Exhibit 2.1
AMENDED PLAN OF CONVERSION
FOR
CORTLAND SAVINGS BANK
CORTLAND, NEW YORK
Table of Contents
Page
1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. PROCEDURE FOR APPROVAL OF THE CONVERSION . . . . . . . . . . . . . . . 7
4. SALE OF CONVERSION STOCK . . . . . . . . . . . . . . . . . . . . . . . 8
5. NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK . . . . . . . . 9
6. PURCHASE BY THE HOLDING COMPANY OF THE STOCK OF THE BANK. . . . . . . . 11
7. ESTABLISHMENT AND FUNDING OF FOUNDATION . . . . . . . . . . . . . . . . 11
8. NON-TRANSFERABLE SUBSCRIPTION RIGHTS AND SHARE ALLOCATIONS. . . . . . . 12
9. COMMUNITY OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10. PUBLIC OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. LIMITATIONS ON PURCHASE AND TRANSFER OF CONVERSION
STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12. PAYMENT FOR CONVERSION STOCK. . . . . . . . . . . . . . . . . . . . . . 15
13. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS. . . . . . 16
14. UNDELIVERED, DEFECTIVE OR LATE ORDER FORMS:
INSUFFICIENT PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 17
15. RESTRICTIONS ON ACQUISITION OF THE BANK AND
HOLDING COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
16. EFFECT OF CONVERSION; CERTAIN COVENANTS
AND AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
17. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION. . . . . . . . . . . . 19
18. VOTING RIGHTS AFTER CONVERSION. . . . . . . . . . . . . . . . . . . . . 20
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT. . . . . . . . . . . . . . . . . . 20
20. DEPOSIT ACCOUNTS AFTER CONVERSION . . . . . . . . . . . . . . . . . . . 21
21. STOCK REPURCHASE AND STOCK BENEFIT PLANS. . . . . . . . . . . . . . . . 21
22. AMENDMENT OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
23. CONSUMMATION AND COMPLETION OF CONVERSION . . . . . . . . . . . . . . . 22
24. REGISTRATION AND MARKETING. . . . . . . . . . . . . . . . . . . . . . . 22
25. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES . . . . . . . . . . . 23
26. EXPENSES OF CONVERSION. . . . . . . . . . . . . . . . . . . . . . . . . 23
27. CONDITIONS TO CONVERSION. . . . . . . . . . . . . . . . . . . . . . . . 23
28. INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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1. INTRODUCTION
This Plan of Conversion ("Plan") provides for the conversion (the
"Conversion") of Cortland Savings Bank from a New York mutual savings bank to a
New York stock savings bank. The purpose of the Conversion is to increase the
Bank's capital, thereby enhancing its ability to pursue lending and investment
opportunities, diversification and growth, which may include the acquisition of
other financial institutions. The Bank's Board of Directors (which term also
includes its Board of Trustees prior to the Conversion) also believes that the
decline in the number of mutual institutions, as well as the decline in the
assets and deposits of mutual institutions, will place mutual institutions at a
disadvantage to stock institutions. Wherever appropriate for purposes of this
Plan of Conversion, capitalized terms shall have the meanings assigned to them
under Section 2 hereof.
The Board of Directors of the Bank currently contemplates that all of the
stock of the Bank shall be held by a Delaware business corporation (the "Holding
Company"). Shares of capital stock of the Bank will be sold to the Holding
Company and the Holding Company will offer the Conversion Stock, in a
Subscription Offering as described below, to Eligible Account Holders, the
Employee Plans established by the Bank or the Holding Company, which may be
funded by the Holding Company, and Supplemental Eligible Account Holders in the
priorities set forth in this Plan. Any shares of Conversion Stock not
subscribed for in the Subscription Offering will be offered for sale to certain
members of the public either directly by the Bank and the Holding Company, or
through an underwriter or syndicate of broker-dealers, in a Community Offering
or a Public Offering. If the Bank decides not to utilize the Holding Company in
the Conversion, Conversion Stock of the Bank, in lieu of the Holding Company,
will be sold in the same manner. Following the completion of the Conversion,
the Bank and the Holding Company, pursuant to applicable regulations of the
Banking Board, intend to implement stock option and other stock benefit plans
and may provide employment or severance agreements to certain management
employees and certain other benefits to the directors, officers and employees of
the Bank as described in the Prospectus.
In furtherance of the Bank's commitment to its communities, the Plan
provides for the establishment of a charitable foundation as part of the
Conversion. The Foundation is intended to complement the Bank's existing
community reinvestment activities to allow the Bank's local communities to
share over the long term in the potential growth and profitability of the
Holding Company and the Bank. Accordingly, the Holding Company intends to
donate to the Foundation from its authorized but unissued Common Stock 2% of
the Conversion Stock issued in the Conversion. The establishment of the
Foundation is subject to the approval of the Voting Depositors of the Bank.
If the Foundation is not approved, the Bank may determine to complete the
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Conversion without the Foundation.
This Plan, which has been unanimously approved by the Board of Directors of
the Bank, must also be approved by the affirmative vote of at least seventy-five
percent (75%) in amount of deposit liabilities of Voting Depositors represented
in person or by proxy and eligible to vote at the Special Meeting, and by the
affirmative vote of at least a majority of the amount of votes eligible to be
cast by Voting Depositors at the Special Meeting. Prior to the submission of
this Plan to the Voting Depositors for consideration, the Plan must be approved
by the Superintendent or his or her designees, must not be objected to by the
FDIC, and certain waivers, if required, may be granted by the Superintendent.
After the Conversion, the Bank will succeed to all the rights, interests,
duties and obligations as existed before the Conversion, including, but not
limited to, all rights and interests of the Bank in and to its assets and
properties, whether real, personal or mixed. All of the Bank's insured Deposit
Accounts will continue to be insured by the Bank Insurance Fund of the FDIC to
the extent provided by applicable law.
2. DEFINITIONS
As used in this Plan of Conversion, the following terms shall have the
following meanings:
"Account Holder" means any Person holding an Account in the Bank.
"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 understanding; (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; or (iii) a
Person or company which acts in concert with another Person ("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 Stock Benefit Plan will not be deemed to be acting in
concert with its trustee or a Person who serves in a similar capacity solely
for the purpose of determining whether stock held by the trustee and stock
held by the plan will be aggregated, and participants or beneficiaries of any
such Tax-Qualified Employee Stock Benefit Plan will not be deemed to be
acting in concert solely as a result of their common interests as
participants or beneficiaries. Directors and Officers of the Bank and the
Holding Company shall not be deemed to be Associates or a group affiliated
with each other or otherwise acting in concert solely as a result of their
being Directors
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or Officers of the Bank or the Holding Company.
"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.
"Appraiser" means the independent person retained by the Bank to prepare an
appraisal of the estimated pro forma market value of the Conversion Stock. Such
Person shall be experienced and expert in the area of corporate appraisal and
acceptable to the Superintendent.
"Associate," when used to indicate a relationship with any Person, means
(a) any corporation or organization (other than the Holding Company, the Bank or
a majority-owned subsidiary of the Bank) of which such Person is an officer or
partner or is, directly or indirectly, either alone or with one or more members
of his or her immediate family, the beneficial owner of 10% or more of any class
of equity securities; (b) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity, except that for the purposes of Section 8 and
this Section, the term "Associate" does not include any Tax-Qualified Employee
Stock Benefit Plan or any Non-Tax-Qualified Employee Stock Benefit Plan in which
a Person has a substantial beneficial interest or serves as a trustee or in a
similar fiduciary capacity, and except that, for purposes of aggregating total
shares that may be acquired or held by Officers and Directors and their
Associates, the term "Associate" does not include any Tax-Qualified Employee
Stock Benefit Plan; and (c) 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, the Bank or any of the Bank's
subsidiaries.
"Bank" means Cortland Savings Bank in its mutual form or in its stock
form, as the context of the reference requires.
"Banking Board" means the Banking Board of the State of New York.
"Banking Law" means the Banking Law of the State of New York.
"Board of Directors" means, as to the Bank, both the Board of Trustees
prior to the Conversion and the Board of Directors after the Conversion.
"Community Offering" means the offering for sale to certain members of the
general public directly by the Bank or the Holding Company, or through a
syndicate of selected broker-dealers, if utilized, of any shares of the
Conversion Stock not subscribed for in the Subscription Offering in accordance
with Section 9.
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"Conversion" means (a) the restatement of the Bank's organization
certificate to authorize the issuance of capital stock in accordance with the
Banking Law and the Conversion Regulations and to otherwise conform to the
requirements applicable to a New York stock savings bank and (b) the issuance of
the common stock of the Bank in accordance with this Plan.
"Conversion Regulations" means Part 86 of the General Regulations of the
Banking Board and the regulations of the FDIC applicable to mutual to stock
conversions, 12 C.F.R. Section 303.15, to the extent such regulations preempt or
supplement Part 86 .
"Conversion Stock" means the $.01 par value common stock offered and issued
pursuant to this Plan by the Holding Company (or by the Bank if the Holding
Company is not utilized). The Conversion Stock will not be insured by the FDIC.
"Deposit Account" means all deposits of the Bank as such term is used in
Section 9019 of the Banking Law of New York, and includes without limitation,
savings, time, demand, negotiable orders of withdrawal (NOW), money market and
passbook accounts maintained by the Bank.
"Depositor" means any Person owning a Deposit Account.
"Director" means a Trustee of the Bank prior to the Conversion, a Director
of the Bank after the Conversion or a Director of the Holding Company.
"Effective Date" means the effective date of the Conversion on which all of
the Conversion Stock is issued and sold and on which the Superintendent endorses
his or her approval on the Bank's Restated Organization Certificate and causes
such Certificate to be filed in the Office of the Superintendent.
"Eligibility Record Date" means the close of business on December 31, 1996.
"Eligible Account Holder" means any Depositor of the Bank who owned a
Qualifying Deposit on the Eligibility Record Date.
"Employee Plans" means the Tax-Qualified Employee Stock Benefit Plans and
the Non-Tax Qualified Employee Stock Benefit Plans approved by the Board of
Directors of the Bank or the Board of Directors of the Holding Company.
"Employees" means all persons who are employed by the Bank, the Holding
Company or a wholly owned subsidiary of either of them.
"Estimated Price Range" means the range of the estimated pro forma market
value of the Conversion Stock, as determined by the Appraiser, prior to the
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Subscription Offering and as it may be amended from time to time thereafter.
"FDIC" means the Federal Deposit Insurance Corporation.
"Foundation" means a non-stock corporation that is a tax-exempt
organization under Section 501(c)(3) of the Internal Revenue Code formed by the
Bank and the Holding Company to which shares of Conversion Stock shall be
transferred upon the Conversion.
"FRB" means the Board of Governors of the Federal Reserve System.
"Holders of Subscription Rights" means the Tax-Qualified Employee Stock
Benefit Plans, Eligible Account Holders and Supplemental Eligible Account
Holders who have Subscription Rights pursuant to Section 8.
"Holding Company" means the Delaware business corporation to be formed for
the purpose of acquiring all of the shares of capital stock of the Bank to be
issued the Conversion unless the Holding Company form of organization is not
utilized.
"Non-Tax-Qualified Employee Stock Benefit Plan" means any defined benefit
or defined contribution plan such as an employee stock ownership plan, bonus
stock or profit sharing plan or other employee benefit plan that is not a
"Tax-Qualified Employee Stock Benefit Plan" and that is maintained by the
Holding Company or the Bank for the benefit of Officers or Employees.
"Officer" means an executive officer of the Holding Company or the Bank and
may include the Chairman of the Board, Chief Executive Officer, President,
Senior Vice President, any vice president in charge of a principal business
functions, Secretary, Treasurer or any person performing functions similar to
those performed by the foregoing persons.
"Order Form" means the form provided by the Holding Company or the Bank
that subscribers must use to order Conversion Stock in the Subscription and
Community Offerings.
"Person" means any corporation, partnership, trust, unincorporated
association, any other entity or any natural person.
"Plan" or "Plan of Conversion" means this Plan of Conversion, including any
amendments thereto.
"Prospectus" means the principal offering document pursuant to which the
Conversion Stock is offered for sale, in accordance with the Conversion
Regulations
5
and SEC rules, and may be titled either a "Prospectus" if the Holding Company is
used or an "Offering Circular" if the Holding Company is not used.
"Proxy Statement" means the document to be used to solicit proxies from
Voting Depositors to vote at the Special Meeting.
"Public Offering" means the offering for sale through the Underwriters to
the general public of any shares of Conversion Stock not subscribed for in the
Subscription Offering or Community Offering, if held.
"Purchase Order" means the document or other evidence reflecting an order
for the purchase of Conversion Stock in the Public Offering.
"Purchase Price" means the price per share at which the Conversion Stock is
ultimately sold in accordance with the terms hereof.
"Qualifying Deposit" means one or more Deposit Accounts with the Bank
totaling, in the aggregate, at least one hundred dollars ($100.00).
"SEC" means the Securities and Exchange Commission.
"Special Meeting" means the Special Meeting of Depositors and any
adjournments thereof held to consider and vote upon this Plan.
"Subaccount Balance" means, with respect to each Eligible Account Holder
and Supplemental Eligible Account Holder, the portion of the liquidation account
that such Eligible Account Holder and Supplemental Eligible Account Holder would
be entitled to receive pursuant to the Conversion Regulations in the event of a
complete liquidation of the Bank subsequent to the Conversion. The initial
Subaccount Balance of each Eligible Account Holder and Supplemental Eligible
Account Holder shall be determined in accordance with Section 86.4(g)(4) of the
Conversion Regulations.
"Subscription Offering" means the offering of the Conversion Stock to
Eligible Account Holders, Employee Plans and Supplemental Eligible Account
Holders.
"Superintendent" means the Superintendent of Banks of the State of New
York.
"Supplemental Eligibility Record Date" means the record date for
determining Supplemental Eligible Account Holders, which is the close of
business on the last day of the calendar quarter preceding the approval of the
Plan by the Superintendent.
"Supplemental Eligible Account Holder" means any depositor of the Bank
(other than an Eligible Account Holder) who owned a Qualifying Deposit, (except
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Officers, Directors and their Associates), on the Supplemental Eligibility
Record Date.
"Tax-Qualified Employee Stock Benefit Plan" means any defined benefit or
defined contribution plan, such as an employee stock ownership plan, stock bonus
plan, profit-sharing plan or other plan, which with its related trust meets the
requirements to be qualified under Section 401 of the Internal Revenue Code of
1986, as amended.
"Underwriter" means the investment banking firm or firms through which the
Conversion Stock will be offered in a Public Offering, if any.
"Voting Depositor" means any Depositor of the Bank who owns a Qualifying
Deposit on the Voting Record Date.
"Voting Record Date" means the date fixed by the Board of Directors of the
Bank as the date for determining eligibility to vote at the Special Meeting,
which date shall not be more than 60 nor less than 10 days before the date of
the Special Meeting.
3. PROCEDURE FOR APPROVAL OF THE CONVERSION
3.1 Application and Notice.
After approval by the Board of Directors of the Bank, the Bank will
cause notice of the adoption of the Plan by the Board of Directors, and of
its intention to convert to stock form to be conspicuously posted at its home
office and each of its branch offices. The Bank will also issue a press
release containing all of the material terms of the proposed Conversion and
will place an advertisement containing such material terms in a newspaper
having general circulation in the communities in which the principal office
and branches of the Bank are located. Thereafter, this Plan will be
submitted, together with an Application for Conversion and other requisite
material in the forms required by the Conversion Regulations, to the
Superintendent for approval, to the Superintendent to request certain
waivers, if required, and to the FDIC for non-objection.
7
3.2 Approval of Plan by Voting Depositors; the Special Meeting.
(a) Following approval of the Bank's Application for Conversion by the
Superintendent, the non-objection of the FDIC and the receipt of all necessary
waivers of the Superintendent, the Bank shall submit the Plan to the Bank's
Voting Depositors for approval at the Special Meeting. The Bank shall mail to
each Voting Depositor, at his or her last known address appearing on the records
of the Bank, a copy of the Plan, a Notice of Special Meeting, proxy card, Proxy
Statement and such other documents as may be required, all in the form required
by the Conversion Regulations, describing the Plan and certain other matters
relating to the Bank and its Conversion. A subscription order form may be
mailed with such materials. Separate and readily distinguishable postage-paid
envelopes shall be provided for the return of proxy cards and subscription order
forms.
(b) The Special Meeting shall be held upon written notice given no less
than 20 days nor more than 45 days prior to the date of the Special Meeting. At
the Special Meeting, each Voting Depositor shall be entitled to cast one vote in
person or by proxy for every one hundred dollars ($100.00) such Voting Depositor
had on deposit with the Bank as of the Voting Record Date; provided, however,
that no Voting Depositor shall be eligible to cast more than one thousand
(1,000) votes. The Board of Directors shall appoint an independent custodian and
tabulator to receive and hold proxies to be voted at the Special Meeting and
count the votes cast in favor of and in opposition to the Plan.
(c) The Superintendent shall be notified of the results of the Special
Meeting by a certificate signed by the President and Secretary of the Bank
within five days after the Special Meeting. In order to be approved, the Plan
must receive the affirmative vote of at least seventy-five percent (75%) in
amount of deposit liabilities of the Voting Depositors represented in person or
by proxy at the Special Meeting and the affirmative vote of at least a majority
of the amount of votes entitled to be cast by Voting Depositors at the Special
Meeting. Upon such approval of the Plan, the Bank will take all other necessary
steps pursuant to applicable laws to effect the Conversion in accordance with
the terms and conditions of the Plan. If the Plan is not approved at the
Special Meeting, the Plan shall not be implemented without further vote and all
funds submitted in the Subscription Offering and Community Offering will be
returned to subscribers, with interest as provided herein, and all withdrawal
authorizations will be canceled.
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3.3 Approval of Holding Company Applications.
The Holding Company will make timely applications for any requisite
regulatory approvals, including an Application with the Superintendent, an
Application on Form FR Y-3 with the FRB, and a registration statement on Form
S-1 to be filed with the SEC. The Bank will be a wholly owned subsidiary of
the Holding Company unless the Holding Company is not utilized in the
Conversion (in which event its registration statement will be withdrawn from
the SEC and the Bank will take all necessary steps to complete the
Conversion). If the Holding Company is utilized, upon the Conversion, the
Bank will issue its capital stock to the Holding Company, and the Holding
Company will issue and sell the Conversion Stock in accordance with this Plan.
The Conversion Stock will not be insured by the FDIC. The Bank will not
knowingly lend funds or otherwise extend credit to any person to purchase
shares of Conversion Stock.
4. SALE OF CONVERSION STOCK
(a) The Conversion Stock will be offered simultaneously in a
Subscription Offering to the Eligible Account Holders, Employee Plans and
Supplemental Eligible Account Holders in the priorities set forth in Section
8 of this Plan. The Subscription Offering may be commenced as early as the
mailing of the Proxy Statement for the Special Meeting of Depositors and must
be commenced in time to complete the Conversion within the time period
specified in Section 23.
Any shares of Conversion Stock not subscribed for in the Subscription
Offering may be offered for sale in the Community Offering as provided in
Section 9 and may also be offered in a Public Offering, as provided in
Section 10, if necessary and feasible. The Subscription Offering may be
commenced prior to the Special Meeting of Depositors, and, in that event, the
Community Offering, if any, may also be commenced prior to the Special
Meeting of Depositors. The offer and sale of Conversion Stock, prior to the
Special Meeting of Depositors shall, however, be conditioned upon approval of
the Plan by the Voting Depositors.
Shares of Conversion Stock may be sold in a Public Offering in a manner
that will achieve a reasonably wide distribution of the Conversion Stock as
determined by the Bank. In the event of a Public Offering, the sale of all
Conversion Stock subscribed for will be consummated only if all unsubscribed for
Conversion Stock is sold.
(b) The Bank may elect to pay fees on either a fixed fee or commission
basis or combination thereof to one or more investment banking firms which
assist it in the sale of the Conversion Stock and may also elect to pay fees on
a per share basis to
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broker-dealers who assist Persons in determining to purchase shares of
Conversion Stock.
(c) The sales price per share of the Conversion Stock shall be a uniform
price determined in accordance with Section 86.5(c) of the Conversion
Regulations and this Plan, except that the price to be paid by or through the
Underwriter or broker-dealers in connection with a Community Offering or Public
Offering may be less a negotiated commission or discount.
5. NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK
(a) The total number of shares (or a range thereof) of Conversion Stock to
be issued and offered for sale will be determined by the Boards of Directors of
the Bank and Holding Company, immediately prior to the commencement of the
Subscription Offering, subject to adjustment thereafter if necessitated or
required by the Conversion Regulations or by market or financial conditions,
with the approval of the Superintendent, if necessary.
All shares of Conversion Stock not subscribed for at the completion of the
Subscription Offering shall be sold within 45 days after completion of the
Subscription Offering, or such longer period as the Superintendent may approve.
If all shares are not sold as provided for herein, the Bank and the Holding
Company will consult with the Superintendent to determine an alternative method
of sale. In such event and if required by the Superintendent or the SEC, a
resolicitation of those Persons who have subscribed for shares will be made. If
such an alternative method is not agreed upon, the Conversion will not be
effected, the Bank will remain in mutual form, all funds submitted to the Bank
and the Holding Company as payment for shares of the Conversion Stock will be
returned to subscribers, with interest as provided herein, and all withdrawal
authorizations will be canceled.
(b) All Conversion Stock shall be sold at a uniform price per share
referred to in this Plan as the Purchase Price. The aggregate price at which
all the Conversion Stock shall be sold shall be consistent with the estimated
pro forma market value of such Conversion Stock on the Effective Date of the
Conversion, as determined by the Appraiser. An initial estimate of such pro
forma market value determined by the Appraiser in accordance with the Conversion
Regulations shall be submitted to the Superintendent and the FDIC as part of the
Bank's Application for Conversion, such valuation to be stated in terms of an
Estimated Price Range, the maximum of which shall be no more than 15% above the
average of the minimum and maximum of such range and the minimum of which shall
be no more than 15% below such average. In the event that the aggregate
purchase price of the Conversion Stock is below the minimum of the Estimated
Price Range, or materially above the maximum of the
10
Estimated Price Range, a resolicitation of purchasers may be required; provided,
that an increase up to 15% above the maximum of the Estimated Price Range which
is supported by an appropriate change in the estimated pro forma market value of
the Conversion Stock, and a resultant increase of up to 15% in the number of
shares of Conversion Stock to be sold, will not be deemed material so as to
require a resolicitation. Any such resolicitation shall be effected in such
manner and within such time as the Holding Company or the Bank shall establish,
with the approval of the Superintendent or the FDIC, if required.
(c) Based on the valuation of the Appraiser, the Boards of Directors of
the Bank and the Holding Company shall fix the price at which Conversion
Stock is to be offered and the number of shares to be offered. The total
number of shares of Conversion Stock offered shall be subject to increase or
decrease at any time prior to any Public Offering or other method of sale to
reflect changes in market and financial conditions. Subscribers shall not
have the right to modify or rescind their subscriptions as a result of any
increase or decrease in the number of shares of Conversion Stock offered,
unless otherwise required by this Plan or by the Superintendent.
(d) In the event shares of Conversion Stock are sold in excess of the
maximum of the Estimated Price Range, such shares will be allocated in the
same manner as other shares are allocated as set forth in Section 8(b) and if
there remain any shares after the satisfaction of all subscriptions in the
Subscription Offering, to fill unfulfilled subscriptions in the Community
Offering.
(e) The Boards of Directors of the Bank and the Holding Company, in
consultation with the Appraiser, shall determine the Purchase Price, with
such discounts, fees or commissions as may be allowed to the Underwriter,
subject to approval by the Superintendent.
(f) The Holding Company shall not consummate any sale unless the
Appraiser shall have confirmed to the Holding Company, the Bank and the
Superintendent that nothing of a material nature has occurred that would
cause the Appraiser to conclude that the aggregate purchase price of the
Conversion Stock is incompatible with its estimate of the aggregate pro forma
market value of the Bank at the time it is to be sold. If such confirmation
is not received, the Bank and the Holding Company may cancel the Subscription
Offering, the Community Offering or the Public Offering, extend the
Conversion, reopen or hold a new Subscription Offering, Community Offering or
Public Offering, or take such other action as the Boards of Directors of the
Bank and the Holding Company shall determine and the Superintendent shall
approve.
(g) The Conversion Stock, upon issuance, shall be fully paid and
nonassessable.
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6. PURCHASE BY THE HOLDING COMPANY OF THE STOCK OF THE BANK
Upon the consummation of the sale of the Conversion Stock, the Holding
Company will purchase from the Bank all of the capital stock of the Bank to be
issued by the Bank in the Conversion in exchange for 50% of the net proceeds
from the sale of the Conversion Stock, or such greater percentage as may be
approved by the Board of Directors of the Holding Company or required by the
Superintendent or the FDIC.
7. ESTABLISHMENT AND FUNDING OF FOUNDATION
(a) As part of the Conversion, the Holding Company and the Bank intend to
establish the Foundation and to donate to the Foundation from authorized but
unissued shares 2.0% of the number of shares of Conversion Stock sold in the
Conversion. The Foundation is being formed in connection with the Conversion in
order to complement the Bank's existing community reinvestment activities and to
share with the Bank's local communities a part of the Bank's financial success
as a locally headquartered, community-minded, financial services institution.
The funding of the Foundation in such manner accomplishes this goal as it
enables the community to share in the potential and profitability of the Holding
Company and the Bank over the long-term.
(b) The Foundation will be dedicated to the promotion of charitable
purposes including community development, grants or donations to support housing
assistance, not-for-profit community groups and other types of organizations or
civic-minded projects. The Foundation will annually distribute 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 to maintain its
qualification under Section 501(c)(3) of the Internal Revenue Code, the
Foundation may sell, on an annual basis, a limited portion of the Conversion
Stock contributed to it by the Holding Company.
(c) A majority of the board of directors of the Foundation will be
comprised of individuals who are Officers or Directors of the Bank and the
remaining board members will be comprised of civic and community leaders from
within the Bank's local community. 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
establishment and funding of the Foundation as part of the Conversion is subject
to the approval of the Superintendent and, if applicable, the FDIC, as more
fully described in the Prospectus.
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8. NON-TRANSFERABLE SUBSCRIPTION RIGHTS AND SHARE ALLOCATIONS
(a) Each Eligible Account Holder and Supplemental Eligible Account
Holder shall receive, without payment, the non-transferable right to
subscribe in the Subscription Offering for such number of shares of
Conversion Stock as equates to an aggregate purchase price of $150,000. The
Employee Plans shall receive, without payment, in the aggregate, the right to
subscribe for 10% of the shares of Conversion Stock, plus shares issued to
the Foundation.
(b) If subscriptions are received in the Subscription Offering for more
shares of Conversion Stock than are to be sold, then shares shall be
allocated in the following order of priority: first to Eligible Account
Holders; second to Employee Plans and third to Supplemental Eligible Account
Holders. Subscription rights received in each category shall be subordinated
to the subscription rights received in all prior categories. No Person in
any category shall be allocated any shares unless all subscriptions in all
prior categories have been filled to the maximum permitted amount. If
subscriptions received within any of the first or third categories exceed the
number of shares available for purchase by that category, then each
subscriber in that category shall first receive, to the extent practicable,
an allocation equal to the lesser of the number of shares subscribed for by
that subscriber or 100 shares. Any remaining shares shall be allocated among
members of such category, to the extent practicable, based upon the ratio
that each subscriber's Qualifying Deposit bears to the Qualifying Deposits of
all subscribers with unfilled subscriptions in that category. If the amount
so allocated to any subscriber exceeds the amount subscribed for by that
subscriber, the excess shall be reallocated (one or more times as necessary)
among those subscribers in such category whose subscriptions are still not
fully satisfied on the same principle until all available shares have been
allocated or all subscriptions satisfied. In no event shall fractional
shares be issued.
(c) Subscription rights of Eligible Account Holders received by
Directors and Officers and their Associates which are based on deposits made
by such persons during the twelve (12) months preceding the Eligibility
Record Date shall be subordinated to the Subscription Rights of all other
Eligible Account Holders.
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9. COMMUNITY OFFERING
(a) If less than the total number of shares of Conversion Stock to be
purchased in the Conversion is sold in the Subscription Offering, shares
remaining which are unsubscribed may be made available for purchase in the
Community Offering to certain members of the general public. The Bank may
establish all terms and conditions of such offer. The shares may be made
available in the Community Offering through a direct community marketing
program. The Community Offering may also be conducted, in whole or in part,
through a broker, dealer, consultant or investment banking firm, experienced
and an expert in the sale of savings institution securities, or a syndicate
thereof. In the Community Offering, if held, a preference will be given to
natural persons residing in Cortland County, New York. The Community
Offering shall be conducted in such a manner as to promote a reasonably wide
distribution of Conversion Stock.
(b) If the purchasers in the Community Offering, whose orders would
otherwise be accepted, subscribe for more shares than are available for
purchase, the shares available to them will be allocated among persons
submitting orders in the Community Offering in an equitable manner as
determined by the Boards of Directors of the Bank and the Company.
(c) The Community Offering, if held, may commence simultaneously with,
during or subsequent to the completion of the Subscription Offering and may
be limited in such manner as the Bank shall determine, subject to the
approval of the Superintendent, if required. If commenced, the Community
Offering must be completed within 45 days after the completion of the
Subscription Offering unless otherwise extended with the approval of the
Superintendent.
(d) The Bank and the Holding Company, in their absolute discretion,
reserve the right to reject any or all orders in whole or in part which are
received in the Community Offering, at the time of receipt or as soon as
practicable following the completion of the Community Offering.
10. PUBLIC OFFERING
Any shares of Conversion Stock not sold in the Subscription Offering or
in the Community Offering, if held, may then be sold through the Underwriter
to the general public at the Purchase Price in the Public Offering, subject
to such terms, conditions and procedures as may be determined by the Boards
of Directors of the Bank and the Holding Company, in a manner that will
achieve a reasonably wide distribution of the Conversion Stock and subject to
the right of the Bank and the Holding Company, in their absolute discretion,
to accept or reject in whole or in part all subscriptions in the Public
Offering.
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11. LIMITATIONS ON PURCHASE AND TRANSFER OF CONVERSION STOCK
The following limitations shall apply to all purchases of shares of
Conversion Stock:
(a) The maximum number of shares of Conversion Stock which may be
subscribed for or purchased in the Conversion by any Person together with any
Associate or group of Persons Acting in Concert shall not exceed such number
of shares as shall equal $150,000 divided by the Purchase Price, except for
Employee Plans, which in the aggregate may subscribe for up to 10% of the
Conversion Stock issued.
(b) The maximum number of shares of Conversion Stock which may be
purchased in all categories of the Conversion by Officers and Directors of
the Bank and the Holding Company and their Associates, collectively, shall
not exceed 25% of the total number of shares of Conversion Stock issued. In
applying this limitation, Conversion Stock purchased by any one or more
Tax-Qualified Employee Stock Benefit Plans shall not be counted.
(c) Shares of Conversion Stock subscribed for in the Subscription
Offering, the Community Offering and any Public Offering or otherwise
purchased shall be aggregated for purposes of determining if the maximum
purchase limitations set forth in this Plan have been violated.
(d) Each person subscribing for shares must purchase, to the extent
available, the lesser of 25 shares of Conversion Stock or Conversion Stock
with an aggregate Purchase Price of at least $500.
(e) Depending upon market or financial conditions, the Boards of
Directors of the Bank and the Holding Company, without further approval of
the subscribers, may decrease or increase the purchase limitations in this
Plan, provided that the maximum purchase limitations may not be increased to
a percentage in excess of 5% of the shares being offered. If the Bank and the
Holding Company increase such maximum purchase limitations, they are only
required to resolicit Persons who subscribed for the maximum purchase amount
and may, in their sole discretion, resolicit other subscribers.
(f) Each Person purchasing Conversion Stock in the Conversion shall be
deemed to confirm that such purchase does not conflict with the purchase
limitations set forth in this Plan.
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(g) As used in this Section, Officers and Directors of the Bank and the
Holding Company shall not be deemed to be Associates or a group affiliated
with each other or otherwise Acting in Concert solely as a result of their
being Officers or Directors of the Bank or the Holding Company. Furthermore,
the Employee Plans shall not be deemed to be Associates or affiliates of or
Persons Acting in Concert with any Director or Officer of the Holding Company
or the Bank for the purpose of determining the right to purchase Conversion
Stock.
(h) For three years after the Conversion, no Officer or Director of the
Bank or the Holding Company, or their Associates, shall purchase or acquire,
without the prior written approval of the Superintendent, direct or indirect
beneficial ownership of any capital stock of the Holding Company, except from
a broker or dealer registered with the SEC. This restriction shall not apply
to purchases made by or held by any Tax-Qualified Employee Stock Benefit Plan
or Non-Tax Qualified Employee Stock Benefit Plan of the Bank or the Holding
Company (including the Employee Plans) which may be attributable to any
Officer or Director.
12. PAYMENT FOR CONVERSION STOCK
All payments for Conversion Stock subscribed for in the Subscription,
Community and Public Offerings must be delivered in full to the Bank,
together with a properly completed and executed Order Form, or Purchase Order
in the case of the Public Offering, on or prior to the expiration date
specified on the Order Form or Purchase Order, as the case may be, unless
such date is extended by the Bank; provided, however, that if the Employee
Plans subscribe for shares during the Subscription Offering, the Employee
Plans will not be required to pay for the shares at the time they subscribe
but rather may pay for such shares of Conversion Stock upon consummation of
the Conversion. The Bank and the Holding Company shall have the right to
require that payments in excess of $25,000 for Conversion Stock be made by
bank check, certified check or withdrawal authorization from an account at
the Bank with collected funds sufficient to pay for the shares ordered.
Notwithstanding the foregoing, the Bank and the Holding Company shall
have the right, in their sole discretion, to permit institutional investors
to submit contractually irrevocable orders in the Community or Public
Offering and to thereafter submit payment for the Conversion Stock for which
they are subscribing in the Community Offering or Public Offering at any time
prior to the completion of the Conversion.
Payment for Conversion Stock subscribed for shall be made either in cash
(if delivered in person), check or money order. Alternatively, subscribers
in the Subscription and Community Offerings may authorize the Bank on the
Order Form to make a withdrawal from the subscriber's Deposit Account at the
Bank in an amount
16
equal to the purchase price of such shares. Such withdrawal 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 requirement, the certificate shall be canceled at the time of
withdrawal, without penalty, and the remaining balance will earn interest at the
passbook rate. Funds for which a withdrawal is authorized will remain in the
subscriber's Deposit Account but may not be used by the subscriber until the
Conversion Stock has been sold or the 45-day period (or such longer period as
may be approved by the Superintendent) following the Subscription Offering has
expired, whichever occurs first. The withdrawal will be given effect only to
the extent necessary to satisfy the subscription (to the extent it can be
filled) at the Purchase Price per share. Interest will continue to be earned on
any amounts authorized for withdrawal from an account until such withdrawal is
given effect at the interest rate applicable to such account. Interest will be
paid by the Bank at not less than the passbook rate as of the date the
Subscription Offering is commenced on payments for Conversion Stock received in
cash or by money order or check. Such interest will be paid from the date
payment is received by the Bank until consummation or termination of the
Conversion. If for any reason the Conversion is not consummated, all payments
made by subscribers in the Subscription, Community and Public Offerings 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.
13. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
After the registration statement filed with the SEC for the Conversion
Stock has been declared effective and approvals have been obtained from the
Superintendent and all other required regulatory agencies, the Holding
Company shall distribute or make available the Prospectus, together with
Order Forms for the purchase of Conversion Stock, to the Holders of
Subscription Rights for the purpose of enabling them to exercise their
respective Subscription Rights. Each Order Form must be preceded or
accompanied by the Prospectus describing the Holding Company (if utilized),
the Bank, the Conversion Stock, the Subscription Offering and the Community
Offering, and contain such information as required by the Conversion
Regulations.
Notwithstanding the above, the Bank and the Holding Company reserve the
right in their sole discretion to accept or reject orders received on
photocopied or facsimile order forms or whose payment is to be made by wire
transfer. The Holding Company may, subject to the provisions of this Plan
and any required approval of the Superintendent, extend the period during
which an Order Form must be completed and delivered. Any such extension
shall be for a period that the Boards of Directors of the Bank and the
Holding Company determine is appropriate.
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14. UNDELIVERED, DEFECTIVE OR LATE ORDER FORMS: INSUFFICIENT PAYMENT
In the event Order Forms or Purchase Orders (a) are not delivered and
are returned to the Bank by the United States Postal Service or the Bank is
unable to locate the addressee, (b) are not received back by the Bank or are
received by the Bank after the expiration date specified thereon, (c) are
defectively filled out or executed, (d) are not accompanied by the full
required payment, or, in the case of institutional investors in the Community
Offering or the Public Offering, by delivering irrevocable orders together
with a legally binding commitment to pay in cash, check, money order or wire
transfer the full amount of the purchase price prior to 48 hours before the
completion of the Conversion for the shares of Conversion 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 or Purchase Order within the time period specified
thereon; provided, however, that the Bank may in its sole discretion, but
will not be required to, waive any irregularity on any Order Form or Purchase
Order or require the submission of corrected Order Forms or Purchase Orders
or the remittance of full payment for subscribed shares by such date as the
Bank may specify. The interpretation of the Bank of terms and conditions of
the Plan and of the Order Forms or Purchase Orders will be final, subject to
the authority of the Superintendent.
15. RESTRICTIONS ON ACQUISITION OF THE BANK AND HOLDING COMPANY
(a) In accordance with the Conversion Regulations, for a period of not
less than three years (or such longer period as may be subsequently
authorized under the Conversion Regulations) following the Effective Date, no
Person or group of Persons Acting in Concert shall, directly or indirectly,
offer to acquire or acquire the beneficial ownership of more than ten percent
(10%) of any class of any equity security of the Holding Company or the Bank
without the prior consent of the Superintendent.
(b) The Restated Organization Certificate of the Bank will contain a
provision stipulating that, for a period of three years following the
Effective Date, no Person or group of Persons Acting in Concert, except the
Holding Company (if a holding company form of organization is utilized) or an
Employee Plan, shall directly or indirectly offer to acquire or acquire the
beneficial ownership of more than ten percent (10%) of any class of an equity
security of the Bank, without the prior written approval of the
Superintendent. In addition, such Restated Organization Certificate may also
provide that, for a period of three years following the Conversion, shares
18
beneficially owned in violation of such provision shall not be entitled to vote
and shall not be voted by any Person or counted as voting stock in connection
with any matter submitted to shareholders for a vote. In addition, the Restated
Organization Certificate will provide that special meetings of the shareholders
relating to changes in control or amendment of the Restated Organization
Certificate may only be called by the Board of Directors and that shareholders
shall not be permitted to cumulate their votes for the election of directors.
(c) The Certificate of Incorporation of the Holding Company shall
contain a provision to the effect that any record owner of any outstanding
shares of the Holding Company's common stock who beneficially owns in excess
of 10% of such outstanding shares shall not be entitled to cast any votes
with respect to any shares held in excess of such 10% limit. Such provision
shall also apply to the record owner of any shares which are beneficially
owned by any Person or group of Persons Acting in Concert who beneficially
own shares in excess of such limit, even though such beneficial owners may
not own any shares of record. In addition, the Certificate of Incorporation
and By-Laws of the Holding Company contain provisions for staggered terms of
the directors, noncumulative voting for directors, limitations on the calling
of special meetings, a fair price provision for certain business combinations
and certain notice requirements.
(d) For the purposes of this Section:
(i) The term "Person" includes an individual, a group Acting in
Concert, a corporation, a partnership, an association, a joint stock
company, a trust, an unincorporated organization or similar company, a
syndicate, or any other group formed for the purpose of acquiring, holding
or disposing, directly or indirectly, of securities of the Bank or the
Holding Company, but the term "Person" does not include the Holding Company
or any majority-owned subsidiary thereof, or any Tax-Qualified Employee
Stock Benefit Plan or any trust or custodial arrangement established in
connection with any such plan; provided, that the plan or plans do not have
beneficial ownership in the aggregate of more than twenty-five percent
(25%) of any class of equity security of the Bank or the Holding Company;
(ii) The term "offer" includes every offer to buy or acquire,
solicitation of an offer to sell, tender offer for, or request or
invitation for tenders of, a security or interest in a security for value;
(iii) The term "acquire" includes every type of acquisition,
whether effected by purchase, exchange, operation of law or otherwise; and
(iv) The term "security" includes non-transferable subscription rights
19
issued pursuant to a plan of conversion as well as a "security" as defined
in 15 U.S.C. Section 78c(a)(10).
16. EFFECT OF CONVERSION; CERTAIN COVENANTS AND AGREEMENTS
(a) On the Effective Date of the Conversion, the Bank shall cease to be
a mutual institution and shall simultaneously become a stock institution.
All of the property, rights, powers, franchises, debts, liabilities,
obligations and duties of the mutual institution shall continue as such in
the stock institution and all deposits in the mutual institution shall remain
as deposits of equal character and value in the stock institution. The
corporate existence of the Bank shall not terminate, and the converted Bank
shall be a continuation of the mutual institution that existed immediately
before the filing of the Restated Organization Certificate.
The Bank shall take all appropriate steps to restate its Organization
Certificate to read in the form of an Organization Certificate for a New York
stock savings bank as specified in the Banking Law and the regulations of the
New York Banking Board and approved by the Board of Directors of the Bank. By
their approval of the Plan, the Voting Depositors of the Bank will thereby
approve and adopt such Restated Organization Certificate. The Bank shall also
take all appropriate steps to adopt by-laws sufficient and appropriate for a
New York stock savings bank.
17. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
(a) All shares of Conversion Stock purchased by Directors or Officers
of the Bank or the Holding Company in the Conversion shall be subject to the
restriction that, except as provided in Section 17(b) below, or as may be
approved by the Superintendent, no interest in such shares may be sold or
otherwise disposed of for value for a period of one (1) year following the
date of purchase.
(b) The restriction on disposition of shares of Conversion Stock set
forth in Section 17(a) above shall not apply to the following:
(i) Any exchange of such shares in connection with a merger or
acquisition involving the Bank or the Holding Company, which has been
approved by the Superintendent; and
(ii) Any disposition of such shares following the death of the person
to whom such shares were initially sold under the terms of the Plan.
(c) With respect to all shares of Conversion Stock subject to restrictions
on resale or subsequent disposition, each of the following provisions shall
apply;
20
(i) Each certificate representing shares restricted within the
meaning of Section 17(b) above shall bear a legend prominently stamped on
its face giving notice of the restriction;
(ii) Appropriate instructions shall be issued to the stock transfer
agent for the Holding Company not to recognize or effect any transfer of
any certificate or record of ownership of any such shares in violation of
any of the transfer restrictions; and
(iii) Any shares of capital stock of the Holding Company issued
with respect to a stock dividend, stock split, or otherwise with respect to
any such restricted stock may not be sold until the restrictions respecting
such originally restricted stock are terminated, and any certificate for
such shares shall bear a legend advising of such restrictions.
18. VOTING RIGHTS AFTER CONVERSION
Upon Conversion, the holders of the capital stock of the Bank shall have
the exclusive voting rights with respect to the Bank as specified in its
Restated Organization Certificate and the holders of the capital stock of the
Holding Company shall have the exclusive voting rights with respect to the
Holding Company.
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT
The Bank shall establish at the time of Conversion a liquidation account
in an amount equal to its net worth as of the net worth of the Bank as set
forth in the latest statement of financial condition included in the
Prospectus. The liquidation account will be maintained by the Bank for the
benefit of the Eligible Account Holders and Supplemental Eligible Account
Holders who continue to maintain their Deposit Accounts at the Bank. Each
Eligible Account Holder and Supplemental Eligible Account Holder shall, with
respect to his Deposit Account, hold a related inchoate interest in a portion
of the liquidation account balance, calculated as set forth below.
In the event of a complete liquidation of the Bank (and only in such
event), following all liquidation payments to creditors (including those to
Account Holders to the extent of their Deposit Accounts) each Eligible
Account Holder and Supplemental Eligible Account Holder shall be entitled to
receive a liquidating distribution from the liquidation account, in the
amount of the then adjusted subaccount balance for his Deposit Account then
held, before any liquidation distribution may be made to any holders of the
Bank's capital stock. No merger, consolidation, purchase of bulk assets with
assumption of Deposit Accounts and other liabilities, or similar transactions
with an FDIC insured institution, in which the Bank is not the surviving
institution, shall be
21
deemed to be a complete liquidation for this purpose. In such transactions, the
liquidation account shall be assumed by the surviving institution.
The initial subaccount balance for a Deposit Account held by an Eligible
Account Holder or Supplemental Eligible Account Holder shall be determined by
multiplying the opening balance in the liquidation account by a fraction, the
numerator of which is the amount of such Eligible Account Holder's or
Supplemental Eligible Account Holder's Qualifying Deposit and the denominator
of which is the total amount of all Qualifying Deposits of all Eligible
Account Holders and Supplemental Eligible Account Holders in the Bank. Such
initial subaccount balance shall not be increased, but shall be subject to
downward adjustment as described below.
If, at the close of business on any annual closing date, commencing on
or after the effective date of the Conversion, the deposit balance in the
Deposit Account of an Eligible Account Holder or Supplemental Eligible
Account Holder is less than the lesser of (i) the balance in the Deposit
Account at the close of business on any other annual closing date subsequent
to the Eligibility Record Date or Supplemental Eligibility Record Date, as
applicable, or (ii) the amount of the Qualifying Deposit in such Deposit
Account, the subaccount balance of such Deposit Account shall be adjusted by
reducing such subaccount balance in an amount proportionate to the reduction
in such deposit balance. In the event of such downward adjustment, the
subaccount balance shall not be subsequently increased, notwithstanding any
subsequent increase in the deposit balance of the related Deposit Account.
If any such Deposit Account is closed, the related subaccount shall be
reduced to zero.
The creation and maintenance of the liquidation account shall not
operate to restrict the use or application of any of the net worth accounts
of the Bank.
20. DEPOSIT ACCOUNTS FOLLOWING CONVERSION
Each Person holding a Deposit Account at the Bank at the time of
Conversion shall retain an identical Deposit Account at the Bank following
the Conversion in the same amount and subject to the same terms and
conditions applicable to such Deposit Account at the time of Conversion
(except as to voting and liquidation rights).
21. STOCK REPURCHASE AND STOCK BENEFIT PLANS
The Holding Company, or the Bank if the Holding Company is not utilized,
will restrict repurchases of Conversion Stock and the implementation of stock
option and management and employee stock benefit plans as required by the
Conversion Regulations, unless such requirements are waived by the
appropriate regulatory agency.
22
22. AMENDMENT OF PLAN
If deemed necessary or desirable, the Plan may be substantively amended
at any time prior to solicitation of proxies from Voting Depositors to vote
on the Plan by a two-thirds vote of the Bank's Board of Directors and at any
time thereafter by such vote of such Board of Directors with the concurrence
of the Superintendent. Any amendment to the Plan made after approval by the
Voting Depositors with the approval of the Superintendent shall not
necessitate further approval by the Voting Depositors unless otherwise
required by the Superintendent. The Plan may be terminated by majority vote
of the Bank's Board of Directors at any time prior to the Special Meeting and
at any time thereafter with the concurrence of the Superintendent.
By adoption of the Plan, the Voting Depositors of the Bank authorize the
Board of Directors of the Bank to amend or terminate the Plan under the
circumstances set forth in this Section.
23. CONSUMMATION AND COMPLETION OF CONVERSION
The Conversion shall be deemed to take place and be effective upon the
completion of all requisite organizational procedures for obtaining the
Restated Organization Certificate for the Bank in stock form and sale of all
Conversion Stock and the filing of the Restated Organization Certificate in
the office of the Superintendent. The Conversion shall be completed within
24 months from the date of approval of this Plan by the Superintendent.
24. REGISTRATION AND MARKETING
Within the time period required by applicable laws and regulations, the
Holding Company will register the securities issued in connection with the
Conversion pursuant to the Securities Exchange Act of 1934 and will not
deregister such securities for a period of at least three years thereafter,
except that such three year registration maintenance requirement may be
fulfilled by any successor to the Holding Company. In addition, the Holding
Company will use its best efforts to encourage and assist market-makers to
establish and maintain a market for the Conversion Stock and to list those
securities on a national or regional securities exchange or the NASDAQ Stock
Market.
23
25. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
The Bank will make reasonable efforts to comply with the securities laws
of all States in the United States in which Persons entitled to subscribe for
shares of Conversion Stock pursuant to the Plan reside. However, no Person
will be issued subscription rights or be permitted to purchase shares of
Conversion Stock in the Subscription Offering if such Person resides in a
foreign country.
26. EXPENSES OF CONVERSION
The expenses incurred by the Bank and Holding Company in connection with
the Conversion shall be reasonable.
27. CONDITIONS TO CONVERSION
The Conversion is expressly conditioned upon the following:
(a) Prior receipt by the Bank of rulings of the United States Internal
Revenue Service and the State of New York taxing authorities, or opinions of
counsel, substantially to the effect that the Conversion will not result in
any adverse federal or state tax consequences to Eligible Account Holders or
Supplemental Eligible Account Holders or the Bank and the Holding Company
before or after the Conversion;
(b) The sale of Conversion Stock with an aggregate purchase price at
least equal to the minimum of the Estimated Valuation Range, except as
otherwise permitted pursuant to this Plan upon the approval of the
Superintendent;
(c) The completion of the Conversion within the time period specified
in Section 23 hereof; and
(d) The non-objection of the FDIC and the approval of the
Superintendent to the Conversion, the approval of the FRB to the Holding
Company's acquisition of the capital stock of the Bank, the declaration of
effectiveness by the SEC of the Holding Company's registration statement, and
the receipt of any other required regulatory approval.
28. INTERPRETATION
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Bank
shall be final, subject to the authority of the Superintendent.
24