EXHIBIT 2
OHIO CENTRAL SAVINGS
DUBLIN, OHIO
PLAN OF CONVERSION AND REORGANIZATION
FROM MUTUAL TO STOCK FORM
December 14, 2004
TABLE OF CONTENTS
1. INTRODUCTION...................................................................................1
2. DEFINITIONS....................................................................................2
3. PROCEDURES FOR CONVERSION......................................................................6
4. BANK AND HOLDING COMPANY APPLICATIONS AND APPROVALS............................................7
5. SALE OF SUBSCRIPTION SHARES....................................................................7
6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES...............................................8
7. RETENTION OF OFFERING PROCEEDS BY THE HOLDING COMPANY..........................................9
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)...............................9
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)........................................10
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY)..................10
11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY).........................................11
12. COMMUNITY OFFERING.............................................................................11
13. SYNDICATED COMMUNITY OFFERING..................................................................12
14. LIMITATION ON PURCHASES........................................................................12
15. PAYMENT FOR SUBSCRIPTION SHARES................................................................14
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS...................................14
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT................................15
18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES..............................................16
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT...........................................................16
20. VOTING RIGHTS OF STOCKHOLDERS..................................................................17
21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION...............................................17
22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE CONVERSION............18
23. TRANSFER OF DEPOSIT ACCOUNTS...................................................................18
24. REGISTRATION AND MARKETING.....................................................................18
25. TAX RULINGS OR OPINIONS........................................................................19
26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS..................................................19
27. RESTRICTIONS ON ACQUISITION OF ASSOCIATION AND HOLDING COMPANY.................................19
28. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK...................................................20
29. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE..................................................21
30. EXPENSES OF CONVERSION.........................................................................21
31. AMENDMENT OR TERMINATION OF PLAN...............................................................21
32. CONDITIONS TO CONVERSION.......................................................................21
33. INTERPRETATION.................................................................................22
(i)
PLAN OF CONVERSION AND REORGANIZATION OF
OHIO CENTRAL SAVINGS
1. INTRODUCTION
This Plan of Conversion and Reorganization provides for the conversion of
Ohio Central Savings (the "Association") from a federally chartered savings
association subsidiary of Third Federal Savings and Loan Association of
Cleveland, MHC, to a federally chartered stock savings association pursuant to
the Rules and Regulations of the OTS. As part of the Conversion, the plan
provides for the Association to redeem its outstanding shares of common stock
held by TFS Financial Corporation ("TFS"), the wholly-owned subsidiary of Third
Federal Savings and Loan Association of Cleveland, MHC, pursuant to a
Divestiture Agreement, dated December 13, 2004, by and among the Association,
TFS and Third Federal Savings and Loan Association of Cleveland, MHC, and the
concurrent formation of a holding company (the "Holding Company") that will own
100% of the common stock of the Association. The Board of Directors has
considered the alternatives available to the Association with respect to its
corporate structure, and has determined that a mutual-to-stock conversion as
described in this Plan will be in the best interests of the Association and its
customers. Restructuring the Association into the capital stock form of
organization will increase its capital base and enhance the Association's
ability to expand its franchise and the range of products and services it
offers. The stock form of organization also will enable the Association to adopt
stock benefit plans that will make the Association more competitive in providing
incentive compensation to management and employees. Stock ownership is viewed as
an effective performance incentive and as a means of attracting, retaining and
compensating management and other key personnel. The stock holding company form
of organization also will offer the Association greater organizational and
operating flexibility, including the expanded powers available to holding
companies under Federal law.
The Plan provides that non-transferable subscription rights to purchase
Common Stock will be offered first to Eligible Account Holders, then to the
Association's Tax-Qualified Employee Plans, then to Supplemental Eligible
Account Holders, 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 Community Offering with a preference given to natural persons who reside in
the Association's Local Community. The price of the Common Stock will be based
upon an independent appraisal of the Association and will reflect its estimated
pro forma market value, as converted. No change will be made in the Board of
Directors or management as a result of the Conversion. After the Conversion, the
Association's insured deposits will continue to be insured by the FDIC to the
extent provided by applicable law.
This Plan has been adopted by the Board of Directors of the Association.
This Plan also must be approved by a majority of the total number of outstanding
votes entitled to be cast by Voting Members of the Association at a Special
Meeting of Members to be called for that purpose. The OTS must approve this Plan
before it is presented to Voting Members for their approval.
1
2. DEFINITIONS
For the purposes of this Plan, the following terms have the following
meanings:
ACCOUNT HOLDER - Any Person holding a Deposit Account in the Association.
ACTING IN CONCERT - The term Acting in Concert means (i) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement; or (ii) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise. A
person or company which acts in concert with another person or company ("other
party") shall also be deemed to be acting in concert with any person or company
who is also acting in concert with that other party, except that any
tax-qualified employee stock benefit plan will not be deemed to be acting in
concert with its trustee or a person who serves in a similar capacity solely for
the purpose of determining whether stock held by the trustee and stock held by
the plan will be aggregated.
AFFILIATE - Any Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with
another Person.
APPRAISED VALUE RANGE - The range of the estimated consolidated pro forma
market value of the Holding Company, which shall also be equal to the estimated
pro forma market value of the total number of Subscription Shares to be issued
in the Conversion, as determined by the Independent Appraiser prior to the
Subscription Offering and as it may be amended from time to time thereafter. The
maximum and minimum of the Appraised Value Range may vary as much as 15% above
and 15% below, respectively, the midpoint of the Appraised Value Range.
ASSOCIATE - The term Associate when used to indicate a relationship with
any person, means (i) any corporation or organization (other than the
Association or a majority-owned subsidiary of the Association) if the person is
a senior officer or partner or beneficially owns, directly or indirectly, 10% or
more of any class of equity securities of the corporation or organization, (ii)
any trust or other estate, if the person has a substantial beneficial interest
in the trust or estate or is a trustee or fiduciary of the trust or estate
except that for the purposes of this Plan relating to subscriptions in the
Offering and the sale of Subscription Shares following the Conversion, a person
who has a substantial beneficial interest in any Non-Tax-Qualified Employee
Stock Benefit Plan or any Tax-Qualified Employee Stock Benefit Plan, or who is a
trustee or fiduciary of such plan, is not an associate of such plan, and except
that, for purposes of aggregating total shares that may be held by Officers and
Directors the term "Associate" does not include any Tax-Qualified Employee Stock
Benefit Plan, and (iii) any person who is related by blood or marriage to such
person and who lives in the same home as such person or who is a Director or
Officer of the Association or the Holding Company, or any of its parents or
subsidiaries.
ASSOCIATION - Ohio Central Savings, Dublin, Ohio, in both mutual and stock
form depending on the context.
2
COMMON STOCK - The common stock, par value $0.01 per share, of the Holding
Company.
COMMUNITY - The Ohio counties of Franklin and Cuyahoga.
COMMUNITY OFFERING - The offering for sale to certain members of the
general public directly by the Holding Company of shares not subscribed for in
the Subscription Offering.
CONTROL - (including the terms "controlling," "controlled by," and "under
common control with") means the direct or indirect power to direct or exercise a
controlling influence over the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise as
described in 12 C.F.R. Part 574.
CONVERSION - The conversion of the mutual association to stock form through
the following steps (1) the redemption of the Association's outstanding common
stock from TFS as agreed upon in the Divestiture Agreement, (2) the exchange of
the Association's stock charter for a new mutual charter, (3) the conversion of
the Association to stock form by adopting a new stock charter, (4) the sale by
the Holding Company of Common Stock, and (5) the issuance and sale by the
Association of Common Stock to the Holding Company, all pursuant to this Plan,
and all steps incident or necessary thereto, including the Offering.
DEPOSIT ACCOUNT - Any withdrawable account, including, without limitation,
savings, time, demand, NOW accounts, money market, certificate and passbook
accounts.
DIRECTOR - A member of the Board of Directors of the Association, or the
Holding Company, as appropriate in the context.
ELIGIBLE ACCOUNT HOLDER - Any Person holding a Qualifying Deposit on the
Eligibility Record Date for purposes of determining subscription rights and
establishing subaccount balances in the Liquidation Account.
ELIGIBILITY RECORD DATE - The date for determining Eligible Account Holders
of the Association, which is September 30, 2003.
EMPLOYEES - All Persons who are employed by the Association.
EMPLOYEE PLANS - Any one or more Tax-Qualified Employee Stock Benefit Plans
of the Association or the Holding Company, including any ESOP.
ESOP - The Association's Employee Stock Ownership Plan and related trust.
FDIC - The Federal Deposit Insurance Corporation.
HOLDING COMPANY - The Maryland corporation formed for the purpose of
acquiring all of the shares of capital stock of the Association in connection
with the Conversion. Shares of Common Stock will be issued in the Conversion to
Participants and others in the Offering.
3
INDEPENDENT APPRAISER - The appraiser retained by the Association to
prepare an appraisal of the pro forma market value of the Subscription Shares.
LIQUIDATION ACCOUNT - The interest in the Association received by Eligible
Account Holders and Supplemental Eligible Account Holders in exchange for their
mutual interest in the Association in connection with the Conversion.
MEMBER - For purposes of this Plan, any Person or entity who qualifies as a
member of the Association by holding a Deposit Account with the Association.
OFFERING - The offering and issuance, pursuant to this Plan, of Common
Stock in a Subscription Offering, Community Offering or Syndicated Community
Offering, as the case may be.
OFFERING RANGE - The range of the number of shares of Common Stock offered
for sale in the Offering. The Offering Range shall be equal to the Appraised
Value Range divided by the Subscription Price.
OFFICER - An executive officer of the Association, or the Holding Company
as appropriate in the context, which includes the Chief Executive Officer,
President, Senior Vice Presidents, Executive Vice President in charge of
principal business functions, Secretary and Controller and any Person performing
functions similar to those performed by the foregoing persons.
ORDER FORM - Any form (together with any cover letter and acknowledgments)
sent to any Participant or Person containing among other things a description of
the alternatives available to such Person under this Plan and by which any such
Person may make elections regarding subscriptions for Subscription Shares.
OTHER MEMBER - Any person holding a Deposit Account on the Voting Record
Date who is not an Eligible Account Holder or Supplemental Eligible Account
Holder, or any borrower who qualifies as a Voting Member.
OTS - The Office of Thrift Supervision, a division of the United States
Department of Treasury.
PARTICIPANT - Any Eligible Account Holder, Employee Plan, Supplemental
Eligible Account Holder, or Other Member.
PERSON - An individual, a corporation, a partnership, an association, a
joint-stock company, a limited liability company, a trust, an unincorporated
organization, or a government or political subdivision of a government.
PLAN - This Plan of Conversion and Reorganization of the Association as it
exists on the date hereof and as it may hereafter be amended in accordance with
its terms.
PROSPECTUS - The one or more documents used in offering the Subscription
Shares.
4
QUALIFYING DEPOSIT - The aggregate balance of all Deposit Accounts in the
Association of (i) an Eligible Account Holder at the close of business on the
Eligibility Record Date, provided such aggregate balance is not less than $50,
and (ii) a Supplemental Eligible Account Holder at the close of business on the
Supplemental Eligibility Record Date, provided such aggregate balance is not
less than $50.
RESIDENT - Any Person who occupies a dwelling within the Community, has a
present intent to remain within the Community for a period of time, and
manifests the genuineness of that intent by establishing an ongoing physical
presence within the Community together with an indication that such presence
within the Community is something other than merely transitory in nature. To the
extent the person is a corporation or other business entity, the principal place
of business or headquarters shall be in the Community. To the extent a person is
a personal benefit plan, the circumstances of the beneficiary shall apply with
respect to this definition. In the case of all other benefit plans,
circumstances of the trustee shall be examined for purposes of this definition.
The Association may utilize deposit or loan records or such other evidence
provided to it to make a determination as to whether a person is a resident. In
all cases, however, such a determination shall be in the sole discretion of the
Association. A Participant must be a "Resident" for purposes of determining
whether such person "resides" in the Community as such term is used in this
Plan.
SEC - The Securities and Exchange Commission.
SPECIAL MEETING OF MEMBERS - The special meeting of Voting Members and any
adjournments thereof held to consider and vote upon this Plan.
SUBSCRIPTION OFFERING - The offering of Subscription Shares to
Participants.
SUBSCRIPTION PRICE - The price per Subscription Share to be paid by
Participants and others in the Offering. The Subscription Price will be
determined by the Board of Directors of the Holding Company and fixed prior to
the commencement of the Subscription Offering.
SUBSCRIPTION SHARES - Shares of Common Stock offered for sale in the
Offering.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER - Any Person, other than Directors and
Officers of the Association and their Associates, holding a Qualifying Deposit
on the Supplemental Eligibility Record Date, who is not an Eligible Account
Holder.
SUPPLEMENTAL ELIGIBILITY RECORD DATE - The date for determining
Supplemental Eligible Account Holders, which shall be the last day of the
calendar quarter preceding OTS approval of the application for conversion.
SYNDICATED COMMUNITY OFFERING - The offering of Subscription Shares, at the
sole discretion of the Holding Company, following the Subscription and Community
Offerings through a syndicate of broker-dealers.
TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN - Any defined benefit plan or
defined contribution plan, such as an employee stock ownership plan, stock bonus
plan, profit-sharing plan or other plan, which, with its related trust, meets
the requirements to be "qualified" under
5
Section 401 of the Internal Revenue Code of 1986, as amended. The Association
may make scheduled discretionary contributions to a tax-qualified employee stock
benefit plan, PROVIDED such contributions do not cause the Association to fail
to meet its regulatory capital requirements. A "Non-Tax-Qualified Employee Stock
Benefit Plan" is any defined benefit plan or defined contribution plan that is
not so qualified.
VOTING MEMBER - Any Person who at the close of business on the Voting
Record Date is entitled to vote as a Member of the Association.
VOTING RECORD DATE - The date fixed by the Directors for determining
eligibility to vote at the Special Meeting of Members.
3. PROCEDURES FOR CONVERSION
A. After approval of this Plan by the Boards of Directors of the
Association by at least a two-thirds vote, this Plan together with all other
requisite material shall be submitted to the OTS for approval. Notice of the
adoption of this Plan by the Board of Directors of the Association and the
submission of this Plan to the OTS for approval will be published in a newspaper
having general circulation in each community in which an office of the
Association is located, and copies of this Plan will be made available at each
office of the Association for inspection by Members.
B. Promptly following approval by the OTS, this Plan will be submitted to
a vote of the Voting Members at the Special Meeting of Members. The Association
will mail to all Voting Members, at their last known address appearing on the
records of the Association, a proxy statement in either long or summary form
describing this Plan, which will be submitted to a vote of Voting Members at the
Special Meeting of Members. The Association also will mail to all Participants
either a Prospectus and Order Form for the purchase of Subscription Shares or a
letter informing them of their right to receive a Prospectus and Order Form and
a postage prepaid card to request such materials, subject to other provisions of
this Plan. In addition, all Participants will receive, or be given the
opportunity to request by either returning a postage prepaid card which will be
distributed with the proxy statement or by letter addressed to the Association's
Secretary, a copy of this Plan. Upon approval of this Plan by a majority of the
total number of votes entitled to be cast by Voting Members, the Holding Company
and the Association will take all other necessary steps pursuant to applicable
laws and regulations to consummate the Conversion and Offering. The Conversion
must be completed within 24 months of the approval of this Plan by Voting
Members, unless a longer time period is permitted by governing laws and
regulations.
C. The Subscription Shares will be offered for sale in the Subscription
Offering to Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental
Eligible Account Holders and Other Members in the priorities set forth in
Sections 8-11 of this Plan, prior to or within 45 days after the date of the
Special Meeting. The Subscription Offering may begin as early as the mailing of
the proxy statement for the Special Meeting. The Holding Company may, either
concurrently with, at any time during, or promptly after the Subscription
Offering, also offer the Common Stock to and accept orders from other Persons in
a Community Offering with a preference given to natural persons residing in the
Community; provided that the Association's
6
Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible
Account Holders, and Other Members shall have the priority rights to subscribe
for Subscription Shares set forth in Sections 8-11 of this Plan. The Holding
Company and the Association may delay commencing the Subscription Offering
beyond such 45-day period in the event there exists unforeseen material adverse
market or financial conditions. If the Subscription Offering commences prior to
the Special Meeting, subscriptions will be accepted subject to the approval of
the Plan at the Special Meeting.
The period for the Subscription Offering will be not less than 20 days nor
more than 45 days and the period for the Community Offering will be not more
than 45 days, unless extended by the Association. If, upon completion of the
Subscription Offering and any Community Offering, any shares of Common Stock
remain available for sale, such shares will, if feasible, be offered for sale in
a Syndicated Community Offering. If for any reason the Syndicated Community
Offering of all shares not sold in the Subscription Offering and Community
Offering cannot be effected, the 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 Common Stock not sold in the
Subscription Offering and Community Offering is required within 45 days after
termination of the Subscription Offering, subject to extension of such 45-day
period by the Holding Company and the Association with the approval of the OTS.
The Holding Company and the Association may jointly seek one or more extensions
of such 45-day period if necessary to complete the sale of all shares of Common
Stock. 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 Common Stock is required within 24 months after the
date of the Special Meeting. The Association may elect to pay fees on a per
share basis to brokers who assist Persons in determining to purchase Common
Stock in the Community Offering and Syndicated Community Offering.
D. The home office of the Association shall be unaffected by the
Conversion. The executive offices of the Holding Company shall be located at the
current offices of the Association.
4. BANK AND HOLDING COMPANY APPLICATIONS AND APPROVALS
The Boards of Directors of the Association and the Holding Company will
take all necessary steps to convert the Association to stock form, form the
Holding Company and complete the Offering. The Association and the Holding
Company shall make timely applications to the OTS and filings with the SEC for
any requisite regulatory approvals to complete the Conversion.
5. SALE OF SUBSCRIPTION SHARES
The Subscription Shares will be offered simultaneously in the Subscription
Offering to the Participants in the respective priorities set forth in this
Plan. The Subscription Offering may begin as early as the mailing of the Proxy
Statement for the Special Meeting of Members. The Common Stock will not be
insured by the FDIC. The Association will not extend credit to any Person to
purchase shares of Common Stock.
7
Any shares of Common Stock for which subscriptions have not been received
in the Subscription Offering may be issued in the Community Offering. The
Subscription Offering may begin prior to the Special Meeting of Members and, in
that event, the Community Offering also may begin prior to the Special Meeting
of Members. The offer and sale of Common Stock prior to the Special Meeting of
Members, however, is subject to the approval of this Plan by Voting Members.
If feasible, any shares of Common Stock remaining after the Subscription
Offering, and the Community Offering should one be conducted, will be sold in a
Syndicated Community Offering or in any manner that will achieve the widest
distribution of the Common Stock. The Syndicated Community Offering may be
conducted in addition to, or instead of, a Community Offering. The issuance of
Common Stock in any Subscription Offering and any Community Offering will be
consummated simultaneously on the date the sale of Common Stock in the
Syndicated Community Offering is consummated and only if the required minimum
number of shares of Common Stock has been issued.
6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES
The total number of shares, or a range thereof, of Subscription Shares to
be offered for sale in the Offering will be determined jointly by the Boards of
Directors of the Association and the Holding Company immediately prior to the
commencement of the Subscription and Community Offerings, and will be based on
the Appraised Value Range and the Subscription Price. The Offering Range will be
equal to the Appraised Value Range divided by the Subscription Price. The
estimated pro forma consolidated market value of the Holding Company will be
subject to adjustment within the Appraised Value Range if necessitated by market
or financial conditions, with the receipt of any required approvals of the OTS,
and the maximum of the Appraised Value Range may be increased by up to 15%
subsequent to the commencement of the Subscription Offering to reflect changes
in market and financial conditions or demand for the shares. The number of
Subscription Shares issued in the Offering will be equal to the estimated pro
forma consolidated market value of the Holding Company, as may be amended,
divided by the Subscription Price.
In the event that the Subscription Price multiplied by the number of
Subscription Shares to be issued in the Offering is below the minimum of the
Appraised Value Range, or materially above the maximum of the Appraised Value
Range, a resolicitation of purchasers may be required, PROVIDED that up to a 15%
increase above the maximum of the Appraised Value Range will not be deemed
material so as to require a resolicitation. Any such resolicitation shall be
effected in such manner and within such time as the Association shall establish,
if all required regulatory approvals are obtained.
Notwithstanding the foregoing, Subscription Shares will not be issued
unless, prior to the consummation of the Offering, the Independent Appraiser
confirms to the Association, and the Holding Company, and 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 number of Subscription Shares issued
in the Offering multiplied by the Subscription Price is incompatible with its
estimate of the aggregate consolidated pro forma market value of the Holding
Company. If such confirmation is
8
not received, the Holding Company may cancel the Offering, extend the Offering
and establish a new Subscription Price and/or Appraised Value Range, extend,
reopen or hold a new Offering, or take such other action as the OTS may permit.
The Common Stock to be issued in the Offering shall be fully paid and
non-assessable.
7. RETENTION OF OFFERING PROCEEDS BY THE HOLDING COMPANY
The Holding Company may retain up to 50% of the proceeds of the Offering.
The Holding Company believes that the Offering proceeds will provide economic
strength to the Holding Company and the Association for the future in a highly
competitive and regulated financial services environment and would facilitate
the continued expansion through acquisitions of financial service organizations,
continued diversification into other related businesses and for other business
and investment purposes, including the possible payment of dividends and
possible future repurchases of the Common Stock as permitted by applicable
federal and state regulations and policy.
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)
A. Each Eligible Account Holder shall have nontransferable subscription
rights to subscribe for in the Subscription Offering up to the greater of 10,000
shares of Common Stock, 0.10% of the total number of shares of Common Stock
issued in the Offering, or fifteen (15) times the product (rounded down to the
next whole number) obtained by multiplying the number of Subscription Shares
offered in the Offering by a fraction of which the numerator is the amount of
the Eligible Account Holder's Qualifying Deposit and the denominator is the
total amount of Qualifying Deposits of all Eligible Account Holders, in each
case on the Eligibility Record Date, subject to the provisions of Section 14.
B. In the event that Eligible Account Holders exercise subscription
rights for a number of Subscription Shares in excess of the total number of such
shares eligible for subscription, the Subscription Shares shall be allocated
among the subscribing Eligible Account Holders so as to permit each subscribing
Eligible Account Holder to purchase a number of shares sufficient to make his or
her total allocation of Subscription Shares equal to the lesser of 100 shares or
the number of shares for which such Eligible Account Holder has subscribed. Any
remaining shares will be allocated among the subscribing Eligible Account
Holders whose subscriptions remain unsatisfied in the proportion that the amount
of the Qualifying Deposit of each Eligible Account Holder whose subscription
remains unsatisfied bears to the total amount of the Qualifying Deposits of all
Eligible Account Holders whose subscriptions remain unsatisfied. If the amount
so allocated exceeds the amount subscribed for by any one or more Eligible
Account Holders, the excess shall be reallocated (one or more times as
necessary) among those Eligible Account Holders whose subscriptions are still
not fully satisfied on the same principle until all available shares have been
allocated.
C. Subscription rights as Eligible Account Holders received by Directors
and Officers and their Associates that are based on deposits made by such
persons during the
9
12 months preceding the Eligibility Record Date shall be subordinated to the
subscription rights of all other Eligible Account Holders.
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)
The Employee Plans shall be given the opportunity to purchase in the
aggregate up to 10% of the Common Stock issued in the Conversion. In the event
of an oversubscription in the Conversion, subscriptions for shares by the
Employee Plans may be satisfied, in whole or in part, out of authorized but
unissued shares of the Holding Company, subject to the maximum purchase
limitations applicable to such plans in this Plan, or may be satisfied, in whole
or in part, through open market purchases by the Employee Plans subsequent to
the closing of the Conversion. If the final valuation exceeds the maximum of the
Offering Range, up to 10% of Common Stock issued in the Conversion may be sold
to the Employee Plans notwithstanding any oversubscription by Eligible Account
Holders.
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD
PRIORITY)
A. Each Supplemental Eligible Account Holder shall have nontransferable
subscription rights to subscribe for in the Subscription Offering up to the
greater of 10,000 shares of Common Stock, 0.10% of the total number of shares of
Common Stock issued in the Offering, or fifteen (15) times the product (rounded
down to the next whole number) obtained by multiplying the number of shares
Subscription Shares offered in the Offering by a fraction of which the numerator
is the amount of the Supplemental Eligible Account Holder's Qualifying Deposit
and the denominator is the total amount of Qualifying Deposits of all
Supplemental Eligible Account Holders, in each case on the Supplemental
Eligibility Record Date, subject to the availability of sufficient shares after
filling in full all subscription orders of the Eligible Account Holders and
Employee Plans and to the purchase limitations specified in Section 14.
B. In the event that Supplemental Eligible Account Holders exercise
subscription rights for a number of Subscription Shares in excess of the total
number of such shares eligible for subscription, the Subscription Shares shall
be allocated among the subscribing Supplemental Eligible Account Holders so as
to permit each such subscribing Supplemental Eligible Account Holder, to the
extent possible, to purchase a number of shares sufficient to make his or her
total allocation of Subscription Shares equal to the lesser of 100 shares or the
number of shares for which each such Supplemental Eligible Account Holder has
subscribed. Any remaining shares will be allocated among the subscribing
Supplemental Eligible Account Holders whose subscriptions remain unsatisfied in
the proportion that the amount of the Qualifying Deposit of each such
Supplemental Eligible Account Holder bears to the total amount of the Qualifying
Deposits of all Supplemental Eligible Account Holders whose subscriptions remain
unsatisfied. If the amount so allocated exceeds the amount subscribed for by any
one or more Supplemental Eligible Account Holders, the excess shall be
reallocated (one or more times as necessary) among those Supplemental Eligible
Account Holders whose subscriptions are still not fully satisfied on the same
principle until all available shares have been allocated.
10
11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)
A. Each Other Member shall have nontransferable subscription rights to
subscribe for in the Subscription Offering up to the greater of 10,000 shares of
Common Stock or 0.10% of the total number of shares of Common Stock issued in
the Offering, subject to the availability of sufficient shares after filling in
full all subscription orders of Eligible Account Holders, Employee Plans and
Supplemental Eligible Account Holders and to the purchase limitations specified
in Section 14.
B. In the event that such Other Members subscribe for a number of
Subscription Shares which, when added to the Subscription Shares subscribed for
by the Eligible Account Holders, Employee Plans and Supplemental Eligible
Account Holders, is in excess of the total number of Subscription Shares to be
issued, the available shares will be allocated to Other Members so as to permit
each such subscribing Other Member, to the extent possible, to purchase a number
of shares sufficient to make his or her total allocation of Subscription Shares
equal to the lesser of 100 shares or the number of shares for which each such
Other Member has subscribed. Any remaining shares will be allocated among the
subscribing Other Members whose subscriptions remain unsatisfied in the
proportion that the amount of the Qualifying Deposit of each such Other Member
bears to the total amount of the Qualifying Deposits of all Other Members whose
subscriptions remain unsatisfied.
12. COMMUNITY OFFERING
If subscriptions are not received for all Subscription Shares offered for
sale in the Subscription Offering, shares for which subscriptions have not been
received may be issued for sale in the Community Offering through a direct
community marketing program which may use a broker, dealer, consultant or
investment banking firm experienced and expert in the sale of savings
institutions securities. Such entities may be compensated on a fixed fee basis
or on a commission basis, or a combination thereof. In the event orders for
Common Stock in the Community Offering exceed the number of shares available for
sale, shares may be allocated (to the extent shares remain available) first to
cover orders of natural persons residing in the Community, and thereafter to
cover orders of other members of the general public, so that each Person in such
category of the Community Offering may receive 100 shares. In the event orders
for Common Stock in any of these categories exceed the number of shares
available for sale, shares may be allocated on a pro rata basis within a
category based on the amount of the respective orders. In addition, orders
received for Common Stock in the Community Offering will first be filled up to a
maximum of two percent (2%) of the shares sold in the Offering, and thereafter
any remaining shares will be allocated on an equal number of shares basis per
order. The Holding Company shall use its best efforts consistent with this Plan
to distribute Common Stock sold in the Community Offering in such a manner as to
promote the widest distribution practicable of such stock. The Holding Company
reserves the right to reject any or all orders in whole or in part, which are
received in the Community Offering. Any Person may purchase up to 10,000 shares
of Common Stock in the Community Offering, subject to the purchase limitations
specified in Section 14.
11
13. SYNDICATED COMMUNITY OFFERING
If feasible, the Board of Directors may determine to offer Subscription
Shares not issued in the Subscription Offering or the Community Offering in a
Syndicated Community, subject to such terms, conditions and procedures as may be
determined by the Holding Company, in a manner that will achieve the widest
distribution of the Common Stock, subject to the right of the Holding Company to
accept or reject in whole or in part any subscriptions in the Syndicated
Community Offering. In the Syndicated Community Offering, any Person may
purchase up to 10,000 shares of Common Stock, subject to the purchase
limitations specified in Section 14.
Provided that the Subscription Offering has begun, the Holding Company may
begin the Syndicated Community Offering at any time, PROVIDED that the
completion of the offer and sale of the Common Stock will be conditioned upon
the approval of this Plan by Voting Members. If the Syndicated Community
Offering does not begin pursuant to the provisions of the preceding sentence,
such offering will begin as soon as practicable following the date upon which
the Subscription and Community Offerings terminate.
If for any reason a Syndicated Community Offering of shares of Common Stock
not sold in the Subscription and Community Offerings cannot be effected, or in
the event that any insignificant residue of shares of Common Stock is not sold
in the Subscription and Community Offerings or in the Syndicated Community, if
possible, the Holding Company will make other arrangements for the disposition
of unsubscribed shares aggregating at least the minimum of the Offering Range.
Such other purchase arrangements will be subject to receipt of any required
approval of the OTS.
14. LIMITATION ON PURCHASES
The following limitations shall apply to all purchases and issuances of
shares of Subscription Shares:
A. The maximum number of Common Stock that may be subscribed for or
purchased in all categories in the Offering by any Person or Participant
together with any Associate or group of Persons Acting in Concert shall not
exceed 20,000 shares of Common Stock, except that the Employee Plans may
subscribe for up to 10% of the Common Stock issued in the Offering (including
shares issued in the event of an increase in the maximum of the Offering Range
of 15%), and each Eligible Account Holder and Supplemental Eligible Account
Holder may subscribe for and purchase the amount of shares of common stock set
forth in Section 8.A and 10.A, respectively.
B. The maximum number of shares of Common Stock that may be issued to or
purchased in all categories of the Offering by Officers and Directors and their
Associates in the aggregate, shall not exceed 34% of the shares of Common Stock
issued in the Offering.
C. A minimum of 25 shares of Common Stock must be purchased by each
Person purchasing shares in the Offering to the extent those shares are
available; PROVIDED, HOWEVER, that in the event the minimum number of shares of
Common Stock purchased times the price per share exceeds $500, then such minimum
purchase requirement shall be reduced to such number
12
of shares which when multiplied by the price per share shall not exceed $500, as
determined by the Board.
D. Notwithstanding any other provision of this Plan, the maximum number
of shares of Common Stock that may be subscribed for or purchased in the
Offering by any Person or Participant together with any Associate or group of
Persons Acting in Concert, shall not exceed 5.0% of the shares of Common Stock
issued and outstanding at the completion of the Offering, except that this
limitation shall not apply to the Employee Plans.
If the number of shares of Common Stock otherwise allocable pursuant to
Sections 8 through 13, inclusive, to any Person or that Person's Associates
would be in excess of the maximum number of shares permitted as set forth above,
the number of shares of Common Stock allocated to each such person shall be
reduced to the lowest limitation applicable to that Person, and then the number
of shares allocated to each group consisting of a Person and that Person's
Associates shall be reduced so that the aggregate allocation to that Person and
his or her Associates complies with the above limits.
Depending upon market or financial conditions, the Board of Directors of
the Holding Company, with the receipt of any required approvals of the OTS and
without further approval of Voting Members, may decrease or increase the
purchase limitations in this Plan, PROVIDED that the maximum purchase
limitations may not be increased to a percentage in excess of 5% of the shares
issued in the Offering except as provided below. If the Holding Company
increases the maximum purchase limitations, the Holding Company is only required
to resolicit Persons who subscribed for the maximum purchase amount in the
Subscription Offering and may, in the sole discretion of the Holding Company,
resolicit certain other large subscribers. In the event that the maximum
purchase limitation is increased to 5% of the shares issued in the Offering,
such limitation may be further increased to 9.99%, PROVIDED that orders for
Common Stock exceeding 5% of the shares of Common Stock issued in the Offering
shall not exceed in the aggregate 10% of the total shares of Common Stock issued
in the Offering. Requests to purchase additional Subscription Shares in the
event that the purchase limitation is so increased will be determined by the
Board of Directors of the Holding Company in its sole discretion.
In the event of an increase in the total number of shares offered in the
Subscription Offering due to an increase in the maximum of the Offering Range of
up to 15% (the "Adjusted Maximum"), the additional shares will be used to fill
the Employee Plans orders and then will be allocated in accordance with the
priorities set forth in this Plan.
For purposes of this Section 14, the Directors of the Association and the
Holding Company shall not be deemed to be Associates or a group affiliated with
each other or otherwise Acting in Concert solely as a result of their being
Directors of the Association or the Holding Company.
Each Person purchasing Common Stock in the Offering shall be deemed to
confirm that such purchase does not conflict with the above purchase limitations
contained in this Plan.
13
15. PAYMENT FOR SUBSCRIPTION SHARES
All payments for Common Stock subscribed for in the Subscription Offering
and Community Offering must be delivered in full to the Association or Holding
Company, together with a properly completed and executed Order Form, on or prior
to the expiration date of the Offering; PROVIDED, HOWEVER, that if the Employee
Plans subscribe for shares in the Subscription Offering, such plans will not be
required to pay for the shares at the time they subscribe but rather may pay for
such shares of Common Stock subscribed for by such plans at the Subscription
Price upon consummation of the Offering.
Payment for Common Stock subscribed for shall be made by check, money order
or bank draft. Alternatively, subscribers in the Subscription and Community
Offerings may pay for the shares for which they have subscribed by authorizing
the Association on the Order Form to make a withdrawal from the designated types
of Deposit Accounts at the Association in an amount equal to the aggregate
Subscription Price of such shares. Such authorized withdrawal shall be without
penalty as to premature withdrawal. If the authorized withdrawal is from a
certificate account, and the remaining balance does not meet the applicable
minimum balance requirement, the certificate shall be canceled at the time of
withdrawal, without penalty, and the remaining balance will earn interest at the
passbook rate. Funds for which a withdrawal is authorized will remain in the
subscriber's Deposit Account but may not be used by the subscriber during the
Subscription and Community Offerings. Thereafter, the withdrawal will be given
effect only to the extent necessary to satisfy the subscription (to the extent
it can be filled) at the Subscription Price per share. Interest will continue to
be earned on any amounts authorized for withdrawal until such withdrawal is
given effect. Interest on funds received by check or money order will be paid by
the Association at not less than the passbook rate on payments for Common Stock.
Such interest will be paid from the date payment is received by the Association
until consummation or termination of the Offering. If for any reason the
Offering is not consummated, all payments made by subscribers in the
Subscription and Community Offerings will be refunded to them with interest. In
case of amounts authorized for withdrawal from Deposit Accounts, refunds will be
made by canceling the authorization for withdrawal. The Association is
prohibited by regulation from knowingly making any loans or granting any lines
of credit for the purchase of stock in the Offering, and therefore, will not do
so.
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the Prospectus prepared by the Holding Company
and Bank has been declared effective by the SEC, Order Forms will be distributed
to the Eligible Account Holders, Employee Plans, Supplemental Eligible Account
Holders and Other Members at their last known addresses appearing on the records
of the Association for the purpose of subscribing for shares of Common Stock in
the Subscription Offering and will be made available for use by those Persons to
whom a Prospectus is delivered.
Each Order Form will be preceded or accompanied by a prospectus describing
the Holding Company, the Association, the Common Stock and the Offering. Each
Order Form will contain, among other things, the following:
14
A. A specified date by which all Order Forms must be received by the
Association or the Holding Company, which date shall be not less than 20 days,
nor more than 45 days, following the date on which the Order Forms are mailed by
the Holding Company, and which date will constitute the termination of the
Subscription Offering unless extended;
B. The Subscription Price per share for shares of Common Stock to be sold
in the Offering;
C. A description of the minimum and maximum number of Subscription Shares
that may be subscribed for pursuant to the exercise of subscription rights or
otherwise purchased in the Subscription and Community Offering;
D. Instructions as to how the recipient of the Order Form is to indicate
thereon the number of Subscription Shares for which such person elects to
subscribe and the available alternative methods of payment therefor;
E. An acknowledgment that the recipient of the Order Form has received a
final copy of the prospectus prior to execution of the Order Form;
F. A statement to the effect that all subscription rights are
nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering to the Holding Company within the subscription
period such properly completed and executed Order Form, together with payment in
the full amount of the aggregate purchase price as specified in the Order Form
for the shares of Common Stock for which the recipient elects to subscribe in
the Subscription Offering (or by authorizing on the Order Form that the
Association withdraw said amount from the subscriber's Deposit Account at the
Association); and
G. A statement to the effect that the executed Order Form, once received
by the Holding Company, may not be modified or amended by the subscriber without
the consent of the Holding Company.
Notwithstanding the above, the Holding Company reserves the right in its
sole discretion to accept or reject orders received on photocopied or facsimiled
order forms.
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT
In the event Order Forms (a) are not delivered by the United States Postal
Service, (b) are not received back by the Holding Company or are received by the
Holding Company after the expiration date specified thereon, (c) are defectively
filled out or executed, (d) are not accompanied by the full required payment,
unless waived by the Holding Company, for the shares of Common Stock subscribed
for (including cases in which deposit accounts from which withdrawals are
authorized are insufficient to cover the amount of the required payment), or (e)
are not mailed pursuant to a "no mail" order placed in effect by the account
holder, the subscription rights of the Person to whom such rights have been
granted will lapse as though such Person failed to return the completed Order
Form within the time period specified thereon; PROVIDED, HOWEVER, that the
Holding Company may, but will not be required to, waive any immaterial
irregularity on any Order Form or require the submission of corrected Order
Forms or
15
the remittance of full payment for subscribed shares by such date as the Holding
Company may specify. The interpretation of the Holding Company of terms and
conditions of this Plan and of the Order Forms will be final, subject to the
authority of the OTS.
18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
The Holding Company will make reasonable efforts to comply with the
securities laws of all States in the United States in which Persons entitled to
subscribe for shares of Common Stock pursuant to this Plan reside. However, no
such Person will be issued subscription rights or be permitted to purchase
shares of Common Stock in the Subscription Offering if such Person resides in a
foreign country; or in a State of the United States with respect to which any of
the following apply: (A) a small number of Persons otherwise eligible to
subscribe for shares under this Plan reside in such state; (B) the issuance of
subscription rights or the offer or sale of shares of Common Stock to such
Persons would require the Holding Company under the securities laws of such
state, to register as a broker, dealer, salesman or agent or to register or
otherwise qualify its securities for sale in such state; and (C) such
registration or qualification would be impracticable for reasons of cost or
otherwise.
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT
The Association shall establish at the time of the Conversion, a
Liquidation Account in an amount equal to the Association's total equity as
reflected in the latest statement of financial condition contained in the final
Prospectus used in the Offering. Following the Conversion, the Liquidation
Account will be maintained by the Association for the benefit of the Eligible
Account Holders and Supplemental Eligible Account Holders who continue to
maintain their Deposit Accounts at the Association. Each Eligible Account Holder
and Supplemental Eligible Account Holder shall, with respect to his Deposit
Account, hold a related inchoate interest in a portion of the Liquidation
Account balance, in relation to his Deposit Account balance at the Eligibility
Record Date or Supplemental Eligibility Record Date, respectively, or to such
balance as it may be subsequently reduced, as hereinafter provided.
In the unlikely event of a complete liquidation of the Association (and
only in such event), following all liquidation payments to creditors (including
those to Account Holders to the extent of their Deposit Accounts) each Eligible
Account Holder and Supplemental Eligible Account Holder shall be entitled to
receive a liquidating distribution from the Liquidation Account, in the amount
of the then adjusted subaccount balance for his Deposit Account then held,
before any liquidation distribution may be made to any holders of the
Association's capital stock. No merger, consolidation, purchase of bulk assets
with assumption of Deposit Accounts and other liabilities, or similar
transactions with an FDIC-insured institution, in which the Association is not
the surviving institution, shall be deemed to be a complete liquidation for this
purpose. In such transactions, the Liquidation Account shall be assumed by the
surviving institution.
The initial subaccount balance for a Deposit Account held by an Eligible
Account Holder and Supplemental Eligible Account Holder shall be determined by
multiplying the opening balance in the Liquidation Account by a fraction, the
numerator of which is the amount of the Qualifying Deposits of such Account
Holder and the denominator of which is the total amount of
16
all Qualifying Deposits of all Eligible Account Holders and Supplemental
Eligible Account Holders. For Deposit Accounts in existence at both the
Eligibility Record Date and the Supplemental Eligibility Record Date, separate
initial subaccount balances shall be determined on the basis of the Qualifying
Deposits in such Deposit Account on each such record date. Such initial
subaccount balance shall not be increased, but shall be subject to downward
adjustment as described below.
If, at the close of business on any December 31 annual closing date,
commencing on or after the effective date of the Conversion, the deposit balance
in the Deposit Account of an Eligible Account Holder or Supplemental Eligible
Account Holder is less than the lesser of (i) the balance in the Deposit Account
at the close of business on any other annual closing date subsequent to the
Eligibility Record Date or Supplemental Eligibility Record Date, or (ii) the
amount of the Qualifying Deposit in such Deposit Account as of the Eligibility
Record Date or Supplemental Eligibility Record Date, the subaccount balance for
such Deposit Account shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of
such downward adjustment, the subaccount balance shall not be subsequently
increased, notwithstanding any subsequent increase in the deposit balance of the
related Deposit Account. If any such Deposit Account is closed, the related
subaccount shall be reduced to zero.
The creation and maintenance of the Liquidation Account shall not operate
to restrict the use or application of any of the equity accounts of the
Association, except that the Association shall not declare or pay a cash
dividend on, or repurchase any of, its capital stock if the effect thereof would
cause its equity to be reduced below (i) the amount required for the Liquidation
Account; or (ii) the regulatory capital requirements of the Association.
20. VOTING RIGHTS OF STOCKHOLDERS
Following consummation of the Conversion, the holders of the voting capital
stock of the Holding Company shall have the exclusive voting rights with respect
to the Holding Company.
21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
A. All shares of Common Stock purchased by Directors or Officers of the
Holding Company or the Association in the Offering shall be subject to the
restriction that, except as provided in this Section 21 or as may be approved by
the OTS, no interest in such shares may be sold or otherwise disposed of for
value for a period of one year following the date of purchase in the Offering.
B. The restriction on disposition of Subscription Shares set forth above
in this Section 21 shall not apply to the following:
(1) Any exchange of such shares in connection with a merger or
acquisition involving the Association or the Holding Company, as
the case may be, which has been approved by the appropriate
federal regulatory agency; and
17
(2) Any disposition of such shares following the death of the person
to whom such shares were initially sold under the terms of this
Plan.
C. With respect to all Subscription Shares subject to restrictions on
resale or subsequent disposition, each of the following provisions shall apply:
(1) Each certificate representing shares restricted by this section
shall bear a legend prominently stamped on its face giving notice
of the restriction;
(2) Instructions shall be issued to the stock transfer agent for the
Holding Company not to recognize or effect any transfer of any
certificate or record of ownership of any such shares in
violation of the restriction on transfer; and
(3) Any shares of capital stock of the Holding Company issued with
respect to a stock dividend, stock split, or otherwise with
respect to ownership of outstanding Subscription Shares subject
to the restriction on transfer hereunder shall be subject to the
same restriction as is applicable to such Subscription Shares.
22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE
CONVERSION
For a period of three years following the Conversion, no Officer, Director
or their Associates shall purchase, without the prior written approval of the
OTS, any outstanding shares of Common Stock except from a broker-dealer
registered with the SEC. This provision shall not apply to negotiated
transactions involving more than 1% of the outstanding shares of Common Stock,
the exercise of any options pursuant to a stock option plan or purchases of
Common Stock made by or held by any Tax-Qualified Employee Stock Benefit Plan or
Non-Tax-Qualified Employee Stock Benefit Plan of the Association or the Holding
Company (including the Employee Plans) which may be attributable to any Officer
or Director. As used herein, the term "negotiated transaction" means a
transaction in which the securities are offered and the terms and arrangements
relating to any sale are arrived at through direct communications between the
seller or any person acting on its behalf and the purchaser or his investment
representative. The term "investment representative" shall mean a professional
investment advisor acting as agent for the purchaser and independent of the
seller and not acting on behalf of the seller in connection with the
transaction.
23. TRANSFER OF DEPOSIT ACCOUNTS
Each person holding a Deposit Account at the Association at the time of
Conversion shall retain an identical Deposit Account at the Association
following Conversion in the same amount and subject to the same terms and
conditions (except as to voting and liquidation rights).
24. REGISTRATION AND MARKETING
Within the time period required by applicable laws and regulations, the
Holding Company will register the securities issued in connection with the
Offering pursuant to the
18
Securities Exchange Act of 1934 and will not deregister such securities for a
period of at least three years thereafter, except that the requirement that
registration be maintained for three years may be fulfilled by any successor to
the Holding Company. In addition, the Holding Company will use its best efforts
to encourage and assist a market-maker to establish and maintain a market for
the Common Stock and to list those securities on a national or regional
securities exchange or the Nasdaq Stock Market.
25. TAX RULINGS OR OPINIONS
Consummation of the Conversion is expressly conditioned upon prior receipt
by the Association of either a ruling or an opinion of counsel with respect to
federal tax laws, and either a ruling, an opinion of counsel, or a letter of
advice from their tax advisor with respect to applicable state tax laws, to the
effect that consummation of the transactions contemplated by the Conversion and
this Plan will not result in a taxable reorganization under the provisions of
the applicable codes or otherwise result in any adverse tax consequences to the
Holding Company or the Association, or the account holders receiving
subscription rights before or after the Conversion, except in each case to the
extent, if any, that subscription rights are deemed to have value on the date
such rights are issued.
26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS
A. The Holding Company and the Association are authorized to adopt
Tax-Qualified Employee Stock Benefit Plans in connection with the Offering,
including without limitation, an ESOP. Existing as well as any newly created
Tax-Qualified Employee Stock Benefit Plans may purchase shares of Common Stock
in the Offering, to the extent permitted by the terms of such benefit plans and
this Plan.
B. The Holding Company and the Association are authorized to enter into
employment agreements with their executive officers.
C. The Holding Company and the Association are authorized to adopt stock
option plans, restricted stock grant plans and other Non-Tax-Qualified Employee
Stock Benefit Plans, provided that such plans conform to any applicable
requirements of federal regulations.
27. RESTRICTIONS ON ACQUISITION OF ASSOCIATION AND HOLDING COMPANY
A. (1) The charter of the Association may contain a provision
stipulating that no person, except the Holding Company, for a
period of five years following the closing date of the Offering,
may directly or indirectly acquire or offer to acquire the
beneficial ownership of more than 10% of any class of an equity
security of the Association, without the prior written approval
of the OTS. In addition, such charter may also provide that for a
period of five years following the closing date of the
Conversion, shares beneficially owned in violation of the
above-described charter provision shall not be entitled to vote
and shall not be voted by any person or counted as voting stock
in connection with any matter submitted to stockholders for a
vote. In addition, special meetings of the stockholders relating
to changes in
19
control or amendment of the charter may only be called by the
Board of Directors, and shareholders shall not be permitted to
cumulate their votes for the election of Directors.
(2) For a period of three years from the date of consummation of the
Conversion, no person, other than the Holding Company, may
directly or indirectly offer to acquire or acquire the beneficial
ownership of more than 10% of any class of an equity security of
the Association without the prior written consent of the OTS.
B. The Articles of Incorporation of the Holding Company may contain a
provision stipulating that in no event shall any record owner of any outstanding
shares of Common Stock who beneficially owns in excess of 10% of such
outstanding shares be entitled or permitted to any vote with respect to any
shares held in excess of 10%. In addition, the Articles of Incorporation and
Bylaws of the Holding Company may contain provisions which prohibit cumulative
voting for the election of directors and provide for staggered terms of the
directors, limitations on the calling of special meetings, a fair price
provision for certain business combinations and certain notice requirements.
C. For the purposes of this section:
(1) The term "person" includes an individual, a firm, a corporation
or other entity;
(2) The term "offer" includes every offer to buy or acquire,
solicitation of an offer to sell, tender offer for, or request or
invitation for tenders of, a security or interest in a security
for value;
(3) The term "acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise;
and
(4) The term "security" includes non-transferable subscription rights
issued pursuant to a plan of conversion as well as a "security"
as defined in 15 U.S.C. ss. 77b(a)1.
28. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
A. The Holding Company shall comply with any applicable regulation in the
repurchase of any shares of its capital stock following consummation of the
Conversion.
B. The Association 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 the
liquidation account, or (ii) the federal or state regulatory capital
requirements.
20
29. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE
The Effective Date of the Conversion shall be the date upon which the final
closing documents required by the OTS shall be filed with the OTS with respect
to the Conversion. The final closing documents shall be filed after all
requisite regulatory and depositor approvals have been obtained, all applicable
waiting periods have expired, and sufficient subscriptions and orders for
Subscription Shares have been received. The Closing of the sale of all shares of
Common Stock sold in the Offering shall occur simultaneously on the effective
date of the Closing.
30. EXPENSES OF CONVERSION
The Association and the Holding Company may retain and pay for the services
of legal, financial and other advisors to assist in connection with any or all
aspects of the Conversion, including the Offering, and such parties shall use
their best efforts to assure that such expenses are reasonable.
31. AMENDMENT OR TERMINATION OF PLAN
If deemed necessary or desirable, this Plan may be substantively amended as
a result of comments from the OTS or otherwise at any time prior to solicitation
of proxies from Voting Members to vote on this Plan by the Board of Directors of
the Association, and at any time thereafter by the Board of Directors of the
Association with the concurrence of the OTS. Any amendment to this Plan made
after approval by Voting Members with the approval of the OTS shall not require
further approval by Voting Members unless otherwise required by the OTS. The
Board of Directors of the Association may terminate this Plan at any time prior
to the Special Meeting of Members to vote on this Plan, and at any time
thereafter with the concurrence of the OTS.
By adopting this Plan, Voting Members of the Association authorize the
Board of Directors of the Association to amend or terminate this Plan under the
circumstances set forth in this Section 31.
32. CONDITIONS TO CONVERSION
Consummation of the Conversion pursuant to this Plan is expressly
conditioned upon the following:
A. Prior receipt by the Association of rulings of the United States
Internal Revenue Service and the state taxing authorities, or opinions of
counsel or tax advisers as described in Section 25 hereof;
B. The issuance of the Subscription Shares offered in the Offering; and
C. The completion of the Conversion within the time period specified in
Section 3 of this Plan.
21
33. INTERPRETATION
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the
Association shall be final, subject to the authority of the OTS.
22