EXHIBIT 2
PLAN OF MUTUAL HOLDING COMPANY REORGANIZATION
AND STOCK ISSUANCE
MONADNOCK COMMUNITY BANK
PETERBOROUGH, NEW HAMPSHIRE
MARCH 11, 2004
PLAN OF MUTUAL HOLDING COMPANY REORGANIZATION
AND
STOCK ISSUANCE
OF
MONADNOCK COMMUNITY BANK
TABLE OF CONTENTS
PAGE
----
I. GENERAL............................................................................1
II. DEFINITIONS........................................................................2
III. Plan of Reorganization.............................................................7
III. Plan of Reorganization.............................................................7
A. Certain Effects of Reorganization..................................................7
B. Special Meeting of Members........................................................11
C. Conditions to Implementation of Reorganization....................................11
I. Rights of Members of the Mutual Holding Comany....................................12
J. Payment of Dividends and Repurchase of Stock......................................12
IV STOCK ISSUANCE PROCEDURE..........................................................12
V. STOCK OFFERING....................................................................13
A. Total Number of Shares and Purchase Price of Common Stock.........................13
B. Subscription Rights...............................................................15
C. Direct Community Offering and Syndicated Community Offering.......................17
D. Additional Limitations Upon Purchases of Shares of
Stock Holding CompanyCommon Stock.................................................18
E. Restrictions and Other Characteristics of Stock Holding Company Common Stock......20
F. Exercise of Subscription Rights; Order Forms......................................21
G. Method of Payment.................................................................22
H. Undelivered, Defective or Late Order Forms; Insufficient Payment..................23
I. Member in Non-Qualified States or in Foreign Countries............................24
VI. STOCK BENEFIT PLANS...............................................................24
VII. SECURITIES REGISTRATION AND MARKET MAKING.........................................24
VIII. RESTRICTIONS ON ACQUISITION OF THE STOCK HOLDING COMPANY AND THE SAVINGS BANK.....25
IX. AMENDMENT OR TERMINATION OF PLAN..................................................25
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XI. TAX RULING........................................................................26
XII. EXTENSION OF CREDIT FOR PURCHASE OF STOCK.........................................26
XII. CONVERSION OF MHC TO STOCK FORM...................................................26
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PLAN OF MUTUAL HOLDING COMPANY REORGANIZATION
AND STOCK ISSUANCE
MONADNOCK COMMUNITY BANK
Peterborough, New Hampshire
I. GENERAL
On March 11, 2004, the Board of Directors of Monadnock Community Bank
(the "Savings Bank") unanimously adopted this Plan whereby the Savings Bank will
reorganize into a mutual holding company structure and the Savings Bank will
become a wholly owned subsidiary of Monadnock Community Bancorp, Inc. (the
"Stock Holding Company") and the Stock Holding Company will become a wholly
owned subsidiary of Monadnock Mutual Holding Company (the "MHC"). In addition,
the Stock Holding Company will conduct a stock offering of up to 49.9% of the
aggregate total voting stock of the Stock Holding Company, pursuant to the laws
of the United States of America and the rules and regulations of the Office of
Thrift Supervision ("OTS").
In adopting the Plan, the Board of Directors has determined that the
Reorganization is advisable and in the best interest of the Savings Bank and its
depositors and is consistent with the Savings Bank's strategic plan. The Savings
Bank is committed to being an independent community-based institution and the
Board of Directors believes that the mutual holding company structure is best
suited for this purpose. As a capital stock savings bank subsidiary of the MHC
and the Stock Holding Company, the Reorganization will afford the Stock Savings
Bank access to capital sources not legally available to mutual savings banks,
while at the same time preserving the mutual form of ownership within the
holding company structure. Although the Stock Savings Bank and the Stock Holding
Company will be authorized to issue capital stock to persons other than the MHC,
so long as the MHC is in existence it will at all times own or control at least
a Majority Interest (as defined herein) of the Stock Savings Bank and the Stock
Holding Company. Also, the mutual holding company structure, by providing the
flexibility to raise capital through the issuance of stock in a manner designed
to meet the Stock Savings Bank's growth needs rather than in a single offering,
will allow the Stock Savings Bank to avoid over-capitalization. This structure
will facilitate the acquisition of other financial institutions, thereby
increasing the Savings Bank's customer base and market for its financial
services, although no particular acquisitions are contemplated at this time.
The Reorganization will structure the Savings Bank in the stock form
used by commercial banks, most major business corporations and a majority of
savings banks and savings institutions. As such, the Reorganization will enable
the Savings Bank to enhance its franchise and to compete more effectively with
commercial banks and other financial institutions for new business
opportunities. In addition, the use of the holding company structure will
provide greater organizational and operating flexibility to the Savings Bank.
Moreover, the formation of a mutual holding company will allow the MHC and/or
the Stock Holding Company to borrow funds, on a secured or unsecured basis, and
to issue debt to the public or in a private
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placement. The proceeds of such borrowings or debt offering could be contributed
to the Stock Savings Bank to increase its capital or could be used by the MHC
and/or the Stock Holding Company for other purposes. There are currently no
plans to issue debt or borrow funds by the MHC and/or the Stock Holding Company.
The Reorganization is subject to the approval of the OTS and also must
be approved by the affirmative vote of a majority of the total votes eligible to
be cast by Voting Members (as defined herein) of the Savings Bank.
The Plan provides that non-transferable subscription rights to purchase
Stock Holding Company Common Stock will be offered first to Eligible Account
Holders of record as of the Eligibility Record Date, Tax-Qualified Employee
Plans, then to Supplemental Eligible Account Holders of record as of the
Supplemental Eligibility Record Date and then to Other Members. Concurrently
with, at any time during, or promptly after the Subscription Offering, and on a
lowest priority basis, an opportunity to subscribe may also be offered to the
general public in a Direct Community Offering, which may be followed by a
Syndicated Community Offering. The price of the Common Stock of the Stock
Holding Company will be based upon an independent appraisal of the Savings Bank
and will reflect its estimated pro forma market value following the Stock
Offering. It is the desire of the Board of Directors of the Savings Bank to
attract new capital to the Savings Bank in order to increase its capital
position, support future growth and increase the amount of funds available for
residential and other lending. The Savings Bank is also expected to benefit from
its management and other personnel having a stock ownership in its business,
since stock ownership is viewed as an effective performance incentive and a
means of attracting, retaining and compensating management and other personnel.
In connection with the Stock Offering, the Savings Bank will apply to
the OTS to have the Stock Holding Company retain up to 50% of the net proceeds
of the Stock Offering, or such other amount as may be determined by the Boards
of Directors of the Savings Bank and the Stock Holding Company. The Stock
Holding Company has the power to issue shares of Capital Stock to persons other
than the MHC. However, so long as the MHC is in existence, the MHC will be
required to own at least a majority of the Voting Stock of the Stock Holding
Company. The Stock Holding Company may issue any amount of Non-Voting Stock to
persons other than the MHC. The Stock Holding Company is authorized to undertake
one or more Minority Stock Offerings of less than 50% in the aggregate of the
total outstanding Common Stock of the Stock Holding Company, and the Stock
Holding Company intends to offer for sale up to 49.9% of its Common Stock in the
Stock Offering. The Savings Bank believes that capitalization of the MHC and the
Stock Holding Company will provide the MHC and the Stock Holding Company with
economic strength separate and apart from the Savings Bank and could facilitate
future activities by the MHC and the Stock Holding Company.
II. DEFINITIONS
ACTING IN CONCERT: The term "acting in concert" shall have the same
meaning given it in ss.574.2(c) of the Rules and Regulations of the OTS as
reasonably interpreted solely within the discretion of the Board of Directors of
the Savings Bank and the Stock Holding Company.
ACTUAL SUBSCRIPTION PRICE: The price per share, determined as provided
in Section V of this Plan, at which Stock Holding Company Common Stock will be
sold in the Subscription Offering.
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AFFILIATE: An "affiliate" of, or a Person "affiliated" with, a specified
Person, is a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by or is under common control with,
the Person specified.
ASSOCIATE: The term "associate," when used to indicate a relationship
with any Person, means (i) any corporation or organization (other than the
Savings Bank, the Stock Holding Company or the MHC or a majority-owned
subsidiary of any of them) of which such Person is a director, officer or
partner or is, directly or indirectly, the beneficial owner of ten percent 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, 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 MHC, the Stock Holding
Company or the Savings Bank or any subsidiary of the MHC or the Stock Holding
Company or any Affiliate thereof; and any person acting in concert with any
persons or entities specified in clauses (i) through (iii) above; provided,
however, that any Tax-Qualified or Non-Tax-Qualified Employee Plan shall not be
deemed to be an associate of any Director or Officer of the Stock Holding
Company or the Savings Bank, to the extent provided herein. When used to refer
to a Person other than an Officer or Director of the Savings Bank, the Savings
Bank in its sole discretion may determine the Persons that are Associates of
other Persons.
CAPITAL STOCK: Any and all authorized stock of the Stock Holding Company
or the Stock Savings Bank.
COMMON STOCK: Common stock, par value $.01 per share, issued by the
Stock Holding Company, pursuant to its stock charter.
DEPOSIT ACCOUNT: Any withdrawable account or deposit in the Savings Bank
including Savings Accounts.
DIRECT COMMUNITY OFFERING: The offering to the general public of any
unsubscribed shares which may be effected as provided in Section V hereof.
DIRECTOR: A member of the Board of Directors of the Savings Bank and,
where applicable, a member of the Board of Directors of the MHC and the Stock
Holding Company.
EFFECTIVE DATE: The effective date of the Reorganization which shall be
the date of consummation of the Reorganization in accordance with this Plan.
ELIGIBILITY RECORD DATE: The close of business on December 31, 2002.
ELIGIBLE ACCOUNT HOLDER: Any Person holding a Qualifying Deposit in the
Savings Bank on the Eligibility Record Date.
EMPLOYEE: A Person who is employed by the Savings Bank at the
commencement of the Stock Offering.
ESOP: The Savings Bank's Employee Stock Ownership Plan.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
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HOLDING COMPANY APPLICATION: The Application submitted to the OTS by the
Stock Holding Company to acquire control of the Stock Savings Bank.
INDEPENDENT APPRAISER: The appraiser retained by the Savings Bank to
prepare an appraisal of the pro forma market value of the Savings Bank and the
Stock Holding Company.
MAJORITY INTEREST: A majority of the combined voting power of all
classes of outstanding stock of the Stock Savings Bank and Stock Holding
Company.
MARKET MAKER: A dealer (i.e., any Person who engages directly or
indirectly as agent, broker or principal in the business of offering, buying,
selling, or otherwise dealing or trading in securities issued by another Person)
who, with respect to a particular security, (i) regularly publishes bona fide,
competitive bid and offer quotations in a recognized inter-dealer quotation
system; or (ii) furnishes bona fide competitive bid and offer quotations on
request; and (iii) is ready, willing, and able to effect transactions in
reasonable quantities at his quoted prices with other brokers or dealers.
MAXIMUM SUBSCRIPTION PRICE: The price per share of Stock Holding Company
Common Stock to be paid initially by subscribers in the Subscription Offering.
MEMBER: Any person holding a Deposit Account in the Savings Bank.
MHC: Monadnock Mutual Holding Company.
MINORITY STOCK OFFERING: One or more offerings of less than 50% in the
aggregate of the outstanding Common Stock of the Stock Holding Company to
persons other than the MHC.
MINORITY STOCKHOLDER: Any owner of the Stock Holding Company's Common
Stock, other than the MHC.
NON-TAX-QUALIFIED EMPLOYEE PLAN: Any defined benefit plan or defined
contribution plan of the Savings Bank or the Stock Holding Company, such as an
employee stock ownership plan, stock bonus plan, profit-sharing plan or other
plan, which with its related trust does not meet the requirements to be
"qualified" under Section 401 of the Internal Revenue Cole.
NON-VOTING STOCK: Any capital stock other than Voting Stock.
NOTICE OF REORGANIZATION: The Notice of Mutual Holding Company
Reorganization and Application for Minority Stock Issuance, to be submitted by
the Savings Bank to the OTS to notify the OTS of the Reorganization.
OFFICER: An executive officer of the MHC, Stock Holding Company or the
Savings Bank, including the Chairman of the Board, President, Executive Vice
Presidents, Senior Vice Presidents in charge of principal business functions,
and any person participating in major policy making functions of the Savings
Bank.
ORDER FORMS: Forms to be used in the Subscription Offering and Direct
Community Offering to order shares of Common Stock.
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OTHER MEMBERS: Members of the Savings Bank other than Eligible Account
Holders or Supplemental Eligible Account Holders.
OTS: Office of Thrift Supervision, Department of the Treasury, and its
successors.
PERSON: An individual, a corporation, a partnership, an Association, a
joint-stock company, a trust, any unincorporated organization, a government or
political subdivision thereof or any other entity.
PLAN: This Plan of Mutual Holding Company Reorganization and Stock
Issuance, including any amendment approved as provided in this Plan.
QUALIFYING DEPOSIT: The aggregate balance of $50 or more of each Deposit
Account of an Eligible Account Holder as of the Eligibility Record Date or of a
Supplemental Eligible Account Holder as of the Supplemental Eligibility Record
Date.
REORGANIZATION: Collectively, all steps necessary for the Savings Bank
to reorganize into the mutual holding company form or organization in accordance
with the Plan and the provisions of the Home Owners' Loan Act, as amended (the
"HOLA") and Part 575 of the OTS Rules and Regulations for Savings Associations.
SAIF: The Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation.
SAVINGS ACCOUNT: The term "Savings Account" means any withdrawable
account in the Savings Bank including a demand account.
SAVINGS BANK: Monadnock Community Bank in its current mutual form.
SEC: U.S. Securities and Exchange Commission.
SPECIAL MEETING OF MEMBERS: The special meeting and any adjournments
thereof held to consider and vote on this Plan.
STOCK HOLDING COMPANY: The federal stock corporation that is majority
owned by the MHC.
STOCK OFFERING: The offering of Stock Holding Company Common Stock to
persons other than the MHC in a Subscription Offering, and to the extent shares
remain available, in a Direct Community Offering, Syndicated Community Offering
or otherwise.
STOCK SAVINGS BANK: The newly organized stock savings bank subsidiary of
the Stock Holding Company resulting from the reorganization.
SUBSCRIPTION OFFERING: The offering of shares of Stock Holding Company
Common Stock for subscription and purchase pursuant to this Plan.
SUBSCRIPTION RIGHTS: Non-transferable, non-negotiable, personal rights
of the Savings Bank's Eligible Account Holders, Tax-Qualified Employee Plans and
Supplemental Eligible
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Account Holders to subscribe for shares of Stock Holding Company Common Stock in
the Subscription Offering.
SUPPLEMENTAL ELIGIBILITY RECORD DATE: The last day of the calendar
quarter preceding approval of the Plan by the OTS.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER: Any person holding a Qualifying
Deposit in the Savings Bank (other than an Officer or Director and their
Associates) on the Supplemental Eligibility Record Date.
SYNDICATED COMMUNITY OFFERING: The offering for sale by a syndicate of
broker-dealers to the general public of any shares of Stock Holding Company
Common Stock not subscribed for in the Subscription Offering or the Direct
Community Offering, if any.
SYNDICATED COMMUNITY OFFERING PRICE: The price per share at which any
unsubscribed shares of the Stock Holding Company Common Stock are initially
offered for sale in the Syndicated Community Offering.
TAX-QUALIFIED EMPLOYEE PLANS: Any defined benefit plan or defined
contribution plan of the Savings Bank or the Stock Holding Company, such as an
employee stock ownership plan, stock bonus plan, profit-sharing plan or other
plan, which with its related trust meets the requirements to be "qualified"
under Section 401 of the Internal Revenue Code.
VOTING MEMBERS: Those members eligible to vote at meetings of the
Members of the Savings Bank.
VOTING RECORD DATE: The date established by the Board of Directors of
the Savings Bank for determining eligibility to vote at the Special Meeting of
Members.
VOTING STOCK: 1. Common or preferred stock, or similar interests if the
shares by statute, charter or in any manner, entitle the holder to: (i) vote for
or to select Directors of the Savings Bank or the Stock Holding Company; and
(ii) vote on or direct the conduct of the operations or other significant
policies of the Savings Bank or the Stock Holding Company
2. Notwithstanding anything in paragraph (1) above, preferred stock is
not "Voting Stock" if: (i) voting rights associated with the preferred stock are
limited solely to the type customarily provided by statute with regard to
matters that would significantly and adversely affect the rights or preferences
of the preferred stock, such as the issuance of additional amounts or classes of
senior securities, the modification of the terms of the preferred stock, the
dissolution of the Savings Bank or the Stock Holding Company, or the payment of
dividends by the Savings Bank or the Stock Holding Company when preferred
dividends are in arrears; (ii) the preferred stock represents an essentially
passive investment or financing device and does not otherwise provide the holder
with control over the issuer; and (iii) the preferred stock does not at the time
entitle the holder, by statute, charter, or otherwise, to select or to vote for
the selection of directors of the Savings Bank or the Stock Holding Company.
3. Notwithstanding anything in paragraphs (1) and (2) above, "Voting
Stock" shall be deemed to include preferred stock and other securities that,
upon transfer or otherwise, are convertible into Voting Stock or exercisable to
acquire Voting Stock where the holder of the stock, convertible security or
right to acquire Voting Stock has the preponderant economic risk
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in the underlying Voting Stock. Securities immediately convertible into Voting
Stock at the option of the holder without payment of additional consideration
shall be deemed to constitute the Voting Stock into which they are convertible;
other convertible securities and rights to acquire Voting Stock shall not be
deemed to vest the holder with the preponderant economic risk in the underlying
Voting Stock if the holder has paid less than 50% of the consideration required
to directly acquire the Voting Stock and has no other economic interest in the
underlying Voting Stock.
III. PLAN OF REORGANIZATION
Pursuant to Section 10(o) of the HOLA and 12 C.F.R. Part 575 of the OTS
Regulations, the Reorganization will be accomplished in accordance with the
procedures set forth in this Plan, applicable regulations of the OTS, and as
otherwise may be required by the OTS.
A. CERTAIN EFFECTS OF REORGANIZATION
1. ORGANIZATION OF THE MHC, THE STOCK HOLDING COMPANY AND
THE STOCK SAVINGS BANK
A principal part of the Reorganization will be the formation of
a federally-chartered capital Stock Savings Bank subsidiary. As a result
of the Reorganization, the Stock Holding Company will initially own 100%
of the Stock Savings Bank's Voting Stock. The MHC will own a Majority
Interest in the Stock Holding Company and an indirect Majority Interest
in the Stock Savings Bank at all times as long as the MHC remains in the
mutual form of organization.
The Reorganization will be effected as follows, or in any manner
approved by the Board or Directors of the Savings Bank and the OTS that
is consistent with the purposes of this Plan and applicable laws and
regulations:
(i) the Savings Bank will organize an interim federal Stock
Savings Bank as a wholly-owned subsidiary ("Interim One"); (ii) Interim
One will organize an interim federal Stock Savings Bank as a
wholly-owned subsidiary ("Interim Two"); (iii) Interim One will organize
the Stock Holding Company as a wholly-owned subsidiary; (iv) the Savings
Bank will exchange its charter for a federal stock Savings Bank charter
("Stock Savings Bank") and Interim One will cancel its outstanding stock
and exchange its charter for a federal mutual holding company charter;
(v) simultaneously with step (iv) Interim Two will merge with and into
Stock Savings Bank pursuant to an Agreement of Merger attached hereto,
with Stock Savings Bank surviving; (vi) all of the initially issued
stock of the Stock Savings Bank will be transferred to the MHC in
exchange for membership shares in the MHC; and (vii) MHC will transfer
all of the outstanding shares of Stock Savings Bank to Stock Holding
Company and the Stock Savings Bank will become a wholly-owned subsidiary
of the Stock Holding Company.
Upon consummation of the Reorganization, the legal existence of
the Savings Bank will not terminate, but the converted Stock Savings
Bank will be a continuation of the Savings Bank, and all property of the
Savings Bank, including its right, title and interest in and to all
property of whatsoever kind and nature, interest and asset of every
conceivable value or benefit then existing or pertaining to the Savings
Bank, or which would inure to the Savings Bank immediately by operation
of law and without the
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necessity of any conveyance or transfer and without any further act or
deed, will vest in the Stock Savings Bank. The Stock Savings Bank will
have, hold, and enjoy the same in its right and fully to the same extent
as the same was possessed, held, and enjoyed by the Savings Bank. The
Stock Savings Bank will continue to have, succeed to, and be responsible
for all rights, liabilities and obligations of the Savings Bank and will
maintain its headquarters operations at the Savings Bank's present
location.
In connection with the Reorganization, the MHC will be
capitalized with $50,000 or such greater amount as may be determined by
the Board of Directors of the Savings Bank subject to the approval of
the OTS, to the extent such assets are not required to be transferred to
or retained by the Stock Savings Bank in order to satisfy capital or
reserve requirements of any applicable law or regulation. The Stock
Holding Company will also be capitalized with not more than 50% of the
net proceeds of the Stock Offering. All other assets of the Savings Bank
will become assets of the Stock Savings Bank. The Savings Bank believes
that capitalization of the MHC and the Stock Holding Company at this
level will provide the MHC and the Stock Holding Company with economic
strength separate and apart from the Stock Savings Bank and could
facilitate future activities by the MHC and the Stock Holding Company.
2. OPERATION OF THE STOCK SAVINGS BANK
Upon the Effective Date of the Reorganization, the Stock Savings
Bank will be owned by the Stock Holding Company, which will be its sole
stockholder. The Stock Holding Company will be owned by the MHC, which
hold a Majority Interest. Those persons who as of the Effective Date
held depository rights with respect to, or other rights as creditors of,
the Savings Bank, shall thereafter have such rights solely with respect
to the Stock Savings Bank. Each deposit account in the Savings Bank at
the Effective Date will become a deposit account in the Stock Savings
Bank in the same amount and upon the same terms and conditions, except
that the holder of each such deposit account will have membership rights
with respect to the MHC rather than the Stock Savings Bank. Members will
not have any voting rights in the Stock Savings Bank. All insured
deposit accounts of the Savings Bank which are transferred to the Stock
Savings Bank will continue to be federally insured up to the legal
maximum by the SAIF in the same manner as deposit accounts existing in
the Savings Bank immediately prior to the Reorganization.
All loans and other borrowings from the Savings Bank shall
retain the same status with the Stock Savings Bank after the
Reorganization as they had with the Savings Bank prior to the
Reorganization. The Stock Savings Bank may exercise any and all powers,
rights and privileges of, and shall be subject to all limitations
applicable to, capital Stock Savings Banks under federal law.
The Board of Directors of the Stock Savings Bank will consist
of the same directors with their same terms as with the Savings Bank.
The Board of Directors will be divided into three classes as nearly
equal in number as possible and the members of each class shall be
elected for a term of three years and until their successors are elected
and qualified. One class shall be elected by ballot annually by the
stockholders of the Stock Savings Bank's Common Stock. Present
management of the Savings Bank will continue as the management of the
Stock Savings Bank following the Reorganization.
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Following the Reorganization, the Stock Savings Bank will have
the power to issue shares of Capital Stock to persons other than the
Stock Holding Company. Pursuant to federal law and regulations, unless
otherwise revised or amended, so long as the MHC is in existence, the
MHC will be required to own a Majority Interest, either directly or
through its ownership of a Majority Interest in a Subsidiary, in the
Stock Savings Bank. One or more offerings of Capital Stock of the Stock
Savings Bank and/or the Stock Holding Company may be made following the
Reorganization, subject to the approval of the OTS and the
above-mentioned Majority Interest condition. Any offer and sale of
Common Stock or Preferred Stock of the Stock Savings Bank and/or the
Stock Holding Company will be conducted in accordance with federal law.
3. OPERATION OF THE MHC AND THE STOCK HOLDING COMPANY
As part of the Reorganization, the MHC and the Stock Holding
Company will not retain assets of the Savings Bank which are to be
transferred to the Stock Savings Bank in order to satisfy capital or
reserve requirements of federal law. All assets, rights, obligations and
liabilities of whatever nature that are not retained by the MHC and the
Stock Holding Company as part of their initial capitalization shall be
deemed to be transferred to the Stock Savings Bank. The MHC shall
continue to possess and may exercise all of the rights, powers and
privileges, and shall be subject to all limitations, applicable to a
federally-chartered mutual savings Bank and any applicable federal law
limitations; provided, however, that the MHC shall not possess or
exercise any deposit taking powers.
The rights and powers of the MHC will be defined by the MHC's
Charter and Bylaws and by federal law governing mutual holding
companies. The rights and powers of the Stock Holding Company will be
defined by the Stock Holding Company's Charter and Bylaws and by federal
law. The MHC and the Stock Holding Company shall be subject to the
limitations and restrictions imposed on savings and loan holding
companies by Section 10(o)(5) of the HOLA, as amended.
All of the members of the Board of Directors of the Savings Bank
will become directors of the MHC and the Stock Holding Company.
Thereafter, approximately one third of the directors of the MHC will be
elected annually by the members of the MHC who will consist of certain
of the former Members of the Savings Bank and certain persons who become
depositors of the Stock Savings Bank after the Reorganization.
Approximately one third of the directors of the Stock Holding Company
will be elected annually by the shareholders of the Stock Holding
Company. Certain senior management persons of the Savings Bank will
assume similar positions with the MHC and the Stock Holding Company.
Subsequent to the Reorganization, persons who had membership or
liquidation rights with respect to the Savings Bank under its existing
charter immediately prior to the Reorganization shall continue to have
such rights solely with respect to the MHC. In addition, all persons who
become depositors of the Stock Savings Bank subsequent to the
Reorganization will also have such membership and liquidation rights
with respect to the MHC. In each case, no person who ceases to be a
holder of a deposit account with the Stock Savings Bank shall have any
membership or liquidation rights with respect to the MHC. All proxies
previously given by the Members to the Board of Directors of the Savings
Bank will run to the Board of Directors of the MHC
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Upon completion of the Reorganization, except for assets
retained by the MHC and the Stock Holding Company and any expenses
incurred in connection with the Reorganization, the Reorganization of
the Savings Bank into a MHC will not result in any reduction in the
amount of the reserves, capital and surplus that the Savings Bank had
prior to the Reorganization. Such reserves, capital and surplus will be
accounted for by the MHC, the Stock Holding Company and the Stock
Savings Bank on a consolidated basis in accordance with generally
accepted accounting principles.
4. CHARTER AND BYLAWS OF THE MHC
As part of the Reorganization, the MHC will be chartered as a
federal mutual holding company. A copy of the proposed Charter and
Bylaws are attached hereto and hereby incorporated into this Plan. The
name of the MHC shall be Monadnock Mutual Holding Company or such other
name approved by the Board of Directors and the OTS. By its approval of
the Plan, the Board of Directors of the Savings Bank has approved and
adopted the Charter and Bylaws of the MHC.
5. CHARTER AND BYLAWS OF STOCK HOLDING COMPANY
As part of the Reorganization, the Stock Holding Company will be
chartered as a federal stock corporation. A copy of the proposed Federal
Charter and Bylaws for the Stock Holding Company are attached hereto and
hereby incorporated into this Plan. The name of the Stock Holding
Company shall be Monadnock Community Bancorp Inc.or such other name
approved by the Board of Director and the OTS. By its approval of the
Plan, the Board of Directors of the Savings Bank has approved and
adopted the Stock Holding Company Charter and Bylaws.
6. CHARTER AND BYLAWS OF THE STOCK SAVINGS BANK
As part of the Reorganization, a charter and bylaws of the Stock
Savings Bank shall be adopted in a form permitted by the OTS to
authorize the Stock Savings Bank to operate as a federally-chartered
Stock Savings Bank. The name of the Stock Savings Bank will be
"Monadnock Community Bank." The Stock Savings Bank's Charter may
authorize a number of shares of Common Stock greater than the number of
shares that shall be issued to the Stock Holding Company in the
Reorganization. A copy of the proposed Charter and Bylaws of the Stock
Savings Bank are attached hereto and hereby incorporated into this Plan.
By its approval of the Plan, the Board of Directors of the Savings Bank
approved the Charter and Bylaws of the Stock Savings Bank.
B. TIMING OF REORGANIZATION AND SALE OF CAPITAL STOCK
The Savings Bank intends to consummate the Reorganization as
soon as feasible following the receipt of all approvals referred to in
the Plan. Subject to the approval of the OTS, the Stock Holding Company
intends to commence the Stock Offering concurrently with the proxy
solicitation of Members. The Stock Holding Company may close the Stock
Offering before the Special Meeting of Members, provided that the offer
and sale of the Common Stock shall be conditioned upon approval of the
Plan by the Members at the Special Meeting of Members. The Stock
Offering shall be conducted in
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compliance with the securities offering regulations of the SEC. The
Savings Bank will not finance or loan funds to any person to purchase
Common Stock.
C. SPECIAL MEETING OF MEMBERS
Subsequent to the approval of the Plan by the OTS, the Special
Meeting of Members shall be scheduled in accordance with the Savings
Bank's Bylaws. Promptly after receipt of approval and at least 20 days
but not more than 45 days prior to the Special Meeting of Members, the
Savings Bank shall distribute proxy solicitation materials to all Voting
Members as of the Voting Record Date. The proxy solicitation materials
shall include a proxy statement (the "Proxy Statement"), other documents
authorized for use by the regulatory authorities, and may also include a
copy of the Plan. The proxy materials shall contain the information that
is relevant to the action to be taken by the Voting Members.
Pursuant to the regulations of the OTS, an affirmative vote of
not less than a majority of the total outstanding votes of the Voting
Members eligible to be cast is required for approval of the Plan,
including adoption of the Charter and Bylaws of the Stock Savings Bank,
the Stock Holding Company and the MHC. Voting may be in person or by
proxy in accordance with the Charter and Bylaws of the Savings Bank. The
OTS shall be notified promptly of the actions of the Voting Members.
D. CONDITIONS TO IMPLEMENTATION OF REORGANIZATION
Consummation of the Reorganization is expressly conditioned upon
the following:
1. Approval of the Plan, the Notice and the Holding Company
Application by a majority of the Board of Directors of
the Savings Bank;
2. Approval of the Plan in writing by the OTS;
3. Approval of the Plan by a majority of the total votes of
Voting Members of the Savings Bank eligible to be cast
at the Special Meeting of Members, including approval of
the Charter and Bylaws of the MHC, the Stock Holding
Company and the Stock Savings Bank;
4. Approval of the Notice of Reorganization and Holding
Company Application by the OTS;
5. Satisfaction of all conditions specified or otherwise
imposed by the OTS in connection with approval of the
Notice of Reorganization, Holding Company Application
and all transactions related thereto;
6. Receipt by the Savings Bank of a favorable ruling of the
Internal Revenue Service ("IRS") or an opinion of the
Savings Bank's tax advisor with respect to federal and
New Hampshire taxation to the effect that consummation
of the Reorganization will not be a taxable event to the
MHC, the Stock Holding Company, the Stock Savings Bank,
the Savings Bank or the Savings Bank's Depositors.
11
E. RIGHTS OF MEMBERS OF THE MHC
Following the Reorganization, all persons who had membership or
liquidation rights with respect to the Savings Bank as of the date of
the Reorganization will continue to have such rights solely with respect
to the MHC. All existing proxies granted by members of the Savings Bank
to the Board of Directors of the Savings Bank shall become the proxies
of the MHC. In addition, all persons who become depositors in the Stock
Savings Bank subsequent to the Reorganization will have membership and
liquidation rights with respect to the MHC. In each case, no person who
ceases to be the holder of a deposit account with the Stock Savings Bank
shall have any membership or liquidation rights with respect to the MHC.
F. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
The Stock Savings Bank shall not declare or pay a cash dividend
on, or repurchase any of, its capital stock if the effect thereof would
cause its regulatory capital to be reduced below (i) the amount required
for any required liquidation account or (ii) the federal regulatory
capital requirement set forth in Section 567.2 of the Rules and
Regulations of the OTS. Otherwise, the Stock Savings Bank may declare
dividends, make capital distributions or repurchase its capital stock in
accordance with applicable law and regulations. Subject to the approval
of the OTS, the MHC may waive its right to receive dividends declared by
the Stock Savings Bank or the Stock Holding Company.
G. INTERPRETATION
All interpretations of this Plan and application of its
provisions to particular circumstances by a majority of the Board of
Directors of the Savings Bank shall be final, subject to the authority
of the OTS. By adoption of the Plan, the Members of the Savings Bank
authorize the Board of Directors to amend or terminate the Plan under
the circumstances set forth in this Section.
IV STOCK ISSUANCE PROCEDURE
The Stock Holding Company Common Stock will be offered for sale in the
Subscription Offering at the Maximum Subscription Price to Eligible Account
Holders Tax-Qualified Employee Plans, Supplemental Eligible Account Holders and
to Other Members. The Savings Bank may, either concurrently with, at any time
during, or promptly after the Subscription Offering, also offer the Stock
Holding Company Stock to and accept subscriptions from other Persons in a Direct
Community Offering and, following that, in a Syndicated Community Offering;
provided that the Savings Bank's Eligible Account Holders, Tax-Qualified
Employee Plans, Supplemental Eligible Account Holders and Other Members shall
have the priority rights to subscribe for Stock Holding Company Common Stock as
set forth in Section V of this Plan.
The period for the Subscription Offering and Direct Community Offering
will be not less than 20 days nor more than 45 days unless extended by the
Savings Bank and the Stock Holding Company. Upon completion of the Subscription
Offering and Direct Community Offering, if any, any unsubscribed shares of Stock
Holding Company Common Stock may be sold through a syndicate of broker-dealers
to selected members of the general public in the Syndicated Community Offering.
If for any reason all of the shares are not sold in the Subscription
12
Offering, Direct Community Offering, if any, and Syndicated Community Offering,
if any, the Stock Holding Company and the Savings Bank will use their best
efforts to obtain other purchasers, subject to OTS approval. Completion of the
sale of all shares of Stock Holding Company Common Stock not sold in the
Subscription Offering is required within 45 days after the last day of the
Subscription Offering unless an extension is approved by the Stock Holding
Company, the Savings Bank and the OTS. In connection with such extensions,
subscribers and other purchasers will be permitted to increase, decrease or
rescind their subscriptions or purchase orders to the extent required by the OTS
in approving the extensions. Completion of the sale of all shares of Stock
Holding Company Common Stock is required within 24 months after the date of
approval of the Plan by the OTS.
V. STOCK OFFERING
A. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF COMMON STOCK
The total number of shares of Stock Holding Company
Common Stock to be issued in the Stock Offering will be
determined jointly by the Boards of Directors of the Stock
Holding Company and the Savings Bank prior to the commencement
of the Subscription Offering, subject to adjustment if
necessitated by market or financial conditions prior to
consummation of the Stock Offering. The total number of shares
of Stock Holding Company Common Stock shall also be subject to
increase or decrease, taking into consideration any change in
the independent appraisal and other factors. The total number of
shares of Common Stock that may be issued to persons other than
the MHC must be less than 50% of the issued and outstanding
shares of the Stock Holding Company.
The aggregate price for which all shares of Stock
Holding Company Common Stock to be sold will be based on an
independent appraisal of the estimated total pro forma market
value of the Stock Holding Company and the Savings Bank. Such
appraisal shall be performed in accordance with OTS guidelines
and will be updated as appropriate as required by applicable
regulations. The appraisal will be made by an Independent
Appraiser experienced in the area of thrift institution
appraisals. The appraisal will include, among other things, an
analysis of the historical and pro forma operating results and
net worth of the Savings Bank and a comparison of the Stock
Holding Company, the Savings Bank and the Stock Holding Stock
Company Common Stock with comparable thrift institutions and
holding companies and their respective outstanding capital
stocks. Based upon the independent appraisal, the Boards of
Directors of the Stock Holding Company and the Savings Bank will
jointly fix the Maximum Subscription Price. The sales price of
the Common Stock shall be at a uniform price, referred to in
this Plan as the Actual Subscription Price, determined in
accordance with OTS regulations.
If, following completion of the Subscription Offering
and Direct Community Offering, if any, a Syndicated Community
Offering is effected, the Actual Subscription Price for each
share of Stock Holding Company Common Stock will be the same as
the Syndicated Community Offering Price at which unsubscribed
shares of Stock Holding Company Common Stock are initially
offered for sale in the Syndicated Community Offering.
13
If, upon completion of the Subscription Offering, Direct
Community Offering, if any, and Syndicated Community Offering,
if any, all of the Stock Holding Company Common Stock is
subscribed for or only a limited number of shares remain
unsubscribed for, subject to Part V hereof, the Actual
Subscription Price for each share of Stock Holding Company
Common Stock will be determined by dividing the estimated
appraised aggregate pro forma market value of the Stock Holding
Company and the Savings Bank, based on the independent appraisal
as updated upon completion of the Subscription Offering or other
sale of all of the Stock Holding Company Common Stock, by the
total number of shares of Stock Holding Company Common Stock to
be issued by the Stock Holding Company upon completion of the
Stock Offering. Such appraisal will then be expressed in terms
of a specific aggregate dollar amount rather than as a range.
Prior to the commencement of the Stock Offering, an
estimated valuation range will be established, which range may
vary within 15% above to 15% below the midpoint of such range,
and up to 15% greater than the maximum of such range, as
determined by the Board of Directors at the time of the Stock
Offering and consistent with OTS regulations. The Stock Holding
Company intends to issue up to 49.9% of its common stock in the
Offering. The number of shares of Common Stock to be issued and
the ownership interest of the MHC may be increased or decreased
by the Stock Holding Company, taking into consideration any
change in the independent valuation and other factors, at the
discretion of the Board of Directors of the Savings Bank and the
Stock Holding Company.
Based upon the independent valuation as updated prior to
the commencement of the Stock Offering, the Board of Directors
may establish the minimum ownership percentage applicable to the
Stock Offering, may fix the ownership percentage of the Minority
Stockholders, or may establish the minimum and maximum aggregate
dollar amount of shares to be sold. In the event the ownership
percentage of the Minority Stockholders is not fixed in the
Stock Offering, the minority ownership percentage (the "Minority
Ownership Percentage") will be determined as follows: (a) the
product of (x) the total number of shares of Common Stock issued
by the Stock Holding Company and (y) the purchase price per
share divided by (b) the estimated aggregate pro forma market
value of the Savings Bank and the Stock Holding Company
immediately after the Stock Offering as determined by the
Independent Appraiser, expressed in terms of a specific
aggregate dollar amount rather than as a range, upon the closing
of the Stock Offering or sale of all the Common Stock.
Notwithstanding the foregoing, no sale of Common Stock
may be consummated unless, prior to such consummation, the
Independent Appraiser confirms to the Stock Holding Company, the
Savings Bank and to the OTS that, to the best knowledge of the
Independent Appraiser, nothing of a material nature has occurred
which, taking into account all relevant factors, would cause the
Independent Appraiser to conclude that the aggregate value of
the Common Stock to be issued is incompatible with its estimate
of the aggregate consolidated pro forma market value of the
Stock Holding Company and the Savings Bank. If such confirmation
is not received, the Stock Holding Company may cancel the Stock
Offering, extend the Stock Offering and establish a new
estimated valuation
14
range and/or estimated price range, extend, reopen or hold a new
Stock Offering or take such other action as the OTS may permit.
The estimated market value of the Stock Holding Company
and the Savings Bank shall be determined for such purpose by an
Independent Appraiser on the basis of such appropriate factors
as are not inconsistent with OTS regulations. The Common Stock
to be issued in the Stock Offering shall be fully paid and
nonassessable.
If there is a Direct Community Offering or Syndicated
Community Offering of shares of Common Stock not subscribed for
in the Subscription Offering, the price per share at which the
Common Stock is sold in such Direct Community Offering or
Syndicated Community Offering shall be equal to the purchase
price per share at which the Common Stock is sold to Persons in
the Subscription Offering. Shares sold in the Direct Community
Offering or Syndicated Community Offering will be subject to the
same limitations as shares sold in the Subscription Offering.
B. SUBSCRIPTION RIGHTS
Non-transferable Subscription Rights to purchase Stock Holding
Company Stock will be issued without payment therefor to Eligible
Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible
Account Holders and other Members of the Savings Bank as set forth
below.
1. PREFERENCE CATEGORY NO. 1: ELIGIBLE ACCOUNT HOLDERS
Each Eligible Account Holder shall receive
non-transferable Subscription Rights to subscribe for
shares of Stock Holding Company Common Stock in an
amount equal to the greater of $70,000, or one-tenth of
one percent (.10%) of the total offering of shares, or
15 times the product (rounded down to the next whole
number) obtained by multiplying the total number of
shares of Stock Holding Company Common Stock to be
issued by a fraction of which the numerator is the
amount of the Qualifying Deposit of the Eligible Account
Holder and the denominator is the total amount of
Qualifying Deposits of all Eligible Account Holders in
the Savings Bank in each case on the Eligibility Record
Date.
If sufficient shares are not available, shares
shall be allocated first to permit each subscribing
Eligible Account Holder to purchase to the extent
possible the lesser of 100 shares or the number of
shares subscribed for, and thereafter among each
subscribing Eligible Account Holder pro rata in the same
proportion that his Qualifying Deposit bears to the
total Qualifying Deposits of all subscribing Eligible
Account Holders whose subscriptions remain unsatisfied.
Non-transferable Subscription Rights to purchase
Stock Holding Company Common Stock received by Directors
and Officers of the Savings Bank and their Associates,
based on their increased deposits in the
15
Savings Bank in the one-year period preceding the
Eligibility Record Date, shall be subordinated to all
other subscriptions involving the exercise of
non-transferable Subscription Rights of Eligible Account
Holders.
2. PREFERENCE CATEGORY NO. 2 : TAX-QUALIFIED EMPLOYEE PLANS
Each Tax-Qualified Employee Plan shall be
entitled to receive non-transferable Subscription Rights
to purchase up to 10% of the shares of Stock Holding
Company Common Stock, provided that singly or in the
aggregate such plans (other than that portion of such
plans which is self-directed) shall not purchase more
than 10% of the shares of the Stock Holding Company
Common Stock. Subscription Rights received pursuant to
this Category shall be subordinated to all Subscription
Rights received by Eligible Account Holders to purchase
shares pursuant to Category No. 1; provided, however,
that notwithstanding any other provision of this Plan to
the contrary, the Tax-Qualified Employee Plans shall
have a first priority Subscription Right to the extent
that the total number of shares of Stock Holding Company
Common Stock sold in the Stock Offering exceeds the
maximum of the estimated valuation range as set forth in
the subscription prospectus.
3. PREFERENCE CATEGORY NO. 3: SUPPLEMENTAL ELIGIBLE ACCOUNT
HOLDERS
Each Supplemental Eligible Account Holder shall
receive non-transferable Subscription Rights to
subscribe for shares of Stock Holding Company Common
Stock in an amount equal to the greater of $70,000, or
one-tenth of one percent (.10%) of the total offering of
Stock Holding Company Common Stock, or 15 times the
product (rounded down to the next whole number) obtained
by multiplying the total number of shares of Stock
Holding Company Stock to be issued by a fraction of
which the numerator is the amount of the Qualifying
Deposit of the Supplemental Eligible Account Holder and
the denominator is the total amount of Qualifying
Deposits of all Supplemental Eligible Account Holders in
the Savings Bank in each case on the Supplemental
Eligibility Record Date.
Subscription Rights received pursuant to this
Category shall be subordinated to all Subscription
Rights received by Eligible Account Holders pursuant to
Category Numbers 1 above.
Any non-transferable Subscription Rights to
purchase shares received by an Eligible Account Holder
in accordance with Category No. 1 shall reduce to the
extent thereof the Subscription Rights to be distributed
to such person pursuant to this Category.
In the event of an oversubscription for shares
under this Category, the shares available shall be
allocated first to permit each subscribing Supplemental
Eligible Account Holder, to the extent possible, to
purchase a number of shares sufficient to make his total
allocation (including the number of shares, if any,
allocated in accordance with Category No. 1)
16
equal to the lesser of 100 shares or the number of
shares subscribed for, and thereafter among each
subscribing Supplemental Eligible Account Holder pro
rata in the same proportion that his Qualifying Deposit
bears to the total Qualifying Deposits of all
subscribing Supplemental Eligible Account Holders whose
subscriptions remain unsatisfied.
4. PREFERENCE CATEGORY NO. 4: OTHER MEMBERS
Each Other Member shall receive non-transferable
subscription rights to subscribe for shares of Stock
Holding Company Common Stock remaining after satisfying
the subscriptions provided for under Category Nos. 1
through 3 above, subject to the following conditions.
i. Each Other Member shall be entitled to subscribe
for an amount of shares equal to the greater of
$70,000, or one-tenth of one percent (.10%) of
the total offering of shares of common stock in
the Stock Offering, to the extent that Stock
Holding Company Common Stock is available.
ii. In the event of an oversubscription for shares
under the provisions of this subparagraph, the
shares available shall be allocated among the
subscribing Other Members pro rata in the same
proportion that his number of votes on the
Voting Record Date bears to the total number of
votes on the Voting Record Date of all
subscribing Other Members on such date. Such
number of votes shall be determined based on the
Savings Bank's mutual charter and bylaws in
effect on the date of approval by members of
this Plan.
C. DIRECT COMMUNITY OFFERING AND SYNDICATED COMMUNITY OFFERING
1. Any shares of Stock Holding Company Common Stock not
subscribed for in the Subscription Offering may be
offered for sale in a Direct Community Offering. This
may involve an offering of all unsubscribed shares
directly to the general public with a preference to
those natural Persons residing in Hillsborough and
Cheshire Counties, New Hampshire. The Direct Community
Offering, if any, shall commence concurrently with,
during or promptly after the Subscription Offering. The
purchase price per share to the general public in a
Direct Community Offering shall be the same as the
Actual Subscription Price. The Stock Holding Company and
the Savings Bank may use an investment banking firm or
firms on a best efforts basis to sell the unsubscribed
shares in the Subscription and Direct Community
Offering. The Stock Holding Company and the Savings Bank
may pay a commission or other fee to such investment
banking firm or firms as to the shares sold by such firm
or firms in the Subscription and Direct Community
Offering and may also reimburse such firm or firms for
expenses incurred in connection with the sale. The Stock
Holding Company Common Stock will be offered and sold in
the Direct Community Offering, if any, in accordance
with OTS regulations, so as to achieve the widest
distribution of the Stock Holding Company Common Stock.
No Person may subscribe for or purchase more
17
than $135,000 of Stock Holding Company Common Stock in
the Direct Community Offering, if any. Further, the
Savings Bank may limit total subscriptions under this
Section V.C.1 so as to assure that the number of shares
available for the Syndicated Community Offering may be
up to a specified percentage of the number of shares of
Stock Holding Company Common Stock. Finally, the Savings
Bank may reserve shares offered in the Direct Community
Offering for sales to institutional investors.
Orders received in the Direct Community Offering and
Syndicated Community Offering shall be filled up to a
maximum of 2% of the Common Stock and thereafter
remaining shares shall be allocated on an equal number
of shares basis per order until all orders have been
filled.
The Savings Bank and the Stock Holding Company, in their
sole discretion, may reject subscriptions, in whole or
in part, received from any Person under this Section
V.C.1. Further, the Savings Bank and the Stock Holding
Company may, at their sole discretion, elect to forego a
Direct Community Offering and instead effect a
Syndicated Community Offering as described below.
2. Any shares of Stock Holding Company Common Stock not
sold in the Subscription Offering or in the Direct
Community Offering, if any, may then be sold through the
syndicate of broker-dealers to members of the general
public in the Syndicated Community Offering. It is
expected that the Syndicated Community Offering will
commence as soon as practicable after termination of the
Subscription Offering and the Direct Community Offering,
if any. The Savings Bank and the Stock Holding Company,
in their sole discretion, may reject any subscription,
in whole or in part, received in the Syndicated
Community Offering. The Syndicated Community Offering
shall be completed within 90 days after the termination
of the Subscription Offering, unless such period is
extended as provided in Section IV hereof. No person may
purchase more than $70,000 of Holding Company Common
Stock in the Syndicated Community Offering, if any.
3. If for any reason any shares remain unsold after the
Subscription Offering, Direct Community Offering, if
any, and Syndicated Community Offering, if any, the
Boards of Directors of the Stock Holding Company and the
Savings Bank will seek to make other arrangements for
the sale of the remaining shares of Stock Holding
Company Common Stock. Such other arrangements will be
subject to the approval of the OTS and to compliance
with applicable securities laws.
D. ADDITIONAL LIMITATIONS UPON PURCHASES OF SHARES OF STOCK HOLDING
COMPANY COMMON STOCK
The following additional limitations shall be imposed on all
purchases of Stock Holding Company Common Stock in the Stock Offering :
18
1. The maximum purchase of Common Stock in the Subscription
Offering by a Person or group of Persons through a
single Deposit Account is [the lesser of $70,000 or
2.59%] of the stock sold in the Stock Offering. No
Person, by himself or herself, or with an Associate or
group of Persons acting in concert, may subscribe for or
purchase in the Stock Offering a number of shares of
Stock Holding Company Common Stock which exceeds an
amount of shares equal to more than [the lesser of
$135,000 or 3.0%] of the stock sold in the Stock
Offering. For purposes of this paragraph, an Associate
of a Person does not include a Tax-Qualified or Non-Tax
Qualified Employee Plan in which the Person has a
substantial beneficial interest or serves as a trustee
or in a similar fiduciary capacity. Moreover, for
purposes of this paragraph, shares held by one or more
Tax-Qualified or Non-Tax Qualified Employee Plans
attributed to a Person shall not be aggregated with
shares purchased directly by or otherwise attributable
to that Person.
2. Directors and Officers and their Associates may not
purchase in all categories in the Stock Offering an
aggregate of more than 35% of the Stock Holding Company
Common Stock issued in the Stock Offering or 35% of the
stockholders' equity held by persons other than the MHC.
For purposes of this paragraph, an Associate of a Person
does not include any Tax-Qualified Employee Plan.
Moreover, any shares attributable to the Officers and
Directors and their Associates, but held by one or more
Tax-Qualified Employee Plans shall not be included in
calculating the number of shares which may be purchased
under the limitation in this paragraph.
3. The minimum number of shares of Stock Holding Company
Common Stock that may be purchased by any Person in the
Stock Offering is 25 shares, provided sufficient shares
are available.
4. The aggregate amount of all Common Stock issued in the
Stock Offering by all stock benefits plans, other than
the ESOP, shall not exceed 25% of the outstanding Common
Stock held by persons other than the MHC.
5. The Boards of Directors of the Stock Holding Company and
the Savings Bank may, in their sole discretion, decrease
the maximum purchase limitation referred to above or
increase the maximum purchase limitation referred to in
paragraph 1 of this subpart D, up to 9.99% of the Common
Stock, provided that orders for shares exceeding 5% of
the Stock Holding Company Common Stock offered in the
Stock Offering shall not exceed, in the aggregate, 10%
of the Stock Holding Company Common Stock being offered
in the Stock Offering.
Depending upon market and financial conditions, the
Boards of Directors of the Stock Holding Company and the Savings
Bank, with the approval of the OTS, may increase or decrease any
of the above purchase limitations.
For purposes of this Section V, the Directors of the
Stock Holding Company and the Savings Bank shall not be deemed
to be Associates or a group acting in concert solely as a result
of their serving in such capacities.
19
Each Person purchasing Stock Holding Company Common
Stock in the Stock Offering shall be deemed to confirm that such
purchase does not conflict with the above purchase limitations.
All questions concerning whether any persons are Associates or a
group acting in concert or whether any purchase conflicts with
the purchase limitations in this Plan or otherwise violates any
provision of this Plan shall be determined by the Stock Holding
Company and the Savings Bank in their sole discretion. Such
determination shall be conclusive and binding on all Persons and
the Stock Holding Company or the Savings Bank may take any
remedial action, including without limitation rejecting the
purchase or referring the matter to the OTS for action, as in
its sole discretion the Savings Bank may deem appropriate.
E. RESTRICTIONS AND OTHER CHARACTERISTICS OF STOCK HOLDING COMPANY
COMMON STOCK
1. TRANSFERABILITY. Stock Holding Company Stock purchased
by Persons other than Directors and Officers of the
Stock Holding Company or the Savings Bank will be
transferable without restriction. Shares purchased by
Directors or Officers shall not be sold or otherwise
disposed of for value for a period of one year from the
date of the completion of the Stock Offering, except for
any disposition of such shares (i) following the death
of the original purchaser, or (ii) resulting from an
exchange of securities in a merger or acquisition
approved by the applicable regulatory authorities. Any
transfers that could result in a change in control of
the Savings Bank or the Stock Holding Company or result
in the ownership by any Person or group acting in
concert of more than 10% of any class of the Savings
Bank's or the Stock Holding Company's equity securities
are subject to the prior approval of the OTS.
The certificates representing shares of Stock Holding
Company Common Stock issued to Directors and Officers
shall bear a legend giving appropriate notice of the
one-year holding period restriction. Appropriate
instructions shall be given to the transfer agent for
such stock with respect to the applicable restrictions
relating to the transfer of restricted stock. Any shares
of Common Stock of the Stock Holding Company
subsequently issued as a stock dividend, stock split, or
otherwise, with respect to any such restricted stock,
shall be subject to the same holding period restrictions
for Stock Holding Company or Savings Bank Directors and
Officers as may be then applicable to such restricted
stock.
No Director or Officer of the Stock Holding Company or
of the Savings Bank, or Associate of such a Director or
Officer, shall purchase any outstanding shares of
capital stock of the Stock Holding Company for a period
of three years following the Stock Offering without the
prior written approval of the OTS, except through a
broker or dealer registered with the SEC. Such
restrictions shall not apply to (i) "negotiated
transactions" involving more than one percent of the
then-outstanding shares of common stock of the Stock
Holding Company or (ii) purchases of stock made by and
held by any Tax-Qualified or Non-Tax Qualified
20
Employee Plan of the Savings Bank or the Stock Holding
Company even if such stock is attributed to Directors
and Officers of the Savings Bank.
2. REPURCHASE AND DIVIDEND RIGHTS. Any cash dividend by the
Savings Bank or stock repurchase by the Stock Holding
Company will, to the extent required, be made in
accordance with OTS regulations and policies as in
effect at the time of such cash dividends or stock
repurchase. Subject to the approval of the OTS, the MHC
may wave its right to receive dividends declared by the
Stock Holding Company or the Savings Bank.
F. EXERCISE OF SUBSCRIPTION RIGHTS; ORDER FORMS
1. As soon as practicable after the prospectus has been
approved by the OTS and declared effective by the SEC,
Order Forms shall be distributed to each Eligible
Account Holder, Tax Qualified Employee Plan and
Supplemental Eligible Account Holder at their last known
address shown on the records of the Savings Bank. Each
Order Form will be preceded or accompanied by a
prospectus describing the Stock Holding Company and the
Savings Bank and the shares of Stock Holding Company
Common Stock being offered for subscription and
containing all other information required by the OTS or
the SEC or necessary to enable Persons to make informed
investment decisions regarding the purchase of Stock
Holding Company Common Stock.
2. The Order Forms (or accompanying instructions) used for
the Subscription Offering and the Direct Community
Offering will contain, among other things, the
following:
(i) A clear and intelligible explanation of the
Subscription Rights granted under the Plan to
Eligible Account Holders, Tax-Qualified Employee
Plans and Supplemental Eligible Account Holders;
(ii) A specified expiration date by which Order Forms
must be returned to and actually received by the
Savings Bank or its representative for purposes
of exercising Subscription Rights, which date
will be not less than 20 days after the Order
Forms are mailed by the Savings Bank;
(iii) The Maximum Subscription Price to be paid for
each share subscribed for when the Order Form is
returned;
(iv) A statement that 25 shares is the minimum number
of shares of Stock Holding Company Common Stock
that may be subscribed for under the Plan;
(v) A specifically designated blank space for
indicating the number of shares being subscribed
for;
21
(vi) A set of detailed instructions as to how to
complete the Order Form including a statement as
to the available alternative methods of payment
for the shares being subscribed for;
(vii) Specifically designated blank spaces for dating
and signing the Order Form;
(viii) An acknowledgment that the subscriber has
received the prospectus;
(ix) A statement of the consequences of failing to
properly complete and return the Order Form,
including a statement that the Subscription
Rights will expire on the expiration date
specified on the Order Form unless such
expiration date is extended by the Stock Holding
Company and the Savings Bank, and that the
Subscription Rights may be exercised only by
delivering the Order Form, properly completed
and executed, to the Savings Bank or its
representative by the expiration date, together
with required payment of the Maximum
Subscription Price for all shares of Stock
Holding Company Common Stock subscribed for;
(x) A statement that the Subscription Rights are
non-transferable and that all shares of Stock
Holding Company Common Stock subscribed for upon
exercise of Subscription Rights must be
purchased on behalf of the Person exercising the
Subscription Rights for his own account; and
(xi) A statement that, after receipt by the Savings
Bank or its representative, a subscription may
not be modified, withdrawn or canceled without
the consent of the Savings Bank.
G. METHOD OF PAYMENT
Payment for all shares of Stock Holding Company Common Stock
subscribed for must accompany all completed Order Forms. Payment may be
made by check, money order, or by withdrawal from the types of Deposit
Account in the Savings Bank designated on the Order Form.
If a subscriber authorizes the Savings Bank to charge his or her
Deposit Account, the funds will continue to earn interest, but may not
be used by the subscriber until all Stock Holding Company Common Stock
has been sold or the Plan is terminated, whichever is earlier. The
Savings Bank will allow subscribers to purchase shares by withdrawing
funds from certificate accounts without the assessment of early
withdrawal penalties. In the case of early withdrawal of only a portion
of such account, the certificate evidencing such account shall be
canceled if the remaining balance of the account is less than the
applicable minimum balance requirement, in which event the remaining
balance will earn interest at the passbook rate. This waiver of the
early withdrawal penalty is applicable only to withdrawals made in
connection with the purchase of Stock Holding Company Common Stock under
the Plan. Interest will also be paid, at not less than the then-current
passbook rate, on all orders paid by check or money
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order, from the date payment is received until consummation of the Stock
Offering. Payments made by check or money order will be placed by the
Savings Bank in an escrow or other account established specifically for
this purpose.
In the event of an unfilled amount of any subscription order,
the Savings Bank will make an appropriate refund or cancel an
appropriate portion of the related withdrawal authorization, after
consummation of the Stock Offering, including any difference between the
Maximum Subscription Price and the Actual Subscription Price (unless
subscribers are afforded the right to apply such difference to the
purchase of additional whole shares). If for any reason the Stock
Offering is not consummated, purchasers will have refunded to them all
payments made and all withdrawal authorizations will be canceled in the
case of subscription payments authorized from Deposit Accounts at the
Savings Bank.
If any Tax-Qualified Employee Plans or Non-Tax-Qualified
Employee Plans subscribe for shares during the Subscription Offering,
such plans will not be required to pay for the shares subscribed for at
the time they subscribe, but may pay for such shares of Stock Holding
Company Common Stock subscribed for upon consummation of the Stock
Offering. In the event that, after the completion of the Subscription
Offering, the amount of shares to be issued is increased above the
maximum of the appraisal range included in the prospectus, the Tax
Qualified and Non-Tax Qualified Employee Plans shall be entitled to
increase their subscriptions by a percentage equal to the percentage
increase in the amount of shares to be issued above the maximum of the
appraisal range provided that such subscriptions shall continue to be
subject to applicable purchase limits and stock allocation procedures.
H. UNDELIVERED, DEFECTIVE OR LATE ORDER FORMS; INSUFFICIENT PAYMENT
The Boards of Directors of the Stock Holding Company and the
Savings Bank shall have the absolute right, in their sole discretion, to
reject any Order Form, including but not limited to, any Order Forms
which (i) are not delivered or are returned by the United States Postal
Service (or the addressee cannot be located); (ii) are not received back
by the Savings Bank or its representative, or are received after the
expiration date specified thereon; (iii) are defectively completed or
executed; (iv) are not accompanied by the total required payment for the
shares of Stock Holding Company Common Stock subscribed for (including
cases in which the subscribers' Deposit Accounts or certificate accounts
are insufficient to cover the authorized withdrawal for the required
payment); or (v) are submitted by or on behalf of a Person whose
representations the Boards of Directors of the Stock Holding Company and
the Savings Bank 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. In such event, the Subscription Rights of the
Person to whom such rights have been granted will not be honored and
will be treated as though such Person failed to return the completed
Order Form within the time period specified therein. The Savings Bank
may, but will not be required to, waive any irregularity relating to any
Order Form or require submission of corrected Order Forms or the
remittance of full payment for subscribed shares by such date as the
Savings Bank may specify. The interpretation of the Stock Holding
Company and the Savings Bank of the terms and conditions of the Plan and
of the proper completion of the Order Form will be final, subject to the
authority of the OTS.
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I. MEMBER IN NON-QUALIFIED STATES OR IN FOREIGN COUNTRIES
The Stock Holding Company and the Savings Bank will make
reasonable efforts to comply with the securities laws of all states in
the United States in which Persons entitled to subscribe for Stock
Holding Company Common Stock pursuant to the Plan reside. However, no
shares will be offered or sold under the Plan to any such Person who (1)
resides in a foreign country or (2) resides in a state of the United
States in which a small number of Persons otherwise eligible to
subscribe for shares under the Plan reside or as to which the Stock
Holding Company and the Savings Bank determine that compliance with the
securities laws of such state would be impracticable for reasons of cost
or otherwise, including, but not limited to, a requirement that the
Stock Holding Company or the Savings Bank or any of their Officers,
Directors or Employees register, under the securities laws of such
state, as a broker, dealer, salesman or agent. No payments will be made
in lieu of the granting of Subscription Rights to any such Person.
VI. STOCK BENEFIT PLANS
The Board of Directors of the Savings Bank and/or the Stock Holding
Company intend to adopt one or more stock benefit plans for its Employees,
Officers and Directors, stock award plans and stock option plans, which will be
authorized to purchase Common Stock and grant options for Common Stock. The
Savings Bank or the Stock Holding Company may make scheduled discretionary
contributions to one or more Tax-Qualified Employee Plans to purchase issued and
outstanding shares of Common Stock or authorized but unissued shares of Common
Stock subsequent to the completion of the Stock Offering, provided such
contributions do not cause the Savings Bank to fail to meet any of its
regulatory capital requirements.
This Plan specifically authorizes the grant and issuance by the Stock
Holding Company of (i) awards of Common Stock after the Stock Offering pursuant
to one or more stock recognition and award plans (the "Recognition Plans") in an
amount equal to up to 4% of the number of shares of Common Stock issued in the
Stock Offering, and (ii) options to purchase a number of shares of the Stock
Holding Company's Common Stock in an amount equal to up to 10% of the number of
shares of Common Stock issued in the Stock Offering and shares of Common Stock
issuable upon exercise of such options. In addition, the aggregate amount of
Common Stock acquired by any Non-Tax Qualified Employee Plan, Directors,
Officers and their Associates may not exceed 4.9% of the outstanding shares of
Common Stock of the Stock Holding Company or 4.9% of its stockholder's equity at
the close of the Stock Offering, PROVIDED, HOWEVER, shares held by any Non-Tax
Qualified Employee Plan or Tax-Qualified Employee Plan available to such person
shall not be counted. Shares awarded pursuant to the Recognition Plans, and
shares issued upon exercise of options may be authorized but unissued shares of
the Stock Holding Company's Common Stock, or shares of Common Stock purchased by
the Stock Holding Company or such plans in the open market. Any awards of Common
Stock under the Recognition Plans and the stock option plans will be subject to
prior stockholder approval.
VII. SECURITIES REGISTRATION AND MARKET MAKING
Promptly following the Stock Offering, the Stock Holding Company will
register its stock with the SEC pursuant to the Exchange Act. In connection with
the registration, the Stock
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Holding Company will undertake not to deregister such stock, without the
approval of the OTS, for a period of three years thereafter.
The Stock Holding Company shall use its best efforts to encourage and
assist two or more market makers to establish and maintain a market for its
common stock promptly following the completion of the Stock Offering. The Stock
Holding Company will also use its best efforts to cause its common stock to be
quoted on the Nasdaq System or to be listed on a national or regional securities
exchange, or to be quoted on the Nasdaq quotation system, or the OTC Electronic
Bulletin Board.
VIII. RESTRICTIONS ON ACQUISITION OF THE STOCK HOLDING COMPANY AND THE SAVINGS
BANK
Regulations of the OTS limit acquisitions, and offers to acquire, direct
or indirect beneficial ownership of more than 10% of any class of an equity
security of the Savings Bank or the Stock Holding Company. In addition,
consistent with the regulations of the OTS, the charter of the Stock Holding
Company and the Savings Bank shall provide that for a period of five years
following completion of the Stock Offering: (i) no Person (i.e., no individual,
group acting in concert, corporation, partnership, Savings Bank, joint stock
company, trust, or unincorporated organization or similar company, syndicate, or
any other group formed for the purpose of acquiring, holding or disposing of
securities of an insured institution) shall directly or indirectly offer to
acquire or acquire beneficial ownership of more than 10% of any class of the
Savings Bank's Stock Holding Company or the equity securities. Shares
beneficially owned in violation of this charter provision 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 matter submitted to the shareholders for a
vote. This limitation shall not apply to any offer to acquire or acquisition of
beneficial ownership of more than 10% of the common stock of the Savings Bank by
a corporation whose ownership is or will be substantially the same as the
ownership of the Savings Bank, provided that the offer or acquisition is made
more than one year following the date of completion of the Stock Offering ; (ii)
stockholders shall not be permitted to cumulate their votes for elections of
Directors; and (iii) special meetings of the stockholders relating to changes in
control or amendment of the charter may only be called by the Board of
Directors.
IX. AMENDMENT OR TERMINATION OF PLAN
If necessary or desirable, the Plan may be amended at any time prior to
the commencement of the Stock Offering by a two-thirds vote of the respective
Boards of Directors of the Stock Holding Company and the Savings Bank and at any
time thereafter by a two-thirds vote of the respective Boards of Directors of
the Stock Holding Company and the Savings Bank only with the concurrence of the
OTS.
The Plan may be terminated by a two-thirds vote of the Savings Bank's
and the Stock Holding Company's Board of Directors at any time prior to the
completion of the Stock Offering, and at any time following completion of the
Stock Offering with the concurrence of the OTS. In its discretion, the Board of
Directors of the Savings Bank and the Stock Holding Company may modify or
terminate the Plan upon the order or with the approval of the OTS. The Plan
shall terminate if the sale of all shares of Stock Holding Company Common Stock
is not completed within 24 months of the date of the commencement of the Stock
Offering. A specific resolution approved by a majority of the Board of Directors
of the Savings Bank and the
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Stock Holding Company is required in order for the Savings Bank and the Stock
Holding Company to terminate the Plan prior to the end of such 24-month period.
X. EXPENSES OF THE REORGANIZATION
The Stock Holding Company and the Savings Bank shall use their best
efforts to assure that expenses incurred by them in connection with the Stock
Offering shall be reasonable.
XI. TAX RULING
Consummation of the Stock Offering is expressly conditioned upon prior
receipt of either a ruling of the United States Internal Revenue Service or an
opinion of tax counsel with respect to federal taxation, and either a ruling of
the New Hampshire taxation authorities or an opinion of tax counsel or other tax
advisor with respect to New Hampshire taxation, to the effect that consummation
of the transactions contemplated herein will not be taxable to the Stock Holding
Company or the Savings Bank.
XII. EXTENSION OF CREDIT FOR PURCHASE OF STOCK
The Savings Bank may not knowingly loan funds or otherwise extend credit
to any Person to purchase shares of the Stock Holding Company Common Stock in
the Stock Offering.
XII. CONVERSION OF MHC TO STOCK FORM
Once the Stock Offering is completed, the MHC, if approved by the OTS,
may elect to convert to the stock form of ownership pursuant to federal law. As
long as required by federal law or regulation, any such conversion is also
subject to the approval of the Members of the MHC. The terms and conditions of
such a conversion cannot be determined at this time and there is no assurance
when, if ever, such a conversion will occur. If the conversion does not occur,
the MHC will always own a majority of the Common Stock of the Stock Holding
Company.
If the MHC converts to stock form, either on a stand-alone basis or in
the context of a conversion-merger ("Conversion Transaction"), under federal
law, shares of stock issued in connection with the Conversion Transaction shall
be subject to subscription rights granted in accordance with OTS regulations. In
addition, pursuant to federal law and OTS regulations, in the Conversion
Transaction the shares of stock held by the stockholders of the Stock Holding
Company shall be exchanged for shares of the converted MHC in a proportion
established by independent appraisals of the MHC, the Stock Holding Company and
the Savings Bank. If, in a Conversion Transaction, the stockholders of the
Savings Bank or Stock Holding Company do not receive, for any reason, shares of
the converted MHC (or its successor) on such proportionate basis, the MHC (or
its successor) shall be obligated to purchase all shares not owned by it
simultaneously with the closing of such Conversion Transaction at the fair
market value of such shares, determined as if such shares had such exchange
rights, as determined by the independent appraisals. Moreover, in the event that
the MHC converts to stock form in a Conversion Transaction, any options or other
convertible securities held by any Officer, Director, or Employee of the Stock
Holding Company shall be convertible into shares of the converted MHC (or its
successor), provided, that any exchange ratio shall provide the holder of such
options or convertible securities with shares at least equal in value to those
exchanged; provided, further however, that if such shares cannot be so
converted, the holders of such options or other
26
convertible securities shall be entitled to receive cash payment for such
options and other convertible securities in an amount equal to the appraised
value of the underlying securities represented by such options or other
convertible securities.
In any Conversion Transaction, stockholders of the Stock Holding Company
other than the MHC ("Minority Stockholders"), if any, will be entitled to
maintain the same percentage ownership interest in the Stock Holding Company
after the Conversion Transaction as their ownership interest in the Stock
Holding Company immediately prior to the Conversion Transaction, subject only to
certain adjustments (i.e., the transfer of assets held solely by the MHC to the
resulting stock company) that may be required by the OTS. These adjustments may
result in a decrease of ownership interest of the Minority Stockholders.
Each certificate representing shares of Common Stock shall bear a legend
giving appropriate notice of the provisions applicable to a Conversion
Transaction.
Attachments A-1 and A-2 Charter and Bylaws of the MHC
Attachments B-1 and B-2 Charter and Bylaws of the Stock Holding Company
Attachments C-1 and C-2 Charter and Bylaws of Stock Savings Bank
Attachment D Agreement of Merger
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