Attached files
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8-K - FORM 8-K - ViewPoint Financial Group | c94999e8vk.htm |
EX-99.1 - EXHIBIT 99.1 - ViewPoint Financial Group | c94999exv99w1.htm |
EXHIBIT 2.1
PLAN OF CONVERSION
AND REORGANIZATION
OF
VIEWPOINT MHC
TABLE OF CONTENTS
PAGE | ||||
1. INTRODUCTION |
1 | |||
2. DEFINITIONS |
1 | |||
3. PROCEDURES FOR CONVERSION |
7 | |||
4. HOLDING COMPANY APPLICATIONS AND APPROVALS |
10 | |||
5. SALE OF SUBSCRIPTION SHARES |
10 | |||
6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES |
11 | |||
7. RETENTION OF CONVERSION PROCEEDS BY THE HOLDING COMPANY |
12 | |||
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY) |
12 | |||
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY) |
13 | |||
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY) |
13 | |||
11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY) |
14 | |||
12. COMMUNITY OFFERING |
14 | |||
13. SYNDICATED COMMUNITY OFFERING AND/OR FIRM COMMITMENT UNDERWRITTEN OFFERING |
15 | |||
14. ADDITIONAL LIMITATIONS ON PURCHASES |
16 | |||
15. PAYMENT FOR SUBSCRIPTION SHARES |
18 | |||
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS |
18 | |||
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT |
19 | |||
18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES |
20 | |||
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT |
20 | |||
20. VOTING RIGHTS OF STOCKHOLDERS |
21 | |||
21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION |
21 | |||
22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE CONVERSION |
22 | |||
23. TRANSFER OF DEPOSIT ACCOUNTS |
22 | |||
24. REGISTRATION AND MARKETING |
22 | |||
25. TAX RULINGS OR OPINIONS |
23 | |||
26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS |
23 | |||
27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY |
24 | |||
28. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK |
25 | |||
29. ARTICLES OF INCORPORATION AND BYLAWS |
25 | |||
30. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE |
25 | |||
31. EXPENSES OF CONVERSION |
25 | |||
32. AMENDMENT OR TERMINATION OF PLAN |
26 | |||
33. CONDITIONS TO CONVERSION |
26 | |||
34. INTERPRETATION |
26 |
i
EXHIBIT A | AGREEMENT OF MERGER BY AND AMONG VIEWPOINT FINANCIAL GROUP, VIEWPOINT INTERIM BANK I AND VIEWPOINT BANK |
|
EXHIBIT B | AGREEMENT OF MERGER BY AND AMONG VIEWPOINT MHC, VIEWPOINT INTERIM BANK II AND VIEWPOINT BANK |
|
EXHIBIT C | AGREEMENT OF MERGER BY AND AMONG VIEWPOINT BANK, VIEWPOINT
FINANCIAL GROUP, INC. AND VIEWPOINT INTERIM BANK III |
|
EXHIBIT D | ARTICLES OF INCORPORATION OF THE HOLDING COMPANY |
|
EXHIBIT E | BYLAWS OF THE HOLDING COMPANY |
ii
PLAN OF CONVERSION AND REORGANIZATION OF
VIEWPOINT MHC
VIEWPOINT MHC
1. INTRODUCTION
This Plan of Conversion and Reorganization (the Plan) provides for the conversion of
ViewPoint MHC, a federal mutual holding company (the Mutual Holding Company), into the capital
stock form of organization. The Mutual Holding Company currently owns a majority of the common
stock of ViewPoint Financial Group, a federal stock corporation (the Mid-Tier Holding Company)
which owns 100% of the common stock of ViewPoint Bank (the Bank), a federally chartered stock
savings bank. A new Maryland stock holding company (the Holding Company) will be established as
part of the Conversion and will succeed to all the rights and obligations of the Mutual Holding
Company and the Mid-Tier Holding Company and issue Holding Company Common Stock in the Conversion.
The purpose of the Conversion is to convert the Mutual Holding Company to the capital stock form of
organization which will provide the Bank and the Holding Company with additional capital to grow
and to respond to changing regulatory and market conditions, and with greater flexibility to effect
corporate transactions, including mergers, acquisitions and branch expansions. The Holding Company
Common Stock will be offered in the Offering upon the terms and conditions set forth herein. The
subscription rights granted to Participants in the Subscription Offering are set forth in Sections
8 through 11 hereof. All sales of Holding Company Common Stock in the Community Offering, the
Syndicated Community Offering, the Firm Commitment Underwritten Offering, or in any other manner
permitted by the Bank Regulators, will be at the sole discretion of the Boards of Directors of the
Bank and the Holding Company. As part of the Conversion, each Minority Stockholder will receive
Holding Company Common Stock in exchange for Minority Shares. The Conversion will have no impact on
depositors, borrowers or other customers of the Bank. After the Conversion, the Banks insured
deposits will continue to be insured by the FDIC to the extent provided by applicable law.
This Plan has been adopted by the Boards of Directors of the Mutual Holding Company, the
Mid-Tier Holding Company and the Bank. This Plan also must be approved by at least (i) a majority
of the total number of outstanding votes entitled to be cast by Voting Members at the Special
Meeting of Members, (ii) two-thirds of the outstanding common stock of the Mid-Tier Holding Company
entitled to be cast at the Meeting of Stockholders, and (iii) a majority of the outstanding shares
of common stock of the Mid-Tier Holding Company entitled to be cast by Minority Stockholders at the
Meeting of Stockholders. The OTS must approve this Plan before it is presented to Voting Members
and Stockholders of the Mid-Tier Holding Company for their approval.
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 Bank.
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 who acts in concert with
another Person (other party) shall also be deemed to be Acting in Concert with any Person 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 shares of Conversion Stock 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.
Articles of Combination The Articles of Combination filed with the OTS and any similar
documents filed with the Bank Regulators in connection with the consummation of any merger relating
to the Conversion.
Associate The term Associate when used to indicate a relationship with any Person, means
(i) any corporation or organization (other than the Mutual Holding Company, the Mid-Tier Holding
Company, the Bank or a majority-owned subsidiary of the Mutual Holding Company, the Mid-Tier
Holding Company or the Bank) 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 (A) who lives in the same home as such
person or (B) who is a Director or Officer of the Mutual Holding Company, the Mid-Tier Holding
Company, the Bank or the Holding Company, or any of their parents or subsidiaries.
Bank ViewPoint Bank, Plano, Texas.
Bank Merger The merger of Interim with the Bank as set forth in this Plan.
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Bank Regulators The applicable Federal or state bank regulatory agency or agencies
responsible for reviewing and approving the Conversion, including the ownership of the Bank by the
Holding Company and the mergers required to effect the Conversion. It is expected that the Bank
Regulators will be the OTS.
Code The Internal Revenue Code of 1986, as amended.
Community The Dallas/Ft. Worth metropolitan statistical area and the Texas counties of
Collin, Dallas, Denton and Tarrant.
Community Offering The offering of Subscription Shares not subscribed for in the
Subscription Offering for sale to certain members of the general public directly by the Holding
Company. The Community Offering may occur concurrently with the Subscription Offering and any
Syndicated Community 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 and reorganization of the Mutual Holding Company to stock form
pursuant to this Plan, and all steps incident or necessary thereto, including the Offering and the
Exchange Offering.
Conversion Stock The Subscription Shares and the Exchange Shares.
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 Bank, the Mid-Tier Holding Company, the
Holding Company or the Mutual 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 Bank,
which is December 31, 2008.
Employees All Persons who are employed by the Bank, the Mid-Tier Holding Company, the
Holding Company or the Mutual Holding Company or any of their Affiliates.
Employee Plans Any one or more Tax-Qualified Employee Stock Benefit Plans of the Bank or
the Holding Company, including any ESOP and 401(k) Plan.
ESOP The Banks Employee Stock Ownership Plan and related trust.
3
Exchange Offering The offering of Holding Company Common Stock to Minority Stockholders in
exchange for Minority Shares.
Exchange Ratio The rate at which shares of Holding Company Common Stock are exchanged for
Minority Shares upon consummation of the Conversion. The Exchange Ratio shall be determined as of
the closing of the Conversion and shall be the rate that will result in the Minority Stockholders
owning in the aggregate the same percentage of the outstanding shares of Holding Company Common
Stock immediately upon completion of the Conversion as the percentage of Mid-Tier Holding Company
common stock owned by them in the aggregate immediately prior to the consummation of the
Conversion.
Exchange Shares The shares of Holding Company Common Stock issued to Minority Stockholders
in the Exchange Offering.
FDIC The Federal Deposit Insurance Corporation.
Firm Commitment Underwritten Offering The offering, at the sole discretion of the Holding
Company, of Subscription Shares not subscribed for in the Subscription Offering and any Community
Offering and/or Syndicated Community Offering, to members of the general public through one or more
underwriters. A Firm Commitment Underwritten Offering may occur concurrently with the Subscription
Offering and any Community Offering and/or Syndicated Community Offering.
Holding Company The Maryland corporation formed for the purpose of acquiring all of the
shares of capital stock of the Bank in connection with the Conversion.
Holding Company Common Stock The common stock, par value $0.01 per share, of the Holding
Company.
Independent Appraiser The appraiser retained by the Mutual Holding Company, Mid-Tier
Holding Company and the Bank to prepare an appraisal of the pro forma market value of the Holding
Company.
Interim ViewPoint Interim Bank III, the interim federal savings bank subsidiary of the
Holding Company established to effect the Conversion.
Liquidation Account The interest in the Bank received by Eligible Account Holders and
Supplemental Eligible Account Holders in exchange for their interest in the Mutual Holding Company
in connection with the Conversion.
Majority Ownership Interest A fraction, the numerator of which is equal to the number of
shares of Mid-Tier Holding Company common stock owned by the Mutual Holding Company immediately
prior to the completion of the Conversion, and the denominator of which is equal to the total
number of shares of Mid-Tier Holding Company common stock issued and outstanding immediately prior
to the completion of the Conversion.
Meeting of Stockholders The special or annual meeting of stockholders of the Mid-Tier
Holding Company and any adjournments thereof held to consider and vote upon this Plan.
4
MHC Merger The conversion of the Mutual Holding Company into an interim stock savings bank
and subsequent merger with and into the Bank as set forth in this Plan.
Mid-Tier Holding Company ViewPoint Financial Group, the federal corporation that owns 100%
of the Banks common stock, and any successor thereto.
Mid-Tier Merger The conversion of the Mid-Tier Holding Company into an interim stock
savings bank and subsequent merger with and into the Bank as set forth in this Plan.
Minority Shares Any outstanding common stock of the Mid-Tier Holding Company, or shares of
common stock of the Mid-Tier Holding Company issuable upon the exercise of options or grant of
stock awards, owned by persons other than the Mutual Holding Company.
Minority Stockholder Any owner of Minority Shares.
Mutual Holding Company ViewPoint MHC, the mutual holding company of the Mid-Tier Holding
Company.
Offering The offering and issuance, pursuant to this Plan, of Holding Company Common Stock
in a Subscription Offering, Community Offering, Syndicated Community Offering and/or Firm
Commitment Underwritten Offering, as the case may be. The term Offering does not include Holding
Company Common Stock issued in the Exchange Offering.
Offering Range The range of the number of shares of Holding Company Common Stock offered
for sale in the Offering multiplied by the Subscription Price. The Offering Range shall be equal to
the Appraised Value Range multiplied by the Majority Ownership Interest. The maximum and minimum of
the Offering Range may vary as much as 15% above and 15% below, respectively, the midpoint of the
Offering Range.
Officer The term Officer means the president, any vice-president (but not an assistant
vice-president, second vice-president, or other vice president having authority similar to an
assistant or second vice-president), the secretary, the treasurer, the comptroller, and any other
person performing similar functions with respect to any organization whether incorporated or
unincorporated. The term Officer also includes the chairman of the Board of Directors if the
chairman is authorized by the charter or bylaws of the organization to participate in its operating
management or if the chairman in fact participates in such management.
Order Form Any form (together with any cover letter and acknowledgments) sent to any Person
containing, among other things, a description of the alternatives available to such Person under
the Plan and by which any such Person may make elections regarding subscriptions for Subscription
Shares.
Other Member A Voting Member who is not an Eligible Account Holder or Supplemental Eligible
Account Holder.
OTS The Office of Thrift Supervision, a bureau of the United States Department of Treasury.
5
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 Mutual Holding Company 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 Conversion Stock.
Qualifying Deposit The aggregate balance of all Deposit Accounts in the Bank of (i) an
Eligible Account Holder at the close of business on the Eligibility Record Date, provided such
aggregate balance is not less than $50, or (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. The term Qualifying Deposit shall also include the aggregate balance of all
Deposit Accounts of not less than $50 held by Persons at the close of business on the Eligibility
Record Date or Supplemental Eligibility Record Date in any entity merged with the Bank, the
Mid-Tier Holding Company or the Mutual Holding Company prior to the closing of the Conversion,
which merger would result in such Persons having the subscription rights of an Eligible Account
Holder or Supplemental Eligible Account Holder under applicable rules of the Bank Regulators.
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 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 Mutual
Holding Company and the Bank 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 Mutual Holding Company and the Bank. A Person
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 U.S. Securities and Exchange Commission.
Special Meeting of Members The special or annual meeting of Voting Members and any
adjournments thereof held to consider and vote upon this Plan.
Stockholder Any owner of outstanding common stock of the Mid-Tier Holding Company,
including the Mutual Holding Company.
Subscription Offering The offering of Subscription Shares to Participants.
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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 Holding Company Common Stock offered for sale in the
Offering. Subscription Shares do not include shares of Holding Company Common Stock issued in
exchange for Minority Shares in the Exchange Offering.
Supplemental Eligible Account Holder Any Person, other than Directors and Officers of the
Mutual Holding Company, the Bank and the Mid-Tier Holding Company (unless the Bank Regulators grant
a waiver permitting a Director or Officer to be included) and their Associates, holding a
Qualifying Deposit on the Supplemental Eligibility Record Date.
Supplemental Eligibility Record Date The date for determining Supplemental Eligible Account
Holders, which shall be the last day of the calendar quarter preceding Bank Regulators approval of
the application for conversion. The Supplemental Eligibility Record Date will only occur if the
Bank Regulators have not approved the Conversion within 15 months after the Eligibility Record
Date.
Syndicated Community Offering The offering, at the sole discretion of the Holding Company,
of Subscription Shares not subscribed for in the Subscription Offering and the Community Offering,
to members of the general public through a syndicate of broker-dealers. The Syndicated Community
Offering may occur concurrently with the Subscription Offering and any Community Offering.
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 Section 401 of
the Internal Revenue Code. The Bank may make scheduled discretionary contributions to a
tax-qualified employee stock benefit plan, provided such contributions do not cause the Bank 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 which is not so qualified.
Voting Member Any Person holding a Deposit Account in the Bank as of the Voting Record
Date.
Voting Record Date The date fixed by the Directors for determining eligibility to vote at
the Special Meeting of Members and/or the Meeting of Stockholders.
3. PROCEDURES FOR CONVERSION
A. After approval of the Plan by the Boards of Directors of the Bank, the Mid-Tier Holding
Company and the Mutual Holding Company, the Plan, together with all other requisite material, shall
be submitted to the Bank Regulators for approval. Notice of the adoption of the Plan by the Boards
of Directors of the Bank, the Mutual Holding Company and the Mid-Tier Holding Company will be
published in a newspaper having general circulation in each community in which an office of the
Bank is located, and copies of the Plan will be made
available at each office of the Bank for inspection by members. The Mutual Holding Company
will publish a notice of the filing with the Bank Regulators of an application to convert in
accordance with the provisions of the Plan as well as notices required in connection with any
holding company merger or other applications required to complete the Conversion.
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B. Promptly following approval by the Bank Regulators, the Plan will be submitted to a vote of
the Voting Members at the Special Meeting of Members and of the Stockholders of the Mid-Tier
Holding Company at the Meeting of Stockholders. The Mutual Holding Company will mail to all Voting
Members, at their last known address appearing on the records of the Bank, a proxy statement in
either long or summary form describing the Plan, which will be submitted to a vote of Voting
Members at the Special Meeting of Members. The Mid-Tier Holding Company will mail to all
Stockholders a proxy statement describing the Plan, which will be submitted to a vote of
Stockholders at the Meeting of Stockholders. The Holding Company also will mail to all Participants
a Prospectus and Order Form for the purchase of Subscription Shares. In addition, all Participants
will receive, or will be given the opportunity to request by either telephone or by letter
addressed to the Banks Secretary, a copy of the Plan as well as the articles of incorporation and
bylaws of the Holding Company. The Plan must be approved by at least (i) a majority of the total
number of votes entitled to be cast by Voting Members at the Special Meeting of Members, (ii)
two-thirds of the outstanding shares of common stock of the Mid-Tier Holding Company entitled to be
cast at the Meeting of Stockholders, and (iii) a majority of the outstanding shares of common stock
of the Mid-Tier Holding Company entitled to be cast by Minority Stockholders at the Meeting of
Stockholders. Upon such approval of the Plan, the Holding Company, the Mutual Holding Company, the
Mid-Tier Holding Company and the Bank will take all other necessary steps pursuant to applicable
laws and regulations to consummate the Conversion. The Conversion must be completed within 24
months of the approval of the Plan by Voting Members, unless a longer time period is permitted by
governing laws and regulations.
C. The period for the Subscription Offering will be not less than 20 days nor more than 45
days, unless extended. Any shares of Holding Company Common Stock for which subscriptions have not
been received in the Subscription Offering may be issued in a Community Offering, a Syndicated
Community Offering, a Firm Commitment Underwritten Offering or in any other manner permitted by the
Bank Regulators. All sales of shares of Holding Company Common Stock must be completed within 45
days after the last day of the Subscription Offering, unless the offering period is extended by the
Mutual Holding Company and the Holding Company with the approval of the Bank Regulators.
D. The Conversion will be effected as follows, or in any other manner that is consistent with
the purposes of this Plan and applicable laws and regulations. The choice of which method to use to
effect the Conversion will be made by the Board of Directors of the Mutual Holding Company
immediately prior to the closing of the Conversion. Each of the steps set forth below shall be
deemed to occur in such order as is necessary to consummate the Conversion pursuant to the Plan,
the intent of the Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company
and the Bank, and applicable regulations and policies. Approval of the Plan by Voting Members and
Stockholders of the Mid-Tier Holding Company also shall constitute approval of each of the
transactions necessary to implement the Plan.
8
(1) | The Bank will organize the Holding Company as a Maryland-chartered stock holding company subsidiary of the Bank. |
(2) | The Holding Company will charter Interim. |
(3) | The Mid-Tier Holding Company will convert to an interim stock savings bank and merge with and into the Bank (the Mid-Tier Merger) with the Bank as the resulting entity pursuant to the Agreement of Merger attached hereto as Exhibit A between the Mid-Tier Holding Company and the Bank, whereby the Mutual Holding Company will receive, and the Minority Stockholders will constructively receive, shares of Bank common stock in exchange for their Mid-Tier Holding Company common stock. |
(4) | Immediately after the Mid-Tier Merger, the Mutual Holding Company will convert to an interim stock savings bank and will merge with and into the Bank (the MHC Merger) with the Bank as the resulting entity pursuant to the Agreement of Merger attached hereto as Exhibit B between the Mutual Holding Company and the Bank, whereby the shares of Bank common stock held by the Mutual Holding Company will be canceled and each Eligible Account Holder and Supplemental Eligible Account Holder will receive an interest in a Liquidation Account of the Bank in exchange for such persons interest in the Mutual Holding Company. |
(5) | Immediately after the Mid-Tier Merger and the MHC Merger, Interim will merge with and into the Bank with the Bank as the surviving entity (the Bank Merger) pursuant to the Agreement of Merger between the Bank and Interim attached hereto as Exhibit C, whereby the Bank will become the wholly owned subsidiary of the Holding Company. The constructive stockholders of the Bank (i.e., Minority Stockholders immediately prior to the Conversion) will exchange the shares of Bank common stock that they constructively received in the Mid-Tier Merger for Holding Company Common Stock. |
(6) | Contemporaneously with the Bank Merger, the Holding Company will offer for sale the Holding Company Common Stock in the Offering. |
E. As part of the Conversion, each of the Minority Shares shall automatically, without further
action of the holder thereof, be converted into and become the right to receive Holding Company
Common Stock based upon the Exchange Ratio. The basis for exchange of Minority Shares for Holding
Company Common Stock shall be fair and reasonable. Options to purchase shares of Mid-Tier Holding
Company common stock which are outstanding immediately prior to the consummation of the Conversion
shall be converted into options to purchase shares of Holding Company Common Stock, with the number
of shares subject to the option and the exercise price per share to be adjusted based upon the
Exchange Ratio so that the aggregate exercise price remains unchanged, and with the duration of the
option remaining unchanged.
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F. The Holding Company shall register the Conversion Stock with the SEC and any appropriate
state securities authorities. In addition, the Mid-Tier Holding Company shall prepare preliminary
proxy materials as well as other applications and information for review by the SEC in connection
with the solicitation of Stockholder approval of the Plan.
G. All assets, rights, interests, privileges, powers, franchises and property (real, personal
and mixed) of the Mid-Tier Holding Company and the Mutual Holding Company shall be automatically
transferred to and vested in the Holding Company by virtue of the Conversion without any deed or
other document of transfer. The Holding Company, without any order or action on the part of any
court or otherwise and without any documents of assumption or assignment, shall hold and enjoy all
of the properties, franchises and interests, including appointments, powers, designations,
nominations and all other rights and interests as the agent or other fiduciary in the same manner
and to the same extent as such rights, franchises, and interests and powers were held or enjoyed by
the Mid-Tier Holding Company and the Mutual Holding Company. The Holding Company shall be
responsible for all of the liabilities, restrictions and duties of every kind and description of
the Mid-Tier Holding Company and the Mutual Holding Company immediately prior to the Conversion,
including liabilities for all debts, obligations and contracts of the Mid-Tier Holding Company and
the Mutual Holding Company, matured or unmatured, whether accrued, absolute, contingent or
otherwise and whether or not reflected or reserved against on balance sheets, books of accounts or
records of the Mid-Tier Holding Company and the Mutual Holding Company.
H. The Articles of Incorporation and Bylaws of the Holding Company shall read in the form of
Exhibit D and Exhibit E, respectively.
I. The home office and branch offices of the Bank shall be unaffected by the Conversion. The
executive offices of the Holding Company shall be located at the current offices of the Mutual
Holding Company and Mid-Tier Holding Company.
4. HOLDING COMPANY APPLICATIONS AND APPROVALS
The Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company, the
Holding Company and the Bank will take all necessary steps to convert the Mutual Holding Company to
stock form, form the Holding Company and complete the Offering. The Mutual Holding Company,
Mid-Tier Holding Company, Bank and Holding Company shall make timely applications to the Bank
Regulators 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
Holding Company Common Stock will not be insured by the FDIC. The Bank will not extend credit to
any Person to purchase shares of Holding Company Common Stock.
10
Any shares of Holding Company Common Stock for which subscriptions have not been received in
the Subscription Offering may be issued in the Community Offering, subject to the
terms and conditions of this Plan. The Community Offering, if any, will involve an offering of
all unsubscribed shares of Holding Company Common Stock directly to the general public with a
preference to those natural persons residing in the Community. The Community Offering may begin
simultaneously or later than the Subscription Offering. The offer and sale of Holding Company
Common Stock prior to the Special Meeting of Members, however, is subject to the approval of the
Plan by the Voting Members and the Stockholders, including Minority Stockholders.
If feasible, any shares of Holding Company Common Stock remaining after the Subscription
Offering period and the Community Offering period (should one be conducted) may be sold in a
Syndicated Community Offering, a Firm Commitment Underwritten Offering or in any manner approved by
the Bank Regulators that will achieve a widespread distribution of the Holding Company Common
Stock. The issuance of Holding Company Common Stock in the Subscription Offering and any Community
Offering will be consummated simultaneously on the date the sale of Holding Company Common Stock in
any Syndicated Community Offering and/or Firm Commitment Underwritten Offering is consummated, and
only if the required minimum number of shares of Holding Company Common Stock has been issued.
6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES
The total number of shares of Conversion Stock to be offered in the Conversion will be
determined jointly by the Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding
Company and the Holding Company immediately prior to the commencement of the Subscription Offering,
and will be based on the Appraised Value Range and the Subscription Price. The Offering Range will
be equal to the Appraised Value Range multiplied by the Majority Ownership Interest. 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 Bank Regulators, 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 shares of
Conversion Stock issued in the Conversion will be equal to the estimated pro forma consolidated
market value of the Holding Company, as may be amended, divided by the Subscription Price, and the
number of Subscription Shares issued in the Offering will be equal to the product of (i) the
estimated pro forma consolidated market value of the Holding Company, as may be amended, divided by
the Subscription Price, and (ii) the Majority Ownership Interest.
In the event that the Subscription Price multiplied by the number of shares of Conversion
Stock to be issued in the Conversion 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 Mutual Holding Company, the Mid-Tier Holding Company and
the Holding Company shall establish, if all required regulatory approvals are obtained.
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Notwithstanding the foregoing, shares of Conversion Stock will not be issued unless, prior to
the consummation of the Conversion, the Independent Appraiser confirms to the Mid-Tier Holding
Company, the Mutual Holding Company, the Holding Company and the Bank Regulators, 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 shares of Conversion Stock issued in the Conversion 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 not received, the Holding Company may cancel the Offering
and the Exchange Offering, extend the Offering and establish a new Subscription Price and/or
Appraised Value Range, or hold a new Offering and Exchange Offering or take such other action as
the Bank Regulators may permit.
The Holding Company Common Stock to be issued in the Conversion shall be fully paid and
nonassessable.
7. RETENTION OF CONVERSION PROCEEDS BY THE HOLDING COMPANY
The Holding Company may retain up to 50% of the net proceeds of the Offering. The Holding
Company believes that the Offering proceeds will provide economic strength to the Holding Company
and the Bank for the future in a highly competitive and regulated financial services environment,
and would support growth in the operations of the Holding Company and the Bank through increased
lending, acquisitions of financial service organizations, continued diversification into other
related businesses and other business and investment purposes, including the possible payment of
dividends and possible future repurchases of the Holding Company Common Stock as permitted by
applicable regulations and policies.
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 200,000 shares of Holding Company Common
Stock, 0.10% of the total number of shares of Holding Company Common Stock issued in the Offering,
or fifteen 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 Holders 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 purchase limitations specified in 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.
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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 12 months preceding the
Eligibility Record Date shall be subordinated to the subscription rights of all other Eligible
Account Holders, except as permitted by the Bank Regulators.
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)
The Employee Plans of the Holding Company and the Bank shall have subscription rights to
purchase in the aggregate up to 10% of the Subscription Shares issued in the Offering, including
any Subscription Shares to be issued as a result of an increase in the maximum of the Offering
Range after commencement of the Subscription Offering and prior to completion of the Conversion.
Alternatively, if permitted by the Bank Regulators, the Employee Plans may purchase all or a
portion of such shares in the open market. Consistent with applicable laws and regulations and
practices and policies, the Employee Plans may use funds contributed by the Holding Company or the
Bank and/or borrowed from an independent financial institution to exercise such subscription
rights, and the Holding Company and the Bank may make scheduled discretionary contributions
thereto, provided that such contributions do not cause the Holding Company or the Bank to fail to
meet any applicable regulatory capital requirements. The Employee Plans shall not be deemed to be
Associates or Affiliates of, or Persons Acting in Concert with, any Director or Officer of the
Holding Company or the Bank.
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 200,000 shares of Holding Company
Common Stock, 0.10% of the total number of shares of Holding Company Common Stock issued in the
Offering, or fifteen 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 Supplemental Eligible Account Holders 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 subject to the purchase limitations specified in Section 14.
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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.
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 200,000 shares of Holding Company Common Stock or 0.10%
of the total number of shares of Holding Company 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 subject 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 subscription of each such Other Member bears to the total amount
of the subscriptions 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 offered 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 Holding Company 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,
next to cover orders of Minority Stockholders as of the Voting Record Date for the Meeting of
Stockholders, and thereafter to cover orders of other members of the general public. In the event
orders for Holding Company Common Stock exceed the number of shares available for sale in a
category pursuant to the distribution priorities described above, shares will
14
be allocated within the category so that each member of that category will receive the lesser
of 100 shares or their ordered amount and thereafter remaining shares will be allocated on an equal
number of shares basis per order. In addition, orders received for Holding Company 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 Mutual Holding Company and the Holding Company shall use their best efforts
consistent with this Plan to distribute Holding Company 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, that are received in
the Community Offering. Any Person may purchase up to 200,000 shares of Holding Company Common
Stock in the Community Offering, subject to the purchase limitations specified in Section 14.
13. SYNDICATED COMMUNITY OFFERING AND/OR FIRM COMMITMENT UNDERWRITTEN OFFERING
If feasible, the Boards of Directors of the Mutual Holding Company and the Holding Company may
determine to offer Subscription Shares not sold in the Subscription Offering or the Community
Offering, if any, for sale in a Syndicated Community Offering, subject to such terms, conditions
and procedures as may be determined by the Mutual Holding Company and the Holding Company, in a
manner that will achieve the widest distribution of Holding Company Common Stock, subject to the
right of the Holding Company to accept or reject in whole or in part any orders in the Syndicated
Community Offering. In the Syndicated Community Offering, any Person may purchase up to 200,000
shares of Holding Company Common Stock, subject to the purchase limitations specified in Section
14. In addition, orders received for Holding Company Common Stock in the Syndicated 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. Provided that the Subscription Offering has begun, the Holding Company may begin the
Syndicated Community Offering at any time.
If feasible, the Boards of Directors of the Mutual Holding Company and the Holding Company may
determine to offer Subscription Shares not sold in the Subscription Offering or any Community
Offering or Syndicated Community Offering, for sale in a Firm Commitment Underwritten Offering
subject to such terms, conditions and procedures as may be determined by the Mutual Holding Company
and the Holding Company, subject to the right of the Holding Company to accept or reject in whole
or in part any orders in the Firm Commitment Underwritten Offering. Provided the Subscription
Offering has begun, the Holding Company may begin the Firm Commitment Underwritten Offering at any
time.
If for any reason a Syndicated Community Offering or Firm Commitment Underwritten Offering of
shares of Holding Company Common Stock not sold in the Subscription Offering or any Community
Offering cannot be effected, or in the event that any insignificant residue of shares of Holding
Company Common Stock is not sold in the Subscription Offering or any Community Offering, Syndicated
Community Offering or Firm Commitment Underwritten Offering, the Holding Company will use its best
efforts to 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 Bank
Regulators.
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14. ADDITIONAL LIMITATIONS ON PURCHASES
In addition to the limitations set forth elsewhere in this Plan, the following limitations
shall apply to all purchases and issuances of shares of Conversion Stock:
A. The maximum number of shares of Holding Company Common Stock that may be purchased in the
Subscription Offering through a single Deposit Account is 200,000 shares.
The maximum number of shares of Holding Company 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 400,000 shares of the Holding
Company Common Stock, except that the Employee Plans may subscribe for up to 10% of the Holding
Company Common Stock sold in the Offering (including shares issued in the event of an increase in
the maximum of the Offering Range of up to 15%).
B. The maximum number of shares of Holding Company 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, combined with any Exchange Shares received by any
such Person or Participant, together with any Associate or group of Persons Acting in Concert,
shall not exceed 5% of the shares of the Holding Company Common Stock outstanding immediately upon
completion of the Conversion, except that the Employee Plans may subscribe for up to 10% of the
Holding Company Common Stock sold in the Offering (including shares sold in the Offering in the
event of an increase in the maximum of the Offering Range of up to 15%).
C. The maximum number of shares of Holding Company 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, when combined with Exchange Shares received by such persons, shall not exceed 25% of the
shares of Holding Company Common Stock issued in the Conversion.
D. A minimum of 25 shares of Holding Company Common Stock must be purchased by each Person or
Participant purchasing shares in the Offering to the extent those shares are available; provided,
however, that in the event the minimum number of shares of Holding Company Common Stock purchased
times the Subscription Price exceeds $500, then such minimum purchase requirement shall be reduced
to such number of shares which when multiplied by the price per share shall not exceed $500, as
determined by the Boards of the Mutual Holding Company and the Holding Company.
E. If the number of shares of Holding Company Common Stock otherwise allocable pursuant to
Sections 8 through 13, inclusive, to any Person or that Persons Associates would be in excess of
the maximum number of shares permitted as set forth above, the number of shares of Holding Company
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 Persons Associates shall be reduced so that the aggregate
allocation to that Person and his or her Associates complies with the above limits.
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Depending upon market or financial conditions, the Boards of Directors of the Holding Company
and the Mutual Holding Company, with the receipt of any required approvals of the Bank Regulators
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 Mutual
Holding Company and the Holding Company increase the maximum purchase limitations, the Mutual
Holding Company and the Holding Company are only required to resolicit Persons who subscribed for
the maximum purchase amount in the Subscription Offering and may, in the sole discretion of the
Mutual Holding Company and 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 Holding Company Common
Stock exceeding 5% of the shares of Holding Company Common Stock issued in the Offering shall not
exceed in the aggregate 10% of the total shares of Holding Company Common Stock issued in the
Offering. Requests to purchase additional shares of the Holding Company Common Stock in the event
that the purchase limitation is so increased will be determined by the Boards of Directors of the
Holding Company and the Mutual Holding Company in their sole discretion.
In the event of an increase in the total number of shares offered in the Offering due to an
increase in the maximum of the Offering Range of up to 15% (the Adjusted Maximum), the additional
shares may be used to fill the Employee Plans orders before all other orders and then will be
allocated in accordance with the priorities set forth in this Plan.
For purposes of this Section 14, (i) Directors, Officers and Employees of the Bank, the
Mid-Tier Holding Company, the Mutual Holding Company and the Holding Company or any of their
subsidiaries 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 capacities as such, (ii) shares purchased
by Tax-Qualified Employee Stock Benefit Plans shall not be attributable to the individual trustees
or beneficiaries of any such plan for purposes of determining compliance with the limitations set
forth in paragraphs A. and B. of this Section 14, and (iii) shares purchased by a Tax-Qualified
Employee Stock Benefit Plan pursuant to instructions of an individual in an account in such plan in
which the individual has the right to direct the investment, including any plan of the Bank
qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended, shall be
aggregated and included in that individuals purchases and not attributed to the Tax-Qualified
Employee Stock Benefit Plan.
Each Person purchasing Holding Company 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.
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15. PAYMENT FOR SUBSCRIPTION SHARES
All payments for Holding Company Common Stock subscribed for in the Subscription Offering and
Community Offering must be delivered in full to the Bank 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 Holding Company Common Stock subscribed for by such
plans at the Subscription Price upon consummation of the Conversion. Subscription funds will be
held in a segregated account at the Bank or, at the discretion of the Mutual Holding Company, at
another insured depository institution.
Payment for Holding Company 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 Bank on the Order Form to make a
withdrawal from the designated types of Deposit Accounts at the Bank 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
subscribers 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 Bank at not
less than the passbook rate. Such interest will be paid from the date payment is received by the
Bank 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 Bank 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 registration statement prepared by the Holding Company has
been declared effective by the SEC and the stock offering materials have been approved by the Bank
Regulators, Order Forms will be distributed to Participants at their last known addresses appearing
on the records of the Bank for the purpose of subscribing for Subscription Shares 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 Mutual Holding Company, the Mid-Tier Holding
Company, the Holding Company, the Bank, the Holding Company Common Stock and the Offering. Each
Order Form will contain, among other things, the following:
A. A specified date by which all Order Forms must be received by the Mutual Holding Company 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 Mutual Holding
Company or the Holding Company, and which date will constitute the termination of the Subscription
Offering unless extended;
18
B. The Subscription Price per share for shares of Holding Company Common Stock to be sold in
the Offering;
C. A description of the minimum and maximum number of Subscription Shares which may be
subscribed for pursuant to the exercise of subscription rights or otherwise purchased in the
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 copy of the final
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 Mutual Holding
Company or 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 Subscription Shares subscribed for in the Offering (or by authorizing on
the Order Form that the Bank withdraw said amount from the subscribers Deposit Account at the
Bank); and
G. A statement to the effect that the executed Order Form, once received by the Mutual Holding
Company or the Holding Company, may not be modified or amended by the subscriber without the
consent of the Holding Company.
Notwithstanding the above, the Mutual Holding Company and the Holding Company reserve the
right in their 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 or are not timely delivered by the United
States Postal Service, (b) are defectively filled out or executed, (c) are not accompanied by the
full required payment, unless waived by the Holding Company, for the shares of Holding Company
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 (d) 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 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 Bank Regulators.
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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 Holding Company
Common Stock pursuant to this Plan reside. However, no such Person will be issued subscription
rights or be permitted to purchase Subscription Shares in the 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 the Plan
reside in such state; (b) the issuance of subscription rights or the offer or sale of Subscription
Shares 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; or (c) such registration or qualification would be impracticable
for reasons of cost or otherwise.
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT
The Bank shall establish at the time of the Conversion, a Liquidation Account in an amount
equal to the product of (i) the Majority Ownership Interest and (ii) the Mid-Tier Holding Companys
total stockholders equity as reflected in the latest statement of financial condition contained in
the final Prospectus used in the Conversion. Following the Conversion, the Liquidation Account will
be maintained by the Bank for the benefit of the Eligible Account Holders and Supplemental Eligible
Account Holders who continue to maintain their Deposit Accounts at the Bank. Each Eligible Account
Holder and Supplemental Eligible Account Holder shall, with respect to his Deposit Account, hold a
related inchoate interest in a portion of the Liquidation Account balance, 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 Bank (and only in such event) following
all liquidation payments to creditors (including those to Account Holders to the extent of their
Deposit Accounts), each Eligible Account Holder and Supplemental Eligible Account Holder shall be
entitled to receive a liquidating distribution from the Liquidation Account, in the amount of the
then adjusted subaccount balance for his Deposit Account then held, before any liquidation
distribution may be made to any holders of the Banks capital stock. No merger, consolidation,
purchase of bulk assets with assumption of Deposit Accounts and other liabilities, or similar
transactions with an FDIC-insured institution, in which the Bank is not the surviving institution,
shall be deemed to be a complete liquidation for this purpose. In such transactions, the
Liquidation Account shall be assumed by the surviving institution.
The initial subaccount balance for a Deposit Account held by an Eligible Account Holder or a
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 Eligible Account Holder or Supplemental Eligible Account Holder, as applicable, and the
denominator of which is the total amount of all Qualifying Deposits of all
Eligible Account Holders or Supplemental Eligible Account Holders, as applicable. 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.
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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 Bank, except that the Bank 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 Bank.
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 Subscription Shares purchased by Directors or Officers of the Mutual Holding Company,
the Mid-Tier Holding Company, the Holding Company or the Bank in the Offering shall be subject to
the restriction that, except as provided in this Section or as may be approved by the Bank
Regulators, 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 shall
not apply to the following:
(1) | Any exchange of such shares in connection with a merger or acquisition involving the Bank or the Holding Company, as the case may be, which has been approved by the appropriate federal regulatory agency; and |
(2) | Any disposition of such shares following the death of the person to whom such shares were initially sold under the terms of the Plan. |
21
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 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 Bank Regulators, any outstanding shares
of Holding Company 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
Holding Company Common Stock, the exercise of any options pursuant to a stock option plan or
purchases of Holding Company Common Stock made by or held by any Tax-Qualified Employee Stock
Benefit Plan or Non-Tax-Qualified Employee Stock Benefit Plan of the Bank or the Holding Company
(including the Employee Plans) which may be attributable to any Officer or Director. 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 Bank at the time of Conversion shall retain an
identical Deposit Account at the Bank 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 Conversion pursuant to the Securities
Exchange Act of 1934 and will not deregister such securities for a period of at least three years
thereafter, except that the maintenance of registration for three years requirement may be
fulfilled by any successor to the Holding Company. In addition, the Holding Company will use its
best efforts to encourage and assist a market-maker to establish and maintain a
market for the Conversion Stock and to list those securities on a national or regional
securities exchange or the Nasdaq Stock Market.
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25. TAX RULINGS OR OPINIONS
Consummation of the Conversion is expressly conditioned upon prior receipt by the Mutual
Holding Company, the Mid-Tier Holding Company, the Holding Company and the Bank 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 Mutual Holding Company, the Mid-Tier Holding Company,
the Holding Company or the Bank, 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 Bank are authorized to adopt Tax-Qualified Employee Stock
Benefit Plans in connection with the Conversion, including without limitation, an ESOP. Existing as
well as any newly created Tax-Qualified Employee Stock Benefit Plans may purchase shares of Holding
Company Common Stock in the Offering, to the extent permitted by the terms of such benefit plans
and this Plan.
B. As a result of the Conversion, the Holding Company shall be deemed to have ratified and
approved all employee stock benefit plans maintained by the Bank and the Mid-Tier Holding Company
and shall have agreed to issue (and reserve for issuance) Holding Company Common Stock in lieu of
common stock of the Mid-Tier Holding Company pursuant to the terms of such benefit plans. Upon
consummation of the Conversion, the Mid-Tier Holding Company common stock held by such benefit
plans shall be converted into Holding Company Common Stock based upon the Exchange Ratio. Also upon
consummation of the Conversion, (i) all rights to purchase, sell or receive Mid-Tier Holding
Company common stock and all rights to elect to make payment in Mid-Tier Holding Company common
stock under any agreement between the Bank or the Mid-Tier Holding Company and any Director,
Officer or Employee thereof or under any plan or program of the Bank or the Mid-Tier Holding
Company, shall automatically, by operation of law, be converted into and shall become an identical
right to purchase, sell or receive Holding Company Common Stock and an identical right to make
payment in Holding Company Common Stock under any such agreement between the Bank or the Mid-Tier
Holding Company and any Director, Officer or Employee thereof or under such plan or program of the
Bank, and (ii) rights outstanding under all stock option plans shall be assumed by the Holding
Company and thereafter shall be rights only for shares of Holding Company Common Stock, with each
such right being for a number of shares of Holding Company Common Stock based upon the Exchange
Ratio and the number of shares of Mid-Tier Holding Company common stock that were available
thereunder immediately prior to consummation of the Conversion, with the price adjusted to reflect
the Exchange Ratio but with no change in any other term or condition of such right.
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C. The Holding Company and the Bank are authorized to adopt stock option plans, restricted
stock award plans and other Non-Tax-Qualified Employee Stock Benefit Plans, provided that such
plans conform to any applicable regulations. The Holding Company and the Bank intend to implement a
stock option plan and a restricted stock award plan no earlier than six months after completion of
the Conversion. Stockholder approval of these plans will be required. If adopted within 12 months
following the completion of the Conversion, the stock option plan will reserve a number of shares
equal to up to 10% of the shares sold in the Offering and the restricted stock award plan will
reserve a number of shares equal to up to 4% of the shares sold in the Offering (unless the Banks
tangible capital is less than 10% upon completion of the Offering, in which case the restricted
stock award plan will reserve a number of shares equal to up to 3% of the shares sold in the
Offering) for awards to Employees and Directors at no cost to the recipients, subject to adjustment
as may be required by Bank Regulators regulations or policy to reflect stock options or stock
awards previously granted by the Mid-Tier Holding Company or the Bank. Shares for such plans may be
issued out of authorized but unissued shares, treasury shares or repurchased shares. Any stock
option plan, restricted stock award plan or other Non-Tax-Qualified Employee Stock Benefit Plan
implemented more than 12 months following the completion of the Conversion will not be subject to
the foregoing restrictions.
D. The Holding Company and the Bank are authorized to enter into employment agreements and/or
change in control agreements with their executive officers.
27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY
A. | (1) | The charter of the Bank may contain a provision stipulating that no person, except the Holding Company, for a period of five years following the closing date of the Conversion, may directly or indirectly acquire or offer to acquire the beneficial ownership of more than 10% of any class of equity security of the Bank, 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 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, shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of equity security of the Bank without the prior written consent of the Bank Regulators. |
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 Holding Company 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
provide for staggered terms of the directors, noncumulative voting for directors, limitations on
the calling of special meetings, a fair price provision for certain business combinations, certain
notice requirements and supermajority voting requirements for certain matters.
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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. § 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 Bank shall not declare or pay a cash dividend on, or repurchase any of, its capital
stock if the effect thereof would cause its regulatory capital to be reduced below (i) the amount
required for the Liquidation Account or (ii) applicable regulatory capital requirements.
29. ARTICLES OF INCORPORATION AND BYLAWS
By voting to adopt this Plan, Voting Members and Stockholders will be voting to adopt the
Articles of Incorporation and Bylaws for the Holding Company attached as Exhibits D and E to this
Plan.
30. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE
The Effective Date of the Conversion shall be the date upon which the Articles of Combination
shall be filed with Bank Regulators. The Articles of Combination shall be filed after all requisite
regulatory, member and stockholder 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 Subscription Shares and the exchange of all Exchange Shares shall
occur simultaneously on the effective date of the closing.
31. EXPENSES OF CONVERSION
The Mutual Holding Company, the Mid-Tier Holding Company, the Bank 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 shall be reasonable.
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32. AMENDMENT OR TERMINATION OF PLAN
If deemed necessary or desirable, this Plan may be substantively amended as a result of
comments from the Bank Regulators or otherwise at any time prior to solicitation of proxies from
Voting Members and Stockholders to vote on this Plan by the Board of Directors of the Mutual
Holding Company, and at any time thereafter by the Board of Directors of the Mutual Holding Company
with the concurrence of the Bank Regulators. Any amendment to this Plan made after approval by
Voting Members and Stockholders with the approval of the Bank Regulators shall not necessitate
further approval by Voting Members unless otherwise required by the Bank Regulators. The Board of
Directors of the Mutual Holding Company may terminate this Plan at any time prior to the Special
Meeting of Members and the Meeting of Stockholders to vote on this Plan, and at any time thereafter
with the concurrence of the Bank Regulators.
By adoption of the Plan, Voting Members of the Mutual Holding Company authorize the Board of
Directors of the Mutual Holding Company to amend or terminate the Plan under the circumstances set
forth in this Section.
33. CONDITIONS TO CONVERSION
Consummation of the Conversion pursuant to this Plan is expressly conditioned upon the
following:
A. Prior receipt by the Mutual Holding Company, the Mid-Tier Holding Company, the Holding
Company and the Bank 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;
C. The issuance of Exchange Shares; and
D. The completion of the Conversion within the time period specified in Section 3 of this
Plan.
34. INTERPRETATION
All interpretations of this Plan and application of its provisions to particular circumstances
by a majority of the Board of Directors of the Mutual Holding Company shall be final, subject to
the authority of the Bank Regulators.
Dated: January 21, 2010
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