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Exhibit 2
PSB HOLDINGS, INC.
STOCK ISSUANCE PLAN
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TABLE OF CONTENTS
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1. Introduction..............................................................1
2. Definitions...............................................................2
3. Number of Shares to be Offered............................................7
4. Independent Valuation and Purchase Price of Shares........................7
5. Method of Offering Shares and Rights to Purchase Stock....................8
6. Additional Limitations on Purchases of Common Stock......................11
7. Payment for Stock........................................................14
8. Manner of Exercising Subscription Rights Through Order Forms.............15
9. Undelivered, Defective or Late Order Form; Insufficient Payment..........16
10. Completion of the Stock Offering.........................................16
11. Establishment and Funding of Charitable Foundation.......................16
12. Market for Common Stock..................................................17
13. Stock Purchases by Management Persons After the Stock Offering...........17
14. Resales of Stock by Directors and Officers...............................18
15. Stock Certificates.......................................................18
16. Restriction on Financing Stock Purchases.................................18
17. Stock Benefit Plans......................................................18
18. Post-Stock Issuance Filing and Market Making.............................19
19. Payment of Dividends and Repurchase of Stock.............................19
20. Stock Offering Expenses..................................................19
21. Employment and Other Severance Agreements................................19
22. Interpretation...........................................................19
23. Amendment or Termination of the Plan.....................................20
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1. INTRODUCTION
The Board of Directors of PSB Holdings, Inc., the mid-tier stock holding
company (the "Holding Company") and the sole stockholder of Putnam Savings Bank
(the "Bank"), has adopted this Stock Issuance Plan (the "Plan") pursuant to
which the Holding Company proposes to offer and sell up to 49.9% of its Common
Stock in the Stock Offering pursuant to regulations of the Office of Thrift
Supervision (the "OTS"). The Common Stock will be offered on a priority basis to
eligible depositors, the Tax-Qualified Employee Plans of the Bank and to
employees, officers and directors of the Holding Company or the Bank, with any
remaining shares offered to the public in a Community Offering or a Syndicated
Community offering, or a combination thereof. The Stock Offering will be
conducted in accordance with 12 C.F.R. Part 563g, Part 575 and, to the extent
applicable, Form OC of the Regulations. Upon completion of the Stock Offering,
Putnam Bancorp MHC, Inc. (the "MHC"), the mutual holding company of the Holding
Company, will continue to own at least a majority of the Common Stock of the
Holding Company.
Prior to the completion of the Stock Offering, the Holding Company and the
MHC will convert to a federal mid-tier stock holding company charter and a
federal mutual holding company charter, respectively, and will be chartered and
regulated by the OTS. The Bank may elect to remain as a Connecticut-chartered
stock savings bank, in which case it shall make an election to be regulated as
if a savings association under Section 10(l) of the HOLA. Alternatively, the
Bank may elect to convert to a federal savings bank charter prior to the closing
of the Stock Offering, in which case the MHC, the Holding Company and the Bank
will be chartered and regulated by the OTS.
The primary purpose of the Stock Offering is to raise capital to support
the future growth of the Bank, both internally and through the acquisition of
other financial institutions. The Bank intends to remain an independent
community-oriented savings bank. After the Stock Offering, the MHC will continue
to control the Bank since only a minority of the Holding Company's Common Stock
is being offered for sale pursuant to this Plan.
As part of the Stock Offering and consistent with its Bank's ongoing
commitment to remain an independent community-oriented savings bank, the Bank
may establish a charitable foundation or trust. The charitable foundation would
complement the Bank's existing community reinvestment and charitable activities
in a manner that will allow the community to share in the growth and success of
the Bank. Accordingly, concurrently with the completion of the Stock Offering,
the Holding Company may contribute to a new charitable foundation or to the
Bank's existing charitable foundation, Common Stock in an amount up to 4% of the
shares of Common Stock issued in the Stock Offering and/or cash, provided the
total contribution of Common Stock and/or cash to the charitable foundation does
not exceed 8% of the gross proceeds of the Stock Offering.
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2. DEFINITIONS
As used in this Plan, the terms set forth below have the following
meanings:
ACTING IN CONCERT: The term Acting in Concert means (i) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement; or (ii) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise. A
Person or company which acts in concert with another Person or company ("other
party") shall also be deemed to be acting in concert with any Person or company
who is also acting in concert with that other party, except that any
Tax-Qualified Employee Plan will not be deemed to be acting in concert with its
trustee or a Person who serves in a similar capacity solely for the purpose of
determining whether stock held by the trustee and stock held by the plan will be
aggregated.
ACTUAL PURCHASE PRICE: The price per share, determined as provided in this
Plan, at which the Common Stock will be sold in the Stock Offering.
AFFILIATE: Any Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with
another Person.
APPLICATION: The Application for Approval of a Minority Stock Issuance by a
Subsidiary of a Mutual Holding Company to be submitted by the Holding Company to
the OTS in connection with the Stock Offering.
ASSOCIATE: The term "Associate," when used to indicate a relationship with
any Person, means: (i) any corporation or organization (other than the Bank, the
Holding Company, the MHC or a majority-owned subsidiary of any thereof) of which
such Person is a senior officer or partner, or beneficially owns, directly or
indirectly, 10% or more of any class of equity securities of the corporation or
organization; (ii) any trust or other estate, if the Person has a substantial
beneficial interest in the trust or estate or is a trustee or fiduciary of the
trust or estate (for purposes of Sections 563b.370, 563b.380, 563b.385,
563b.390, 563b.395 and 563b.505 of the Regulations, a Person who has a
substantial beneficial interest in a Tax-Qualified or Non-Tax Qualified Employee
Plan, or who is a trustee or a fiduciary of the plan, is not an associate of the
plan. For purposes of Section 563b.370 of the Regulations, a Tax-Qualified
Employee Plan is not an associate of a Person); (iii) any Person who is related
by blood or marriage to such Person and (a) who lives in the same house as the
Person or (b) who is a director or senior officer of the Bank, the Holding
Company, the MHC or a subsidiary thereof.
BANK: Putnam Savings Bank.
CAPITAL STOCK: Any and all authorized stock of the Bank or the Holding
Company.
CHARTER CONVERSIONS: The Conversion of the MHC, the Holding Company and/or
the Bank to federal charters subject to the regulation and supervision of the
OTS, which shall occur prior to the completion of the Stock Offering.
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COMMON STOCK: Common stock, par value $0.10 per share, issuable by the
Holding Company in connection with the Stock Offering, including securities
convertible into Common Stock, pursuant to its stock charter.
COMMUNITY: The Connecticut County of Windham.
COMMUNITY OFFERING: The offering to certain members of the general public
of any unsubscribed shares in the Subscription Offering. The Community Offering
may include a Syndicated Community Offering or public offering.
CONTROL: (including the terms "controlling," "controlled by" and "under
common control with") means the direct or indirect power to direct or exercise a
controlling influence over the management and policies of a person, whether
through the ownership of voting securities, by contract, or otherwise as
described in Part 574 of the Regulations.
CONVERSION TRANSACTION: A conversion of the MHC from the mutual to the
stock form of organization.
DEPOSIT ACCOUNT(s): Any withdrawable account as defined in Section 561.42
of the Regulations, and shall include all demand deposit accounts as defined in
Section 561.16 of the Regulations and certificates of deposit.
EFFECTIVE DATE: The date upon which all necessary approvals have been
obtained to complete the Stock Offering, and the Stock Offering has been
completed.
ELIGIBLE ACCOUNT HOLDER: Any person holding a Qualifying Deposit on the
Eligibility Record Date for purposes of determining subscription rights.
ELIGIBILITY RECORD DATE: March 31, 2003, the date for determining who
qualifies as an Eligible Account Holder of the Bank.
EMPLOYEE PLANS: The Tax-Qualified and Non-Tax Qualified Employee Plans of
the Bank and/or the Holding Company.
ESOP: The Bank's employee stock ownership plan and related trust.
ESTIMATED VALUATION RANGE: The range of the estimated pro forma market
value of the total number of shares of Common Stock to be issued by the Holding
Company to the MHC and to Minority Stockholders, as determined by the
Independent Appraiser prior to the Subscription Offering and as it may be
amended from time to time thereafter.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
FDIC: The Federal Deposit Insurance Corporation.
FOUNDATION: Any new and/or existing charitable foundation intended to
qualify as an exempt organization under Section 501(c)(3) of the Internal
Revenue Code that will receive Common Stock and/or cash in connection with the
Stock Offering.
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HOLA: The Home Owners' Loan Act, as amended.
HOLDING COMPANY: PSB Holdings, Inc., a Connecticut corporation or PSB
Holdings, Inc., a federal corporation upon completion of the Charter Conversion,
as indicated by the context, which will be majority-owned by the MHC after the
completion of the Stock Offering and which will own 100% of the common stock of
the Bank, and any successor to such corporation that may be established in
connection with a Conversion Transaction.
INDEPENDENT APPRAISER: The appraiser retained by the Holding Company and
the Bank to prepare an appraisal of the pro forma market value of the Bank and
the Holding Company.
MANAGEMENT PERSON: Any Officer or director of the Bank or any Affiliate of
the Bank, and any person acting in concert with any such Officer or director.
MARKET MAKER: A dealer (I.E., any person who engages directly or indirectly
as agent, broker, or principal in the business of offering, buying, selling or
otherwise dealing or trading in securities issued by another person) who, with
respect to a particular security, (1) regularly publishes BONA FIDE competitive
bid and offer quotations on request, and (2) is ready, willing and able to
effect transactions in reasonable quantities at the dealer's quoted prices with
other brokers or dealers.
MHC: Putnam Bancorp MHC, Inc., a Connecticut-chartered mutual holding
company or Putnam Bancorp MHC, Inc., a federally-chartered mutual holding
company upon completion of the Charter Conversion (as indicated by the context),
which will own at least a majority of the Common Stock of the Holding Company
upon completion of the Stock Offering.
MINORITY OWNERSHIP INTEREST: The shares of the Holding Company's Common
Stock owned by persons other than the MHC, expressed as a percentage of the
total shares of Holding Company Common Stock outstanding.
MINORITY STOCKHOLDER: Any owner of the Holding Company's Common Stock,
other than the MHC.
NON-VOTING STOCK: Any Capital Stock other than Voting Stock.
OFFERING RANGE: The aggregate purchase price of the Common Stock to be sold
in the Stock Offering based on the Independent Valuation expressed as a range,
which may vary within 15% above or 15% below the midpoint of such range, with a
possible adjustment by up to 15% above the maximum of such range. The Offering
Range will be based on the Estimated Valuation Range, but will represent a
Minority Ownership Interest equal to up to 49.9% of the Common Stock.
OFFICER: An executive officer of the Holding Company or the Bank, including
the Chief Executive Officer, President, Senior Vice Presidents in charge of
principal business functions, Secretary, Treasurer and any other person
performing similar functions.
ORDER FORM: Any form (together with any attached cover letter and/or
certifications or acknowledgements), sent by the Holding Company to any Person
containing among other things
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a description of the alternatives available to such Person under the Plan and by
which any such Person may make elections regarding purchases of Common Stock in
the Subscription and Community Offerings.
OTHER DEPOSITOR: Any person holding a Qualifying Deposit on the Other
Depositor Record Date who is not an Eligible Account Holder, a Tax-Qualified
Employee Plan, or a Supplemental Eligible Account Holder.
OTHER DEPOSITOR RECORD DATE: July 31, 2004, the date for determining who
qualifies as an Other Depositor of the Bank.
OTS: The Office of Thrift Supervision, and any successor thereto.
PERSON: An individual, corporation, partnership, association, joint-stock
company, limited liability company, trust, unincorporated organization, or a
government or political subdivision of a government.
PLAN: This Stock Issuance Plan.
QUALIFYING DEPOSIT: The aggregate balance of each Deposit Account of an
Eligible Account Holder as of the close of business on the Eligibility Record
Date or of a Supplemental Eligible Account Holder as of the close of business
on the Supplemental Eligibility Record Date or of an Other Depositor as of
the close of business on the Other Depositor Record Date, as the case may be,
provided such aggregate balance is not less than $50.
REGULATIONS: The rules and regulations of the OTS, including the OTS rules
and regulations regarding mutual holding companies.
RESIDENT: The terms "resident," "residence," "reside," "resided" or
"residing" as used herein with respect to any person shall mean any person who
occupied a dwelling within the Bank's Community, has an intent to remain with
the Community for a period of time, and manifests the genuineness of that intent
by establishing an ongoing physical presence within the Community together with
an indication that such presence within the Community is something other than
merely transitory in nature. To the extent the Person is a corporation or other
business entity, the principal place of business or headquarters shall be in the
Community. To the extent a person is a personal benefit plan, the circumstances
of the beneficiary shall apply with respect to this definition. In the case of
all other benefit plans, the circumstances of the trustee shall be examined for
purposes of this definition. The Bank may utilize deposit or loan records or
such other evidence provided to it to make a determination as to whether a
person is a resident. In all cases, however, such a determination shall be in
the sole discretion of the Bank.
SEC: The Securities and Exchange Commission.
STOCK OFFERING: The offering of Common Stock of the Holding Company to
persons other than the MHC, in a Subscription Offering and, to the extent shares
remain available, in a Community Offering or a Syndicated Community Offering.
SUBSCRIPTION OFFERING: The offering of Common Stock of the Holding Company
for subscription and purchase pursuant to Section 5A of this Plan.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER: Any Person holding a Qualifying
Deposit on the Supplemental Eligibility Record Date, who is not an Eligible
Account Holder, a Tax-Qualified Employee Plan or an Officer or director of the
Bank.
SUPPLEMENTAL ELIGIBILITY RECORD DATE: The last day of the calendar quarter
preceding approval of the Plan by the OTS.
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SYNDICATED COMMUNITY OFFERING: The offering of Common Stock following or
contemporaneously with the Community Offering through a syndicate of
broker-dealers.
TAX-QUALIFIED EMPLOYEE PLAN: Any defined benefit plan or defined
contribution plan (including any employee stock ownership plan, stock bonus
plan, profit-sharing plan, or other plan) of the Bank, the Holding Company, the
MHC or any of their affiliates, which, with its related trusts, meets the
requirements to be qualified under Section 401 of the Internal Revenue Code. The
term "Non-Tax-Qualified Employee Plan" means any stock benefit plan which is not
so qualified under Section 401 of the Internal Revenue Code.
VOTING STOCK:
(1) Voting Stock means common stock or preferred stock, or similar
interests if the shares by statute, charter or in any manner, entitle
the holder:
(i) To vote for or to select directors of the Bank or the Holding
Company; and
(ii) To vote on or to direct the conduct of the operations or other
significant policies of the Bank or the Holding Company.
(2) Notwithstanding anything in paragraph (1) above, preferred stock is
not "Voting Stock" if:
(i) Voting rights associated with the preferred stock are limited
solely to the type customarily provided by statute with regard
to matters that would significantly and adversely affect the
rights or preferences of the preferred stock, such as the
issuance of additional amounts or classes of senior
securities, the modification of the terms of the preferred
stock, the dissolution of the Bank, or the payment of
dividends by the Bank when preferred dividends are in arrears;
(ii) The preferred stock represents an essentially passive
investment or financing device and does not otherwise provide
the holder with control over the issuer; and
(iii) The preferred stock does not at the time entitle the holder,
by statute, charter, or otherwise, to select or to vote for
the selection of directors of the Bank or the Holding Company.
(3) Notwithstanding anything in paragraphs (1) and (2) above, "Voting
Stock" shall be deemed to include preferred stock and other securities
that, upon transfer or otherwise, are convertible into Voting Stock or
exercisable to acquire Voting Stock where the holder of the stock,
convertible security or right to acquire Voting Stock has the
preponderant economic risk in the underlying Voting Stock. Securities
immediately convertible into Voting Stock at the option of the holder
without payment of additional consideration shall be deemed to
constitute the Voting Stock into which they are convertible; other
convertible securities and rights to acquire Voting Stock shall not be
deemed to vest the holder with the
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preponderant economic risk in the underlying Voting Stock if the
holder has paid less than 50% of the consideration required to
directly acquire the Voting Stock and has no other economic interest
in the underlying Voting Stock.
3. NUMBER OF SHARES TO BE OFFERED
The total number of shares (or range thereof) of Common Stock to be issued
and offered for sale pursuant to the Plan shall be determined initially by the
Board of Directors of the Holding Company in conjunction with the determination
of the Independent Appraiser. The number of shares to be offered may be adjusted
prior to completion of the Stock Offering. The total number of shares of Common
Stock that may be issued to persons other than the MHC at the close of the Stock
Offering must be less than 50% of the issued and outstanding shares of Common
Stock of the Holding Company.
4. INDEPENDENT VALUATION AND PURCHASE PRICE OF SHARES
All shares of Common Stock sold in the Stock Offering shall be sold at a
uniform price per share. The purchase price and number of shares to be
outstanding shall be determined by the Board of Directors of the Holding Company
on the basis of the estimated pro forma market value of the Holding Company and
the Bank. The aggregate purchase price for the Common Stock will not be
inconsistent with such market value of the Holding Company and the Bank. The pro
forma market value of the Holding Company and the Bank will be determined for
such purposes by the Independent Appraiser.
Prior to the commencement of the Stock Offering, an Estimated Valuation
Range will be established, which range may vary within 15% above to 15% below
the midpoint of such range, and up to 15% greater than the maximum of such
range, as determined by the Board of Directors at the time of the Stock Offering
and consistent with OTS regulations. The Holding Company intends to issue up to
49.9% of its Common Stock in the Stock Offering. The number of shares of Common
Stock to be issued and the ownership interest of the MHC may be increased or
decreased by the Holding Company, taking into consideration any change in the
independent valuation and other factors, at the discretion of the Board of
Directors of the Holding Company.
Based upon the independent valuation as updated prior to the commencement
of the Stock Offering, the Board of Directors may establish the minimum and
maximum percentage of shares of Common Stock that will be offered for sale in
the Stock Offering, or it may fix the percentage of shares that will be offered
for sale in the Stock Offering. In the event the percentage of the shares
offered for sale in the Minority Stock Offering is not fixed in the Stock
Offering, the Minority Ownership Interest resulting from the Stock Offering will
be determined as follows: (a) the product of (x) the total number of shares of
Common Stock sold by the Holding Company and (y) the purchase price per share,
divided by (b) the aggregate pro forma market value of the Bank and the Holding
Company upon the closing of the Stock Offering and sale of all the Common Stock.
Notwithstanding the foregoing, no sale of Common Stock may be consummated
unless, prior to such consummation, the Independent Appraiser confirms to the
Holding Company, the Bank and to the OTS that, to the best knowledge of the
Independent Appraiser, nothing of a
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material nature has occurred which, taking into account all relevant factors,
would cause the Independent Appraiser to conclude that the aggregate value of
the Common Stock sold in the Stock Offering at the Actual Purchase Price is
incompatible with its estimate of the aggregate consolidated pro forma market
value of the Holding Company and the Bank. If such confirmation is not received,
the Holding Company may cancel the Stock Offering, extend the Stock Offering and
establish a new price range and/or estimated price range, extend, reopen or hold
a new Stock Offering or take such other action as the OTS may permit.
The estimated market value of the Holding Company and the Bank shall be
determined for such purpose by an Independent Appraiser on the basis of such
appropriate factors as are not inconsistent with OTS regulations. The Common
Stock to be issued in the Stock Offering shall be fully paid and non-assessable.
If there is a Community Offering or Syndicated Community Offering of shares
of Common Stock not subscribed for in the Subscription Offering, the price per
share at which the Common Stock is sold in such Community Offering or Syndicated
Community Offering shall be the Actual Purchase Price which will be equal to the
purchase price per share at which the Common Stock is sold to persons in the
Subscription Offering. Shares sold in the Community Offering or Syndicated
Community Offering will be subject to the same limitations as shares sold in the
Subscription Offering.
5. METHOD OF OFFERING SHARES AND RIGHTS TO PURCHASE STOCK
In descending order of priority, the opportunity to purchase Common
Stock shall be given in the Subscription Offering to: (1) Eligible Account
Holders; (2) Tax-Qualified Employee Plans; (3) Supplemental Eligible Account
Holders; (4) Other Depositors; and (5) employees, officers and directors of
the Bank or the Holding Company. Any shares of Common Stock that are not
subscribed for in the Subscription Offering may at the discretion of the Bank
and the Holding Company be offered for sale in a Community Offering or a
Syndicated Community Offering. The minimum purchase by any Person shall be 25
shares. The Holding Company shall determine in its sole discretion whether
each prospective purchaser is a "resident," "associate," or "acting in
concert" as defined in the Plan, and shall interpret all other provisions of
the Plan in its sole discretion. All such determinations are in the sole
discretion of the Holding Company, and may be based on whatever evidence the
Holding Company chooses to use in making any such determination.
In addition to the priorities set forth below, the Board of Directors may
establish other priorities for the purchase of Common Stock, subject to the
approval of the OTS. The priorities for the purchase of shares in the Stock
Offering are as follows:
A. SUBSCRIPTION OFFERING
PRIORITY 1: ELIGIBLE ACCOUNT HOLDERS. Each Eligible Account Holder shall
receive non-transferable subscription rights to subscribe for shares of Common
Stock offered in the Stock Offering in an amount equal to the greater of
$250,000, one-tenth of one percent (.1%) of the total shares offered in the
Stock Offering, or 15 times the product (rounded down to the nearest whole
number) obtained by multiplying the total number of shares of Common Stock to be
issued in the Stock Offering by a fraction, of which the numerator is the
Qualifying Deposit of
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the Eligible Account Holder and the denominator is the total amount of
Qualifying Deposits of all Eligible Account Holders, in each case on the
Eligibility Record Date and subject to the provisions of Section 6; PROVIDED
that the Holding Company may, in its sole discretion and without further notice
to or solicitation of subscribers or other prospective purchasers, increase such
maximum purchase limitation to 5% of the maximum number of shares offered in the
Stock Offering or decrease such maximum purchase limitation to 0.1% of the
maximum number of shares offered in the Stock Offering, subject to the overall
purchase limitations set forth in Section 6. If there are insufficient shares
available to satisfy all subscriptions of Eligible Account Holders, shares will
be allocated to Eligible Account Holders so as to permit each such subscribing
Eligible Account Holder to purchase a number of shares sufficient to make his
total allocation equal to the lesser of 100 shares or the number of shares
subscribed for. Thereafter, unallocated shares will be allocated pro rata to
remaining subscribing Eligible Account Holders whose subscriptions remain
unfilled in the same proportion that each such subscriber's Qualifying Deposit
bears to the total amount of Qualifying Deposits of all subscribing Eligible
Account Holders whose subscriptions remain unfilled. To ensure proper allocation
of stock, each Eligible Account Holder must list on his subscription order form
all accounts in which he or she had an ownership interest as of the Eligibility
Record Date. Officers, directors, and their Associates may be Eligible Account
Holders. However, if an officer, director, or his or her Associate receives
subscription rights based on increased deposits in the year before the
Eligibility Record Date, subscription rights based upon these deposits are
subordinate to the subscription rights of other Eligible Account Holders.
PRIORITY 2: TAX-QUALIFIED EMPLOYEE PLANS. The Tax-Qualified Employee Plans
shall be given the opportunity to purchase in the aggregate up to 10% of the
shares issued in the Stock Offering. In the event of an oversubscription in the
Stock Offering, subscriptions for shares by the Tax-Qualified Employee Plans may
be satisfied, in whole or in part, out of authorized but unissued shares of the
Holding Company subject to the maximum purchase limitations applicable to such
plans as set forth in Section 6, or may be satisfied, in whole or in part,
through open market purchases by the Tax-Qualified Employee Plans subsequent to
the closing of the Stock Offering. If the final valuation exceeds the maximum of
the Offering Range, up to 10% of the Common Stock issued in the Stock Offering
may be sold to the Tax-Qualified Employee Plans notwithstanding any
oversubscription by Eligible Account Holders.
PRIORITY 3: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. To the extent there are
sufficient shares remaining after satisfaction of subscriptions by Eligible
Account Holders, and the Tax-Qualified Employee Plans, each Supplemental
Eligible Account Holder shall receive non-transferable subscription rights to
subscribe for shares of Common Stock offered in the Stock Offering in an amount
equal to the greater of $250,000, one-tenth of one percent (.1%) of the total
shares offered in the Stock Offering, or 15 times the product (rounded down to
the nearest whole number) obtained by multiplying the total number of shares of
Common Stock to be issued in the Stock Offering by a fraction, of which the
numerator is the Qualifying Deposit of the Supplemental Eligible Account Holder
and the denominator is the total amount of Qualifying Deposits of all
Supplemental Eligible Account Holders, in each case on the Supplemental
Eligibility Record Date and subject to the provisions of Section 6; PROVIDED
that the Holding Company may, in its sole discretion and without further notice
to or solicitation of subscribers or other prospective purchasers, increase such
maximum purchase limitation to 5% of the maximum number of shares offered in the
Stock Offering or decrease such maximum purchase
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limitation to 0.1% of the maximum number of shares offered in the Stock
Offering, subject to the overall purchase limitations set forth in Section 6. In
the event Supplemental Eligible Account Holders subscribe for a number of shares
which, when added to the shares subscribed for by Eligible Account Holders and
the Tax-Qualified Employee Plans, is in excess of the total shares offered in
the Stock Offering, the subscriptions of Supplemental Eligible Account Holders
will be allocated among subscribing Supplemental Eligible Account Holders so as
to permit each subscribing Supplemental Eligible Account Holder to purchase a
number of shares sufficient to make his total allocation equal to the lesser of
100 shares or the number of shares subscribed for. Thereafter, unallocated
shares will be allocated to each subscribing Supplemental Eligible Account
Holder whose subscription remains unfilled in the same proportion that such
subscriber's Qualifying Deposits on the Supplemental Eligibility Record Date
bear to the total amount of Qualifying Deposits of all subscribing Supplemental
Eligible Account Holders whose subscriptions remain unfilled.
PRIORITY 4: OTHER DEPOSITORS. To the extent there are sufficient shares
remaining after satisfaction of subscriptions by Eligible Account Holders,
the Tax-Qualified Employee Plans, and Supplemental Eligible Account Holders,
each Other Depositor shall receive non-transferable subscription rights to
subscribe for shares of Common Stock offered in the Stock Offering in an
amount equal to the greater of $250,000, one-tenth of one percent (.1%) of
the total shares offered in the Stock Offering, or 15 times the product
(rounded down to the nearest whole number) obtained by multiplying the total
number of shares of Common Stock to be issued in the Stock Offering by a
fraction, of which the numerator is the Qualifying Deposit of the Other
Depositor and the denominator is the total amount of Qualifying Deposits of
all Other Depositors, in each case on the Other Depositor Record Date and
subject to the provisions of Section 6; PROVIDED that the Holding Company
may, in its sole discretion and without further notice to or solicitation of
subscribers or other prospective purchasers, increase such maximum purchase
limitation to 5% of the maximum number of shares offered in the Stock
Offering or decrease such maximum purchase limitation to 0.1% of the maximum
number of shares offered in the Stock Offering, subject to the overall
purchase limitations set forth in Section 6. In the event Other Depositors
subscribe for a number of shares which, when added to the shares subscribed
for by Eligible Account Holders, the Tax-Qualified Employee Plans and
Supplemental Eligible Account Holders, is in excess of the total shares
offered in the Stock Offering, the subscriptions of Other Depositors will be
allocated among subscribing Other Depositors so as to permit each subscribing
Other Depositor to purchase a number of shares sufficient to make his total
allocation equal to the lesser of 100 shares or the number of shares
subscribed for. Thereafter, unallocated shares will be allocated to each
subscribing Other Depositor whose subscription remains unfilled in the same
proportion that such subscriber's Qualifying Deposits on the Other Depositor
Record Date bear to the total amount of Qualifying Deposits of all
subscribing Other Depositors whose subscriptions remain unfilled.
PRIORITY 5: EMPLOYEES, OFFICERS AND DIRECTORS. To the extent that shares
remain available for purchase after satisfaction of all subscriptions of the
Eligible Account Holders, Tax-Qualified Employee Plan, Supplemental Eligible
Account Holders and Other Depositors, employees, officers and directors of
the Bank or the Holding Company shall have the opportunity to purchase up to
$250,000 of the Common Stock offered in the Stock Offering; provided that the
Holding Company may, in its sole discretion, and without further notice to or
solicitation of subscribers or other prospective purchasers, increase such
maximum purchase limitation to 5% of the maximum number of shares offered in
the Stock Offering or decrease such maximum purchase limitation to 0.1% of
the maximum number of shares offered in the Stock Offering, subject to the
overall purchase limitations set forth in Section 6. In the event that
employees, officers and directors subscribe for a number of shares, which,
when added to the shares subscribed for by Eligible Account Holders,
Tax-Qualified Employee Plans and Supplemental Eligible Account Holders and
Other Depositors is in excess of the total shares offered in the Stock
Offering, the subscriptions of such Persons will be allocated among
employees, officers and directors on a pro rata basis based on the size of
each Person's order.
B. COMMUNITY OFFERING
Any shares of Common Stock not subscribed for in the Subscription Offering
may be offered for sale in a Community Offering. This will involve an offering
of all unsubscribed shares directly to the general public with a preference to
those natural persons residing in the Community. The Community Offering, if any,
shall be for a period of not more than 45 days unless extended by the Holding
Company, and shall commence concurrently with, during or promptly after the
Subscription Offering. The Holding Company and the Bank may use one or
investment banking firms on a best efforts basis to sell the unsubscribed shares
in the Subscription and Community Offering. The Holding Company and the Bank may
pay a commission or other fee to such investment banking firm(s) as to the
shares sold by such firm(s) in the Subscription and Community Offering and may
also reimburse such firm(s) for expenses incurred in connection with the sale.
The Community Offering may include a syndicated community offering managed by
such investment banking firm(s). The Common Stock will be offered and sold in
the Community Offering, in accordance with the Regulations, so as to achieve the
widest distribution of the Common Stock. No Person may purchase more than
$250,000 of Common Stock in the Community Offering, subject to the overall
purchase
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limitations set forth in Section 6. In the event orders for Common Stock in the
Community Offering exceed the number of shares available for sale, shares will
be allocated (to the extent shares remain available) first to cover orders of
natural persons residing in the Community, and thereafter to cover orders of
other members of the general public, so that each Person in such category of the
Community Offering may receive 100 shares. In the event orders for Common Stock
in any of these categories exceed the number of shares available for sale,
shares may be allocated on a pro rata basis within a category based on the
amount of the respective orders. In addition, orders received for Common Stock
in the Community Offering or any Syndicated Community Offering shall first be
filled up to a maximum of two percent (2%) of the shares sold and thereafter,
remaining shares will be allocated on an equal number of shares basis per order
until all orders are filled.
The Holding Company, in its sole discretion, may reject subscriptions, in
whole or in part, received from any Person under this Section 5(B).
C. SYNDICATED COMMUNITY OFFERING
Any shares of Common Stock not sold in the Subscription Offering or in the
Community Offering, if any, may be offered for sale to the general public by a
selling group of broker-dealers in a Syndicated Community Offering, subject to
terms, conditions and procedures, including the timing of the offering, as may
be determined by the Holding Company in a manner that is intended to achieve the
widest distribution of the Common Stock subject to the rights of the Holding
Company to accept or reject in whole or in part all orders in the Syndicated
Community Offering. It is expected that the Syndicated Community Offering would
commence as soon as practicable after termination of the Subscription Offering
and the Community Offering, if any. The Syndicated Community Offering shall be
completed within 45 days after the termination of the Subscription Offering,
unless such period is extended as provided herein. No Person may purchase more
than $250,000 of Common Stock in the Syndicated Community Offering, subject to
the overall purchase limitations set forth in Section 6.
If for any reason a Syndicated Community Offering of unsubscribed shares of
Common Stock cannot be effected and any shares remain unsold after the
Subscription Offering and the Community Offering, if any, the Board of Directors
of the Holding Company will seek to make other arrangements for the sale of the
remaining shares. Such other arrangements will be subject to the approval of the
OTS and to compliance with applicable securities laws.
6. ADDITIONAL LIMITATIONS ON PURCHASES OF COMMON STOCK
Purchases of Common Stock in the Stock Offering will be subject to the
following purchase limitations:
A. The aggregate amount of outstanding Common Stock of the Holding
Company owned or controlled by persons other than MHC at the close of
the Stock Offering shall be less than 50% of the Holding Company's
total outstanding Common Stock.
B. The maximum purchase of Common Stock in the Subscription Offering by a
Person or group of Persons through a single Deposit Account is
$250,000. No
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Person by himself, or with an Associate or group of Persons acting in
concert, may purchase more than $500,000 of the Common Stock offered
in the Stock Offering, except that: (i) the Holding Company may, in
its sole discretion and without further notice to or solicitation of
subscribers or other prospective purchasers, increase such maximum
purchase limitation to 5% of the number of shares offered in the Stock
Offering; (ii) the Tax-Qualified Employee Plans may purchase up to 10%
of the shares offered in the Stock Offering; and (iii) for purposes of
this subsection 6(B) shares to be held by any Tax-Qualified Employee
Plan and attributable to a person shall not be aggregated with other
shares purchased directly by or otherwise attributable to such person.
C. The aggregate amount of Common Stock acquired in the Stock Offering,
plus all prior issuances by the Holding Company, by any
Non-Tax-Qualified Employee Plan or any Management Person and his or
her Associates, exclusive of any shares of Common Stock acquired by
such plan or Management Person and his or her Associates in the
secondary market, shall not exceed 4.9% of the outstanding shares of
Common Stock of the Holding Company at the conclusion of the Stock
Offering. In calculating the number of shares held by any Management
Person and his or her Associates under this paragraph, shares held by
any Tax-Qualified Employee Plan or Non-Tax-Qualified Employee Plan of
the Holding Company or the Bank that are attributable to such Person
shall not be counted.
D. The aggregate amount of Common Stock acquired in the Stock Offering,
plus all prior issuances by the Holding Company, by any
Non-Tax-Qualified Employee Plan or any Management Person and his or
her Associates, exclusive of any Common Stock acquired by such plan or
Management Person and his or her Associates in the secondary market,
shall not exceed 4.9% of the stockholders' equity of the Holding
Company at the conclusion of the Stock Offering. In calculating the
number of shares held by any Management Person and his or her
Associates under this paragraph, shares held by any Tax-Qualified
Employee Plan or Non-Tax-Qualified Employee Plan of the Holding
Company or the Bank that are attributable to such Person shall not be
counted.
E. The aggregate amount of Common Stock acquired in the Stock Offering,
plus all prior issuances by the Holding Company, by any one or more
Tax-Qualified Employee Plans, exclusive of any shares of Common Stock
acquired by such plans in the secondary market, shall not exceed 4.9%
of the outstanding shares of Common Stock of the Holding Company at
the conclusion of the Stock Offering.
F. The aggregate amount of Common Stock acquired in the Stock Offering,
plus all prior issuances by the Holding Company, by any one or more
Tax-Qualified Employee Plans, exclusive of any shares of Common Stock
acquired by such plans in the secondary market, shall not exceed 4.9%
of the stockholders' equity of the Holding Company at the conclusion
of the Stock Offering
G. The aggregate amount of Common Stock acquired in the Stock Offering,
plus all prior issuances by the Holding Company, by all stock benefit
plans of the Holding
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Company or the Bank, other than employee stock ownership plans, shall
not exceed 25% of the outstanding common stock of the Holding Company
held by persons other than the MHC.
H. The aggregate amount of Common Stock acquired in the Stock Offering,
plus all prior issuances by the Holding Company, by all
Non-Tax-Qualified Employee Plans or Management Persons and their
Associates, exclusive of any Common Stock acquired by such plans or
Management Persons and their Associates in the secondary market, shall
not exceed 25% of the outstanding shares of Common Stock held by
persons other than the MHC at the conclusion of the Stock Offering. In
calculating the number of shares held by Management Persons and their
Associates under this paragraph or paragraph I. below, shares held by
any Tax-Qualified Employee Plan or Non-Tax-Qualified Employee Plan
that are attributable to such persons shall not be counted.
I. The aggregate amount of Common Stock acquired in the Stock Offering,
plus all prior issuances by the Holding Company, by all
Non-Tax-Qualified Employee Plans or Management Persons and their
Associates, exclusive of any Common Stock acquired by such plans or
Management Persons and their Associates in the secondary market, shall
not exceed 25% of the stockholders' equity of the Holding Company held
by persons other than the MHC at the conclusion of the Stock Offering.
J. Notwithstanding any other provision of this Plan, no person shall be
entitled to purchase any Common Stock to the extent such purchase
would be illegal under any federal law or state law or regulation or
would violate regulations or policies of the National Association of
Securities Dealers, Inc., particularly those regarding free riding and
withholding. The Holding Company and/or its agents may ask for an
acceptable legal opinion from any purchaser as to the legality of such
purchase and may refuse to honor any purchase order if such opinion is
not timely furnished.
K. The Board of Directors of the Holding Company has the right in its
sole discretion to reject any order submitted by a person whose
representations the Board of Directors believes to be false or who it
otherwise believes, either alone or acting in concert with others, is
violating, circumventing, or intends to violate, evade or circumvent
the terms and conditions of this Plan.
L. A minimum of 25 shares of Common Stock must be purchased by each
Person purchasing shares in the Stock Offering to the extent those
shares are available; provided, however, that in the event the minimum
number of shares of Common Stock purchased times the price per share
exceeds $500, then such minimum purchase requirement shall be reduced
to such number of shares which when multiplied by the price per share
shall not exceed $500, as determined by the Board.
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SUBSCRIPTION RIGHTS AFFORDED UNDER THIS PLAN AND BY OTS REGULATIONS ARE
NON-TRANSFERABLE. NO PERSON MAY TRANSFER, OFFER TO TRANSFER, OR ENTER INTO ANY
AGREEMENT OR UNDERSTANDING TO TRANSFER, THE LEGAL OR BENEFICIAL OWNERSHIP OF ANY
SUBSCRIPTION RIGHTS UNDER THIS PLAN. NO PERSON MAY TRANSFER, OFFER TO TRANSFER
OR ENTER INTO AN AGREEMENT OR UNDERSTANDING TO TRANSFER LEGAL OR BENEFICIAL
OWNERSHIP OF ANY SHARES OF COMMON STOCK EXCEPT PURSUANT TO THIS PLAN.
EACH PERSON PURCHASING COMMON STOCK IN THE STOCK OFFERING WILL BE DEEMED TO
CONFIRM THAT SUCH PURCHASE DOES NOT CONFLICT WITH THE PURCHASE LIMITATIONS IN
THIS PLAN. ALL QUESTIONS CONCERNING WHETHER ANY PERSONS ARE ASSOCIATES OR A
GROUP ACTING IN CONCERT OR WHETHER ANY PURCHASE CONFLICTS WITH THE PURCHASE
LIMITATIONS IN THIS PLAN OR OTHERWISE VIOLATES ANY PROVISION OF THIS PLAN SHALL
BE DETERMINED BY THE BANK IN ITS SOLE DISCRETION. SUCH DETERMINATION SHALL BE
CONCLUSIVE, FINAL AND BINDING ON ALL PERSONS, AND THE BANK MAY TAKE ANY REMEDIAL
ACTION INCLUDING, WITHOUT LIMITATION, REJECTING THE PURCHASE OR REFERRING THE
MATTER TO THE OTS FOR ACTION, AS THE BANK MAY IN ITS SOLE DISCRETION DEEM
APPROPRIATE.
7. PAYMENT FOR STOCK
All payments for Common Stock subscribed for or ordered in the Stock
Offering must be delivered in full to the Holding Company or the Bank, together
with a properly completed and executed order form, or purchase order in the case
of the Syndicated Community Offering, on or prior to the expiration date
specified on the order form or purchase order, as the case may be, unless such
date is extended by the Holding Company; PROVIDED, that if the Employee Plans
subscribe for shares of Common Stock during the Subscription Offering, such
plans may pay for such shares at the Actual Purchase Price upon consummation of
the Stock Offering. The Holding Company or the Bank may make scheduled
discretionary contributions to the ESOP provided such contributions from the
Bank, if any, do not cause the Bank to fail to meet its regulatory capital
requirement.
Payment for Common Stock shall be made either by check or money order, or
if a purchaser has a Deposit Account in the Bank, such purchaser may pay for the
shares subscribed for by authorizing the Bank to make a withdrawal from the
purchaser's Deposit Account at the Bank in an amount equal to the purchase price
of such shares. Such authorized withdrawal, whether from a savings passbook or
certificate account, shall be without penalty as to premature withdrawal. If the
authorized withdrawal is from a certificate account, and the remaining balance
does not meet the applicable minimum balance requirements, the certificate shall
be canceled at the time of withdrawal, without penalty, and the remaining
balance will earn interest at the Bank's passbook rate. Funds for which a
withdrawal is authorized will remain in the purchaser's Deposit Account but may
not be used by the purchaser until the Common Stock has been sold or the 45-day
period (or such longer period as may be approved by the OTS) following the Stock
Offering has expired, whichever occurs first. Thereafter, the withdrawal will be
given effect only to the extent necessary to satisfy the subscription (to the
extent it can be filled) at the Actual Purchase Price per share. Interest will
continue to be earned on any amounts authorized for withdrawal until such
withdrawal is given effect. The Bank or the Holding Company will
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pay interest, at a rate no less than the Bank's passbook rate, for all amounts
paid by check or money order to purchase Common Stock. Such interest will be
earned from the date payment is received by the Bank or the Holding Company
until consummation or termination of the Stock Offering. If for any reason the
Stock Offering is not consummated, all payments made by subscribers in the Stock
Offering will be refunded to them with interest. In case of amounts authorized
for withdrawal from Deposit Accounts, refunds will be made by canceling the
authorization for withdrawal.
8. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the prospectus prepared by the Holding
Company and the Bank has been declared effective by the OTS and the SEC,
copies of the prospectus and order forms will be distributed to all Eligible
Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account
Holders, Other Depositors and employees, officers and directors of the Bank
or the Holding Company at their last known addresses appearing on the records
of the Bank for the purpose of subscribing for shares of Common Stock in the
Subscription Offering and will be made available to those persons that
purchase Common Stock in the Community Offering.
Each order form will be preceded or accompanied by the prospectus
describing the Holding Company, the Bank, the Common Stock and the Subscription
and Community Offerings. Each order form will contain, among other things, the
following:
A. A specified date by which all order forms must be received by the
Bank, which date shall be not less than 20, nor more than 45 days,
following the date on which the order forms are mailed by the Holding
Company or the Bank, and which date will constitute the termination of
the Subscription Offering;
B. The purchase price per share for shares of Common Stock to be sold in
the Subscription and Community Offerings;
C. A description of the minimum and maximum number of shares of Common
Stock that may be subscribed for pursuant to the exercise of
Subscription Rights or otherwise purchased in the Community Offering;
D. Instructions as to how the recipient of the order form must indicate
thereon the number of shares of Common Stock for which such Person
elects to subscribe and the available alternative methods of payment
therefor;
E. An acknowledgment that the recipient of the order form has received a
final copy of the prospectus prior to execution of the order form;
F. A statement indicating the consequences of failing to properly
complete and return the order form, including a statement to the
effect that all subscription rights are nontransferable, will be void
at the end of the Subscription Offering, and can only be exercised by
delivering to the Holding Company or the Bank within the subscription
period such properly completed and executed order form, together with
a check or money order in the full amount of the purchase price as
specified in the order form for the shares of Common Stock for which
the
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recipient elects to subscribe in the Subscription Offering (or by
authorizing on the order form that the Bank withdraw said amount from
the subscriber's Deposit Account at the Bank); and
G. A statement to the effect that the executed order form, once received
by the Holding Company or the Bank, may not be modified or amended by
the subscriber without the consent of the Holding Company or the Bank.
Notwithstanding the above, the Holding Company reserves the right in its
sole discretion to accept or reject orders received on photocopied or facsimiled
order forms.
9. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT
In the event order forms (a) are not delivered and are returned to the
Holding Company or the Bank by the United States Postal Service or the Holding
Company is unable to locate the addressee, (b) are not received back by the
Holding Company or the Bank or are received by the Holding Company or the Bank
after the expiration date specified thereon, (c) are defectively filled out or
executed, (d) are not accompanied by the full required payment for the shares of
Common Stock subscribed for (including cases in which Deposit Accounts from
which withdrawals are authorized are insufficient to cover the amount of the
required payment), or (e) are not mailed pursuant to a "no mail" order placed in
effect by the account holder, the subscription rights of the Person to whom such
rights have been granted will lapse as though such Person failed to return the
completed order form within the time period specified thereon; PROVIDED, that
the Holding Company may, but will not be required to, waive any immaterial
irregularity on any order form or require the submission of corrected order
forms or the remittance of full payment for subscribed shares by such date as
the Holding Company may specify. The interpretation by the Holding Company of
terms and conditions of this Plan and of the order forms will be final, subject
to the authority of the OTS.
10. COMPLETION OF THE STOCK OFFERING
The Stock Offering will be terminated if not completed within 90 days from
the date on which the prospectus is declared effective by the OTS unless an
extension is approved by the OTS.
11. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION
As part of the Stock Offering, the Holding Company and the Bank intend to
establish the Foundation which will qualify as an exempt organization under
Section 501(c)(3) of the Internal Revenue Code and contribute to the Foundation
(i) up to 4% of the number of shares of Common Stock issued in the Stock
Offering, and/or (ii) cash, provided that the total contribution to the
Foundation does not exceed 8% of the gross proceeds from the sale of Common
Stock in the Stock Offering. The Company and the Bank may elect to contribute
the foregoing amounts to the Bank's existing charitable foundation rather than
establishing a new foundation. Contributions to the Foundation in connection
with the Stock Offering are intended to complement the Bank's existing community
reinvestment activities and to permit the communities in which the Bank operates
to share in financial success of the Bank as a locally headquartered,
community-oriented savings bank.
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The Foundation will be dedicated to the promotion of charitable purposes
within the communities in which the Bank operates, including, but not limited
to, grants or donations to support housing assistance, scholarships, local
education, not-for-profit medical facilities, not-for-profit community groups
and other types of organizations or civic minded projects. The Foundation will
distribute annually total grants to assist charitable organizations or to fund
projects within its local community of not less than 5% of the average fair
value of Foundation assets each year. In order to serve the purposes for which
it was formed and maintain its 501(c)(3) qualification, the Foundation may sell,
on an annual basis, a limited portion of the Common Stock contributed to it by
the Holding Company.
The board of directors of the Foundation will be responsible for
establishing the policies of the Foundation with respect to grants or donations,
consistent with the stated purposes of the Foundation. The Foundation will
comply with applicable federal banking laws and regulations.
The establishment and funding of the Foundation as part of the Stock
Offering may be subject to the approval of the Bank's depositors or the MHC's
corporators by an affirmative vote of a majority of the votes eligible to be
cast by depositors in person or by proxy or by a majority of the MHC's
corporators at a special meeting to consider such proposal. In the event that
the Bank's depositors or the MHC's corporators are required to approve, but do
not approve the establishment of the Foundation, the Holding Company may
determine to complete the Stock Offering without the establishment of the
Foundation and may do so without amending this Plan or obtaining any further
vote of the Bank's depositors or the MHC's corporators. For comparison purposes,
if a vote of depositors or corporators is required, such persons will be
provided with a projection of the pro forma market value of the Common Stock, an
Estimated Valuation Range and certain selected pro forma financial data that
would result if the Stock Offering were consummated with and without
establishment of the Foundation.
12. MARKET FOR COMMON STOCK
If at the close of the Stock Offering the Holding Company has more than 100
shareholders of any class of stock, the Holding Company shall use its best
efforts to:
(i) encourage and assist a market maker to establish and maintain a market
for that class of stock; and
(ii) list that class of stock on a national or regional securities
exchange, or on the Nasdaq quotation system.
13. STOCK PURCHASES BY MANAGEMENT PERSONS AFTER THE STOCK OFFERING
For a period of three years after the Stock Offering, no Management Person
or his or her Associates may purchase, without the prior written approval of the
OTS, any Common Stock of the Holding Company, except from a broker-dealer
registered with the SEC, except that the foregoing shall not apply to:
A. Negotiated transactions involving more than 1% of the outstanding
stock in the class of stock; or
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B. Purchases of stock made by and held by any Tax-Qualified or Non-Tax
Qualified Employee Plan even if such stock is attributable to
Management Persons or their Associates.
14. RESALES OF STOCK BY DIRECTORS AND OFFICERS
Common Stock purchased by Management Persons and their Associates in the
Stock Offering may not be resold for a period of at least one year following the
date of purchase, except in the case of death of a Management Person or an
Associate.
15. STOCK CERTIFICATES
Each stock certificate shall bear a legend giving appropriate notice of the
restrictions set forth in Section 14 above. Appropriate instructions shall be
issued to the Holding Company's transfer agent with respect to applicable
restrictions on transfers of such stock. Any shares of stock issued as a stock
dividend, stock split or otherwise with respect to such restricted stock, shall
be subject to the same restrictions as apply to the restricted stock.
16. RESTRICTION ON FINANCING STOCK PURCHASES
The Holding Company and the Bank will not loan funds to any Person to
purchase Common Stock in the Stock Offering, and will not knowingly offer or
sell any of the Common Stock to any Person whose purchase would be financed by
funds loaned to the Person by the Holding Company, the Bank or any Affiliate.
17. STOCK BENEFIT PLANS
The Board of Directors of the Bank and/or the Holding Company intend to
adopt one or more stock benefit plans for employees, officers and directors,
including an ESOP, stock award plans and stock option plans, which will be
authorized to purchase Common Stock and grant options for Common Stock. However,
only the Tax-Qualified Employee Plans will be permitted to purchase Common Stock
in the Stock Offering, subject to the purchase priorities set forth in this
Plan. The Board of Directors of the Bank intends to establish the ESOP and
authorize the ESOP and any other Tax-Qualified Employee Plans to purchase in the
aggregate up to 10% of the shares issued in the Stock Offering. The Bank or the
Holding Company may make scheduled discretionary contributions to one or more
Tax-Qualified Employee Plans to purchase Common Stock issued in the Stock
Offering, or to purchase issued and outstanding shares of Common Stock in the
open market or from authorized but unissued shares of Common Stock or treasury
shares from the Holding Company subsequent to the completion of the Stock
Offering; PROVIDED such contributions do not cause the Bank to fail to meet any
of its regulatory capital requirements. In addition to shares purchased by one
or more Tax-Qualified Employee Plans in this Stock Offering, any subsequent
stock offering, and/or from authorized but unissued shares or treasury shares of
the Holding Company, this Plan also specifically authorizes the Holding Company
to grant awards under one or more stock benefit plans, including stock
recognition and award plans and stock option plans, in an amount up to 25% of
the shares of Common Stock held by persons other than the MHC.
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18. POST-STOCK ISSUANCE FILING AND MARKET MAKING
If the Holding Company has more than 35 stockholders of any class of stock,
the Holding Company shall register its Common Stock with the SEC pursuant to the
Exchange Act, and shall undertake not to deregister such Common Stock for a
period of three years thereafter.
19. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
The Holding Company may not declare or pay a cash dividend on its Common
Stock if the effect thereof would cause the regulatory capital of the Bank to be
reduced below the amount required under Section 567.2 of the Regulations.
Otherwise, the Holding Company may declare dividends or make other capital
distributions in accordance with Section 563b.520 of the Regulations. Following
completion of the Stock Offering, the Holding Company may repurchase its Common
Stock consistent with Section 563b.510 and Section 563b.515 of the Regulations
relating to stock repurchases, as long as such repurchases do not cause the
regulatory capital of the Bank to be reduced below the amount required under
Section 563b.550. of the Regulations. The MHC may from time to time purchase
Common Stock of the Holding Company. Subject to any notice or approval
requirements of the OTS under the Regulations, the MHC may waive its right to
receive dividends declared by the Holding Company.
20. STOCK OFFERING EXPENSES
The Regulations require that the expenses of any Stock Offering must be
reasonable. The Bank will use its best efforts to assure that the expenses
incurred by the Bank and the Holding Company in effecting the Stock Offering
will be reasonable.
21. EMPLOYMENT AND OTHER SEVERANCE AGREEMENTS
Following or contemporaneously with the Stock Offering, the Bank and/or the
Holding Company may enter into employment and/or severance arrangements with one
or more executive officers of the Bank and/or the Holding Company. It is
anticipated that any employment contracts entered into by the Bank and/or the
Holding Company will be for terms not exceeding three years and that such
contracts will provide for annual renewals of the term of the contracts, subject
to approval by the Board of Directors. The Bank and/or the Holding Company also
may enter into severance arrangements with one or more executive officers which
provide for the payment of severance compensation in the event of a change in
control of the Bank and/or the Holding Company. The significant terms of such
employment and severance arrangements have not been determined as of this time,
but will be described in any prospectus circulated in connection with the Stock
Offering and will be subject to and comply with all regulations of the OTS.
22. INTERPRETATION
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Holding
Company shall be final, subject to the authority of the OTS.
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23. AMENDMENT OR TERMINATION OF THE PLAN
If necessary or desirable, the terms of the Plan may be substantially
amended by a majority vote of the Holding Company's Board of Directors as a
result of comments from regulatory authorities or otherwise at any time prior to
the approval of the Plan by the OTS and at any time thereafter with the
concurrence of the OTS. The Plan may be terminated by a majority vote of the
Board of Directors at any time prior to the approval of the Plan by the OTS and
may be terminated by a majority vote of the Board of Directors at any time
thereafter with the concurrence of the OTS.
Dated: April 7, 2004, and as subsequently amended
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