscription Offering, and the Community Offering must be completed
within 45 days after the completion of the Subscription Offering, unless
extended by the Primary Parties with any required regulatory approval.
(e) Subject to such terms, conditions and procedures as may be
determined by the Primary Parties, all shares of Conversion Stock not subscribed
for in the Subscription Offering or ordered in the Public Shareholders Offering
or the Community Offering may be sold by a syndicate of broker-dealers to the
general public in a Syndicated Community Offering. Each order for Conversion
Stock in the Syndicated Community Offering shall be subject to the absolute
right of the Primary Parties to accept or reject any such order in whole or in
part either at the time of receipt of an order or as soon as practicable after
completion of the Syndicated Community Offering. The amount of Conversion Stock
that any Person may purchase in the Syndicated Community Offering shall not
exceed $250,000 of Conversion Stock in the Subscription Offering, provided,
however, that this amount may be increased to up to 5% of the total offering of
shares of Conversion Stock, subject to any required regulatory approval but
without the further approval of Members of the Mutual Holding Company or the
Shareholders of the Mid-Tier Holding Company; and provided further that, to the
extent applicable, and subject to the limitations on purchases of Conversion
Stock set forth in this Section 11(e) and Section 12 of this Plan, orders for
Conversion Stock in the Syndicated Community Offering shall first be filled to a
maximum of 2% of the total number of shares of Conversion Stock sold in the
Offerings and thereafter any remaining shares shall be allocated on an equal
number of shares basis per order until all orders have been filled. The Primary
Parties may commence the Syndicated Community Offering concurrently with, at any
time during, or as soon as practicable after the end of, the Subscription
Offering and/or Community Offering, and the Syndicated Community Offering must
be completed within 45 days after the completion of the Subscription Offering,
unless extended by the Primary Parties with any required regulatory approval.
(f) The Holding Company and the Association may sell any shares of
Conversion Stock remaining following the Subscription Offering, the Public
Shareholders Offering, Community Offering and/or the Syndicated Community
Offering in a Public Offering. The provisions of
18
Section 12 hereof shall not be applicable to the sales to underwriters for
purposes of the Public Offering but shall be applicable to sales by the
underwriters to the public. The price to be paid by the underwriters in such an
offering shall be equal to the Actual Purchase Price less an underwriting
discount to be negotiated among such underwriters and the Association and the
Holding Company, subject to any required regulatory approval or consent.
(g) If for any reason a Syndicated Community Offering or Public
Offering of shares of Conversion Stock not sold in the Subscription Offering and
the Community Offering cannot be effected, or in the event that any
insignificant residue of shares of Conversion Stock is not sold in the
Subscription Offering, Community Offering or Syndicated Community Offering, the
Primary Parties shall use their best efforts to obtain other purchasers for such
shares in such manner and upon such conditions as may be satisfactory to the
OTS.
12. LIMITATIONS ON SUBSCRIPTIONS AND PURCHASES OF CONVERSION
STOCK.
(a) The maximum number of shares of Conversion Stock which may be
purchased in the Conversion by the ESOP shall not exceed 8% and all
Tax-Qualified Employee Stock Benefit Plans shall not exceed 10% of the total
number of shares of Conversion Stock sold in the Offerings, in each instance,
including any shares which may be issued in the event of an increase in the
maximum of the Estimated Price Range to reflect changes in market, financial and
economic conditions after commencement of the Subscription Offering and prior to
completion of the Offerings; provided, however, that purchases of Conversion
Stock which are made by Plan Participants pursuant to the exercise of
subscription rights granted to such Plan Participant in his individual capacity
as a Participant or purchases by a Plan Participant in the Public Shareholders
Offering or the Community Offering using the funds thereof held in Tax-Qualified
Employee Stock Benefit Plans shall not be deemed to be purchases by a
Tax-Qualified Employee Stock Benefit Plan for purposes of this Section 12(a).
(b) Except in the case of Tax-Qualified Employee Stock Benefit Plans in
the aggregate, as set forth in Section 12(a) hereof, and certain Eligible
Account Holders and Supplemental Eligible Account Holders, as set forth in
Sections 5(a)(ii) and (iii) and 7(a)(ii) and (iii) hereof, and in addition to
the other restrictions and limitations set forth herein, the maximum amount of
Holding Company Common Stock which any Person together with any Associate or
group of Persons acting in concert may, directly or indirectly, subscribe for or
purchase in the Conversion and Reorganization shall not exceed the number of
shares of Conversion Stock that when combined with Exchange Shares received
aggregate 1% of the total number of shares of Holding Company Common Stock
issued in the Conversion and Reorganization.
(c) The number of shares of Conversion Stock which Directors and
Officers and their Associates may purchase in the aggregate in the Offerings
shall not exceed 25% of the total number of shares of Conversion Stock sold in
the Offerings, including any shares which may be issued in the event of an
increase in the maximum of the Estimated Price Range to reflect changes in
market,
19
financial and economic conditions after commencement of the Subscription
Offering and prior to completion of the Offerings.
(d) No Person may purchase fewer than 25 shares of Conversion Stock in
the Offerings, to the extent such shares are available; provided, however, that
if the Actual Purchase Price is greater than $20.00 per share, such minimum
number of shares shall be adjusted so that the aggregate Actual Purchase Price
for such minimum shares will not exceed $500.00.
(e) For purposes of the foregoing limitations and the determination of
Subscription Rights, (i) Directors, Officers and Employees shall not be deemed
to be Associates or a group acting in concert solely as a result of their
capacities as such, (ii) shares purchased by Tax-Qualified Employee Stock
Benefit Plans shall not be attributable to the individual trustees or
beneficiaries of any such plan for purposes of determining compliance with the
limitations set forth in Section 12(b) or Section 12(c) hereof, (iii) Exchange
Shares shall be valued at the Actual Purchase Price, and (iv) shares purchased
by a Tax-Qualified Employee Stock Benefit Plan pursuant to instructions of an
individual in an account in such plan in which the individual has the right to
direct the investment, including any plan of the Association qualified under
Section 401(k) of the Code, shall be aggregated and included in that
individual's purchases and not attributed to the Tax-Qualified Employee Stock
Benefit Plan.
(f) Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the Members of
the Mutual Holding Company or the Shareholders of the Mid-Tier Holding Company,
the Primary Parties may increase or decrease any of the individual or aggregate
purchase limitations set forth herein to a percentage which does not exceed 5%
of the total offering of shares of Holding Company Common Stock in the
Conversion and Reorganization whether prior to, during or after the Subscription
Offering, Public Shareholders Offering, Community Offering and/or Syndicated
Community Offering. In the event that an individual purchase limitation is
increased after commencement of the Subscription Offering or any other offering,
the Primary Parties shall permit any Person who subscribed for the maximum
number of shares of Conversion Stock to purchase an additional number of shares,
so that such Person shall be permitted to subscribe for the then maximum number
of shares permitted to be subscribed for by such Person, subject to the rights
and preferences of any Person who has priority Subscription Rights. In the event
that any of the individual or aggregate purchase limitations are decreased after
commencement of the Subscription Offering or any other offering, the orders of
any Person who subscribed for more than the new purchase limitation shall be
decreased by the minimum amount necessary so that such Person shall be in
compliance with the then maximum number of shares permitted to be subscribed for
by such Person.
(g) The Primary Parties shall have the right to take all such action as
they may, in their sole discretion, deem necessary, appropriate or advisable in
order to monitor and enforce the terms, conditions, limitations and restrictions
contained in this Section 12 and elsewhere in this Plan and the terms,
conditions and representations contained in the Order Form, including, but not
limited to, the absolute right (subject only to any necessary regulatory
approvals or concurrences) to reject,
20
limit or revoke acceptance of any subscription or order and to delay, terminate
or refuse to consummate any sale of Conversion Stock which they believe might
violate, or is designed to, or is any part of a plan to, evade or circumvent
such terms, conditions, limitations, restrictions and representations. Any such
action shall be final, conclusive and binding on all persons, and the Primary
Parties and their respective Boards shall be free from any liability to any
Person on account of any such action.
(h) Notwithstanding anything to the contrary contained in this Plan and
except as may otherwise be required by the OTS, the Public Shareholders will not
have to sell any Mid-Tier Holding Company Common Stock or be limited in
receiving Exchange Shares even if their ownership of Mid-Tier Holding Company
Common Stock when converted into Exchange Shares would exceed an applicable
purchase limitation; provided, however, that a Public Shareholder who would
exceed an applicable purchase limitation may be precluded from purchasing
Conversion Stock in the Offerings.
13. TIMING OF SUBSCRIPTION OFFERING; MANNER OF EXERCISING
SUBSCRIPTION RIGHTS AND ORDER FORMS.
(a) The Subscription Offering may be commenced concurrently with or at
any time after the mailing to Voting Members of the Mutual Holding Company and
Shareholders of the Mid-Tier Holding Company of the proxy statement(s) to be
used in connection with the Special Meeting and the Shareholders' Meeting. The
Subscription Offering may be closed before the Special Meeting and the
Shareholders' Meeting, provided that the offer and sale of the Conversion Stock
shall be conditioned upon the approval of the Plan by the Voting Members of the
Mutual Holding Company and the Shareholders of the Mid-Tier Holding Company at
the Special Meeting and the Shareholders' Meeting, respectively.
(b) The exact timing of the commencement of the Subscription Offering
shall be determined by the Primary Parties in consultation with the Independent
Appraiser and any financial or advisory or investment banking firm retained by
them in connection with the Conversion. The Primary Parties may consider a
number of factors, including, but not limited to, their current and projected
future earnings, local and national economic conditions, and the prevailing
market for stocks in general and stocks of financial institutions in particular.
The Primary Parties shall have the right to withdraw, terminate, suspend, delay,
revoke or modify any such Subscription Offering, at any time and from time to
time, as they in their sole discretion may determine, without liability to any
Person, subject to compliance with applicable securities laws and any necessary
regulatory approval or concurrence.
(c) The Primary Parties shall, promptly after the SEC has declared the
Registration Statement, which includes the Prospectus, effective and all
required regulatory approvals have been obtained, distribute or make available
the Prospectus, together with Order Forms for the purchase of Conversion Stock,
to all Participants for the purpose of enabling them to exercise their
respective Subscription Rights, subject to Section 15 hereof. To the extent
permitted by applicable law and
21
regulation, the Primary Parties may elect to mail a Prospectus and Order Form
only to those Participants who request such materials by returning a
postage-paid card to the Primary Parties by a date specified in the letter
informing them of their Subscription Rights. Under such circumstances, the
Subscription Offering shall not be closed prior to the expiration of 30 days
after the mailing by the Primary Parties of the postage-paid card to
Participants.
(d) A single Order Form for all Deposit Accounts maintained with the
Association by an Eligible Account Holder and any Supplemental Eligible Account
Holder may be furnished, irrespective of the number of Deposit Accounts
maintained with the Association on the Eligibility Record Date and Supplemental
Eligibility Record Date, respectively. No person holding a subscription right
may exceed any otherwise applicable purchase limitation by submitting multiple
orders for Conversion stock. Multiple orders are subject to adjustment, as
appropriate, on a pro rata basis and deposit balances will be divided equally
among such orders in allocating shares in the event of an oversubscription.
(e) The recipient of an Order Form shall have no less than 20 days and
no more than 45 days from the date of mailing of the Order Form (with the exact
termination date to be set forth on the Order Form) to properly complete and
execute the Order Form and deliver it to the Primary Parties. The Primary
Parties may extend such period by such amount of time as they determine is
appropriate. Failure of any Participant to deliver a properly executed Order
Form to the Primary Parties, along with payment (or authorization for payment by
withdrawal) for the shares of Conversion Stock subscribed for, within the time
limits prescribed, shall be deemed a waiver and release by such person of any
rights to subscribe for shares of Conversion Stock. Each Participant shall be
required to confirm to the Primary Parties by executing an Order Form that such
Person has fully complied with all of the terms, conditions, limitations and
restrictions in the Plan.
(f) The Primary Parties shall have the absolute right, in their sole
discretion and without liability to any Participant or other Person, to reject
any Order Form, including, but not limited to, any Order Form that is (i)
improperly completed or executed; (ii) not timely received; (iii) not
accompanied by the proper payment (or authorization of withdrawal for payment)
or, in the case of institutional investors in the Community Offering, not
accompanied by an irrevocable order together with a legally binding commitment
to pay the full amount of the purchase price prior to 48 hours before the
completion of the Offerings; or (iv) submitted by a Person whose representations
the Primary Parties believe to be false or who they otherwise believe, either
alone, or acting in concert with others, is violating, evading or circumventing,
or intends to violate, evade or circumvent, the terms and conditions of the
Plan. Furthermore, in the event Order Forms (i) are not delivered and are
returned to the Association, the Mid-Tier Holding Company or the Mutual Holding
Company by the Untied States Postal Service or the Association, the Mid-Tier
Holding Company or the Mutual Holding Company is unable to locate the addressee,
or (ii) are not mailed pursuant to a "no mail" order placed in effect by the
account holder, the subscription rights of the person to which such rights have
been granted will lapse as though such person failed to return the contemplated
Order Form within the time period specified thereon. The Primary Parties may,
but will not be required to, waive any irregularity on any Order Form or may
require the submission of corrected
22
Order Forms or the remittance of full payment for shares of Conversion Stock by
such date as they may specify. The interpretation of the Primary Parties of the
terms and conditions of the Order Forms shall be final and conclusive.
14. PAYMENT FOR CONVERSION STOCK.
(a) Payment for shares of Conversion Stock subscribed for by
Participants in the Subscription Offering and payment for shares of Conversion
Stock ordered by Persons in the Public Shareholders Offering or the Community
Offering shall be equal to the Initial Purchase Price multiplied by the number
of shares which are being subscribed for or ordered, respectively. Such payment
may be made in cash, if delivered in person, or by check or money order at the
time the Order Form is delivered to the Primary Parties. The Primary Parties, in
their sole and absolute discretion, may also elect to receive payment for shares
of Conversion Stock by wire transfer. In addition, the Primary Parties may elect
to provide Participants and/or other Persons who have a Deposit Account with the
Association the opportunity to pay for shares of Conversion Stock by authorizing
the Association to withdraw from such Deposit Account an amount equal to the
aggregate Initial Purchase Price of such shares. If the Actual Purchase Price is
less than the Initial Purchase Price, the Primary Parties shall refund the
difference to all Participants and other Persons, unless the Primary Parties
choose to provide Participants and other Persons the opportunity on the Order
Form to elect to have such difference applied to the purchase of additional
whole shares of Conversion Stock. If the Actual Purchase Price is more than the
Initial Purchase Price, the Primary Parties shall reduce the number of shares of
Conversion Stock ordered by Participants and other Persons and refund any
remaining amount which is attributable to a fractional share interest, unless
the Primary Parties choose to provide Participants and other Persons the
opportunity to increase the Actual Purchase Price submitted by them.
(b) Consistent with applicable laws and regulations and policies and
practices of the OTS, payment for shares of Conversion Stock subscribed for by
Tax-Qualified Employee Stock Benefit Plans may be made with funds contributed by
the Holding Company and/or the Association and/or funds obtained pursuant to a
loan from an unrelated financial institution pursuant to a loan commitment which
is in force from the time that any such plan submits an Order Form until the
closing of the transactions contemplated hereby.
(c) If a Participant or other Person authorizes the Association to
withdraw the amount of the Initial Purchase Price from his or her Deposit
Account, the Association shall have the right to make such withdrawal or to
freeze funds equal to the aggregate Initial Purchase Price upon receipt of the
Order Form. Notwithstanding any regulatory provisions regarding penalties for
early withdrawals from certificate accounts, the Association may allow payment
by means of withdrawal from certificate accounts without the assessment of such
penalties. In the case of an early withdrawal of only a portion of such account,
the certificate evidencing such account shall be canceled if any applicable
minimum balance requirement ceases to be met. In such case, the remaining
balance will earn interest at the regular passbook rate. However, where any
applicable minimum balance is maintained in such certificate account, the rate
of return on the balance of the
23
certificate account shall remain the same as prior to such early withdrawal.
This waiver of the early withdrawal penalty applies only to withdrawals made in
connection with the purchase of Conversion Stock and is entirely within the
discretion of the Primary Parties.
(d) The Association shall pay interest, at not less than the passbook
rate, for all amounts paid in cash, by check or money order to purchase shares
of Conversion Stock in the Subscription Offering and the Community Offering from
the date payment is received until the date the Conversion and Reorganization is
completed or terminated.
(e) The Association shall not knowingly loan funds or otherwise extend
credit to any Participant or other Person to purchase Conversion Stock.
(f) Each share of Conversion Stock shall be non-assessable upon payment
in full of the Actual Purchase Price.
15. ACCOUNT HOLDERS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES.
The Primary Parties shall make reasonable efforts to comply with the
securities laws of all jurisdictions in the United States in which Participants
reside. However, no Participant will be offered or receive any Conversion Stock
under the Plan if such Participant resides in a foreign country or resides in a
jurisdiction of the United States with respect to which all of the following
apply: (a) there are few Participants otherwise eligible to subscribe for shares
under this Plan who reside in such jurisdiction; (b) the granting of
Subscription Rights or the offer or sale of shares of Conversion Stock to such
Participants would require any of the Primary Parties or their respective
Directors and Officers, under the laws of such jurisdiction, to register as a
broker-dealer, salesman or selling agent or to register or otherwise qualify the
Conversion Stock for sale in such jurisdiction, or any of the Primary Parties
would be required to qualify as a foreign corporation or file a consent to
service of process in such jurisdiction; and (c) such registration,
qualification or filing in the judgment of the Primary Parties would be
impracticable or unduly burdensome for reasons of cost or otherwise.
16. VOTING RIGHTS OF SHAREHOLDERS.
Following consummation of the Conversion and Reorganization, voting
rights with respect to the Association shall be held and exercised exclusively
by the Holding Company as holder of all of the Association's outstanding voting
capital stock, and voting rights with respect to the Holding Company shall be
held and exercised exclusively by the holders of the Holding Company's voting
capital stock.
17. LIQUIDATION ACCOUNT.
(a) At the time of the Mutual Holding Company Merger, the Association
shall establish a liquidation account in an amount equal to the amount of
dividends with respect to the Association
24
Common Stock of the Mid-Tier Holding Company Common Stock waived by the Mutual
Holding Company plus the greater of (i) $36,134,000, which is equal to 100% of
the retained earnings of the Association as of March 31, 1994, the date of the
latest statement of financial condition contained in the final offering circular
utilized in the formation of the Mutual Holding Company, or (ii) 51.34% of the
Mid-Tier Holding Company's total shareholders' equity as reflected in its latest
statement of financial condition contained in the final Prospectus utilized in
the Conversion and Reorganization. The function of the liquidation account will
be to preserve the rights of certain holders of Deposit Accounts in the
Association who maintain such accounts in the Association following the
Conversion and Reorganization to a priority to distributions in the unlikely
event of a liquidation of the Association subsequent to the Conversion and
Reorganization.
(b) The liquidation account shall be maintained for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders, if any, who
maintain their Deposit Accounts in the Association after the Conversion and
Reorganization. Each such account holder will, with respect to each Deposit
Account held, have a related inchoate interest in a portion of the liquidation
account balance, which interest will be referred to in this Section 17 as the
"subaccount balance." All Deposit Accounts having the same social security
number will be aggregated for purposes of determining the initial subaccount
balance with respect to such Deposit Accounts, except as provided in Section
17(d) hereof.
(c) In the event of a complete liquidation of the Association
subsequent to the Conversion and Reorganization (and only in such event), each
Eligible Account Holder and Supplemental Eligible Account Holder, if any, shall
be entitled to receive a liquidation distribution from the liquidation account
in the amount of the then current subaccount balances for Deposit Accounts then
held (adjusted as described below) before any liquidation distribution may be
made with respect to the capital stock of the Association. No merger,
consolidation, sale of bulk assets or similar combination transaction with
another FDIC-insured institution in which the Association is not the surviving
entity shall be considered a complete liquidation for this purpose. In any such
transaction, the liquidation account shall be assumed by the surviving entity.
(d) The initial subaccount balance for a Deposit Account held by an
Eligible Account Holder and Supplemental Eligible Account Holder, if any, shall
be determined by multiplying the opening balance in the liquidation account by a
fraction, of which the numerator is the amount of the Qualifying Deposits of
such account holder and the denominator is the total amount of Qualifying
Deposits of all Eligible Account Holders and Supplemental Eligible Account
Holders, if any. For Deposit Accounts in existence at both the Eligibility
Record Date and the Supplemental Eligibility Record Date, if any, separate
initial subaccount balances shall be determined on the basis of the Qualifying
Deposits in such Deposit Accounts on each such record date. Initial subaccount
balances shall not be increased, and shall be subject to downward adjustment as
provided below.
(e) If the aggregate deposit balance in the Deposit Account(s) of any
Eligible Account Holder or Supplemental Eligible Account Holder, if any, at the
close of business on any December 31 annual closing date, commencing December
31, 1998, is less than the lesser of (a) the aggregate
25
deposit balance in such Deposit Account(s) at the close of business on any other
annual closing date subsequent to such record dates or (b) the aggregate deposit
balance in such Deposit Account(s) as of the Eligibility Record Date or the
Supplemental Eligibility Record Date, if any, the subaccount balance for such
Deposit Account(s) shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of
such a downward adjustment, the subaccount balance shall not be subsequently
increased, notwithstanding any subsequent increase in the deposit balance of the
related Deposit Account(s). The subaccount balance of an Eligible Account Holder
or Supplemental Eligible Account Holder, if any, will be reduced to zero if the
Account Holder ceases to maintain a Deposit Account at the Association that has
the same social security number as appeared on his Deposit Account(s) at the
Eligibility Record Date or, if applicable, the Supplemental Eligibility Record
Date.
(f) Subsequent to the Conversion and Reorganization, the Association
may not pay cash dividends generally on deposit accounts and/or capital stock of
the Association, or repurchase any of the capital stock of the Association, if
such dividend or repurchase would reduce the Association's regulatory capital
below the aggregate amount of the then current subaccount balances for Deposit
Accounts then held; otherwise, the existence of the liquidation account shall
not operate to restrict the use or application of any of the net worth accounts
of the Association.
(g) For purposes of this Section 17, a Deposit Account includes a
predecessor or successor account which is held by an Account Holder with the
same social security number.
18. TRANSFER OF DEPOSIT ACCOUNTS.
Each Deposit Account in the Association at the time of the consummation
of the Conversion and Reorganization shall become, without further action by the
holder, a Deposit Account in the Association equivalent in withdrawable amount
to the withdrawal value (as adjusted to give effect to any withdrawal made for
the purchase of Conversion Stock), and subject to the same terms and conditions
(except as to voting and liquidation rights) as such Deposit Account in the
Association immediately preceding consummation of the Conversion and
Reorganization. Holders of Deposit Accounts in the Association shall not, as
such holders, have any voting rights.
19. REQUIREMENTS FOLLOWING CONVERSION FOR REGISTRATION,
MARKET MAKING AND STOCK EXCHANGE LISTING.
In connection with the Conversion and Reorganization, the Holding
Company shall register the Holding Company Common Stock pursuant to Section 12
of the Securities Exchange Act of 1934, as amended, and shall undertake not to
deregister such stock for a period of three years thereafter. The Holding
Company also shall use its best efforts to (i) encourage and assist a market
maker to establish and maintain a market for the Holding Company Common Stock
and (ii) list the Holding Company Common Stock on a national or regional
securities exchange or to have quotations for such stock disseminated on The
Nasdaq Stock Market.
26
20. DIRECTORS AND OFFICERS OF THE ASSOCIATION.
Each person serving as a Director or Officer of the Association at the
time of the Conversion and Reorganization shall continue to serve as a Director
or Officer of the Association for the balance of the term for which the person
was elected prior to the Conversion and Reorganization, and until a successor is
elected and qualified. The number, names, business addresses and terms of the
Directors of the Association are set forth in the Plans of Merger included as
Annexes A, B and C hereto.
21. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS
FOLLOWING THE CONVERSION AND REORGANIZATION.
For a period of three years following the Conversion and
Reorganization, the Directors and Officers of the Holding Company and the
Association and their Associates may not purchase, without the prior written
approval of the OTS, Holding Company Common Stock except from a broker-dealer
registered with the SEC. This prohibition shall not apply, however, to (i) a
negotiated transaction arrived at by direct negotiation between buyer and seller
and involving more than 1% of the outstanding Holding Company Common Stock and
(ii) purchases of stock made by and held by any Tax-Qualified Employee Stock
Benefit Plan (and purchases of stock made by and held by any Non-Tax-Qualified
Employee Stock Benefit Plan following the receipt of shareholder approval of
such plan) which may be attributable to individual officers or directors.
The foregoing restriction on purchases of Holding Company Common Stock
shall be in addition to any restrictions that may be imposed by federal and
state securities laws.
22. RESTRICTIONS ON TRANSFER OF STOCK.
All shares of Conversion Stock which are purchased by Persons other
than Directors and Officers shall be transferable without restriction, except in
connection with a transaction proscribed by Section 23 of this Plan. Shares of
Conversion Stock purchased by Directors and Officers of the Holding Company and
the Association on original issue from the Holding Company (by subscription or
otherwise) shall be subject to the restriction that such shares shall not be
sold or otherwise disposed of for value for a period of one year following the
date of purchase, except for any disposition of such shares following the death
of the original purchaser or pursuant to any merger or similar transaction
approved by the OTS. The shares of Conversion Stock issued by the Holding
Company to Directors and Officers shall bear the following legend giving
appropriate notice of such one-year restriction:
"The shares of stock evidenced by this Certificate
are restricted as to transfer for a period of one year from
the date of this Certificate pursuant to Part 563b of the
Rules and Regulations of the Office of Thrift Supervision.
These shares may not be transferred during such one-year
period without a legal opinion of counsel for the Company
that said transfer is permissible under the provisions of
applicable law and
27
regulation. This restrictive legend shall be deemed null and
void after one year from the date of this Certificate."
In addition, the Holding Company shall give appropriate instructions to
the transfer agent for the Holding Company Common Stock with respect to the
applicable restrictions relating to the transfer of restricted stock. Any shares
issued at a later date as a stock dividend, stock split or otherwise with
respect to any such restricted stock shall be subject to the same holding period
restrictions as may then be applicable to such restricted stock.
The foregoing restriction on transfer shall be in addition to any
restrictions on transfer that may be imposed by federal and state securities
laws.
23. RESTRICTIONS ON ACQUISITION OF STOCK OF THE HOLDING COMPANY.
The certificate of incorporation of the Holding Company shall prohibit
any Person together with Associates or group of Persons acting in concert from
offering to acquire or acquiring, directly or indirectly, beneficial ownership
of more than 10% of any class of equity securities of the Holding Company, or of
securities convertible into more than 10% of any such class, for such period of
time following completion of the Conversion and Reorganization as may be
determined by the Board of Directors of the Holding Company. The certificate of
incorporation of the Holding Company also shall provide that all equity
securities beneficially owned by any Person in excess of 10% of any class of
equity securities shall be considered "excess shares", and that excess shares
shall not be counted as shares entitled to vote and shall not be voted by any
Person or counted as voting shares in connection with any matters submitted to
the shareholders for a vote. The foregoing restrictions shall not apply to (i)
any offer with a view toward public resale made exclusively to the Holding
Company by underwriters or a selling group acting on its behalf, (ii) the
purchase of shares by a Tax-Qualified Employee Stock Benefit Plan established
for the benefit of the employees of the Holding Company and its subsidiaries
which is exempt from approval requirements under 12 C.F.R. ss.574.3(c)(1)(vi) or
any successor thereto, and (iii) any offer or acquisition approved in advance by
the affirmative vote of two-thirds of the entire Board of Directors of the
Holding Company. Directors, Officers or Employees of the Holding Company or the
Association or any subsidiary thereof shall not be deemed to be Associates or a
group acting in concert with respect to their individual acquisitions of any
class of equity securities of the Holding Company solely as a result of their
capacities as such.
24. TAX RULINGS OR OPINIONS.
Consummation of the Conversion and Reorganization is conditioned upon
prior receipt by the Primary Parties of either a ruling or an opinion of counsel
with respect to federal tax laws, and either a ruling or an opinion with respect
to Florida tax laws, to the effect that consummation of the transactions
contemplated hereby will not result in a taxable reorganization under the
provisions of the applicable codes or otherwise result in any adverse tax
consequences to the Primary Parties or to account holders receiving Subscription
Rights before or after the Conversion and Reorganization,
28
except in each case to the extent, if any, that Subscription Rights are deemed
to have fair market value on the date such rights are issued.
25. STOCK COMPENSATION PLANS.
(a) The Holding Company and the Association are authorized to adopt
Tax-Qualified Employee Stock Benefit Plans in connection with the Conversion and
Reorganization, including without limitation an employee stock ownership plan.
(b) The Holding Company and the Association also are authorized to
adopt stock option plans, restricted stock grant plans and other
Non-Tax-Qualified Employee Stock Benefit Plans, provided that no stock options
shall be granted, and no shares of Conversion Stock shall be purchased, pursuant
to any of such plans prior to the earlier of (i) the one-year anniversary of the
consummation of the Conversion and Reorganization or (ii) the receipt of
shareholder approval of such plans at either an annual or special meeting of
shareholders of the Holding Company held no earlier than six months following
the Conversion and Reorganization.
(c) Existing as well as any newly-created Tax-Qualified Employee Stock
Benefit Plans may purchase shares of Conversion Stock in the Offerings, to the
extent permitted by the terms of such benefit plans and this Plan.
(d) The Holding Company and the Association are authorized to enter
into employment or severance agreements with their executive officers.
26. DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK.
(a) The Holding Company generally may not repurchase any shares of its
capital stock during the first year following consummation of the Conversion and
Reorganization, except as may be otherwise approved by the OTS. During the
second and third years following consummation of the Conversion and
Reorganization, the Holding Company may not repurchase any of its capital stock
from any person, other than pursuant to (i) an offer to repurchase made by the
Holding Company on a pro rata basis to all of its shareholders and which is
approved by the OTS, (ii) the repurchase of qualifying shares of a director, if
any, (iii) purchases in the open market by a Tax-Qualified or Non-Tax-Qualified
Employee Stock Benefit Plan in an amount reasonable and appropriate to fund the
plan, or (iv) a repurchase program approved by the OTS.
(b) The Association may not declare or pay a cash dividend on, or
repurchase any of, its capital stock if the effect thereof would cause the
regulatory capital of the Association to be reduced below the amount required
for the liquidation account. Any dividend declared or paid on, or repurchase of,
the Association's capital stock also shall be in compliance with Section 563.134
of the Regulations Applicable to All Savings Associations, or any successor
thereto.
29
(c) Notwithstanding anything to the contrary set forth herein, the
Holding Company may repurchase its capital stock to the extent and subject to
the requirements set forth in Section 563b.3(g)(3) of the Regulations Applicable
to All Savings Associations, or any successor thereto, or as otherwise may be
approved by the OTS.
27. PAYMENT OF FEES TO BROKERS.
The Primary Parties may elect to offer to pay fees on a per share basis
to securities brokers who assist purchasers of Conversion Stock in the
Offerings.
28. EFFECTIVE DATE.
The effective date of the Conversion and Reorganization shall be the
date upon which the last of the following actions occurs: (i) the filing of
Articles of Combination with the OTS with respect to the Mid-Tier Holding
Company Merger, (ii) the filing of Articles of Combination with the OTS with
respect to the Mutual Holding Company Merger, (iii) the filing of Articles of
Combination with the OTS with respect to the Association Merger and (iv) the
closing of the issuance of the shares of Conversion Stock in the Offerings. The
filing of Articles of Combination relating to the Mutual Holding Company Merger,
the Mid-Tier Holding Company Merger and the Association Merger and the closing
of the issuance of shares of Conversion Stock in the Offerings shall not occur
until all requisite regulatory, Member and Shareholder approvals have been
obtained, all applicable waiting periods have expired and sufficient
subscriptions and orders for the Conversion Stock have been received. It is
intended that the closing of the Mutual Holding Company Merger, the Mid-Tier
Holding Company Merger, the Association Merger and the sale of shares of
Conversion Stock in the Offerings shall occur consecutively and substantially
simultaneously.
29. AMENDMENT OR TERMINATION OF THE PLAN.
If deemed necessary or desirable by the Boards of Directors of the
Primary Parties, this Plan may be substantively amended, as a result of comments
from regulatory authorities or otherwise, at any time prior to the solicitation
of proxies from Members and Shareholders to vote on the Plan and at any time
thereafter with the concurrence of the OTS. Any amendment to this Plan made
after approval by the Members and Shareholders with the concurrence of the OTS
shall not necessitate further approval by the Members or Shareholders unless
otherwise required by the OTS. This Plan shall terminate if the sale of all
shares of Conversion Stock is not completed within 24 months from the date of
the Special Meeting. Prior to the earlier of the Special Meeting and the
Shareholders' Meeting, this Plan may be terminated by the Boards of Directors of
the Primary Parties without approval of the OTS; after the Special Meeting or
the Shareholders' Meeting, the Boards of Directors may terminate this Plan only
with the approval of the OTS.
30. INTERPRETATION OF THE PLAN.
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of each of the Boards of Directors of the
Primary Parties shall be final, subject to the authority of the OTS.
30
IN WITNESS WHEREOF, the parties have caused this Plan, as amended to be
executed by their duly authorized officers as of this 13th day of August 1998.
COMFED, M. H. C.
Attest: /s/ DEBORAH M. ROUSSEAU By: /s/ JAMES B. PITTARD, JR.
------------------------ -----------------------------------------
Deborah M. Rousseau James B. Pittard, Jr.
Secretary President and Chief Executive Officer
COMMUNITY SAVINGS, F. A.
Attest: /s/ DEBORAH M. ROUSSEAU By: /s/ JAMES B. PITTARD, JR.
------------------------ -----------------------------------------
Deborah M. Rousseau James B. Pittard, Jr.
Secretary President and Chief Executive Officer
COMMUNITY SAVINGS BANKSHARES, INC.
(a federal corporation)
Attest: /s/ DEBORAH M. ROUSSEAU By: /s/ JAMES B. PITTARD, JR.
------------------------ -----------------------------------------
Deborah M. Rousseau James B. Pittard, Jr.
Secretary President and Chief Executive Officer
COMMUNITY SAVINGS BANKSHARES, INC.
(a Delaware corporation)
Attest: /s/ DEBORAH M. ROUSSEAU By: /s/ JAMES B. PITTARD, JR.
Deborah M. Rousseau James B. Pittard, Jr.
Secretary President and Chief Executive Officer
31
ANNEX A
PLAN OF MERGER
This Plan of Merger, dated as of August 13, 1998, is between Community
Savings Bankshares, Inc. (the "Mid-Tier Holding Company"), a federally chartered
stock corporation, and Community Savings, F. A. (the "Association" or the
"Surviving Association"), a federally chartered savings association.
WITNESSETH:
WHEREAS, the Mid-Tier Holding Company, ComFed, M. H. C. (the "Mutual
Holding Company") and the Association have adopted a Plan of Conversion of the
Mutual Holding Company and Agreement and Plan of Reorganization between
Community Savings Bankshares, Inc. (the "Holding Company"), the Mutual Holding
Company and the Association (the "Plan of Conversion"), pursuant to which (i)
the Mid-Tier Holding Company will convert to a federally chartered interim stock
savings association and simultaneously merge with and into the Association; (ii)
the Mutual Holding Company will convert to a federally chartered interim stock
savings association and simultaneously merge with and into the Association (the
"Mutual Holding Company Merger"), (iii) the Association and a newly-formed
interim savings association will merge, pursuant to which the Association will
become a wholly owned subsidiary of the Holding Company (the "Association
Merger"), and (iv) the Holding Company will offer shares of its common stock in
the manner set forth in the Plan of Conversion;
WHEREAS, the Mutual Holding Company, which owns 51.4% of the
outstanding common stock of the Mid-Tier Holding Company, par value $1.00 per
share ("Mid-Tier Holding Company Common Stock"), will convert to a federally
chartered interim stock savings association pursuant to the Plan of Conversion
and merge with and into the Association pursuant to a Plan of Merger (the
"Mutual Holding Company Merger"), pursuant to which, among other things, all
shares of Mid-Tier Holding Company Common Stock held by the Mutual Holding
Company and all interest of members in the Mutual Holding Company will be
canceled; and
WHEREAS, the Mid-Tier Holding Company owns 100% of the outstanding
common stock of the Association, par value $1.00 per share ("Association Common
Stock");
WHEREAS, the Mid-Tier Holding Company will convert to a federally
chartered interim stock savings association pursuant to the Plan of Conversion
and merge with and into the Association pursuant to this Plan of Merger (the
"Mid-Tier Holding Company Merger"), pursuant to which, among other things, all
shares of Association Common Stock held by the Mid-Tier Holding Company will be
cancelled; and
WHEREAS, the Mid-Tier Holding Company and the Association (the
"Constituent Associations") desire to provide for the terms and conditions of
the Mid-Tier Holding Company Merger.
NOW, THEREFORE, the Mid-Tier Holding Company and the Association hereby
agree as follows:
1. EFFECTIVE DATE. The Mid-Tier Holding Company Merger shall become
effective on the date specified in the endorsement of the Articles of
Combination relating to the Mid-Tier Holding Company Merger by the Secretary of
the Office of Thrift Supervision ("OTS") pursuant to 12 C.F.R.
ss.552.13(k), or any successor thereto (the "Effective Date").
2. THE MID-TIER HOLDING COMPANY MERGER AND EFFECT THEREOF. Subject to
the terms and conditions set forth herein and the prior approval of the OTS of
the Conversion and Reorganization, as defined in the Plan of Conversion, and the
expiration of all applicable waiting periods, the Mid-Tier Holding Company shall
convert from federal stock corporation to a federal interim stock savings
association and simultaneously merge with and into the Association, which shall
be the Surviving Association. Upon consummation of the Mid-Tier Holding Company
Merger, the Surviving Association shall be considered the same business and
corporate entity as each of the Constituent Associations and thereupon and
thereafter all the property, rights, powers and franchises of each of the
Constituent Associations shall vest in the Surviving Association and the
Surviving Association shall be subject to and be deemed to have assumed all of
the debts, liabilities, obligations and duties of each of the Constituent
Associations and shall have succeeded to all of each of their relationships,
fiduciary or otherwise, as fully and to the same extent as if such property,
rights, privileges, powers, franchises, debts, obligations, duties and
relationships had been originally acquired, incurred or entered into by the
Surviving Association. In addition, any reference to either of the Constituent
Associations in any contract, will or document, whether executed or taking
effect before or after the Effective Date, shall be considered a reference to
the Surviving Association if not inconsistent with the other provisions of the
contract, will or document; and any pending action or other judicial proceeding
to which either of the Constituent Associations is a party shall not be deemed
to have abated or to have been discontinued by reason of the Mid-Tier Holding
Company Merger, but may be prosecuted to final judgment, order or decree in the
same manner as if the Mid-Tier Holding Company Merger had not occurred or the
Surviving Association may be substituted as a party to such action or
proceeding, and any judgment, order or decree may be rendered for or against it
that might have been rendered for or against either of the Constituent
Associations if the Mid-Tier Holding Company Merger had not occurred.
3. CANCELLATION OF ASSOCIATION COMMON STOCK HELD BY THE MID-TIER
HOLDING COMPANY AND MEMBER INTERESTS; LIQUIDATION ACCOUNT.
(a) On the Effective Date, (i) each share of Association Common Stock
issued and outstanding immediately prior to the Effective Date and held by the
Mid-Tier Holding Company shall, by virtue of the Mid-Tier Holding Company Merger
and without any action on the part of the
A-2
holder thereof, be canceled, (ii) the interests in the Mutual Holding Company of
any person, firm or entity who or which qualified as a member of the Mutual
Holding Company in accordance with its mutual charter and bylaws and the laws of
the United States prior to the Mutual Holding Company's conversion from mutual
to stock form (the "Members") shall, by virtue of the Mutual Holding Company
Merger which shall occur substantially simultaneously with the Mid-Tier Mutual
Holding Company Merger and without any action on the part of the holder thereof,
be canceled, and (iii) the Association shall establish a liquidation account on
behalf of each depositor member of the Mutual Holding Company, as defined in the
Plan of Conversion, in accordance with Section 17 of the Plan of Conversion.
(b) At or after the Effective Date and prior to the Association Merger,
each certificate or certificates theretofore evidencing issued and outstanding
shares of Mid-Tier Holding Company Common Stock, other than any such certificate
or certificates held by the Mutual Holding Company, which shall be canceled,
shall be deemed to represent issued and outstanding shares of Association Common
Stock which shall be exchanged as provided by the Association Merger.
4. DISSENTING SHARES. No shareholder of the Mid-Tier Holding Company
shall have any dissenter or appraisal rights in connection with the Mid-Tier
Holding Company Merger.
5. NAME OF SURVIVING CORPORATION. The name of the Surviving
Association shall be "Community Savings, F. A."
6. DIRECTORS OF THE SURVIVING ASSOCIATION. Upon and after the
Effective Date, until changed in accordance with the Charter and Bylaws of the
Surviving Association and applicable law, the number of directors of the
Surviving Association shall be seven. The names of those persons who, upon and
after the Effective Date, shall be directors of the Surviving Association are
set forth below. Each such director shall serve for the term which expires at
the annual meeting of shareholders of the Surviving Association in the year set
forth after his respective name, and until a successor is elected and qualified.
Name Term Expires
---- ------------
James B. Pittard, Jr. 1999
Robert F. Cromwell 1999
Karl D. Griffin 2000
Harold I. Stevenson 2000
Forest C. Beaty, Jr. 2001
Frederick A. Teed 2001
The address of each such director is c/o Community Savings, F. A., 660
U.S. Highway One, North Palm Beach, Florida 33408.
A-3
7. OFFICERS OF THE SURVIVING ASSOCIATION. Upon and after the Effective
Date, until changed in accordance with the Charter and Bylaws of the Surviving
Association and applicable law, the officers of the Association immediately
prior to the Effective Date shall be the officers of the Surviving Association.
8. OFFICES. Upon the Effective Date, all offices of the Association
shall be offices of the Surviving Association. As of the Effective Date, the
home office of the Surviving Association shall remain at 660 U.S. Highway One,
North Palm Beach, Florida, 33408 and the locations of the other offices of the
Surviving Association shall be as set forth in Exhibit A hereto, except for the
addition of deposit-taking offices authorized or the deletion of deposit-taking
offices closed subsequent to the date hereof and the Effective Date.
9. CHARTER AND BYLAWS. On and after the Effective Date, the Charter of
the Association as in effect immediately prior to the Effective Date shall be
the Charter of the Surviving Association until amended in accordance with the
terms thereof and applicable law, except that the Charter shall be amended to
provide for the establishment of a liquidation account in accordance with
applicable law and regulation.
On and after the Effective Date, the Bylaws of the Association as in
effect immediately prior to the Effective Date shall be the Bylaws of the
Surviving Association until amended in accordance with the terms thereof and
applicable law.
10. SHAREHOLDER AND MEMBER APPROVALS. The affirmative votes of the
holders of Mid-Tier Holding Company Common Stock, set forth in Section 3(e) of
the Plan of Conversion and the Members set forth in Section 3(b) of the Plan of
Conversion shall be required to approve the Plan of Conversion, of which this
Plan of Merger is a part, on behalf of the Mid-Tier Holding Company and the
Mutual Holding Company, respectively. The approval of the Mid-Tier Holding
Company, as the sole holder of the Association Common Stock, shall be required
to approve the Plan of Conversion, of which this Plan of Merger, is a part, on
behalf of the Association.
11. ABANDONMENT OF AGREEMENT. This Plan of Merger may be abandoned by
either the Mid-Tier Holding Company or the Association at any time before the
Effective Date in the manner set forth in Section 29 of the Plan of Conversion.
12. AMENDMENTS. This Plan of Merger may be amended in the manner set
forth in Section 29 of the Plan of Conversion by a subsequent writing signed by
the parties hereto upon the approval of the Board of Directors of each of the
parties hereto.
13. SUCCESSORS. This Agreement shall be binding on the successors of
the Mid-Tier Holding Company and the Association.
A-4
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the United States of America.
IN WITNESS WHEREOF, the Mid-Tier Holding Company and the Association
have caused this Plan of Merger to be executed by their duly authorized officers
as of the day and year first above written.
COMMUNITY SAVINGS BANKSHARES, INC.
(A FEDERAL CORPORATION)
Attest:
By:
- ------------------- -------------------------------------
Deborah M. Rousseau James B. Pittard, Jr.
Secretary President and Chief Executive Officer
COMMUNITY SAVINGS, F. A.
Attest:
By:
- ------------------- -------------------------------------
Deborah M. Rousseau James B. Pittard, Jr.
Secretary President and Chief Executive Officer
A-5
ANNEX B
PLAN OF MERGER
This Plan of Merger, dated as of August 13, 1998, is between ComFed, M.
H. C. (the "Mutual Holding Company"), a federally chartered mutual holding
company and Community Savings, F. A. (the "Association" or the "Surviving
Association"), a federally chartered savings association.
WITNESSETH:
WHEREAS, the Mutual Holding Company, Community Savings Bankshares,
Inc., a federal stock corporation (the "Mid-Tier Holding Company"), and the
Association have adopted a Plan of Conversion of the Mutual Holding Company and
Agreement and Plan of Reorganization between Community Savings Bankshares, Inc.
a newly formed Delaware corporation (the "Holding Company") and the Association
(the "Plan of Conversion"), pursuant to which (i) the Mid-Tier Holding Company
will convert to a federally chartered interim stock savings association and
simultaneously merge with and into the Association (the "Mid-Tier Holding
Company Merger"); (ii) the Mutual Holding Company will convert to a federally
chartered interim stock savings association and simultaneously merge with and
into the Association; (iii) the Association and a newly-formed interim savings
association will merge, pursuant to which the Association will become a wholly
owned subsidiary of the Holding Company (the "Association Merger"), and (iv) the
Holding Company will offer shares of its common stock in the manner set forth in
the Plan of Conversion;
WHEREAS, the Mutual Holding Company, which owns 51.4% of the
outstanding common stock of the Mid-Tier Holding Company, par value $1.00 per
share ("Mid-Tier Holding Company Common Stock"), will convert to a federally
chartered interim stock savings association pursuant to the Plan of Conversion
and substantially simultaneously with the completion of the Mid-Tier Holding
Company Merger merge with and into the Association pursuant to this Plan of
Merger (the "Mutual Holding Company Merger"), pursuant to which, among other
things, all interests of members in the Mutual Holding Company and all shares of
Mid-Tier Common Stock held by the Mutual Holding Company will be canceled; and
WHEREAS, the Mutual Holding Company and the Association (the
"Constituent Associations") desire to provide for the terms and conditions of
the Mutual Holding Company Merger.
NOW, THEREFORE, the Mutual Holding Company and the Association hereby
agree as follows:
1. EFFECTIVE DATE. The Mutual Holding Company Merger shall become
effective on the date specified in the endorsement of the Articles of
Combination relating to the Mid-Tier Holding
Company Merger by the Secretary of the Office of Thrift Supervision ("OTS")
pursuant to 12 C.F.R. ss. 552.13(k), or any successor thereto (the "Effective
Date").
2. THE MUTUAL HOLDING COMPANY MERGER AND EFFECT THEREOF. Subject to
the terms and conditions set forth herein and the prior approval of the OTS of
the Conversion and Reorganization, as defined in the Plan of Conversion, and the
expiration of all applicable waiting periods, the Mutual Holding Company shall
convert from the mutual form to a federal interim stock savings association and
simultaneously merge with and into the Association, which shall be the Surviving
Association. Upon consummation of the Mutual Holding Company Merger, the
Surviving Association shall be considered the same business and corporate entity
as each of the Constituent Associations and thereupon and thereafter all the
property, rights, powers and franchises of each of the Constituent Associations
shall vest in the Surviving Association and the Surviving Association shall be
subject to and be deemed to have assumed all of the debts, liabilities,
obligations and duties of each of the Constituent Associations and shall have
succeeded to all of each of their relationships, fiduciary or otherwise, as
fully and to the same extent as if such property, rights, privileges, powers,
franchises, debts, obligations, duties and relationships had been originally
acquired, incurred or entered into by the Surviving Association. In addition,
any reference to either of the Constituent Associations in any contract, will or
document, whether executed or taking effect before or after the Effective Date,
shall be considered a reference to the Surviving Association if not inconsistent
with the other provisions of the contract, will or document; and any pending
action or other judicial proceeding to which either of the Constituent
Associations is a party shall not be deemed to have abated or to have been
discontinued by reason of the Mutual Holding Company Merger, but may be
prosecuted to final judgment, order or decree in the same manner as if the
Mutual Holding Company Merger had not occurred or the Surviving Association may
be substituted as a party to such action or proceeding, and any judgment, order
or decree may be rendered for or against it that might have been rendered for or
against either of the Constituent Associations if the Mutual Holding Company
Merger had not occurred.
3. CANCELLATION OF MID-TIER HOLDING COMPANY COMMON STOCK HELD BY THE
MUTUAL HOLDING COMPANY AND MEMBER INTERESTS; LIQUIDATION ACCOUNT.
(a) On the Effective Date, (i) each share of Mid-Tier Holding Company
Common Stock issued and outstanding immediately prior to the Effective Date
(which shall be deemed to be Association Common Stock pursuant to the Mid-Tier
Holding Company Merger) and held by the Mutual Holding Company shall, by virtue
of the Mutual Holding Company Merger and without any action on the part of the
holder thereof, be canceled, (ii) the interests in the Mutual Holding Company of
any person, firm or entity who or which qualified as a member of the Mutual
Holding Company in accordance with its mutual charter and bylaws and the laws of
the United States prior to the Mutual Holding Company's conversion from mutual
to stock form (the "Members") shall, by virtue of the Mutual Holding Company
Merger which shall occur substantially simultaneously with the Mid-Tier Mutual
Holding Company Merger, and without any action on the part of the holder
thereof, be canceled, and (iii) the Association shall establish a liquidation
account on behalf of each depositor
B-2
member of the Mutual Holding Company, as defined in the Plan of Conversion, in
accordance with Section 17 of the Plan of Conversion.
(b) At or after the Effective Date and prior to the Association Merger,
each certificate or certificates theretofore evidencing issued and outstanding
shares of Mid-Tier Common Stock, other than any such certificate or certificates
held by the Mutual Holding Company, which shall be canceled, shall be deemed to
represent issued and outstanding shares of Association Common Stock which shall
be exchanged as provided by the Association Merger.
4. DISSENTING SHARES. No member of the Mutual Holding Company shall
have any dissenter or appraisal rights in connection with the Mutual Holding
Company Merger. Holders of Mid-Tier Holding Company Common Stock shall not have
any dissenter or appraisal rights pursuant to 12 C.F.R.ss.552.14.
5. NAME OF SURVIVING CORPORATION. The name of the Surviving
Association shall be "Community Savings, F. A."
6. DIRECTORS OF THE SURVIVING ASSOCIATION. Upon and after the
Effective Date, until changed in accordance with the Charter and Bylaws of the
Surviving Association and applicable law, the number of directors of the
Surviving Association shall be seven. The names of those persons who, upon and
after the Effective Date, shall be directors of the Surviving Association are
set forth below. Each such director shall serve for the term which expires at
the annual meeting of shareholders of the Surviving Association in the year set
forth after his respective name, and until a successor is elected and qualified.
Name Term Expires
---- ------------
James B. Pittard, Jr. 1999
Robert F. Cromwell 1999
Karl D. Griffin 2000
Harold I. Stevenson 2000
Forest C. Beaty, Jr. 2001
Frederick A. Teed 2001
The address of each such director is c/o Community Savings, F. A., 660
U.S. Highway One, North Palm Beach, Florida 33408.
7. OFFICERS OF THE SURVIVING ASSOCIATION. Upon and after the Effective
Date, until changed in accordance with the Charter and Bylaws of the Surviving
Association and applicable law, the officers of the Association immediately
prior to the Effective Date shall be the officers of the Surviving Association.
B-3
8. OFFICES. Upon the Effective Date, all offices of the Association
shall be offices of the Surviving Association. As of the Effective Date, the
home office of the Surviving Association shall remain at 660 U.S. Highway One,
North Palm Beach, Florida, 33408 and the locations of the other offices of the
Surviving Association shall be as set forth in Exhibit A hereto, except for the
addition of deposit-taking offices authorized or the deletion of deposit-taking
offices closed subsequent to the date hereof and the Effective Date.
9. CHARTER AND BYLAWS. On and after the Effective Date, the Charter of
the Association as in effect immediately prior to the Effective Date shall be
the Charter of the Surviving Association until amended in accordance with the
terms thereof and applicable law, except that the Charter shall be amended to
provide for the establishment of a liquidation account in accordance with
applicable law and regulation.
On and after the Effective Date, the Bylaws of the Association as in
effect immediately prior to the Effective Date shall be the Bylaws of the
Surviving Association until amended in accordance with the terms thereof and
applicable law.
10. SHAREHOLDER AND MEMBER APPROVALS. The affirmative votes of the
holders of Mid-Tier Holding Company Common Stock, set forth in Section 3(e) of
the Plan of Conversion and the Members set forth in Section 3(b) of the Plan of
Conversion shall be required to approve the Plan of Conversion, of which this
Plan of Merger is a part, on behalf of the Mid-Tier Holding Company and the
Mutual Holding Company, respectively. The approval of the Mid-Tier Holding
Company, as the sole holder of the Association Common Stock, shall be required
to approve the Plan of Conversion, of which this Plan of Merger, is a part, on
behalf of the Association.
11. ABANDONMENT OF AGREEMENT. This Plan of Merger may be abandoned by
either the Mutual Holding Company or the Association at any time before the
Effective Date in the manner set forth in Section 29 of the Plan of Conversion.
12. AMENDMENTS. This Plan of Merger may be amended in the manner set
forth in Section 29 of the Plan of Conversion by a subsequent writing signed by
the parties hereto upon the approval of the Board of Directors of each of the
parties hereto.
13. SUCCESSORS. This Agreement shall be binding on the successors of
the Mutual Holding Company and the Association.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the United States of America.
B-4
IN WITNESS WHEREOF, the Mutual Holding Company and the Association have
caused this Plan of Merger to be executed by their duly authorized officers as
of the day and year first above written.
COMFED, M. H. C.
Attest:
By:
- ------------------- -------------------------------------
Deborah M. Rousseau James B. Pittard, Jr.
Secretary President and Chief Executive Officer
COMMUNITY SAVINGS, F. A.
Attest:
By:
- ------------------- -------------------------------------
Deborah M. Rousseau James B. Pittard, Jr.
Secretary President and Chief Executive Officer
B-5
ANNEX C
PLAN OF MERGER
This Plan of Merger, dated as of August 13, 1998, is among Community
Savings, F. A. (the "Association" or the "Surviving Association"), a federally
chartered savings association, Community Savings Bankshares, Inc. (the "Holding
Company"), a Delaware corporation, and Community Interim Savings Association
("Interim"), a federally chartered interim savings association.
WITNESSETH:
WHEREAS, the Association has organized the Holding Company as a
first-tier, wholly- owned subsidiary for the purpose of becoming the stock
holding company of the Association upon completion of the Conversion and
Reorganization, as defined in the Plan of Conversion of ComFed, M. H. C. (the
"Mutual Holding Company") and Agreement and Plan of Reorganization between the
Holding Company, the Mutual Holding Company and the Association (the "Plan of
Conversion");
WHEREAS, the Mutual Holding Company, a federally chartered mutual
holding company which owns 51.4% of the common stock of Community Savings
Bankshares, Inc., a federal stock corporation (the "Mid-Tier Holding Company"),
par value $1.00 per share ("Mid-Tier Holding Company Common Stock"), will
convert to a federally chartered interim stock savings association and
simultaneously merge with and into the Association pursuant to the Plan of
Conversion and the Plan of Merger included as Annex B thereto (the "Mutual
Holding Company Merger"), pursuant to which all shares of Mid-Tier Common Stock
held by the Mutual Holding Company will be cancelled;
WHEREAS, substantially simultaneously with the Mutual Holding Company
Merger, the Mid-Tier Holding Company will convert into a federal interim stock
savings association and merge with and into the Association (the "Mid-Tier
Holding Company Merger") and the shares of Mid-Tier Holding Company Common Stock
held by other than the Mutual Holding Company will be deemed to represent shares
of Association common stock, $1.00 par value per share ("Association Common
Stock");
WHEREAS, the formation of a stock holding company by the Association
will be facilitated by causing the Holding Company to become the sole
shareholder of a newly-formed interim federally chartered stock savings
association and then merging the interim savings association with and into the
Association (the "Association Merger"), pursuant to which the Association will
become a wholly owned subsidiary of the Holding Company and, in connection
therewith, all outstanding shares of Mid-Tier Common Stock will be converted
automatically into and become shares of common stock of the Holding Company, par
value $1.00 per share ("Holding Company Common Stock");
WHEREAS, Interim is being organized by the officers of the Association
as an interim federally chartered stock savings association with the Holding
Company as its sole shareholder in order to effect the Association Merger; and
C-1
WHEREAS, the Association and Interim (the "Constituent Associations")
desire to provide for the terms and conditions of the Association Merger.
NOW, THEREFORE, the Association, the Holding Company and Interim hereby
agree as follows:
1. EFFECTIVE DATE. The Association Merger shall become effective on
the date specified in the endorsement of the Articles of Combination relating to
the Association Merger by the Secretary of the Office of Thrift Supervision
("OTS") pursuant to 12 C.F.R. ss.552.13(k), or any successor thereto (the
"Effective Date").
2. THE ASSOCIATION MERGER AND EFFECT THEREOF. Subject to the terms and
conditions set forth herein and the prior approval of the OTS of the Conversion
and the Reorganization, as defined in the Plan of Conversion, and the expiration
of all applicable waiting periods, Interim shall merge with and into the
Association, which shall be the Surviving Association. Upon consummation of the
Association Merger, the Surviving Association shall be considered the same
business and corporate entity as each of the Constituent Associations and
thereupon and thereafter all the property, rights, powers and franchises of each
of the Constituent Associations shall vest in the Surviving Association and the
Surviving Association shall be subject to and be deemed to have assumed all of
the debts, liabilities, obligations and duties of each of the Constituent
Associations and shall have succeeded to all of each of their relationships,
fiduciary or otherwise, as fully and to the same extent as if such property,
rights, privileges, powers, franchises, debts, obligations, duties and
relationships had been originally acquired, incurred or entered into by the
Surviving Association. In addition, any reference to either of the Constituent
Associations in any contract, will or document, whether executed or taking
effect before or after the Effective Date, shall be considered a reference to
the Surviving Association if not inconsistent with the other provisions of the
contract, will or document; and any pending action or other judicial proceeding
to which either of the Constituent Associations is a party shall not be deemed
to have abated or to have been discontinued by reason of the Association Merger,
but may be prosecuted to final judgment, order or decree in the same manner as
if the Association Merger had not occurred or the Surviving Association may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of the Constituent Associations if the Association Merger had not
occurred.
3. CONVERSION OF STOCK.
(a) On the Effective Date, (i) each share of Mid-Tier Common Stock
issued and outstanding immediately prior to the Effective Date shall, by virtue
of the Association Merger and without any action on the part of the holder
thereof, be converted into the right to receive Holding Company Common Stock
based on the Exchange Ratio, as defined in the Plan of Conversion, plus the
right to receive cash in lieu of any fractional share interest, as determined in
accordance with Section 3(c) hereof, (ii) each share of common stock, par value
$1.00 per share, of Interim ("Interim Common Stock") issued and outstanding
immediately prior to the Effective Date shall, by virtue of the Association
Merger and without any action on the part of the holder thereof, be converted
into one share of Association Common Stock, and (iii) each share of Holding
Company Common Stock
C-2
issued and outstanding immediately prior to the Effective Date shall, by virtue
of the Association Merger and without any action on the part of the holder
thereof, be cancelled. By voting in favor of this Plan of Merger, the Holding
Company, as the sole shareholder of Interim, shall have agreed (i) to issue
shares of Holding Company Common Stock in accordance with the terms hereof and
(ii) to cancel all previously issued and outstanding shares of Holding Company
Common Stock upon the effectiveness of the Association Merger.
(b) On and after the Effective Date, there shall be no registrations of
transfers on the stock transfer books of Interim, the Mid-Tier Holding Company
or the Association of shares of Interim Common Stock, Mid-Tier Holding Company
Common Stock or Association Common Stock which were outstanding immediately
prior to the Effective Date.
(c) Notwithstanding any other provision hereof, no fractional shares of
Holding Company Common Stock shall be issued to holders of Mid-Tier Holding
Company Common Stock. In lieu thereof, each holder of shares of Mid-Tier Holding
Company Common Stock entitled to a fraction of a share of Holding Company Common
Stock shall, at the time of surrender of the certificate or certificates
representing such holder's shares, receive an amount of cash equal to the
product arrived at by multiplying such fraction of a share of Holding Company
Common Stock by the Actual Purchase Price, as defined in the Plan of Conversion.
No such holder shall be entitled to dividends, voting rights or any other rights
in respect of any fractional share.
4. EXCHANGE OF SHARES.
(a) At or after the Effective Date, each holder of a certificate or
certificates theretofore evidencing issued and outstanding shares of Mid-Tier
Common Stock, upon surrender of the same to an agent, duly appointed by the
Holding Company ("Exchange Agent"), shall be entitled to receive in exchange
therefor a certificate or certificates representing the number of full shares of
Holding Company Common Stock for which the shares of Mid-Tier Holding Company
Common Stock theretofore represented by the certificate or certificates so
surrendered shall have been converted as provided in Section 3(a) hereof. The
Exchange Agent shall mail to each holder of record of an outstanding certificate
which immediately prior to the Effective Date evidenced shares of Mid-Tier
Holding Company Common Stock, and which is to be exchanged for Holding Company
Common Stock as provided in Section 3(a) hereof, a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to such certificate shall pass, only upon delivery of such certificate to the
Exchange Agent) advising such holder of the terms of the exchange effected by
the Association Merger and of the procedure for surrendering to the Exchange
Agent such certificate in exchange for a certificate or certificates evidencing
Holding Company Common Stock.
(b) No holder of a certificate theretofore representing shares of
Mid-Tier Holding Company Common Stock shall be entitled to receive any dividends
in respect of the Holding Company Common Stock into which such shares shall have
been converted by virtue of the Association Merger until the certificate
representing such shares of Mid-Tier Holding Company Common Stock is surrendered
in exchange for certificates representing shares of Holding Company Common
Stock. In the event that dividends are declared and paid by the Holding Company
in respect of Holding Company Common Stock after the Effective Date but prior to
surrender of
C-3
certificates representing shares of Mid-Tier Holding Company Common Stock,
dividends payable in respect of shares of Holding Company Common Stock not then
issued shall accrue (without interest). Any such dividends shall be paid
(without interest) upon surrender of the certificates representing such shares
of Mid-Tier Holding Company Common Stock. The Holding Company shall be entitled,
after the Effective Date, to treat certificates representing shares of Mid-Tier
Holding Company Common Stock as evidencing ownership of the number of full
shares of Holding Company Common Stock into which the shares of Mid-Tier Holding
Company Common Stock represented by such certificates shall have been converted,
notwithstanding the failure on the part of the holder thereof to surrender such
certificates.
(c) The Holding Company shall not be obligated to deliver a certificate
or certificates representing shares of Holding Company Common Stock to which a
holder of Mid-Tier Holding Company Common Stock would otherwise be entitled as a
result of the Association Merger until such holder surrenders the certificate or
certificates representing the shares of Mid-Tier Holding Company Common Stock
for exchange as provided in this Section 4, or, in default thereof, an
appropriate Affidavit of Loss and Indemnity Agreement and/or a bond as may be
required in each case by the Holding Company. If any certificate evidencing
shares of Holding Company Common Stock is to be issued in a name other than that
in which the certificate evidencing Mid-Tier Holding Company Common Stock
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the certificate so surrendered shall be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange pay to the Exchange Agent any transfer or other tax required by reason
of the issuance of a certificate for shares of Holding Company Common Stock in
any name other than that of the registered holder of the certificate surrendered
or otherwise establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not payable.
(d) If, between the date hereof and the Effective Date, the shares of
Mid-Tier Holding Company Common Stock shall be changed into a different number
or class of shares by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, or a stock dividend
thereon shall be declared with a record date within said period, the Exchange
Ratio specified in Section 3(a) hereof shall be adjusted accordingly.
5. DISSENTING SHARES. No holders of shares of Mid-Tier Holding Company
Common Stock shall have dissenter and appraisal rights in connection with the
Association Merger pursuant to 12 C.F.R. ss.552.14.
6. NAME OF SURVIVING ASSOCIATION. The name of the Surviving Mid-Tier
Holding Company shall be "Community Savings, F. A."
7. DIRECTORS OF THE SURVIVING ASSOCIATION. Upon and after the
Effective Date, until changed in accordance with the Charter and Bylaws of the
Surviving Association and applicable law, the number of directors of the
Surviving Association shall be seven. The names of those persons who, upon and
after the Effective Date, shall be directors of the Surviving Association are
set forth below. Each such director shall serve for the term which expires at
the annual meeting of
C-4
shareholders of the Surviving Association in the year set forth after his
respective name, and until a successor is elected and qualified.
Name Term Expires
---- ------------
James B. Pittard, Jr. 1999
Robert F. Cromwell 1999
Karl D. Griffin 2000
Harold I. Stevenson 2000
Forest C. Beaty, Jr. 2001
Frederick A. Teed 2001
The address of each such director is c/o Community Savings, F. A., 660
U.S. Highway One, North Palm Beach, Florida 33408.
8. OFFICERS OF THE SURVIVING ASSOCIATION. Upon and after the Effective
Date, until changed in accordance with the Charter and Bylaws of the Surviving
Association and applicable law, the officers of the Association immediately
prior to the Effective Date shall be the officers of the Surviving Association.
9. OFFICES. Upon the Effective Date, all offices of the Association
shall be offices of the Surviving Association. As of the Effective Date, the
home office of the Surviving Association shall remain at 660 U.S. Highway One,
North Palm Beach, Florida 33408 and the locations of the other offices of the
Surviving Association shall be as set forth in Exhibit A hereto, except for the
addition of deposit-taking offices authorized or the deletion of deposit-taking
offices closed subsequent to the date hereof and the Effective Date.
10. CHARTER AND BYLAWS. On and after the Effective Date, the Charter
and Bylaws of the Association as in effect immediately prior to the Effective
Date shall be the Charter and Bylaws of the Surviving Association until amended
in accordance with the terms thereof and applicable law.
11. SAVINGS ACCOUNTS. Upon the Effective Date, any savings accounts of
Interim, without reissue, shall be and become savings accounts of the Surviving
Association without change in their respective terms, including, without
limitation, maturity, minimum required balances or withdrawal value.
12. STOCK COMPENSATION PLANS. By voting in favor of this Agreement, the
Holding Company shall have approved adoption of the Mid-Tier Holding Company's
existing 1995 Recognition and Retention Plan for Employees and Outside Directors
and the 1995 Stock Option Plan (collectively the "Plans") as plans of the
Holding Company and shall have agreed to issue Holding Company Common Stock in
lieu of Mid-Tier Holding Company Common Stock pursuant to the terms of such
Plans. As of the Effective Date, rights outstanding under the Plans shall be
assumed by the Holding Company and thereafter shall be rights only for shares of
Holding Company Common Stock, with each such right being for a number of shares
of Holding Company Common Stock equal to the number of shares of Association
Common Stock that were available thereunder
C-5
immediately prior to the Effective Date times the Exchange Ratio, as defined in
the Plan of Conversion, and the price of each such right shall be adjusted to
reflect the Exchange Ratio and so that the aggregate purchase price of the right
is unaffected, but with no change in any other term or condition of such right.
The Holding Company shall make appropriate amendments to the Plans to reflect
the adoption of the Plans by the Holding Company without adverse effect upon the
rights outstanding thereunder, including changing references to the Mid-Tier
Holding Company (or the Association) in the Plans to the Holding Company where
appropriate.
13. SHAREHOLDER APPROVAL. The affirmative votes of the holders of
Mid-Tier Holding Company Common Stock set forth in Section 3 of the Plan of
Conversion shall be required to approve the Plan of Conversion, of which this
Plan of Merger is a part, on behalf of the Mid-Tier Holding Company. The
approval of the Holding Company, as the sole holder of the Interim Common Stock,
shall be required to approve the Plan of Conversion, of which this Plan of
Merger is a part, on behalf of Interim. The approval of the Mid-Tier Holding
Company, as the sole holder of the Association Common Stock, shall be required
to approve the Plan of Conversion, of which this Plan of Merger is a part, on
behalf of the Association.
14. REGISTRATION; OTHER APPROVALS. In addition to the approvals set
forth in Sections 1 and 13 hereof and the Plan of Conversion, the parties'
obligations to consummate the Association Merger shall be subject to the Holding
Company Common Stock to be issued hereunder in exchange for Mid-Tier Holding
Company Common Stock being registered under the Securities Act of 1933, as
amended, and registered or qualified under applicable state securities laws, as
well as the receipt of all other approvals, consents or waivers as the parties
may deem necessary or advisable.
15. ABANDONMENT OF AGREEMENT. This Plan of Merger may be abandoned by
either the Association or Interim at any time before the Effective Date in the
manner set forth in Section 29 of the Plan of Conversion.
16. AMENDMENTS. This Plan of Merger may be amended in the manner set
forth in Section 29 of the Plan of Conversion by a subsequent writing signed by
the parties hereto upon the approval of the Board of Directors of each of the
parties hereto.
17. SUCCESSORS. This Agreement shall be binding on the successors of
the Association and Interim.
18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the United States of America.
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IN WITNESS WHEREOF, the Association, the Holding Company and Interim
have caused this Plan of Merger to be executed by their duly authorized officers
as of the day and year first above written.
COMMUNITY SAVINGS, F. A.
Attest:
By:
- ------------------- -------------------------------------
Deborah M. Rousseau James B. Pittard, Jr.
Secretary President and Chief Executive Officer
COMMUNITY SAVINGS BANKSHARES, INC.
(a Delaware Corporation)
Attest:
By:
- ------------------- -------------------------------------
Deborah M. Rousseau James B. Pittard, Jr.
Secretary President and Chief Executive Officer
COMMUNITY INTERIM SAVINGS
ASSOCIATION (In Organization)
Attest:
By:
- ------------------- -------------------------------------
Deborah M. Rousseau James B. Pittard, Jr.
Secretary President and Chief Executive Officer
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