Exhibit 2.3
Plan of Conversion of MHC and Agreement and Plan
Of Reorganization between MHC, the Company and the Bank
PLAN OF CONVERSION
(EXCLUDING ANNEXES)
OF
WILLOW GROVE MUTUAL HOLDING COMPANY
AND
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
WILLOW GROVE MUTUAL HOLDING COMPANY,
WILLOW GROVE BANCORP, INC.
(A FEDERAL CORPORATION)
WILLOW GROVE BANCORP, INC.
(A PENNSYLVANIA CORPORATION)
AND
WILLOW GROVE BANK
TABLE OF CONTENTS
SECTION
NUMBER PAGE
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1. Introduction............................................................................. 1
2. Definitions.............................................................................. 3
3. General Procedure for Conversion and Reorganization...................................... 9
4. Total Number of Shares and Purchase Price of
Conversion Stock...................................................................... 12
5. Subscription Rights of Eligible Account Holders.......................................... 13
6. Subscription Rights of Tax-Qualified Employee
Stock Benefit Plans................................................................... 13
7. Subscription Rights of Supplemental Eligible Account Holders............................. 14
8. Subscription Rights of Other Members..................................................... 15
9. Subscription Rights of Directors, Officers and Employees................................. 15
10. Subscription Rights of Public Shareholders............................................... 15
11. Community Offering, Syndicated Community Offering and
Other Offerings......................................................................... 16
12. Limitations on Subscriptions and Purchases of Conversion Stock........................... 18
13. Timing of Subscription Offering; Manner of Exercising
Subscription Rights and Order Forms.................................................... 20
14. Payment for Conversion Stock............................................................. 22
15. Account Holders in Nonqualified States or in Foreign Countries........................... 23
16. Voting Rights of Shareholders............................................................ 23
17. Liquidation Account...................................................................... 24
18. Transfer of Deposit Accounts............................................................. 25
19. Requirements Following Conversion and Reorganization for
Registration, Market Making and Stock Exchange Listing................................. 25
20. Directors and Officers of the Bank....................................................... 26
21. Requirements for Stock Purchases by Directors
and Officers Following the Conversion and Reorganization............................... 26
22. Restrictions on Transfer of Stock........................................................ 26
23. Restrictions on Acquisition of Stock of the Holding Company.............................. 27
24. Tax Rulings or Opinions.................................................................. 27
25. Stock Compensation Plans................................................................. 28
26. Dividend and Repurchase Restrictions on Stock............................................ 28
27. Payment of Fees to Brokers............................................................... 28
28. Effective Date........................................................................... 29
29. Amendment or Termination of the Plan..................................................... 29
30. Interpretation of the Plan............................................................... 29
Exhibit 2.3
1. INTRODUCTION.
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For purposes of this section, all capitalized terms have the meanings
ascribed to them in Section 2.
On December 23, 1998, Willow Grove Bank, a federally chartered mutual
savings association ("Willow Grove"), reorganized into the mutual holding
company form of organization. To accomplish this transaction, Willow Grove
organized a federally chartered, stock-form savings association known as Willow
Grove Bank (the "Bank") as a wholly owned subsidiary of a newly formed federally
chartered stock-form mid-tier holding company known as Willow Grove Bancorp,
Inc. (the "Mid-Tier Holding Company"). The Mid-Tier Holding Company
simultaneously issued 2,812,974 shares of its common stock to a newly formed
federally chartered mutual holding company known as Willow Grove Mutual Holding
Company (the "Mutual Holding Company"), contributed 89,635 of its shares of
common stock to the Willow Grove Foundation (the"Foundation"), and sold
2,240,878 of its shares of common stock to depositors of the Bank, employee
stock benefit plans of the Bank, directors, officers and employees of the Bank
and members of the general public.
The Boards of Directors of the Mutual Holding Company, the Mid-Tier
Holding Company and the Bank believe that a conversion of the Mutual Holding
Company to stock form and reorganization of the Bank pursuant to this Plan of
Conversion is in the best interests of the Mutual Holding Company, the Mid-Tier
Holding Company and the Bank, as well as the best interests of their respective
Members and Shareholders. The Boards of Directors determined that this Plan of
Conversion equitably provides for the interests of Members through the granting
of subscription rights and the establishment of a liquidation account. The
Conversion and Reorganization will result in the raising of additional capital
for the Bank and the Holding Company and is expected to result in a more active
and liquid market for the Holding Company Common Stock than currently exists for
the Mid-Tier Holding Company Common Stock. In addition, the Conversion and
Reorganization have been structured to re-unite the accumulated earnings and
profits tax attribute retained by the Mutual Holding Company with the retained
earnings of the Bank through a tax-free reorganization. Finally, the Conversion
and Reorganization is designed to enable the Bank and the Holding Company to
more effectively compete in the financial services marketplace.
If the Bank had undertaken a standard conversion involving the
formation of a stock holding company in 1998, applicable OTS regulations would
have required a greater amount of Mid-Tier Holding Company Common Stock to be
sold than the amount raised in connection with the formation of the Mutual
Holding Company. In addition, if a standard conversion had been conducted in
1998, management of the Bank believed that it may have been difficult to
prudently invest in a timely manner the larger amount of capital that would have
been raised, when compared to the net proceeds raised in connection with the
formation of the Mutual Holding Company. A standard conversion in 1998 also
would have immediately eliminated all aspects of the mutual form of
organization.
The Mid-Tier Holding Company recognized $21.4 million in net proceeds
from the sale of its common stock in 1998 in connection with the formation of
the Mutual Holding Company. The Bank has pursued a plan of expansion and growth
since the formation of the Mutual Holding Company and, as a result of, among
other factors, leveraging its balance sheet, total assets have increased from
$405.4 million as June 30, 1998 to $625.1 million at the Mid-Tier Holding
Company at June 30, 2001. During the same period, the Bank has increased the
number of its full service banking offices from seven to 12, and its net loans
receivable have increased from $315.7 million to $454.2 million. Such growth
reflects the Bank's efforts to become a full-service community banking
institution. The Bank remains committed to controlled growth and
diversification. The additional funds received in a Conversion will facilitate
the Bank's ability to continue to grow in accordance with its business plan,
through both internal growth and acquisitions of other institutions or branch
offices. The Bank believes that its current mutual holding company form may, and
may continue to, impede its ability to undertake certain of such acquisitions.
Given the current consolidation efforts in the banking industry in general and
in the Bank's market area in particular, the Bank believes that there will be
significant acquisition opportunities in the future. The Bank believes that a
Conversion will enhance its ability to continue its growth through acquisitions
and will
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support its ability to more fully serve the borrowing and other financial needs
of the communities it serves. The Bank and the Mid-Tier Holding Company have
also gained experience in being companies required to meet the filing
requirements of the Securities Exchange Act of 1934 and in conducting
shareholder meetings and other shareholder matters, such as communications,
press releases, NASD matters and dividend payments. In light of the foregoing,
the Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding
Company and the Bank believe that it is in the best interests of such companies
and their respective Members and Shareholders to raise additional capital at
this time, and that the most feasible way to do so is through the Conversion and
Reorganization.
In connection with the Conversion and Reorganization, the Bank will
form a new first-tier, wholly-owned subsidiary known as Willow Grove Bancorp,
Inc., a Pennsylvania corporation, which will become the Holding Company upon
consummation of the Conversion and Reorganization. The Holding Company will in
turn form a federally chartered interim savings association ("Interim") as a
wholly-owned subsidiary. As described in more detail in Section 3, the Mutual
Holding Company will convert from the mutual form to a federal interim stock
savings association and simultaneously merge with and into the Bank pursuant to
the Plan of Merger included as Annex B hereto, pursuant to which the Mutual
Holding Company will cease to exist and a liquidation account will be
established by the Bank for the benefit of depositor Members as of specified
dates, and Interim will then merge with and into the Bank pursuant to the Plan
of Merger included as Annex C hereto, pursuant to which the Bank will become a
wholly owned subsidiary of the Holding Company. In connection therewith, each
share of Mid-Tier Holding Company Common Stock outstanding immediately prior to
the effective time thereof shall be automatically converted, without further
action by the holder thereof, into and become the right to receive shares of
Holding Company Common Stock based on the Exchange Ratio, plus cash in lieu of
any fractional share interest. Preceding these transactions the Mid-Tier Holding
Company will convert to an interim federal stock savings association and merge
with and into the Bank with the Bank as the surviving entity. Annex A hereto
describes this transaction.
In connection with the Conversion and Reorganization, the Holding
Company will offer shares of Conversion Stock in the Offerings as provided
herein. Shares of Conversion Stock will be offered in a Subscription Offering in
descending order of priority to Eligible Account Holders, Tax-Qualified Employee
Stock Benefit Plans, Supplemental Eligible Account Holders, Other Members,
Directors, Officers and Employees and Public Shareholders. The Subscription
Rights granted in connection with the Subscription Offering are
non-transferrable. Any shares of Conversion Stock remaining unsold after the
Subscription Offering will be offered for sale to the public through a Community
Offering and/or Syndicated Community Offering, as determined by the Boards of
Directors of the Holding Company, the Mid-Tier Holding Company and the Bank in
their sole discretion.
This Plan was adopted by the Boards of Directors of the Mutual Holding
Company, the Mid-Tier Holding Company and the Bank on September 7, 2001.
This Plan is subject to the approval of the OTS and must be adopted by
(1) at least a majority of the total number of votes eligible to be cast by
Voting Members of the Mutual Holding Company at the Special Meeting and (2)
holders of at least two-thirds of the outstanding Mid-Tier Holding Company
Common Stock at the Shareholders' Meeting. In addition, the Primary Parties have
conditioned the consummation of the Conversion and Reorganization on the
approval of the Plan by at least a majority of the votes cast, in person or by
proxy, by the Public Shareholders at the Shareholders' Meeting.
After the Conversion and Reorganization, the Bank will continue to be
regulated by the OTS, as its chartering authority, and by the FDIC, which
insures the Bank's deposits. In addition, the Bank will continue to be a member
of the Federal Home Loan Bank System and all insured savings deposits will
continue to be insured by the FDIC up to the maximum provided by law.
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2. DEFINITIONS.
-----------
As used in this Plan, the terms set forth below have the following
meaning:
2.1 ACTUAL PURCHASE PRICE means the price per share at which the
Conversion Stock is ultimately sold by the Holding Company in the Offerings in
accordance with the terms hereof.
2.2 AFFILIATE means a Person who, directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified.
2.3 ASSOCIATE, when used to indicate a relationship with any Person,
means (i) a corporation or organization (other than the Mutual Holding Company,
the Mid-Tier Holding Company, the Bank, a majority-owned subsidiary of the Bank
or the Holding Company) of which such Person is a director, officer or partner
or is, directly or indirectly, the beneficial owner of 10% or more of any class
of equity securities, (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity, provided, however, that such term shall not
include any Tax-Qualified Employee Stock Benefit Plan of the Holding Company or
the Bank in which such Person has a substantial beneficial interest or serves as
a trustee or in a similar fiduciary capacity, and (iii) any relative or spouse
of such Person, or any relative of such spouse, who has the same home as such
Person or who is a director or officer of the Holding Company or the Bank or any
of the subsidiaries of the foregoing.
2.4 BANK means Willow Grove Bank, a federally chartered savings
association.
2.5 BANK MERGER means the merger of Interim with and into the Bank
pursuant to the Plan of Merger included as Annex C hereto.
2.6 BANK COMMON STOCK means the common stock of the Bank, par value
$.01 per share, which stock is not and will not be insured by the FDIC or any
other governmental authority, all of which is currently held by the Mid-Tier
Holding Company and subsequent to the Conversion and Reorganization, all of
which will be held by the Holding Company.
2.7 CODE means the Internal Revenue Code of 1986, as amended.
2.8 COMMUNITY OFFERING means the offering for sale by the Holding
Company of any shares of Conversion Stock not subscribed for in the Subscription
Offering to such Persons within or without the Commonwealth of Pennsylvania as
may be selected by the Holding Company, the Mid-Tier Holding Company and the
Bank in their sole discretion and to whom a copy of the Prospectus is delivered
by or on behalf of the Holding Company.
2.9 CONTROL (including the terms "controlling," "controlled by," and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
2.10 CONVERSION AND REORGANIZATION means (i) the conversion of the
Mid-Tier Holding Company from a federally chartered stock corporation to a
federal interim savings association and the subsequent Mid-Tier Holding Company
Merger pursuant to which the Mid-Tier Holding Company will cease to exist, (ii)
the conversion of the Mutual Holding Company from mutual form to a federal
interim stock savings association and the subsequent Mutual Holding Company
Merger, pursuant to which the Mutual Holding Company will cease to exist, (iii)
the Bank Merger, pursuant to which the Bank will become a wholly owned
subsidiary of the Holding Company and, in connection therewith, each share of
Mid-Tier Holding Company Common Stock outstanding immediately prior to the
effective time thereof shall automatically be converted, without further action
by the holder thereof, into and become the right to receive shares of Holding
Company Common Stock based on the Exchange Ratio, plus cash in lieu of any
fractional share interest, and (iv) the issuance of Conversion Stock by the
Holding Company in the
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Offerings as provided herein, which will increase the number of shares of
Holding Company Common Stock outstanding and the capitalization of the Holding
Company and the Bank. All such transactions shall occur substantially
simultaneously.
2.11 CONVERSION STOCK means the Holding Company Common Stock to be
issued and sold in the Offerings pursuant to the Plan of Conversion.
.........
2.12 DEPOSIT ACCOUNT means with drawable or repurchasable shares,
investment certificates or deposits or other savings accounts, including money
market deposit accounts, negotiable order of withdrawal accounts and demand
accounts, held by an account holder of the Bank.
2.13 DIRECTOR, OFFICER AND EMPLOYEE means the terms as applied
respectively to any person who is a director, officer or employee of the Mutual
Holding Company, the Mid-Tier Holding Company, the Bank or any subsidiary
thereof.
2.14 ELIGIBLE ACCOUNT HOLDER means any Person holding a Qualifying
Deposit on the Eligibility Record Date for purposes of determining Subscription
Rights and establishing subaccount balances in the liquidation account to be
established pursuant to Section 17 hereof.
2.15 ELIGIBILITY RECORD DATE means the date for determining Qualifying
Deposits of Eligible Account Holders and is the close of business on June 30,
2000.
2.16 ESTIMATED PRICE RANGE means the range of the estimated aggregate
pro forma market value of the total number of shares of Conversion Stock to be
issued in the Offerings, as determined by the Independent Appraiser in
accordance with Section 4 hereof.
2.17 EXCHANGE RATIO means the rate at which shares of Holding Company
Common Stock will be exchanged for shares of Mid-Tier Holding Common Stock held
by the Public Shareholders in connection with the Bank Merger. The exact rate
shall be determined by the Mutual Holding Company, the Mid-Tier Holding Company
and the Bank in order to ensure that upon consummation of the Conversion and
Reorganization the Public Shareholders will own in the aggregate approximately
the same percentage of the Holding Company Common Stock to be outstanding upon
completion of the Conversion and Reorganization as the percentage of Mid-Tier
Holding Company Common Stock owned by them in the aggregate immediately prior to
consummation of the Conversion and Reorganization, before giving effect to (a)
cash paid in lieu of any fractional interests of Holding Company Common Stock
and (b) any shares of Conversion Stock purchased by the Public Shareholders or
Tax-Qualified Employee Stock Benefit Plans in the Offerings.
2.18 EXCHANGE SHARES mean the shares of Holding Company Common Stock to
be issued to the Public Shareholders in connection with the Bank Merger.
2.19 FDIC means the Federal Deposit Insurance Corporation or any
successor thereto.
2.20 HOLDING COMPANY means Willow Grove Bancorp, Inc., a stock
corporation to be organized under the laws of the State of Pennsylvania. Such
corporation will be initially formed as a first-tier, wholly owned subsidiary of
the Bank. Upon completion of the Conversion and Reorganization, the Holding
Company shall hold all of the outstanding capital stock of the Bank.
2.21 HOLDING COMPANY COMMON STOCK means the common stock of the Holding
Company, par value $.01 per share, which stock cannot and will not be insured by
the FDIC or any other governmental authority.
2.22 INDEPENDENT APPRAISER means the independent investment banking or
financial consulting firm retained by the Holding Company, the Mid-Tier Holding
Company and the Bank to prepare an appraisal of the estimated pro forma market
value of the Conversion Stock.
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2.23 INITIAL PURCHASE PRICE means the price per share to be paid
initially by Participants for shares of Conversion Stock subscribed for in the
Subscription Offering and by Persons for shares of Conversion Stock ordered in
the Community Offering and/or Syndicated Community Offering.
2.24 INTERIM means Willow Grove Interim Savings Association, which will
be formed as a first-tier, wholly-owned subsidiary of the Holding Company to
facilitate the Bank Merger.
2.25 MEMBER means any Person qualifying as a member of the Mutual
Holding Company in accordance with its mutual charter and bylaws and the laws of
the United States.
2.26 MID-TIER HOLDING COMPANY means Willow Grove Bancorp, Inc., an
existing federally chartered stock corporation.
2.27 MID-TIER HOLDING COMPANY COMMON STOCK means the common stock of
the Mid-Tier Holding Company, par value $.01 per share, which stock is not
insured by the FDIC or any other governmental entity.
2.28 MID-TIER HOLDING COMPANY MERGER means the Merger of the Mid-Tier
Mutual Holding Company (following its conversion to a federal interim stock
savings association) with and into the Bank pursuant to the Plan of Merger
included as Annex A hereto.
2.29 MUTUAL HOLDING COMPANY means Willow Grove Mutual Holding Company.
2.30 MUTUAL HOLDING COMPANY MERGER means the merger of the Mutual
Holding Company (following its conversion into a federal interim stock savings
association) with and into the Bank pursuant to the Plan of Merger included as
Annex B hereto.
2.31 OFFERINGS mean the Subscription Offering, the Community Offering
and the Syndicated Community Offering.
2.32 OFFICER means the chairman of the board of directors, president,
chief executive officer, vice-president, secretary, treasurer or principal
financial officer, comptroller or principal accounting officer and any other
person performing similar functions with respect to any organization whether
incorporated or unincorporated.
2.33 ORDER FORM means the form or forms to be provided by the Holding
Company, containing all such terms and provisions as set forth in Section 13
hereof, to a Participant or other Person by which Conversion Stock may be
ordered in the Offerings.
2.34 OTHER MEMBER means a Voting Member who is not an Eligible Account
Holder or a Supplemental Eligible Account Holder.
2.35 OTS means the Office of Thrift Supervision or any successor
thereto.
2.36 PARTICIPANT means any Eligible Account Holder, Tax-Qualified
Employee Stock Benefit Plan, Supplemental Eligible Account Holder, Other Member,
Director, Officer and Employee and Public Shareholder.
2.37 PERSON means an individual, a corporation, a limited liability
company, a partnership, a limited liability partnership, an association, a joint
stock company, a trust, an unincorporated organization or a government or any
political subdivision thereof.
2.38 PLAN and PLAN OF CONVERSION mean this Plan of Conversion and
Agreement and Plan of Reorganization as adopted by the Boards of Directors of
the Mutual Holding Company, the Mid-Tier Holding Company and the Bank and any
amendment hereto approved as provided herein. The Board of Directors of the
Holding Company shall adopt this Plan as soon as practicable following its
organization,
7
and the Board of Directors of Interim shall adopt the Plan of Merger included as
Annex C hereto as soon as practicable following its organization
2.39 PRIMARY PARTIES mean the Mutual Holding Company, the Mid-Tier
Holding Company, the Bank and the Holding Company.
2.40 PROSPECTUS means the one or more documents to be used in offering
the Conversion Stock in the Offerings.
2.41 PUBLIC OFFERING means an underwritten firm commitment offering to
the public through one or more underwriters.
2.42 PUBLIC SHAREHOLDERS mean those Persons who own shares of Mid-Tier
Holding Company Common Stock, excluding the Mutual Holding Company, as of the
Voting Record Date.
2.43 QUALIFYING DEPOSIT means the aggregate balance of all Deposit
Accounts in the Bank of (i) an Eligible Account Holder at the close of business
on the Eligibility Record Date, provided such aggregate balance is not less than
$50, and (ii) a Supplemental Eligible Account Holder at the close of business on
the Supplemental Eligibility Record Date, provided such aggregate balance is not
less than $50.
2.44 SEC means the Securities and Exchange Commission.
2.45 SPECIAL MEETING means the Special Meeting of Members of the Mutual
Holding Company called for the purpose of submitting this Plan to the Members
for their approval, including any adjournments of such meeting.
2.46 SHAREHOLDERS mean those Persons who own shares of Mid-Tier Holding
Company Common Stock.
2.47 SHAREHOLDERS' MEETING means the annual or special meeting of
Shareholders of the Mid-Tier Holding Company called for the purpose of
submitting this Plan to the Shareholders for their approval, including any
adjournments of such meeting.
2.48 SUBSCRIPTION OFFERING means the offering of the Conversion Stock
to Participants.
2.49 SUBSCRIPTION RIGHTS mean nontransferable rights to subscribe for
Conversion Stock granted to Participants pursuant to the terms of this Plan.
2.50 SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER means any Person, except
Directors and Officers of the Bank and their Associates, holding a Qualifying
Deposit at the close of business on the Supplemental Eligibility Record Date.
2.51 SUPPLEMENTAL ELIGIBILITY RECORD DATE, if applicable, means the
date for determining Qualifying Deposits of Supplemental Eligible Account
Holders and shall be required if the Eligibility Record Date is more than 15
months prior to the date of the latest amendment to the Application for
Conversion filed by the Mutual Holding Company prior to approval of such
application by the OTS. If applicable, the Supplemental Eligibility Record Date
shall be the last day of the calendar quarter preceding OTS approval of the
Application for Conversion submitted by the Mutual Holding Company pursuant to
this Plan of Conversion.
2.52 SYNDICATED COMMUNITY OFFERING means the offering for sale by a
syndicate of broker-dealers to the general public of shares of Conversion Stock
not purchased in the Subscription Offering and the Community Offering.
2.53 TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN means any defined
benefit plan or defined contribution plan, such as an employee stock ownership
plan, stock bonus plan, profit-sharing plan or
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other plan, which is established for the benefit of the employees of the Holding
Company and/or the Bank and which, with its related trust, meets the
requirements to be "qualified" under Section 401 of the Code as from time to
time in effect. A "Non-Tax-Qualified Employee Stock Benefit Plan" is any defined
benefit plan or defined contribution stock benefit plan which is not so
qualified.
2.54 VOTING MEMBER means a Person who at the close of business on the
Voting Record Date is entitled to vote as a Member of the Mutual Holding Company
in accordance with its mutual charter and bylaws.
2.55 VOTING RECORD DATE means the date or dates for determining the
eligibility of Members to vote at the Special Meeting and of Shareholders to
vote at the Shareholders' Meeting, as applicable.
3. GENERAL PROCEDURE FOR CONVERSION AND REORGANIZATION.
(a) After the Bank's organization of the Holding Company and the
receipt of all requisite regulatory approvals, the Holding Company will form
Interim as a first-tier, wholly owned subsidiary of the Holding Company, and the
Board of Directors of Interim shall adopt the Plan of Merger included as Annex C
hereto by at least a two-thirds vote. In addition, the Holding Company shall
approve such Plan of Merger in its capacity as the sole shareholder of Interim.
Furthermore, the Mid-Tier Holding Company shall approve the Plan and the Plan of
Merger in its capacity as the sole shareholder of the Bank.
(b) An application for the Conversion and Reorganization, including
the Plan and all other requisite material (the "Application for Conversion"),
shall be submitted to the OTS for approval. The Mutual Holding Company, the
Mid-Tier Holding Company and the Bank also will cause notice of the adoption of
the Plan by the Boards of Directors of the Mutual Holding Company, the Mid-Tier
Holding Company and the Bank to be given by publication in a newspaper having
general circulation in each community in which an office of the Bank is located
and will cause copies of the Plan to be made available at each office of the
Mutual Holding Company, the Mid-Tier Holding Company and the Bank for inspection
by Members and Shareholders. The Mutual Holding Company, the Mid-Tier Holding
Company and the Bank will again cause to be published, in accordance with the
requirements of applicable regulations of the OTS, a notice of the filing with
the OTS of an application to convert the Mutual Holding Company from mutual to
stock form and will post the notice of the filing for the Application for
Conversion in each of their offices.
(c) Promptly following receipt of requisite approval of the OTS,
this Plan will be submitted to the Members for their consideration and approval
at the Special Meeting. The Mutual Holding Company may, at its option, mail to
all Members as of the Voting Record Date, at their last known address appearing
on the records of the Mutual Holding Company and the Bank, a proxy statement in
either long or, to the extent permitted by applicable law and regulation,
summary form describing the Plan which will be submitted to a vote of the
Members at the Special Meeting. The Holding Company also shall mail to all such
Members (as well as other Participants) either a Prospectus and Order Form for
the purchase of Conversion Stock or, to the extent permitted by applicable law
and regulation, a letter informing them of their right to receive a Prospectus
and Order Form and a postage prepaid card to request such materials, subject to
the provisions of Section 15 hereof. In addition, all such Members will receive,
or be given the opportunity to request by returning a postage-prepaid card which
will be distributed with the proxy statement, letter or other written
communication, a copy of the certificate of incorporation and bylaws of the
Holding Company. The Plan must be approved by the affirmative vote of at least a
majority of the total number of votes eligible to be cast by Voting Members at
the Special Meeting.
(d) Subscription Rights to purchase shares of Conversion Stock will
be issued without payment therefor to Eligible Account Holders, Tax-Qualified
Employee Stock Benefit Plans, Supplemental Eligible Account Holders, if any,
Other Members, Directors, Officers and Employees and Public Shareholders, as set
forth in Sections 5, 6, 7, 8, 9 and 10 hereof.
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(e) The Mid-Tier Holding Company shall file preliminary proxy
materials with the OTS and the SEC in order to seek the approval of the Plan by
its Shareholders. Promptly following clearance of such proxy materials and the
receipt of any other requisite approval of the OTS, the Mid-Tier Holding Company
will mail definitive proxy materials to all Shareholders as of the Voting Record
Date, at their last known address appearing on the records of the Mid-Tier
Holding Company, for their consideration and approval of this Plan at the
Shareholders' Meeting. The Plan must be approved by the holders of at least
two-thirds of the outstanding Mid-Tier Holding Company Common Stock as of the
Voting Record Date. In addition, the Primary Parties have conditioned the
consummation of the Conversion and Reorganization on the approval of the Plan by
at least a majority of the votes cast, in person or by proxy, by the Public
Shareholders at the Shareholders' Meeting.
(f) The Holding Company shall submit or cause to be submitted a
holding company application to the OTS for approval of the acquisition of the
Bank. Such application also shall include an application to form Interim. In
addition, an application to merge the Mutual Holding Company (following its
conversion into a federal interim stock savings association) and the Bank, an
application to merge the Mid-Tier Holding Company (following its conversion into
a federal interim stock savings association and the Bank) and an application to
merge Interim and the Bank shall be filed with the OTS, either as exhibits to
the holding company application or separately. All notices required to be
published in connection with such applications shall be published at the times
required.
(g) The Holding Company shall file a Registration Statement with
the SEC to register the Holding Company Common Stock to be issued in the
Conversion and Reorganization under the Securities Act of 1933, as amended, and
shall register such Holding Company Common Stock under any applicable state
securities laws. Upon registration and after the receipt of all required
regulatory approvals, the Conversion Stock shall be first offered for sale in a
Subscription Offering to Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans, Supplemental Eligible Account Holders, if any, Other Members,
Directors, Officers and Employees and Public Shareholders as of the Voting
Record Date. It is anticipated that any shares of Conversion Stock remaining
unsold after the Subscription Offering will be sold through a Community Offering
and/or a Syndicated Community Offering. The purchase price per share for the
Conversion Stock shall be a uniform price determined in accordance with Section
4 hereof. The Holding Company shall contribute to the Bank an amount of the net
proceeds received by the Holding Company from the sale of Conversion Stock as
shall be determined by the Boards of Directors of the Holding Company and the
Bank and as shall be approved by the OTS.
(h) The effective date of the Conversion and Reorganization shall
be the date set forth in Section 28 hereof. Upon the effective date, the
following transactions shall occur:
(i) The Mutual Holding Company shall convert from a mutual
holding company to a federal interim stock savings association. The
Mid-Tier Holding Company shall convert into a federal interim stock
savings association and simultaneously merge with and into the Bank in
the Mid-Tier Holding Company Merger, with the Bank being the surviving
institution. Immediately thereafter, the Mutual Holding Company, as
converted, shall merge with and into the Bank in the Mutual Holding
Company Merger, with the Bank being the surviving institution. As a
result of the Mutual Holding Company Merger and the Mid-Tier Holding
Company Merger, (x) the shares of Mid-Tier Holding Company Common Stock
held by the Mutual Holding Company (following its conversion to a
federal interim stock savings association) shall be extinguished and
(y) Members of the Mutual Holding Company will be granted interests in
the liquidation account to be established by the Bank pursuant to
Section 17 hereof.
(ii) Interim shall merge with and into the Bank pursuant to
the Bank Merger, with the Bank being the surviving institution. As a
result of the Bank Merger, (x) the shares of Holding Company Common
Stock held by the Bank shall be extinguished; (y) the shares of
Mid-Tier Holding Company Common Stock held by the Public Shareholders
shall be converted into the right to receive shares of Holding Company
Common Stock based upon the Exchange Ratio, plus cash in lieu of any
fractional share interest based
10
upon the Actual Purchase Price; and (z) the shares of common stock of
Interim held by the Holding Company shall be converted into shares of
Bank Common Stock on a one-for-one basis, with the result that the Bank
shall become a wholly owned subsidiary of the Holding Company. In
addition, as a result of the Bank Merger, options to purchase shares of
Mid-Tier Holding Company Common Stock which are outstanding immediately
prior to consummation of the Conversion and Reorganization shall be
converted into options to purchase shares of Holding Company Common
Stock, with the number of shares subject to the option and the exercise
price per share to be adjusted based upon the Exchange Ratio so that
the aggregate exercise price remains unchanged, and with the duration
of the option remaining unchanged.
(iii) The Holding Company shall sell the Conversion Stock in
the Offerings, as provided herein.
(i) The Primary Parties may retain and pay for the services of
financial and other advisors and investment bankers to assist in connection with
any or all aspects of the Conversion and Reorganization, including in connection
with the Offerings the payment of fees to brokers and investment bankers for
assisting Persons in completing and/or submitting Order Forms. All fees,
expenses, retainers and similar items shall be reasonable.
4. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK.
-------------------------------------------------------------
(a) The aggregate price at which shares of Conversion Stock shall
be sold in the Offerings shall be based on a pro forma valuation of the
aggregate market value of the Conversion Stock prepared by the Independent
Appraiser. The valuation shall be based on financial information relating to the
Primary Parties, market, financial and economic conditions, a comparison of the
Primary Parties with selected publicly-held financial institutions and holding
companies and with comparable financial institutions and holding companies and
such other factors as the Independent Appraiser may deem to be important. The
valuation shall be stated in terms of an Estimated Price Range, the maximum of
which shall generally be no more than 15% above the average of the minimum and
maximum of such price range and the minimum of which shall generally be no more
than 15% below such average. The valuation shall be updated during the
Conversion and Reorganization as market and financial conditions warrant and as
may be required by the OTS.
(b) Based upon the independent valuation, the Boards of Directors
of the Primary Parties shall fix the Initial Purchase Price and the number (or
range) of shares of Conversion Stock to be offered in the Subscription Offering,
Community Offering and/or Syndicated Community Offering. The Actual Purchase
Price and the total number of shares of Conversion Stock to be issued in the
Offerings shall be determined by the Boards of Directors of the Primary Parties
upon conclusion of the Offerings in consultation with the Independent Appraiser
and any financial advisor or investment banker retained by the Primary Parties
in connection therewith.
(c) Subject to the approval of the OTS, the Estimated Price Range
may be increased or decreased to reflect market, financial and economic
conditions prior to completion of the Conversion and Reorganization, and under
such circumstances the Primary Parties may increase or decrease the total number
of shares of Conversion Stock to be issued in the Conversion and Reorganization
to reflect any such change. Notwithstanding anything to the contrary contained
in this Plan, no resolicitation of subscribers shall be required and subscribers
shall not be permitted to modify or cancel their subscriptions unless the gross
proceeds from the sale of the Conversion Stock issued in the Conversion and
Reorganization are less than the minimum or more than 15% above the maximum of
the Estimated Price Range set forth in the Prospectus. In the event of an
increase in the total number of shares offered in the Conversion and
Reorganization due to an increase in the Estimated Price Range, the priority of
share allocation shall be as set forth in this Plan.
11
5. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS.
-----------------------------------------------
(a) Each Eligible Account Holder shall receive, without payment,
Subscription Rights to purchase up to the greater of (i) $500,000 of Conversion
Stock (or such maximum purchase limitation as may be established for the
Community Offering and/or Syndicated Community Offering), (ii) one-tenth of 1%
of the total offering of shares in the Subscription Offering and (iii) 15 times
the product (rounded down to the next whole number) obtained by multiplying the
total number of shares of Conversion Stock offered in the Subscription Offering
by a fraction, of which the numerator is the amount of the Qualifying Deposits
of the Eligible Account Holder and the denominator is the total amount of all
Qualifying Deposits of all Eligible Account Holders, in each case subject to
Sections 12 and 15 hereof.
(b) In the event of an oversubscription for shares of Conversion
Stock pursuant to Section 5(a), available shares shall be allocated among
subscribing Eligible Account Holders so as to permit each such Eligible Account
Holder, to the extent possible, to purchase a number of shares which will make
his or her total allocation equal to the lesser of the number of shares
subscribed for or 100 shares. Any available shares remaining after each
subscribing Eligible Account Holder has been allocated the lesser of the number
of shares subscribed for or 100 shares shall be allocated among the subscribing
Eligible Account Holders in the proportion which the Qualifying Deposit of each
such subscribing Eligible Account Holder bears to the total Qualifying Deposits
of all such subscribing Eligible Account Holders whose orders are unfilled,
provided that no fractional shares shall be issued. Subscription Rights of
Eligible Account Holders who are also Directors or Officers and their Associates
shall be subordinated to those of other Eligible Account Holders to the extent
that they are attributable to increased deposits during the one-year period
preceding the Eligibility Record Date.
6. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLANS.
-----------------------------------------------------------------
Tax-Qualified Employee Stock Benefit Plans shall receive, without
payment, Subscription Rights to purchase in the aggregate up to 10% of the
Conversion Stock, including any shares of Conversion Stock to be issued in the
Conversion and Reorganization as a result of an increase in the Estimated Price
Range after commencement of the Subscription Offering and prior to completion of
the Conversion and Reorganization. The subscription rights granted to
Tax-Qualified Employee Stock Benefit Plans shall be subject to the availability
of shares of Conversion Stock after taking into account the shares of Conversion
Stock purchased by Eligible Account Holders; provided, however, that in the
event that the total number of shares of Conversion is increased to any amount
greater than the number of shares representing the maximum of the Estimated
Price Range as set forth in the Prospectus ("Maximum Shares"), the ESOP shall
have a priority right to purchase any such shares exceeding the Maximum Shares
up to an aggregate of 8% of Conversion Stock. Shares of Conversion Stock
purchased by any individual participant ("Plan Participant") in a Tax-Qualified
Employee Stock Benefit Plan using funds therein pursuant to the exercise of
subscription rights granted to such Participant in his individual capacity as a
Participant and/or purchases by such Plan Participant in the Community Offering
shall not be deemed to be purchases by a Tax-Qualified Employee Stock Benefit
Plan for purposes of calculating the maximum amount of Conversion Stock that
Tax-Qualified Employee Stock Benefit Plans may purchase pursuant to the first
sentence of this Section 6 if the individual Plan Participant controls or
directs the investment authority with respect to such account or subaccount.
Consistent with applicable laws and regulations and policies and practices of
the OTS, the Tax-Qualified Employee Stock Benefit Plans may use funds
contributed by the Holding Company or the Bank and/or borrowed from an
independent financial institution to exercise such Subscription Rights, and the
Holding Company and the Bank may make scheduled discretionary contributions
thereto, provided that such contributions do not cause the Holding Company or
the Bank to fail to meet any applicable regulatory capital requirement.
12
7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS.
------------------------------------------------------------
(a) In the event that the Eligibility Record Date is more than 15
months prior to the date of the latest amendment to the Application for
Conversion filed prior to OTS approval, then, and only in that event, a
Supplemental Eligibility Record Date shall be set and each Supplemental Eligible
Account Holder shall receive, without payment, Subscription Rights to purchase
up to the greater of (i) $500,000 of Conversion Stock in the Subscription
Offering (or such maximum purchase limitation as may be established for the
Community Offering and/or Syndicated Community Offering), (ii) one-tenth of 1%
of the total offering of shares in the Subscription Offering and (iii) 15 times
the product (rounded down to the next whole number) obtained by multiplying the
total number of shares of Conversion Stock offered in the Subscription Offering
by a fraction, of which the numerator is the amount of the Qualifying Deposits
of the Supplemental Eligible Account Holder and the denominator is the total
amount of all Qualifying Deposits of all Supplemental Eligible Account Holders,
in each case subject to Sections 12 and 15 hereof and the availability of shares
of Conversion Stock for purchase after taking into account the shares of
Conversion Stock purchased by Eligible Account Holders and Tax-Qualified
Employee Stock Benefit Plans through the exercise of Subscription Rights under
Sections 5 and 6 hereof.
(b) In the event of an oversubscription for shares of Conversion
Stock pursuant to Section 7(a), available shares shall be allocated among
subscribing Supplemental Eligible Account Holders so as to permit each such
Supplemental Eligible Account Holder, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation (including the
number of shares, if any, allocated in accordance with Section 5(a)) equal to
the lesser of the number of shares subscribed for or 100 shares. Any remaining
available shares shall be allocated among subscribing Supplemental Eligible
Account Holders in the proportion that the amount of their respective Qualifying
Deposits bears to the total amount of the Qualifying Deposits of all such
subscribing Supplemental Eligible Account Holders whose orders are unfilled,
provided that no fractional shares shall be issued.
8. SUBSCRIPTION RIGHTS OF OTHER MEMBERS.
-------------------------------------
(a) Each Other Member shall receive, without payment, Subscription
Rights to purchase up to the greater of (i) $500,000 of Conversion Stock in the
Subscription Offering (or such maximum purchase limitation as may be established
for the Community Offering and/or Syndicated Community Offering) and (ii)
one-tenth of 1% of the total offering of shares in the Subscription Offering,
subject to Sections 12 and 15 hereof and the availability of shares of
Conversion Stock for purchase after taking into account the shares of Conversion
Stock purchased by Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans and Supplemental Eligible Account Holders, if any, through the
exercise of Subscription Rights under Sections 5, 6 and 7 hereof.
(b) If, pursuant to this Section 8, Other Members subscribe for a
number of shares of Conversion Stock in excess of the total number of shares of
Conversion Stock remaining, available shares shall be allocated among
subscribing Other Members so as to permit each such Other Member, to the extent
possible, to purchase a number of shares which will make his or her total
allocation equal to the lesser of the number of shares subscribed for or 100
shares. Any remaining shares shall be allocated among subscribing Other Members
on a pro rata basis in the same proportion as each such Other Member's
subscription bears to the total subscriptions of all such subscribing Other
Members, provided that no fractional shares shall be issued.
9. SUBSCRIPTION RIGHTS OF DIRECTORS, OFFICERS AND EMPLOYEES.
(a) To the extent that there are sufficient shares remaining after
satisfaction of all subscriptions under the above categories, Directors,
Officers and Employees of the Bank shall receive, without payment, Subscription
Rights to purchase in this category up to an aggregate of 15.0% of the shares of
Conversion Stock offered in the Subscription Offering.
(b) In the event of an oversubscription for shares of Conversion
Stock pursuant to Section 9(a), Subscription Rights for the purchase of such
shares shall be allocated among the individual
13
Directors, Officers and Employees on a point system basis, whereby a point will
be assigned for each year of employment and for each salary increment of $5,000
per annum and five points for each office held in the Mutual Holding Company and
the Bank, including a directorship. If any such Director, Officer or Employee
does not subscribe for his or her full allocation of shares, any shares not
subscribed for may be purchased by other Directors, Officers and Employees in
proportion to their respective subscriptions, provided that no fractional shares
shall be issued.
10. SUBSCRIPTION RIGHTS OF PUBLIC SHAREHOLDERS.
-------------------------------------------
(a) Each Public Shareholder shall receive, without payment,
Subscription Rights to purchase up to the greater of (i) $500,000 of Conversion
Stock in the Subscription Offering (or such maximum purchase limitation as may
be established for the Community Offering and/or Syndicated Community Offering)
and (ii) one-tenth of 1% of the total offering of shares in the Subscription
Offering, subject to Sections 12 and 15 hereof and the availability of shares of
Conversion Stock for purchase after taking into account the shares of Conversion
Stock purchased by Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans, Supplemental Eligible Account Holders, if any, and Directors,
Officers and Employees.
(b) If, pursuant to this Section 10, Public Shareholders subscribe
for a number of shares of Conversion Stock in excess of the total number of
shares of Conversion Stock remaining, available shares shall be allocated among
subscribing Public Shareholders as of the Voting Record Date on a pro rata basis
in the same proportion as each such Public Shareholder's subscription bears to
the total subscriptions of all such subscribing Public Shareholders, provided
that no fractional shares shall be issued.
11. COMMUNITY OFFERING, SYNDICATED COMMUNITY OFFERING AND
-----------------------------------------------------
OTHER OFFERINGS.
---------------
(a) If less than the total number of shares of Conversion Stock are
sold in the Subscription Offering, it is anticipated that all remaining shares
of Conversion Stock shall, if practicable, be sold in a Community Offering.
Subject to the requirements set forth herein, the manner in which the Conversion
Stock is sold in the Community Offering shall have as the objective the
achievement of the widest possible distribution of such stock.
(b) In the event of a Community Offering, all shares of Conversion
Stock which are not subscribed for in the Subscription Offering shall be offered
for sale by means of a direct community marketing program, which may provide for
the use of brokers, dealers or investment banking firms experienced in the sale
of financial institution securities. Any available shares in excess of those not
subscribed for in the Subscription Offering will be available for purchase by
members of the general public to whom a Prospectus is delivered by the Holding
Company or on its behalf, with preference given to natural persons residing in
counties in Pennsylvania in which the Bank has a branch office ("Preferred
Subscribers").
(c) A Prospectus and Order Form shall be furnished to such Persons
as the Primary Parties may select in connection with the Community Offering, and
each order for Conversion Stock in the Community Offering shall be subject to
the absolute right of the Primary Parties to accept or reject any such order in
whole or in part either at the time of receipt of an order or as soon as
practicable following completion of the Community Offering. Available shares
will be allocated first to each Preferred Subscriber whose order is accepted in
an amount equal to the lesser of 100 shares or the number of shares subscribed
for by each such Preferred Subscriber, if possible. Thereafter, unallocated
shares shall be allocated among the Preferred Subscribers whose accepted orders
remain unsatisfied in the same proportion that the unfilled order of each bears
to the total unfilled orders of all Preferred Subscribers whose accepted orders
remain unsatisfied, provided that no fractional shares shall be issued. If there
are any shares remaining after all accepted orders by Preferred Subscribers have
been
14
satisfied, such remaining shares shall be allocated to other members of the
general public who purchase in the Community Offering, applying the same
allocation described above for Preferred Subscribers.
(d) The amount of Conversion Stock that any Person may purchase in
the Community Offering shall not exceed the greater of (i) $500,000 of
Conversion Stock in the Subscription Offering or (ii) one-tenth of 1% of the
total offering in the Subscription Offering, provided, however, that this amount
may be increased to up to 5% of the total offering of shares of Conversion
Stock, subject to any required regulatory approval but without the further
approval of Members of the Mutual Holding Company or the Shareholders of the
Mid-Tier Holding Company; and provided further that, to the extent applicable,
and subject to the preferences set forth in Section 11(b) and (c) of this Plan
and the limitations on purchases of Conversion Stock set forth in this Section
11(d) and Section 12 of this Plan, orders for Conversion Stock in the Community
Offering shall first be filled to a maximum of 2% of the total number of shares
of Conversion Stock sold in the Offerings and thereafter any remaining shares
shall be allocated on an equal number of shares basis per order until all orders
have been filled. The Primary Parties may commence the Community Offering
concurrently with, at any time during, or as soon as practicable after the end
of, the Subscription Offering, and the Community Offering must be completed
within 45 days after the completion of the Subscription Offering, unless
extended by the Primary Parties with any required regulatory approval.
(e) Subject to such terms, conditions and procedures as may be
determined by the Primary Parties, all shares of Conversion Stock not subscribed
for in the Subscription Offering or ordered in the Community Offering may be
sold by a syndicate of broker-dealers to the general public in a Syndicated
Community Offering. Each order for Conversion Stock in the Syndicated Community
Offering shall be subject to the absolute right of the Primary Parties to accept
or reject any such order in whole or in part either at the time of receipt of an
order or as soon as practicable after completion of the Syndicated Community
Offering. The amount of Conversion Stock that any Person may purchase in the
Syndicated Community Offering shall not exceed $500,000 of Conversion Stock in
the Subscription Offering, provided, however, that this amount may be increased
to up to 5% of the total offering of shares of Conversion Stock, subject to any
required regulatory approval but without the further approval of Members of the
Mutual Holding Company or the Shareholders of the Mid-Tier Holding Company; and
provided further that, to the extent applicable, and subject to the limitations
on purchases of Conversion Stock set forth in this Section 11(e) and Section 12
of this Plan, orders for Conversion Stock in the Syndicated Community Offering
shall first be filled to a maximum of 2% of the total number of shares of
Conversion Stock sold in the Offerings and thereafter any remaining shares shall
be allocated on an equal number of shares basis per order until all orders have
been filled. The Primary Parties may commence the Syndicated Community Offering
concurrently with, at any time during, or as soon as practicable after the end
of, the Subscription Offering and/or Community Offering, and the Syndicated
Community Offering must be completed within 45 days after the completion of the
Subscription Offering, unless extended by the Primary Parties with any required
regulatory approval.
(f) The Holding Company and the Bank may sell any shares of
Conversion Stock remaining following the Subscription Offering, Community
Offering and/or the Syndicated Community Offering in a Public Offering. The
provisions of Section 12 hereof shall not be applicable to the sales to
underwriters for purposes of the Public Offering but shall be applicable to
sales by the underwriters to the public. The price to be paid by the
underwriters in such an offering shall be equal to the Actual Purchase Price
less an underwriting discount to be negotiated among such underwriters and the
Bank and the Holding Company, subject to any required regulatory approval or
consent.
(g) If for any reason a Syndicated Community Offering or public
offering of shares of Conversion Stock not sold in the Subscription Offering and
the Community Offering cannot be effected, or in the event that any
insignificant residue of shares of Conversion Stock is not sold in the
Subscription Offering, Community Offering or Syndicated Community Offering, the
Primary Parties shall use their best efforts to obtain other purchasers for such
shares in such manner and upon such conditions as may be satisfactory to the
OTS.
15
12. LIMITATIONS ON SUBSCRIPTIONS AND PURCHASES OF CONVERSION STOCK.
-------------------------------------------------------- -----
(a) The maximum number of shares of Conversion Stock which may be
purchased in the Conversion by the ESOP shall not exceed 8% and all
Tax-Qualified Employee Stock Benefit Plans shall not exceed 10% of the total
number of shares of Conversion Stock sold in the Offerings, in each instance,
including any shares which may be issued in the event of an increase in the
maximum of the Estimated Price Range to reflect changes in market, financial and
economic conditions after commencement of the Subscription Offering and prior to
completion of the Offerings; provided, however, that purchases of Conversion
Stock which are made by Plan Participants pursuant to the exercise of
subscription rights granted to such Plan Participant in his individual capacity
as a Participant or purchases by a Plan Participant in the Community Offering
using the funds thereof held in Tax-Qualified Employee Stock Benefit Plans shall
not be deemed to be purchases by a Tax-Qualified Employee Stock Benefit Plan for
purposes of this Section 12(a).
(b) Except in the case of Tax-Qualified Employee Stock Benefit
Plans in the aggregate, as set forth in Section 12(a) hereof, and certain
Eligible Account Holders and Supplemental Eligible Account Holders, as set forth
in Sections 5(a)(ii) and (iii) and 7(a)(ii) and (iii) hereof, and in addition to
the other restrictions and limitations set forth herein, the maximum amount of
Holding Company Common Stock which any Person together with any Associate or
group of Persons acting in concert may, directly or indirectly, subscribe for or
purchase in the Conversion and Reorganization shall not exceed the number of
shares of Conversion Stock that when combined with Exchange Shares (which, for
this purpose, shall not include any shares held in any of the Tax Qualified
Employee Stock Benefit Plans or Non-Tax Qualified Stock Benefit Plans of the
Company, the Mid-Tier Holding Company or the Bank) received aggregate 2% of the
total number of shares of Holding Company Common Stock issued in the Conversion
and Reorganization.
(c) The number of shares of Conversion Stock which Directors and
Officers and their Associates may purchase in the aggregate in the Offerings
shall not exceed 25% of the total number of shares of Conversion Stock sold in
the Offerings, including any shares which may be issued in the event of an
increase in the maximum of the Estimated Price Range to reflect changes in
market, financial and economic conditions after commencement of the Subscription
Offering and prior to completion of the Offerings.
(d) No Person may purchase fewer than 25 shares of Conversion Stock
in the Offerings, to the extent such shares are available; provided, however,
that if the Actual Purchase Price is greater than $20.00 per share, such minimum
number of shares shall be adjusted so that the aggregate Actual Purchase Price
for such minimum shares will not exceed $500.00.
(e) For purposes of the foregoing limitations and the determination
of Subscription Rights, (i) Directors, Officers and Employees shall not be
deemed to be Associates or a group acting in concert solely as a result of their
capacities as such, (ii) shares purchased by Tax-Qualified Employee Stock
Benefit Plans shall not be attributable to the individual trustees or
beneficiaries of any such plan for purposes of determining compliance with the
limitations set forth in Section 12(b) or Section 12(c) hereof, (iii) Exchange
Shares shall be valued at the Actual Purchase Price, and (iv) shares purchased
by a Tax-Qualified Employee Stock Benefit Plan pursuant to instructions of an
individual in an account in such plan in which the individual has the right to
direct the investment, including any plan of the Bank qualified under Section
401(k) of the Code, shall be aggregated and included in that individual's
purchases and not attributed to the Tax-Qualified Employee Stock Benefit Plan.
(f) Subject to any required regulatory approval and the
requirements of applicable laws and regulations, but without further approval of
the Members of the Mutual Holding Company or the Shareholders of the Mid-Tier
Holding Company, the Primary Parties may increase or decrease any of the
individual or aggregate purchase limitations set forth herein to a percentage
which does not exceed 5% of the total offering of shares of Holding Company
Common Stock in the Conversion and Reorganization whether prior to, during or
after the Subscription Offering, Community Offering and/or Syndicated Community
Offering. In the event that an individual purchase limitation is increased after
commencement of the Subscription Offering or any other offering, the Primary
Parties shall permit any Person who subscribed for the maximum number of shares
of Conversion Stock to purchase an additional number of shares, so that such
Person shall be permitted to subscribe for the then maximum number of shares
permitted to be subscribed for by such Person, subject to the rights and
preferences of any Person who has priority Subscription Rights. In the event
that any of the individual or aggregate purchase limitations are decreased after
commencement
16
of the Subscription Offering or any other offering, the orders of any Person who
subscribed for more than the new purchase limitation shall be decreased by the
minimum amount necessary so that such Person shall be in compliance with the
then maximum number of shares permitted to be subscribed for by such Person.
(g) The Primary Parties shall have the right to take all such
action as they may, in their sole discretion, deem necessary, appropriate or
advisable in order to monitor and enforce the terms, conditions, limitations and
restrictions contained in this Section 12 and elsewhere in this Plan and the
terms, conditions and representations contained in the Order Form, including,
but not limited to, the absolute right (subject only to any necessary regulatory
approvals or concurrences) to reject, limit or revoke acceptance of any
subscription or order and to delay, terminate or refuse to consummate any sale
of Conversion Stock which they believe might violate, or is designed to, or is
any part of a plan to, evade or circumvent such terms, conditions, limitations,
restrictions and representations. Any such action shall be final, conclusive and
binding on all persons, and the Primary Parties and their respective Boards
shall be free from any liability to any Person on account of any such action.
(h) Notwithstanding anything to the contrary contained in this Plan
and except as may otherwise be required by the OTS, the Public Shareholders will
not have to sell any Mid-Tier Holding Company Common Stock or be limited in
receiving Exchange Shares even if their ownership of Mid-Tier Holding Company
Common Stock when converted into Exchange Shares would exceed an applicable
purchase limitation; provided, however, that a Public Shareholder who would
exceed an applicable purchase limitation may be precluded from purchasing
Conversion Stock in the Offerings.
13. TIMING OF SUBSCRIPTION OFFERING; MANNER OF EXERCISING SUBSCRIPTION
------------------------------------------------------------------
RIGHTS AND ORDER FORMS.
----------------------
(a) The Subscription Offering may be commenced concurrently with or
at any time after the mailing to Voting Members of the Mutual Holding Company
and Shareholders of the Mid-Tier Holding Company of the proxy statement(s) to be
used in connection with the Special Meeting and the Shareholders' Meeting. The
Subscription Offering may be closed before the Special Meeting and the
Shareholders' Meeting, provided that the offer and sale of the Conversion Stock
shall be conditioned upon the approval of the Plan by the Voting Members of the
Mutual Holding Company and the Shareholders of the Mid-Tier Holding Company at
the Special Meeting and the Shareholders' Meeting, respectively.
(b) The exact timing of the commencement of the Subscription
Offering shall be determined by the Primary Parties in consultation with the
Independent Appraiser and any financial or advisory or investment banking firm
retained by them in connection with the Conversion. The Primary Parties may
consider a number of factors, including, but not limited to, their current and
projected future earnings, local and national economic conditions, and the
prevailing market for stocks in general and stocks of financial institutions in
particular. The Primary Parties shall have the right to withdraw, terminate,
suspend, delay, revoke or modify any such Subscription Offering, at any time and
from time to time, as they in their sole discretion may determine, without
liability to any Person, subject to compliance with applicable securities laws
and any necessary regulatory approval or concurrence.
(c) The Primary Parties shall, promptly after the SEC has declared
the Registration Statement, which includes the Prospectus, effective and all
required regulatory approvals have been obtained, distribute or make available
the Prospectus, together with Order Forms for the purchase of Conversion Stock,
to all Participants for the purpose of enabling them to exercise their
respective Subscription Rights, subject to Section 15 hereof. To the extent
permitted by applicable law and regulation, the Primary Parties may elect to
mail a Prospectus and Order Form only to those Participants
17
who request such materials by returning a postage-paid card to the Primary
Parties by a date specified in the letter informing them of their Subscription
Rights. Under such circumstances, the Subscription Offering shall not be closed
prior to the expiration of 30 days after the mailing by the Primary Parties of
the postage-paid card to Participants.
(d) A single Order Form for all Deposit Accounts maintained with
the Bank by an Eligible Account Holder and any Supplemental Eligible Account
Holder may be furnished, irrespective of the number of Deposit Accounts
maintained with the Bank on the Eligibility Record Date and Supplemental
Eligibility Record Date, respectively. No person holding a subscription right
may exceed any otherwise applicable purchase limitation by submitting multiple
orders for Conversion Stock. Multiple orders are subject to adjustment, as
appropriate, on a pro rata basis and deposit balances will be divided equally
among such orders in allocating shares in the event of an oversubscription.
(e) The recipient of an Order Form shall have no less than 20 days
and no more than 45 days from the date of mailing of the Order Form (with the
exact termination date to be set forth on the Order Form) to properly complete
and execute the Order Form and deliver it to the Primary Parties. The Primary
Parties may extend such period by such amount of time as they determine is
appropriate. Failure of any Participant to deliver a properly executed Order
Form to the Primary Parties, along with payment (or authorization for payment by
withdrawal) for the shares of Conversion Stock subscribed for, within the time
limits prescribed, shall be deemed a waiver and release by such person of any
rights to subscribe for shares of Conversion Stock. Each Participant shall be
required to confirm to the Primary Parties by executing an Order Form that such
Person has fully complied with all of the terms, conditions, limitations and
restrictions in the Plan.
(f) The Primary Parties shall have the absolute right, in their
sole discretion and without liability to any Participant or other Person, to
reject any Order Form, including, but not limited to, any Order Form that is (i)
improperly completed or executed; (ii) not timely received; (iii) not
accompanied by the proper payment (or authorization of withdrawal for payment)
or, in the case of institutional investors in the Community Offering, not
accompanied by an irrevocable order together with a legally binding commitment
to pay the full amount of the purchase price prior to 48 hours before the
completion of the Offerings; or (iv) submitted by a Person whose representations
the Primary Parties believe to be false or who they otherwise believe, either
alone, or acting in concert with others, is violating, evading or circumventing,
or intends to violate, evade or circumvent, the terms and conditions of the
Plan. Furthermore, in the event Order Forms (i) are not delivered and are
returned to the Bank, the Mid-Tier Holding Company or the Mutual Holding Company
by the Untied States Postal Service or the Bank, the Mid-Tier Holding Company or
the Mutual Holding Company is unable to locate the addressee, or (ii) are not
mailed pursuant to a "no mail" order placed in effect by the account holder, the
subscription rights of the person to which such rights have been granted will
lapse as though such person failed to return the contemplated Order Form within
the time period specified thereon. The Primary Parties may, but will not be
required to, waive any irregularity on any Order Form or may require the
submission of corrected Order Forms or the remittance of full payment for shares
of Conversion Stock by such date as they may specify. The interpretation of the
Primary Parties of the terms and conditions of the Order Forms shall be final
and conclusive.
18
14. PAYMENT FOR CONVERSION STOCK.
----------------------------
(a) Payment for shares of Conversion Stock subscribed for by
Participants in the Subscription Offering and payment for shares of Conversion
Stock ordered by Persons in the Community Offering shall be equal to the Initial
Purchase Price multiplied by the number of shares which are being subscribed for
or ordered, respectively. Such payment may be made in cash, if delivered in
person, or by check or money order at the time the Order Form is delivered to
the Primary Parties. The Primary Parties, in their sole and absolute discretion,
may also elect to receive payment for shares of Conversion Stock by wire
transfer. In addition, the Primary Parties may elect to provide Participants
and/or other Persons who have a Deposit Account with the Bank the opportunity to
pay for shares of Conversion Stock by authorizing the Bank to withdraw from such
Deposit Account an amount equal to the aggregate Initial Purchase Price of such
shares. If the Actual Purchase Price is less than the Initial Purchase Price,
the Primary Parties shall refund the difference to all Participants and other
Persons, unless the Primary Parties choose to provide Participants and other
Persons the opportunity on the Order Form to elect to have such difference
applied to the purchase of additional whole shares of Conversion Stock. If the
Actual Purchase Price is more than the Initial Purchase Price, the Primary
Parties shall reduce the number of shares of Conversion Stock ordered by
Participants and other Persons and refund any remaining amount which is
attributable to a fractional share interest, unless the Primary Parties choose
to provide Participants and other Persons the opportunity to increase the Actual
Purchase Price submitted by them.
(b) Consistent with applicable laws and regulations and policies
and practices of the OTS, payment for shares of Conversion Stock subscribed for
by Tax-Qualified Employee Stock Benefit Plans may be made with funds contributed
by the Holding Company and/or the Bank and/or funds obtained pursuant to a loan
from an unrelated financial institution pursuant to a loan commitment which is
in force from the time that any such plan submits an Order Form until the
closing of the transactions contemplated hereby.
(c) If a Participant or other Person authorizes the Bank to
withdraw the amount of the Initial Purchase Price from his or her Deposit
Account, the Bank shall have the right to make such withdrawal or to freeze
funds equal to the aggregate Initial Purchase Price upon receipt of the Order
Form. Notwithstanding any regulatory provisions regarding penalties for early
withdrawals from certificate accounts, the Bank may allow payment by means of
withdrawal from certificate accounts without the assessment of such penalties.
In the case of an early withdrawal of only a portion of such account, the
certificate evidencing such account shall be canceled if any applicable minimum
balance requirement ceases to be met. In such case, the remaining balance will
earn interest at the regular passbook rate. However, where any applicable
minimum balance is maintained in such certificate account, the rate of return on
the balance of the certificate account shall remain the same as prior to such
early withdrawal. This waiver of the early withdrawal penalty applies only to
withdrawals made in connection with the purchase of Conversion Stock and is
entirely within the discretion of the Primary Parties.
(d) The Bank shall pay interest, at not less than the passbook
rate, for all amounts paid in cash, by check or money order to purchase shares
of Conversion Stock in the Subscription Offering and the Community Offering from
the date payment is received until the date the Conversion and Reorganization is
completed or terminated.
(e) The Bank shall not knowingly loan funds or otherwise extend
credit to any Participant or other Person to purchase Conversion Stock.
(f) Each share of Conversion Stock shall be non-assessable upon
payment in full of the Actual Purchase Price.
19
15. ACCOUNT HOLDERS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES.
-----------------------------------------------------------
The Primary Parties shall make reasonable efforts to comply with the
securities laws of all jurisdictions in the United States in which Participants
reside. However, no Participant will be offered or receive any Conversion Stock
under the Plan if such Participant resides in a foreign country or resides in a
jurisdiction of the United States with respect to which all of the following
apply: (a) there are few Participants otherwise eligible to subscribe for shares
under this Plan who reside in such jurisdiction; (b) the granting of
Subscription Rights or the offer or sale of shares of Conversion Stock to such
Participants would require any of the Primary Parties or their respective
Directors and Officers, under the laws of such jurisdiction, to register as a
broker-dealer, salesman or selling agent or to register or otherwise qualify the
Conversion Stock for sale in such jurisdiction, or any of the Primary Parties
would be required to qualify as a foreign corporation or file a consent to
service of process in such jurisdiction; and (c) such registration,
qualification or filing in the judgment of the Primary Parties would be
impracticable or unduly burdensome for reasons of cost or otherwise.
16. VOTING RIGHTS OF SHAREHOLDERS.
-----------------------------
Following consummation of the Conversion and Reorganization, voting
rights with respect to the Bank shall be held and exercised exclusively by the
Holding Company as holder of all of the Bank's outstanding voting capital stock,
and voting rights with respect to the Holding Company shall be held and
exercised exclusively by the holders of the Holding Company's voting capital
stock.
17. LIQUIDATION ACCOUNT.
-------------------
(a) At the time of the Mutual Holding Company Merger, the Bank
shall establish a liquidation account in an amount equal to the greater of (i)
$35,865,000, which is equal to 100% of the retained earnings of the Bank as of
June 30, 1998, the date of the latest statement of financial condition contained
in the final offering circular utilized in the formation of the Mutual Holding
Company, or (ii) the percentage of the outstanding shares of the common stock of
the Mid-Tier Holding Company owned by the Mutual Holding Company prior to the
Mid-Tier Holding Company Merger, multiplied by the Mid-Tier Holding Company's
total shareholders' equity as reflected in its latest statement of financial
condition contained in the final Prospectus utilized in the Conversion and
Reorganization. The function of the liquidation account will be to preserve the
rights of certain holders of Deposit Accounts in the Bank who maintain such
accounts in the Bank following the Conversion and Reorganization to a priority
to distributions in the unlikely event of a liquidation of the Bank subsequent
to the Conversion and Reorganization.
(b) The liquidation account shall be maintained for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders, if any, who
maintain their Deposit Accounts in the Bank after the Conversion and
Reorganization. Each such account holder will, with respect to each Deposit
Account held, have a related inchoate interest in a portion of the liquidation
account balance, which interest will be referred to in this Section 17 as the
"subaccount balance." All Deposit Accounts having the same social security
number will be aggregated for purposes of determining the initial subaccount
balance with respect to such Deposit Accounts, except as provided in Section
17(d) hereof.
(c) In the event of a complete liquidation of the Bank subsequent
to the Conversion and Reorganization (and only in such event), each Eligible
Account Holder and Supplemental Eligible Account Holder, if any, shall be
entitled to receive a liquidation distribution from the liquidation account in
the amount of the then current subaccount balances for Deposit Accounts then
held (adjusted as described below) before any liquidation distribution may be
made with respect to the capital stock of the Bank. No merger, consolidation,
sale of bulk assets or similar combination transaction with another FDIC-insured
institution in which the Bank is not the surviving entity shall be considered a
complete liquidation for this purpose. In any such transaction, the liquidation
account shall be assumed by the surviving entity.
(d) The initial subaccount balance for a Deposit Account held by an
Eligible Account Holder and Supplemental Eligible Account Holder, if any, shall
be determined by multiplying the opening balance in the liquidation account by a
fraction, of which the numerator is the amount of the Qualifying Deposits of
20
such account holder and the denominator is the total amount of Qualifying
Deposits of all Eligible Account Holders and Supplemental Eligible Account
Holders, if any. For Deposit Accounts in existence at both the Eligibility
Record Date and the Supplemental Eligibility Record Date, if any, separate
initial subaccount balances shall be determined on the basis of the Qualifying
Deposits in such Deposit Accounts on each such record date. Initial subaccount
balances shall not be increased, and shall be subject to downward adjustment as
provided below.
(e) If the aggregate deposit balance in the Deposit Account(s) of
any Eligible Account Holder or Supplemental Eligible Account Holder, if any, at
the close of business on any December 31 annual closing date, commencing
December 31, 2002, is less than the lesser of (a) the aggregate deposit balance
in such Deposit Account(s) at the close of business on any other annual closing
date subsequent to such record dates or (b) the aggregate deposit balance in
such Deposit Account(s) as of the Eligibility Record Date or the Supplemental
Eligibility Record Date, if any, the subaccount balance for such Deposit
Account(s) shall be adjusted by reducing such subaccount balance in an amount
proportionate to the reduction in such deposit balance. In the event of such a
downward adjustment, the subaccount balance shall not be subsequently increased,
notwithstanding any subsequent increase in the deposit balance of the related
Deposit Account(s). The subaccount balance of an Eligible Account Holder or
Supplemental Eligible Account Holder, if any, will be reduced to zero if the
Account Holder ceases to maintain a Deposit Account at the Bank that has the
same social security number as appeared on his Deposit Account(s) at the
Eligibility Record Date or, if applicable, the Supplemental Eligibility Record
Date.
(f) Subsequent to the Conversion and Reorganization, the Bank may
not pay cash dividends generally on deposit accounts and/or capital stock of the
Bank, or repurchase any of the capital stock of the Bank, if such dividend or
repurchase would reduce the Bank's regulatory capital below the aggregate amount
of the then current subaccount balances for Deposit Accounts then held;
otherwise, the existence of the liquidation account shall not operate to
restrict the use or application of any of the net worth accounts of the Bank.
(g) For purposes of this Section 17, a Deposit Account includes a
predecessor or successor account which is held by an Account Holder with the
same social security number.
18. TRANSFER OF DEPOSIT ACCOUNTS.
----------------------------
Each Deposit Account in the Bank at the time of the consummation of the
Conversion and Reorganization shall become, without further action by the
holder, a Deposit Account in the Bank equivalent in withdrawable amount to the
withdrawal value (as adjusted to give effect to any withdrawal made for the
purchase of Conversion Stock), and subject to the same terms and conditions
(except as to voting and liquidation rights) as such Deposit Account in the Bank
immediately preceding consummation of the Conversion and Reorganization. Holders
of Deposit Accounts in the Bank shall not, as such holders, have any voting
rights.
19. REQUIREMENTS FOLLOWING CONVERSION FOR REGISTRATION,
---------------------------------------------------
MARKET MAKING AND STOCK EXCHANGE LISTING.
-----------------------------------------
In connection with the Conversion and Reorganization, the Holding
Company shall register the Holding Company Common Stock pursuant to Section 12
of the Securities Exchange Act of 1934, as amended, and shall undertake not to
deregister such stock for a period of three years thereafter. The Holding
Company also shall use its best efforts to (i) encourage and assist a market
maker to establish and maintain a market for the Holding Company Common Stock
and (ii) list the Holding Company Common Stock on a national or regional
securities exchange or to have quotations for such stock disseminated on the
Nasdaq Stock Market.
21
20. DIRECTORS AND OFFICERS OF THE BANK.
----------------------------------
Each person serving as a Director or Officer of the Bank at the time of
the Conversion and Reorganization shall continue to serve as a Director or
Officer of the Bank for the balance of the term for which the person was elected
prior to the Conversion and Reorganization, and until a successor is elected and
qualified. The number, names, business addresses and terms of the Directors of
the Bank are set forth in the Plans of Merger included as Annexes A, B and C
hereto.
21. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING
--------------------------------------------------------------------
THE CONVERSION AND REORGANIZATION.
---------------------------------
For a period of three years following the Conversion and
Reorganization, the Directors and Officers of the Holding Company and the Bank
and their Associates may not purchase, without the prior written approval of the
OTS, Holding Company Common Stock except from a broker-dealer registered with
the SEC. This prohibition shall not apply, however, to (i) a negotiated
transaction arrived at by direct negotiation between buyer and seller and
involving more than 1% of the outstanding Holding Company Common Stock and (ii)
purchases of stock made by and held by any Tax-Qualified Employee Stock Benefit
Plan (and purchases of stock made by and held by any Non-Tax-Qualified Employee
Stock Benefit Plan following the receipt of shareholder approval of such plan)
which may be attributable to individual officers or directors.
The foregoing restriction on purchases of Holding Company Common Stock
shall be in addition to any restrictions that may be imposed by federal and
state securities laws.
22. RESTRICTIONS ON TRANSFER OF STOCK.
---------------------------------
All shares of Conversion Stock which are purchased by Persons other
than Directors and Officers shall be transferable without restriction, except in
connection with a transaction proscribed by Section 23 of this Plan. Shares of
Conversion Stock purchased by Directors and Officers of the Holding Company and
the Bank on original issue from the Holding Company (by subscription or
otherwise) shall be subject to the restriction that such shares shall not be
sold or otherwise disposed of for value for a period of one year following the
date of purchase, except for any disposition of such shares following the death
of the original purchaser or pursuant to any merger or similar transaction
approved by the OTS. The shares of Conversion Stock issued by the Holding
Company to Directors and Officers shall bear the following legend giving
appropriate notice of such one-year restriction:
"The shares of stock evidenced by this Certificate are
restricted as to transfer for a period of one year from the date of
this Certificate pursuant to Part 563b of the Rules and Regulations of
the Office of Thrift Supervision. These shares may not be transferred
during such one-year period without a legal opinion of counsel for the
Company that said transfer is permissible under the provisions of
applicable law and regulation. This restrictive legend shall be deemed
null and void after one year from the date of this Certificate."
In addition, the Holding Company shall give appropriate instructions to
the transfer agent for the Holding Company Common Stock with respect to the
applicable restrictions relating to the transfer of restricted stock. Any shares
issued at a later date as a stock dividend, stock split or otherwise with
respect to any such restricted stock shall be subject to the same holding period
restrictions as may then be applicable to such restricted stock.
The foregoing restriction on transfer shall be in addition to any
restrictions on transfer that may be imposed by federal and state securities
laws.
22
23. RESTRICTIONS ON ACQUISITION OF STOCK OF THE HOLDING COMPANY.
-----------------------------------------------------------
The certificate of incorporation of the Holding Company shall prohibit
any Person together with Associates or group of Persons acting in concert from
offering to acquire or acquiring, directly or indirectly, beneficial ownership
of more than 10% of any class of equity securities of the Holding Company, or of
securities convertible into more than 10% of any such class, for such period of
time following completion of the Conversion and Reorganization as may be
determined by the Board of Directors of the Holding Company. The certificate of
incorporation of the Holding Company also shall provide that all equity
securities beneficially owned by any Person in excess of 10% of any class of
equity securities shall be considered "excess shares", and that excess shares
shall not be counted as shares entitled to vote and shall not be voted by any
Person or counted as voting shares in connection with any matters submitted to
the shareholders for a vote. The foregoing restrictions shall not apply to (i)
any offer with a view toward public resale made exclusively to the Holding
Company by underwriters or a selling group acting on its behalf, (ii) the
purchase of shares by a Tax-Qualified Employee Stock Benefit Plan established
for the benefit of the employees of the Holding Company and its subsidiaries
which is exempt from approval requirements under 12 C.F.R. ss.574.3(c)(1)(vi) or
any successor thereto, and (iii) any offer or acquisition approved in advance by
the affirmative vote of two-thirds of the entire Board of Directors of the
Holding Company. Directors, Officers or Employees of the Holding Company or the
Bank or any subsidiary thereof shall not be deemed to be Associates or a group
acting in concert with respect to their individual acquisitions of any class of
equity securities of the Holding Company solely as a result of their capacities
as such.
24. TAX RULINGS OR OPINIONS.
-----------------------
Consummation of the Conversion and Reorganization is conditioned upon
prior receipt by the Primary Parties of either a ruling or an opinion of counsel
with respect to federal tax laws, and either a ruling or an opinion with respect
to Pennsylvania tax laws, to the effect that consummation of the transactions
contemplated hereby will not result in a taxable reorganization under the
provisions of the applicable codes or otherwise result in any adverse tax
consequences to the Primary Parties or to account holders receiving Subscription
Rights before or after the Conversion and Reorganization, except in each case to
the extent, if any, that Subscription Rights are deemed to have fair market
value on the date such rights are issued.
25. STOCK COMPENSATION PLANS.
------------------------
(a) The Holding Company and the Bank are authorized to adopt
Tax-Qualified Employee Stock Benefit Plans in connection with the Conversion and
Reorganization, including without limitation an employee stock ownership plan.
(b) The Holding Company and the Bank also are authorized to adopt
stock option plans, restricted stock grant plans and other Non-Tax-Qualified
Employee Stock Benefit Plans, provided that no stock options shall be granted,
and no shares of Conversion Stock shall be purchased, pursuant to any of such
plans prior to the earlier of (i) the one-year anniversary of the consummation
of the Conversion and Reorganization or (ii) the receipt of shareholder approval
of such plans at either an annual or special meeting of shareholders of the
Holding Company held no earlier than six months following the Conversion and
Reorganization.
(c) Existing as well as any newly-created Tax-Qualified Employee
Stock Benefit Plans may purchase shares of Conversion Stock in the Offerings, to
the extent permitted by the terms of such benefit plans and this Plan.
(d) The Holding Company and the Bank are authorized to enter into
employment or severance agreements with their executive officers.
23
26. DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK.
---------------------------------------------
(a) Following consummation of the Conversion and Reorganization,
any repurchases of shares of capital stock by the Holding Company will be made
in accordance with then applicable laws and regulations.
(b) The Bank may not declare or pay a cash dividend on, or
repurchase any of, its capital stock if the effect thereof would cause the
regulatory capital of the Bank to be reduced below the amount required for the
liquidation account. Any dividend declared or paid on, or repurchase of, the
Bank's capital stock also shall be in compliance with Section 563.146 of the
Regulations Applicable to All Savings Banks, or any successor thereto.
27. PAYMENT OF FEES TO BROKERS.
--------------------------
The Primary Parties may elect to offer to pay fees on a per share basis
to securities brokers who assist purchasers of Conversion Stock in the
Offerings.
28. EFFECTIVE DATE.
--------------
The effective date of the Conversion and Reorganization shall be the
date upon which the last of the following actions occurs: (i) the filing of
Articles of Combination with the OTS with respect to the Mid-Tier Holding
Company Merger, (ii) the filing of Articles of Combination with the OTS with
respect to the Mutual Holding Company Merger, (iii) the filing of Articles of
Combination with the OTS with respect to the Bank Merger and (iv) the closing of
the issuance of the shares of Conversion Stock in the Offerings. The filing of
Articles of Combination relating to the Mutual Holding Company Merger, the
Mid-Tier Holding Company Merger and the Bank Merger and the closing of the
issuance of shares of Conversion Stock in the Offerings shall not occur until
all requisite regulatory, Member and Shareholder approvals have been obtained,
all applicable waiting periods have expired and sufficient subscriptions and
orders for the Conversion Stock have been received. It is intended that the
closing of the Mutual Holding Company Merger, the Mid-Tier Holding Company
Merger, the Bank Merger and the sale of shares of Conversion Stock in the
Offerings shall occur consecutively and substantially simultaneously.
29. AMENDMENT OR TERMINATION OF THE PLAN.
------------------------------------
If deemed necessary or desirable by the Boards of Directors of the
Primary Parties, this Plan may be substantively amended, as a result of comments
from regulatory authorities or otherwise, at any time prior to the solicitation
of proxies from Members and Shareholders to vote on the Plan and at any time
thereafter with the concurrence of the OTS. Any amendment to this Plan made
after approval by the Members and Shareholders with the concurrence of the OTS
shall not necessitate further approval by the Members or Shareholders unless
otherwise required by the OTS. This Plan shall terminate if the sale of all
shares of Conversion Stock is not completed within 24 months from the date of
the Special Meeting. Prior to the earlier of the Special Meeting and the
Shareholders' Meeting, this Plan may be terminated by the Boards of Directors of
the Primary Parties without approval of the OTS; after the Special Meeting or
the Shareholders' Meeting, the Boards of Directors may terminate this Plan only
with the approval of the OTS.
30. INTERPRETATION OF THE PLAN.
--------------------------
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of each of the Boards of Directors of the
Primary Parties shall be final, subject to the authority of the OTS.
24
IN WITNESS WHEREOF, the parties have caused this Plan to be executed by
their duly authorized officers as of this 7th day of September 2001.
WILLOW GROVE MUTUAL HOLDING COMPANY
Attest: /s/ John T. Powers By: /s/ Frederick A. Marcell Jr.
----------------------------------- --------------------------------------------
John T. Powers Frederick A. Marcell Jr.
Corporate Secretary President and Chief Executive Officer
WILLOW GROVE BANK
Attest: /s/ John T. Powers By: /s/ Frederick A. Marcell Jr.
----------------------------------- --------------------------------------------
John T. Powers Frederick A. Marcell Jr.
Corporate Secretary President and Chief Executive Officer
WILLOW GROVE BANCORP, INC.
(a federal corporation)
Attest: /s/ John T. Powers By: /s/ Frederick A. Marcell Jr.
----------------------------------- --------------------------------------------
John T. Powers Frederick A. Marcell Jr.
Corporate Secretary President and Chief Executive Officer
WILLOW GROVE BANCORP, INC.
(a Pennsylvania corporation, in organization)
Attest: /s/ John T. Powers By: /s/ Frederick A. Marcell Jr.
----------------------------------- --------------------------------------------
John T. Powers Frederick A. Marcell Jr.
Corporate Secretary President and Chief Executive
25