EXHIBIT 2
PLAN OF STOCK ISSUANCE
ATLANTIC COAST FEDERAL CORPORATION
WAYCROSS, GEORGIA
MARCH 12, 2004
PLAN OF STOCK ISSUANCE OF
ATLANTIC COAST FEDERAL CORPORATION
TABLE OF CONTENTS
PAGE
----
I. GENERAL.......................................................................................... 1
II. DEFINITIONS...................................................................................... 2
III. CONDITIONS TO COMPLETION OF STOCK OFFERING....................................................... 6
IV. STOCK ISSUANCE PROCEDURE......................................................................... 6
V. STOCK OFFERING................................................................................... 7
A. Total Number of Shares and Purchase Price of Common Stock............................... 7
B. Subscription Rights..................................................................... 9
C. Direct Community Offering and Syndicated Community Offering............................. 11
D. Additional Limitations Upon Purchases of Shares of Stock
Holding Company Common Stock............................................................ 12
E. Restrictions and Other characteristics of Stock Holding Company......................... 14
F. Exercise of Subscription Rights; Order Forms............................................ 15
G. Method of Payment....................................................................... 16
H. Undelivered, Defective or Late Order Forms; Insufficient Payment........................ 17
I. Member in Non-Qualified States or in Foreign Countries.................................. 18
VI. CHARTER AND BYLAWS OF THE MHC, STOCK HOLDING
COMPANY AND THE ASSOCIATION...................................................................... 18
VII. STOCK BENEFIT PLANS.............................................................................. 18
VIII. SECURITIES REGISTRATION AND MARKET MAKING........................................................ 19
IX STATUS OF DEPOSIT ACCOUNTS AND LOAN SUBSEQUENT TO
STOCK OFFERING................................................................................... 20
X. RESTRICTIONS ON ACQUISITION OF THE STOCK HOLDING
COMPANY AND THE ASSOCIATION...................................................................... 20
XI. AMENDMENT OR TERMINATION OF PLAN................................................................. 20
XII. EXPENSES OF THE STOCK OFFERING................................................................... 21
XIII. TAX RULING....................................................................................... 21
XIV. EXTENSION OF CREDIT FOR PURCHASE OF STOCK........................................................ 21
XV. CONVERSION OF MHC TO STOCK FORM.................................................................. 21
PLAN OF STOCK ISSUANCE
ATLANTIC COAST FEDERAL
Waycross, Georgia
I. GENERAL
On January 1, 2003, Atlantic Coast Federal (the "Association")
reorganized into a mutual holding company structure whereby the Association
became a wholly owned subsidiary of Atlantic Coast Federal Corporation (the
"Stock Holding Company") and the Stock Holding Company became a wholly owned
subsidiary of Atlantic Coast Federal, MHC (the "MHC"). On March 12, 2004, the
Boards of Directors of the Stock Holding Company unanimously adopted this Plan
whereby the Stock Holding Company will conduct a stock offering, in compliance
with OTS regulations, of up to 49.9% of the aggregate total voting stock of the
Stock Holding Company. 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, then to
Tax Qualified Employee Plans and then to Supplemental Eligible Account Holders
of record as of the Supplemental Eligibility Record Date. 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 or a Syndicated Community Offering. The
price of the Common Stock of the Stock Holding Company will be based upon an
independent appraisal of the Association and will reflect its estimated pro
forma market value following the Stock Offering. It is the desire of the Board
of Directors of the Association to attract new capital to the Association in
order to increase its capital position, support future growth and increase the
amount of funds available for residential and other lending. The Association 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 Association 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 Association 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 Association 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
Association 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 Association 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.
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
Association, 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
Association 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
Association, to the extent provided herein. When used to refer to a Person other
than an Officer or Director of the Association, the Association in its sole
discretion may determine the Persons that are Associates of other Persons.
ASSOCIATION: Atlantic Coast Federal.
CAPITAL STOCK: Any and all authorized stock of the Stock Holding
Company or the Association.
COMMON STOCK: Common stock, par value $.01 per share, issued by the
Stock Holding Company, pursuant to its stock charter.
DEPOSIT ACCOUNT: Any withdrawable or repurchasable account or deposit
in the Association including Savings Accounts and demand accounts.
2
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 Association and,
where applicable, a member of the Board of Directors of the MHC and the Stock
Holding Company.
ELIGIBILITY RECORD DATE: The close of business on December 31, 2002.
ELIGIBLE ACCOUNT HOLDER: Any Person holding a Qualifying Deposit in the
Association on the Eligibility Record Date.
EMPLOYEE: A Person who is employed by the Association at the
commencement of the Stock Offering.
ESOP: The Stock Holding Company's employee stock ownership plan.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
INDEPENDENT APPRAISER: The appraiser retained by the Association to
prepare an appraisal of the pro forma market value of the Association and the
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 Association.
MHC: Atlantic Coast Federal, MHC.
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 Association 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 Code.
3
NON-VOTING STOCK: Any capital stock other than Voting Stock.
OTS: Office of Thrift Supervision, Department of the Treasury, and its
successors.
OFFICER: An executive officer of the MHC, Stock Holding Company or the
Association, 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
Association.
ORDER FORMS: Forms to be used in the Subscription Offering to exercise
Subscription Rights.
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 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.
SAIF: The Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation.
SAVINGS ACCOUNT: The term "Savings Account" means any withdrawable
account in the Association including a demand account.
SEC: U.S. Securities and Exchange Commission.
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 or otherwise.
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 Association's Eligible Account Holders, Tax-Qualified Employee Plans and
Supplemental Eligible Account Holders to subscribe for shares of Stock Holding
Company Common Stock in the Subscription Offering.
4
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 Association (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 Association 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 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 Association or the Stock Holding Company; and (ii)
vote on or direct the conduct of the operations or other significant policies of
the Association 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 Association or the Stock Holding Company, or the payment of
dividends by the Association 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 Association 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 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
5
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. CONDITIONS TO COMPLETION OF STOCK OFFERING
Completion of the Stock Offering is expressly conditioned upon the
following:
A. The Board of Directors shall adopt this Plan by not less than a
majority-vote.
B. The Association will promptly cause an Application for Minority Stock
Issuance to be prepared and filed with the OTS, and a Registration
Statement on Form S-1 to be prepared and filed with the SEC.
C. Approval of the Application for Minority Stock Issuance and the Plan by
the OTS.
D. Satisfaction of all conditions contained in the OTS approval.
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, and to Supplemental Eligible Account
Holders. The Association 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 or a Syndicated Community Offering; provided that the Association's
Eligible Account Holders, Tax-Qualified Employee Plans, and Supplemental
Eligible Account Holders 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
Association 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 Offering,
Direct Community Offering, if any, and Syndicated Community Offering, if any,
the Stock Holding Company and the Association 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 90 days after the offering circular was declared
effective by the OTS unless an extension is approved by the Stock Holding
Company, the Association 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.
6
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 Association 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 in connection with any oversubscriptions in the
Subscription Offering or Direct Community Offering. 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 Association. 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 Association and a comparison of the Stock
Holding Company, the Association 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 Association
will jointly fix the Maximum Subscription Price. The sales
price of the Common Stock shall be at a uniform 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.
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
7
of the Stock Holding Company and the Association, 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 Association 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
Association 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 Association 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
Association. 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 range
and/or estimated price range, extend, reopen or hold a new
Stock Offering or take such other action as the OTS may
permit.
8
The estimated market value of the Stock Holding
Company and the Association 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 and Supplemental Eligible
Account Holders of the Association 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 $500,000, 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 Association 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 100 shares, 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 Association and
their Associates, based on their increased deposits
in the
9
Association 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 $500,000,
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 Association 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 and Tax-Qualified Employee Plans pursuant to
Category Numbers 1 and 2 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.
10
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) equal to 100 shares, 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.
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 the counties in
which the Association has an office. The Direct
Community Offering, if any, shall be for a period of
not less than 20 days nor more than 45 days unless
extended by the Stock Holding Company and the
Association, and 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 Association 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
Association 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 than $500,000 of Stock Holding
Company Common Stock in the Direct Community
Offering, if any. Further, the Association 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
Association 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
11
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 Association 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 Association 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 Association
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 $500,000 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 Association 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:
1. 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 $500,000 of Stock Holding Company Common Stock
issued 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
12
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 27% of the Stock Holding
Company Common Stock issued in the Stock Offering or
27% 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 Association may, in their sole discretion,
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.
Requests to purchase additional shares of Holding
Company Common Stock under this provision will be
allocated by the Boards of Directors on a pro rata
basis giving priority in accordance with the priority
rights set forth in this Section V.
Depending upon market and financial conditions, the
Boards of Directors of the Stock Holding Company and the
Association, 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 Association shall not be deemed
to be Associates or a group acting in concert solely as a
result of their serving in such capacities.
Each Person purchasing Stock Holding Company Common
Stock in the Stock Offering shall be deemed to confirm that
such purchase does not conflict
13
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 Association in their sole discretion. Such
determination shall be conclusive and binding on all Persons
and the Stock Holding Company or the Association 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 Association 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
Association 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
Association 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
Association'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 Association Directors and Officers as may
be then applicable to such restricted stock.
No Director or Officer of the Stock Holding Company
or of the Association, 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
14
Employee Plan of the Association or the Stock Holding
Company even if such stock is attributed to Directors
and Officers of the Association.
2. REPURCHASE AND DIVIDEND RIGHTS. Any cash dividend by
the Association 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 Association.
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
Association. Each Order Form will be preceded or
accompanied by a prospectus describing the Stock
Holding Company and the Association 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 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 Association 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 Association;
(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;
15
(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 subscription 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
Association, and that the Subscription
Rights may be exercised only by delivering
the Order Form, properly completed and
executed, to the Association 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
Association or its representative, a
subscription may not be modified, withdrawn
or canceled without the consent of the
Association.
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 in by check or money order, or, if the subscriber has a Deposit
Account in the Association (including a certificate of deposit), the
subscriber may authorize the Association to charge the subscriber's
Deposit Account.
If a subscriber authorizes the Association 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 Association will allow subscribers to purchase shares by
withdrawing funds from certificate accounts without the assessment of
early withdrawal penalties with the exception of prepaid interest in
the form of promotional gifts. In the
16
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 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 Association in an escrow or other account
established specifically for this purpose.
In the event of an unfilled amount of any subscription order,
the Association 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
Association.
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 subscription 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
Association 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 Association 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 Association believe to be false or who
they
17
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 Association 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 Association may specify. The interpretation
of the Stock Holding Company and the Association 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.
I. MEMBER IN NON-QUALIFIED STATES OR IN FOREIGN COUNTRIES
The Stock Holding Company and the Association 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 Association 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 Association 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. CHARTER AND BYLAWS OF THE MHC, STOCK HOLDING COMPANY AND THE
ASSOCIATION
As part of the Stock Offering, the charter and bylaws of the MHC, the
Stock Holding Company and the Association shall be revised as necessary in
connection with the Stock Offering. The proposed revised charter and bylaws of
the Stock Holding Company and the Association are attached hereto as Exhibits A
and B, respectively and made a part of this Plan.
VII. STOCK BENEFIT PLANS
The Board of Directors of the Association and/or the Stock Holding
Company intend to adopt one or more stock benefit plans for its Employees,
Officers and Directors, including an ESOP, stock award plans and stock option
plans, which will be authorized to purchase Common Stock and grant options for
Common Stock. However, only the Tax-Qualified Employee Plans will be permitted
to purchase Common Stock in the Stock Offering subject to the purchase
priorities set forth in this Plan. The Board of Directors of the Association
intends to establish the ESOP and authorize the ESOP and any other Tax-Qualified
Employee Plans to purchase in the aggregate up to 10% of the shares issued,
excluding shares issued to the MHC. The Association or the Stock Holding Company
may make scheduled discretionary contributions to one or more Tax-Qualified
Employee Plans to purchase Common Stock issued in the Stock Offering or to
18
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 Association 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, (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, and (iii) Common Stock to one or more
Tax-Qualified Employee Plans, including the ESOP, at the closing of the Stock
Offering or at any time thereafter, in an amount equal to up tp 8% of the share
issued, provided, however, that the aggregate amount of Common Stock acquired by
such Tax-Qualified Employee Plans shall not exceed 4.9% of the outstanding
shares of Common Stock of the Stock Holding Company at the close of the Stock
Offering or 4.9% of the stockholders' equity at the close of the Stock Offering.
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 to
the Tax-Qualified Employee Plans or 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. In addition to shares purchased by one or more
Tax-Qualified Employee Plans in this Stock Offering, any subsequent stock
offering, and/or from authorized but unissued shares or treasury shares of the
Stock Holding Company, this Plan specifically authorizes the Stock Holding
Company to grant awards under one or more stock benefit plans, including stock
recognition and award plans and stock option plans, in an amount up to 25% of
the number of shares of Common Stock held by persons other than the MHC.
VIII. 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 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.
19
IX. STATUS OF DEPOSIT ACCOUNTS AND LOANS SUBSEQUENT TO STOCK OFFERING
Each Deposit Account holder shall retain, without payment, a
withdrawable Deposit Account or Accounts in the Association, equal in amount to
the withdrawable value of such account holder's Deposit Account or Accounts
prior to the Stock Offering. All Deposit Accounts will continue to be insured by
the SAIF up to the applicable limits of insurance coverage, and shall be subject
to the same terms and conditions as such Deposit Account in the Association at
the time of the Stock Offering. All loans shall retain the same status after the
Stock Offering as such loans had prior to the Stock Offering.
X. RESTRICTIONS ON ACQUISITION OF THE STOCK HOLDING COMPANY AND THE
ASSOCIATION
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 Association or the Stock Holding Company. In addition,
consistent with the regulations of the OTS, the charter of the Stock Holding
Company and the Association 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, association, 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
Association'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 Association by
a corporation whose ownership is or will be substantially the same as the
ownership of the Association, 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.
XI. 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 Association and at any
time thereafter by a two-thirds vote of the respective Boards of Directors of
the Stock Holding Company and the Association only with the concurrence of the
OTS.
The Plan may be terminated by a two-thirds vote of the Association'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 Association 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 Association and the Stock Holding
20
Company is required in order for the Association and the Stock Holding Company
to terminate the Plan prior to the end of such 24-month period.
XII. EXPENSES OF THE STOCK OFFERING
The Stock Holding Company and the Association shall use their best
efforts to assure that expenses incurred by them in connection with the Stock
Offering shall be reasonable.
XIII. 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 Georgia or Florida taxation authorities or an opinion of tax counsel or
other tax advisor with respect to Georgia or Florida taxation, to the effect
that consummation of the transactions contemplated herein will not be taxable to
the Stock Holding Company or the Association.
XIV. EXTENSION OF CREDIT FOR PURCHASE OF STOCK
The Association 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.
XV. 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 Association. If, in a Conversion Transaction, the stockholders of the
Association 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
21
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 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 Stock Holding Company
Attachments B-1 and B-2 Charter and Bylaws of the Association
22