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PLAN OF CONVERSION
AND REORGANIZATION
OF
OSAGE
FEDERAL MHC
AND
PLANS OF
MERGER
AMONG
OSAGE
FEDERAL MHC
OSAGE FEDERAL
FINANCIAL, INC.
AND
OSAGE
FEDERAL BANK
ADOPTED ON
JULY 21, 2006
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section
Number
Page
------
----
<S> <C>
<C>
1.
Introduction............................................................................ 1
2.
Definitions............................................................................. 3
3.
General Procedure for Conversion and
Reorganization..................................... 9
4.
Total Number of Shares and Purchase Price of
Conversion
Stock...................................................................... 12
5.
Subscription Rights of Eligible Account Holders (First
Priority)........................ 13
6.
Subscription Rights of the Tax-Qualified Employee Stock
Benefit Plans (Second
Priority)....................................................... 14
7.
Subscription Rights of Supplemental Eligible Account Holders
(Third
Priority)...................................................................... 14
8.
Subscription Rights of Other Members (Fourth
Priority)..................................
15
9.
Community
Offering...................................................................... 15
10.
Syndicated Community Offering/Underwritten Public
Offering..............................
16
11.
Limitations on Subscriptions and Purchases of Conversion
Stock.......................... 17
12.
Timing of Subscription Offering; Manner of Exercising
Subscription Rights and Order
Forms................................................... 19
13.
Payment for Conversion
Stock............................................................ 21
14.
Account Holders in Nonqualified States or Foreign
Countries.............................
22
15.
Dissenters'
Rights...................................................................... 22
16.
Voting Rights of
Stockholders........................................................... 22
17.
Liquidation
Account..................................................................... 22
18.
Transfer of Deposit
Accounts............................................................ 24
19.
Requirements Following Conversion and Reorganization for
Registration, Market Making
and Stock Exchange Listing................................ 24
20.
Directors and Officers of the Bank and the Holding
Company..............................
24
21.
Requirements for Stock Purchases by Directors and Officers
Following the Conversion and
Reorganization............................................ 25
22.
Restrictions on Transfer of
Stock....................................................... 25
23.
Restrictions on Acquisition of Stock of the Holding
Company.............................
26
24.
Tax Rulings or
Opinions................................................................. 26
25.
Stock Compensation
Plans................................................................ 27
26.
Dividend and Repurchase Restrictions on
Stock........................................... 27
27.
Payment of Fees to Brokers.............................................................. 28
28.
Effective
Date.......................................................................... 28
29.
Amendment or Termination of the
Plan.................................................... 28
30.
Interpretation of the
Plan.............................................................. 28
Appendix A - MHC Plan of Merger between Interim Bank No. 1 (formerly the Mutual
Holding
Company) and the Bank
Appendix B - Middle Tier Plan of Merger between Interim Bank No. 2 (formerly
Middle Tier
Holding Company) and the Bank
Appendix C - Bank Plan of Merger between Interim Bank No. 3 (subsidiary of the
Holding
Company) and the Bank
</TABLE>
i
<PAGE>
PLAN OF CONVERSION AND
REORGANIZATION
1. INTRODUCTION
------------
For purposes of this
section, all capitalized
terms have the meaning
ascribed to them in Section 2.
In 2004, Osage Federal Bank, formerly Osage Federal Savings and Loan
Assocation (the "Bank"), a federally
chartered mutual savings
association
reorganized into the mutual holding
company form of organization and
converted
to a federal stock savings bank (the "MHC
Reorganization"). In
connection with
the MHC Reorganization, Osage Federal Financial, Inc., a federally chartered
corporation which owns
all of the stock of the Bank ("Middle
Tier Holding
Company"), sold 684,394 shares (or
approximately 30%) of its common stock
in a
subscription offering at $10.00 per
share and issued the remaining 70% to Osage
Federal MHC. Upon completion of these transactions, the Bank remained the
wholly
owned subsidiary of Osage Federal
Financial, Inc. As of June 30,
2006, the MHC
and the Public Stockholders own an
aggregate of 1,596,919 (69.83%) and
690,090
(30.17%) of the
outstanding Middle Tier
Holding Company Common
Stock,
respectively. Pursuant to this
Plan of Conversion, the Bank will form a new
state-chartered stock holding
company, Osage Bancshares,
Inc. ("Holding
Company") and the existing shares
of Middle Tier Holding Company Common Stock
owned by Public Stockholders will be converted pursuant to an Exchange Ratio
into shares of common stock of the
Holding Company ("Holding Company
Common
Stock").
The Boards of Directors of the
Mutual Holding Company, the Middle Tier
Holding Company, the Holding Company and the Bank believe that
a conversion of
the Mutual Holding Company to stock form
pursuant to this Plan of Conversion is
in the best interests of the Mutual Holding Company and the Bank, as well as
the
best interests of their
respective Members and Stockholders.
The Boards of
Directors have determined that this Plan
of Conversion equitably provides for
the interests of Members through the granting of subscription
rights and the
establishment of a liquidation
account. The Conversion will
result in the Bank
being wholly owned by a state-chartered
stock holding company which is owned by
public stockholders, which is a more common structure and form of ownership
than
a mutual holding company. In addition, the Conversion will result in the
raising
of additional capital for the Bank and
the Holding Company to make investments
and acquisitions and should
result in a more active and liquid market for the
Holding Company Common
Stock than currently exists for Middle Tier Holding
Company Common Stock. The proceeds of the Conversion
will enable the Bank to
continue to grow its assets and branch office structure, while still
maintaining
a high level of regulatory capital.
Finally, the Conversion
is designed to
enable the Bank and the Holding Company to compete more effectively in a market
which is consolidating.
1
<PAGE>
In the current transaction,
(i) the Middle Tier Holding
Company will
convert into an interim federal
stock savings bank, which will merge with and
into the Bank, and (ii) the Mutual Holding
Company will convert into an interim
federal stock savings bank and merge
with and into the Bank, pursuant to
which
merger Mutual Holding Company will cease
to exist and the shares of Middle Tier
Holding Company Stock held by the Mutual Holding Company will be canceled. The
Mutual Holding Company will cease to exist and a liquidation
account will be
established for the benefit of depositor
Members as of specified dates.
Shares
of Middle Tier Holding Company Common Stock held by Public Stockholders shall
be
automatically converted into the right to receive shares of
Holding Company
Common Stock based on an
Exchange Ratio plus cash in lieu
of any fractional
share interest.
In connection with the
Conversion and Mergers, the Holding Company will
offer shares of Conversion Stock in the Offerings as provided herein. Shares of
Conversion Stock will be offered in a Subscription Offering in descending order
of priority to Eligible Account
Holders, Tax-Qualified Employee Stock Benefit
Plans, Supplemental Eligible Account Holders and Other
Members. Any shares of
Conversion Stock remaining
unsold after the Subscription
Offering will be
offered for sale to the public through a Community Offering
and/or Syndicated
Community Offering and/or Underwritten
Public Offering, as determined by
the
Boards of Directors
of the Holding Company
and the Bank
in their sole
discretion.
The Conversion is intended to
raise capital and provide support to the
Bank's lending and
investment activities and
thereby enhance the
Bank's
capabilities to serve the borrowing and other financial needs of the
communities
it serves. The use of the Holding
Company will provide greater organizational
flexibility and facilitate
acquisitions and the opening and/or
purchase of
additional branch offices.
This Plan is
subject to the approval
of the OTS and also must be
approved by (1) at least a majority of the total number of votes eligible to be
cast by Voting Members of the Mutual Holding Company at the Special Meeting,
(2)
the vote of at least two-thirds of the outstanding shares of Middle Tier
Holding
Company Common Stock
at the Stockholders' Meeting
and (3) the vote at the
Stockholders' Meeting of at least a
majority of the shares of
Middle Tier
Holding Company Common Stock held by the Public Stockholders.
After the Conversion,
the Bank will continue to be regulated by the
OTS, as its chartering authority,
and by the FDIC, which insures the Bank's
deposits. In addition, the Bank will continue to be a member of the Federal
Home
Loan Bank System, and all insured
savings deposits will continue to be
insured
by the FDIC up to the maximum amount provided by law.
2
<PAGE>
2. DEFINITIONS
-----------
As used in this Plan,
the terms set forth below have the
following
meanings:
Account Holder means 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 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. The Holding
Company and the Bank may determine, in
their sole discretion, whether
purchasers are "acting in
concert" based upon
joint account relationships and/or shared addresses on the records of the Bank.
Actual Purchase Price means the price per share at which the Conversion
---------------------
Stock is ultimately sold by the
Holding Company in the Offerings in
accordance
with the terms hereof.
Affiliate means a Person who, directly or indirectly, through one or
---------
more intermediaries, controls or is controlled by or is under common control
with the Person specified.
Associate, when used to indicate a relationship with any
Person, means
---------
(i) a corporation or organization (other
than the Holding Company, the Mutual
Holding Company, the Middle Tier Holding Company,
the Bank, a majority-owned
subsidiary of the Holding Company, Bank or the Middle Tier Holding Company) of
which such Person
is a director, officer
or partner or is,
directly or
indirectly, the beneficial
owner of 10% or
more of any class
of equity
securities, (ii) any
trust or other
estate in which
such Person has a
substantial beneficial interest or as to
which such Person serves as trustee or
in a similar fiduciary capacity, provided,
however, that such term shall not
include any Tax-Qualified Employee Stock
Benefit Plan of the Holding Company or
the Bank in which such Person has a substantial beneficial interest or serves
as
a trustee or in a similar fiduciary
capacity, and (iii) any relative
or spouse
of such Person, or any relative of such spouse, who has the same home as such
Person or who is a director or
officer of the Holding
Company, the Mutual
Holding Company, the
Middle Tier Holding
Company or the Bank or any of the
subsidiaries of the foregoing.
Bank means Osage Federal Bank.
----
Bank Common Stock means the
common stock of the Bank, par value $0.10
-----------------
per share, which stock is not and will not be insured by the
FDIC or any other
governmental authority.
3
<PAGE>
Bank Merger means the merger of
Interim Bank No. 3, a subsidiary of the
-----------
Holding Company, with and into the Bank.
Code means the Internal Revenue
Code of 1986, as amended.
----
Community Offering means the offering for sale by the
Holding Company
-------------------
of any shares of
Conversion Stock not
subscribed for in the Subscription
Offering to (i) Public Stockholders,
(ii) natural persons residing in the Local
Community, and (iii) such other Persons
within or without the State of Oklahoma
as may be selected by the
Holding Company and the Bank
within their sole
discretion.
Control (including the terms
"controlling," "controlled by," and "under
-------
common control with") means the possession, directly or indirectly, of the
power
to direct or cause the direction of the
management and policies of a
Person,
whether through the ownership of voting securities, by contract or otherwise.
Conversion and
Reorganization means (i) the
conversion of the Mutual
-------------------------------
Holding Company to an interim federal
stock savings bank and the subsequent
merger, pursuant to which the Mutual
Holding Company will cease to exist,
(ii)
the conversion of Middle
Tier Holding Company to an interim federal
stock
savings bank and merger into Bank, and (iii) the issuance of Conversion Stock
by
the Holding Company in the Offerings as provided herein.
Conversion Stock means the Holding Company
Common Stock to be issued
-----------------
and sold in the Offerings pursuant to the Plan of Conversion.
Deposit Account means savings
and demand accounts, including passbook
---------------
accounts, money market deposit
accounts and negotiable order of
withdrawal
accounts, and certificates of deposit
and other authorized accounts of the Bank
held by a Member.
Director, Officer and Employee means the terms as
applied respectively
-------------------------------
to any person who is a director,
officer or employee of the Mutual
Holding
Company, the Bank, the Middle Tier
Holding Company, the Holding Company or
any
subsidiary thereof.
Effective Date
means the effective
date of the
Conversion and
----------------
Reorganization, as set forth in Section 28 hereof.
Eligible Account Holder means any Person holding a
Qualifying Deposit
------------------------
on the Eligibility Record Date for purposes of determining subscription
rights
and establishing subaccount
balances in the
liquidation account to be
established pursuant to the provision herein.
Eligibility Record
Date means the date for
determining Qualifying
-------------------------
Deposits of Eligible Account
Holders and is the close of business on June 30,
2005.
4
<PAGE>
Estimated Price Range means the range of the estimated
aggregate pro
----------------------
forma market value of the
Conversion Stock to be issued in
the Offerings, as
determined by the Independent Appraiser in accordance with Section 4 hereof.
Exchange Ratio means the rate at
which shares of Holding Company Common
--------------
Stock will be received by the Public
Stockholders in exchange for
their Middle
Tier Holding Company Common
Stock. The exact rate shall be
determined by the
Mutual Holding Company
and the Holding Company in order to ensure that upon
consummation of the Conversion and Reorganization, the Public Stockholders will
own in the aggregate approximately the same
percentage of the Holding Company
Common Stock to
be outstanding upon
completion of the
Conversion and
Reorganization as the percentage of Middle Tier Holding Company
Common Stock
owned by them in the aggregate on the Effective
Date, but before giving effect
to (a) cash paid in lieu of any
fractional interests of Middle
Tier Holding
Company Common Stock and (b) any shares
of Conversion Stock
purchased by the
Public Stockholders in the Offerings or tax- qualified employee stock benefit
plans thereafter. No fractions of a
share of Holding Company Common Stock shall
be issued; such fractional
share interests shall
instead be automatically
converted into cash based upon the Actual Purchase Price.
Exchange Shares means the shares of Holding Company
Common Stock to be
----------------
issued to the Public Stockholders in
connection with the merger of Interim Bank
No. 1 (formerly Mutual Holding Company ("MHC Merger") with and into
the Bank.
FDIC means the Federal
Deposit Insurance Corporation or any successor
----
thereto.
Holding Company
means Osage Federal Financial,
Inc., a corporation
----------------
newly organized under the laws of the State of
Maryland or any other state
selected by the Boards of Directors of the Holding Company and the Bank. At the
completion of the Reorganization, the Bank will become a wholly owned
subsidiary
of the Holding Company.
Holding Company
Common Stock means the Common Stock of the Holding
-------------------------------
Company, par value $.01 per share, which stock cannot and will not be insured
by
the FDIC or any other governmental authority.
Independent Appraiser
means the independent investment
banking or
----------------------
financial consulting firm
retained by the Holding
Company and the Bank to
prepare an appraisal of the estimated
pro forma market value of the
Conversion
Stock.
Initial Purchase
Price means the price per share to be paid initially
------------------------
by Participants for shares of
Conversion Stock subscribed
for in the
Subscription Offering and by Public Stockholders and other Persons for shares
of
Conversion Stock ordered in the Community
Offering and/or Syndicated
Community
Offering.
Interim Bank No. 1 means the
interim federal stock
savings bank that
-----------------
will be formed as a result of the conversion of Osage Federal MHC into the
stock
form of organization.
5
<PAGE>
Interim Bank No. 2 means the
interim federal stock
savings bank that
------------------
will be formed as a result of the conversion of Middle Tier Holding Company
into
an interim federal stock savings bank.
Interim Bank No. 3 mean an
interim federal stock
savings bank wholly
------------------
owned by the Holding Company, which will be merged with and into the Bank.
Local Community
means all counties
in which the Bank has its home
----------------
office or a branch office.
Member means any Person qualifying
as a member of the Mutual Holding
------
Company in accordance with its mutual charter
and bylaws and the laws of the
United States.
Mergers means the completion of
the MHC Merger, the Middle Tier Merger,
-------
and the Bank Merger.
MHC Merger
means the merger of Interim Bank
No. 1 (formerly Mutual
-----------
Holding Company) with and into the Bank.
Middle Tier
Merger means the merger of
Interim Bank No. 2 (formerly
--------------------
Middle Tier Holding Company) with and into the Bank.
Middle Tier Holding Company
means Osage Federal Financial,
Inc., a
----------------------------
corporation organized under
the laws of the United States
that, since the
completion of the MHC
Reorganization in 2004, has held
all of the outstanding
capital stock of the Bank.
Middle Tier Holding Company Common Stock means the Common Stock of
the
-----------------------------------------
Middle Tier Holding Company, par value $.10 per share, which stock cannot and
will not be insured by the FDIC or any other governmental authority.
Mutual Holding Company means Osage Federal MHC prior to its
conversion
-----------------------
into an interim federal stock savings bank.
Offerings means the
Subscription Offering, the Community
Offering, the
--------
Syndicated Community Offering and Underwritten Public Offering, if applicable.
Officer means the
president, chief executive officer,
executive vice
-------
presidents, senior vice presidents in
charge of principal business functions,
secretary, treasurer or principal financial officer, comptroller or principal
accounting officer and any other
person performing similar
functions with
respect to any organization whether incorporated or unincorporated.
Order Form means the form or
forms provided by the
Holding Company,
----------
containing all such terms and provisions
as set forth herein, to a Participant
or other Person by which Conversion Stock may be ordered in the Offerings.
6
<PAGE>
Other Member
means a Voting Member who is not an
Eligible Account
-------------
Holder or a Supplemental Eligible Account Holder.
OTS means the Office of Thrift
Supervision or any successor thereto.
---
Participant means any Eligible
Account Holder, Tax-Qualified Employee
----------
Stock Benefit Plan, Supplemental Eligible Account Holder and Other Member.
Person means
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 and
Plan of Conversion
mean this Plan
of Conversion and
----
--------------------
Reorganization and Plan of Merger as
adopted by the Boards of Directors of
the
Mutual Holding Company,
the Middle Tier Holding Company
and the Bank and any
amendments hereto approved as provided herein. The Board of Directors of
Interim
No. 1, Interim No. 2 and Interim No. 3 shall adopt the Plans of Merger included
as Appendices hereto as soon as practicable following their organization.
Primary Parties means the Middle
Tier Holding Company, Mutual Holding
---------------
Company, the Bank and the Holding Company.
Prospectus means the one or more documents to be used in offering the
----------
Conversion Stock in the Offerings.
Public Stockholders
means those Persons who own shares of Middle Tier
--------------------
Holding Company Common Stock, excluding
the Mutual Holding Company, as of the
Stockholder Voting Record Date.
Qualifying Deposit means the aggregate balance of all
Deposit Accounts
-------------------
in the Bank of (i) an Eligible Account
Holder at the close of business on the
Eligibility Record Date, provided such aggregate balance is not less
than $50,
and (ii) a Supplemental Eligible Account
Holder at the close of business on the
Supplemental Eligibility Record Date,
provided such aggregate balance
is not
less than $50.
Resident means any person who,
on the date designated for that category
--------
of subscriber in the Plan, maintained a bona fide residence
within the Local
Community and has manifested an intent to remain within the Local Community for
a period
of time. The
designated dates for
Eligible Account Holders,
Supplemental Eligible Account
Holders and Other Members are
the Eligibility
Record Date, the Supplemental
Eligibility Record Date and the
Voting Record
Date, respectively. To the extent the
person is a corporation or other business
entity, the principal place of business or headquarters must be within the
Local
Community in order to qualify
as a Resident. To the
extent the 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 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 bona fide
7
<PAGE>
resident of the Local Community.
Subscribers in the Community
Offering who are
natural persons also will have a
purchase preference if they were
residents of
the Local Community on the date of the Prospectus. In all cases,
however, such
determination shall be in the sole
discretion of the Bank
and the Holding
Company.
SEC means the Securities and
Exchange Commission.
---
Special Meeting
means the Special Meeting
of Members of the Mutual
----------------
Holding Company called for the purpose of submitting this Plan to the Members
for their approval, including any adjournments of such meeting.
Stockholders means those Persons who own shares of Middle
Tier Holding
------------
Company Common Stock.
Stockholders' Meeting
means the annual
or special meeting
of
-----------------------
stockholders of Middle Tier Holding Company called for the purpose of
submitting
this Plan to the Stockholders for their approval, including any adjournments of
such meeting.
Stockholder Voting
Record Date means the date for determining
the
---------------------------------
Public Stockholders of the Middle Tier
Holding Company eligible to vote at the
Stockholders' Meeting.
Subscription Offering
means the offering of the
Conversion Stock to
----------------------
Participants.
Subscription Rights
means nontransferable rights to
subscribe for
--------------------
Conversion Stock granted to Participants pursuant to the terms of this Plan.
Supplemental Eligible
Account Holder means
any Person holding
a
---------------------------------------
Qualifying Deposit at the close of business
on the Supplemental Eligibility
Record Date.
Supplemental Eligibility Record
Date, if applicable, means the date for
------------------------------------
determining Qualifying Deposits of Supplemental Eligible
Account Holders and
shall be required if the Eligibility Record Date is more than 15 months prior
to
the date of the latest amendment to the
Application for Conversion filed by the
Mutual Holding Company
prior to approval of such
application by the OTS. If
applicable, the Supplemental
Eligibility Record Date
shall be the close of
business last day of
the calendar quarter
preceding OTS approval
of the
Application for Conversion submitted by
the Mutual Holding Company pursuant to
this Plan of Conversion.
Syndicated Community
Offering means the
offering for sale
by a
-------------------------------
syndicate of broker- dealers to the general public of shares of Conversion
Stock
not purchased in the Subscription Offering and the Community Offering.
Tax-Qualified Employee
Stock Benefit Plan means any
defined benefit
--------------------------------------------
plan or defined contribution plan,
such as an employee stock ownership
plan,
stock bonus plan, profit-sharing plan or other plan, which is established for
the benefit of the employees of the Holding Company and the Bank and which,
with
its related trust, meets the requirements to be "qualified" under
Section
8
<PAGE>
401 of the Code as from time to time in effect.
A "Non-Tax-Qualified Employee
Stock Benefit Plan" is any defined
benefit plan or defined
contribution stock
benefit plan which is not so qualified.
Underwritten Public
Offering means the offering of Holding Company
------------------------------
Common Stock following or concurrently
with the Subscription Offering and any
Community or Syndicated Community Offering by one or more underwriters on a
firm
commitment basis.
Underwriter means one or more investment
banking firms that agree in
-----------
connection with the Conversion to
purchase from the Holding Company and sell to
the public in an Underwritten Public Offering shares of Holding Company
Common
Stock not subscribed for in the Subscription Offering, the Community Offering
or
any Syndicated Community Offering.
Voting Member means a Person who
at the close of business on the Voting
-------------
Record Date is entitled to vote as a Member of the Mutual Holding
Company in
accordance with its mutual charter and bylaws.
Voting Record
Date means the
date or dates for
determining the
--------------------
eligibility of Members to vote at the Special Meeting.
3. GENERAL PROCEDURE FOR CONVERSION
AND REORGANIZATION
---------------------------------------------------
A. An Application for the
Conversion and Reorganization, including
the
Plan and all other requisite material (the "Application for
Conversion"), shall
be submitted to the OTS for approval.
The Mutual Holding Company,
the Middle
Tier Holding Company and the Bank also
will cause notice of the adoption of the
Plan by the Boards of Directors of the Mutual Holding Company,
the Middle Tier
Holding Company and the Bank to be given
by publication in a newspaper having
general circulation in each community in
which an office of the Bank is located
and will cause copies of the Plan to be
made available at each
office of the
Mutual Holding Company,
the Middle Tier
Holding Company and the Bank for
inspection by Members and Stockholders.
The Mutual Holding Company, the
Middle
Tier Holding Company and the Bank will cause to be published, in accordance
with
the requirements of applicable
regulations of the OTS, a notice of the filing
with the OTS of an application to convert the Mutual Holding Company from
mutual
to stock form.
B. Promptly following
receipt of requisite approval of
the OTS, this
Plan will be submitted to the Members
for their consideration and approval at
the Special Meeting. The Mutual Holding
Company may, at its option, mail to all
Members as of the Voting Record Date, at
their last known address appearing on
the records of the Mutual Holding Company and the Bank, a proxy
statement in
either long or summary form describing
the Plan which will be submitted
to a
vote of the Members at the Special Meeting.
The Holding Company also shall mail
to all such Members (as well as
other Participants) either a
Prospectus and
Order Form for the purchase of Conversion
Stock or a letter informing them of
their right to receive a Prospectus and Order Form and a postage prepaid card to
request such materials, subject to the provisions herein.
9
<PAGE>
The Plan must be approved by the affirmative
vote of at least a majority of the
total number of votes eligible
to be cast by Voting Members at the
Special
Meeting.
C. Subscription
Rights to purchase shares of Conversion Stock will be
issued without payment
therefor to Eligible Account Holders,
Tax-Qualified
Employee Plans, Supplemental Eligible Account Holders and Other Members.
D. The Middle
Tier Holding Company
shall file preliminary
proxy
materials with the
OTS in order to seek
the approval of the
Plan by its
Stockholders. Promptly following
clearance of such proxy materials
and the
receipt of any other requisite approval of the OTS, the Middle
Tier Holding
Company will mail definitive
proxy materials to all Stockholders
as of the
Stockholder Voting Record Date, at their last known address
appearing on the
records of the Middle Tier Holding Company, for their consideration and
approval
of this Plan at the Stockholders'
Meeting. The Plan must be approved by (a) the
vote of at least two-thirds of the
outstanding shares of Middle Tier
Holding
Company Common Stock as of the
Stockholder Voting Record Date
and (b) the vote
of at least a majority of the shares of Middle Tier Holding Company Common
Stock
held by the Public Stockholders as of the Stockholder Voting Record Date.
E. The Mutual
Holding Company shall
apply to convert to a federal
interim stock savings bank.
F. The Middle Tier Holding Company shall apply to convert to a federal
interim stock savings bank.
G. The Holding Company shall
file a Registration Statement with the SEC
to register the Holding Company Common
Stock to be issued in the Conversion and
Merger under the Securities Act of 1933, as amended, and shall
register such
Holding Company Common Stock under any applicable state
securities laws. Upon
registration and after the receipt of
all required regulatory approvals,
the
Conversion Stock shall be first offered
for sale in a Subscription Offering to
Eligible Account Holders,
Tax-Qualified Employee Stock
Benefit Plans,
Supplemental Eligible Account Holders
and Other Members. It is anticipated that
any shares of Conversion Stock remaining unsold after the Subscription Offering
will be sold through
a Community Offering
and/or a Syndicated
Community
Offering. The purchase
price per share for the
Conversion Stock shall be a
uniform price determined in accordance with the provisions herein.
The Holding
Company shall contribute to the Bank an
amount of the net proceeds received by
the Holding Company from the sale of Conversion
Stock as shall be determined by
the Boards of Directors of the
Holding Company and the Bank and as shall be
approved by the OTS.
H. The Effective Date of the
Conversion and Reorganization shall be the
date set forth in Section 28 hereof.
Upon the Effective Date,
the following
transactions shall occur:
(i) The
Bank will establish
the Holding Company
as a
first-tier state-chartered stock
holding company subsidiary.
10
<PAGE>
(ii) The Holding
Company will form an interim
corporation
("Interim Bank No.
3"), a new, wholly owned first-tier
subsidiary with
an interim federal stock savings
bank charter.
(iii) Middle
Tier Holding Company
will adopt an interim
federal stock
savings bank charter to be known as Interim Bank No. 2;
Interim Bank No. 2 will then
merge with and into the Bank ("Middle Tier
Merger"), with the Bank as the surviving entity.
The Mutual Holding
Company will receive, and Minority
Stockholders will constructively
receive, shares of Bank common stock in exchange for
their Middle Tier
Holding Company common stock.
(iv) Immediately following the Middle Tier Merger, the Mutual
Holding Company will convert
into an interim federal stock savings bank
to be known as Interim Bank No.
1. Then, Interim Bank No. 1, formerly
the Mutual Holding Company, will merge with and into the Bank with the
Bank as the surviving entity
("MHC Merger"). The shares of
Bank Common
Stock previously
held by the Mutual Holding Company (now Interim Bank
No. 1) will be canceled. Eligible
members of the Mutual Holding Company
as of
certain specified dates
will be granted
interests in a
liquidation account to be
established by the Bank. The
amount in the
liquidation account
will be the greater of (a)
100% of retained
earnings as of September 30,
2003 (the date of the latest statement
of
financial condition
contained in the final offering circular utilized
in the Bank's
initial stock offering),
or (b) 70% of Middle Tier
Holding Company's total
shareholders' equity as reflected in its latest
statement of financial
condition.
(v) Immediately following the MHC Merger, Interim Bank No. 3
will merge
with and into the Bank,
with the Bank as the surviving
entity ("Bank
Merger"). As a result of the
Bank Merger, Bank stock
deemed held by Public Stockholders
will be converted into
Holding
Company Common Stock based upon
the Exchange Ratio which is designed to
ensure that the same Public Stockholders
will own, approximately the
same percentage of Holding Company
Common Stock as the percentage of
Middle Tier Holding
Company Common Stock owned by them immediately
prior to the Conversion and
Reorganization before giving effect to
(a)
cash paid in lieu of fractional
shares and (b) any shares of
Holding
Company stock purchased by
Public Stockholders in the Offering.
(vi) Immediately
after the Bank Merger, the
Holding Company
shall sell the Conversion Stock
in the Offerings, as provided herein.
I. The Primary Parties may
retain and pay for the services of financial
and other advisors and investment bankers to assist in connection with any or
all aspects of the Conversion and
Reorganization, including in
connection with
the Offerings, the
payment of fees to brokers and
investment bankers for
assisting Persons in completing and/or
submitting and/or processing Order Forms
and staffing and managing the stock sales center. All fees, expenses, retainers
and similar items shall be reasonable.
11
<PAGE>
4. TOTAL NUMBER OF SHARES AND
PURCHASE PRICE OF CONVERSION STOCK
-------------------------------------------------------------
A. The aggregate
price at which shares of
Conversion Stock shall be
sold in the Offerings shall be based on
a pro forma valuation of the aggregate
market value of the Conversion Stock prepared by the Independent
Appraiser. The
valuation shall be based on
financial information relating
to the Primary
Parties, market, financial and economic
conditions, a comparison of the Primary
Parties with selected publicly held financial institutions and holding
companies
such other factors as the
Independent Appraiser may deem to
be important. The
valuation shall be stated in terms of an Estimated Price Range,
the maximum of
which shall generally be no more than 15% above the average of the
minimum and
maximum of such price range and the minimum of which shall generally be no more
than 15% below such average. As
mandated by OTS regulations,
the amount of
Conversion Stock is based upon an independent
valuation, which is not approved
or otherwise determined by the
Holding Company or the Board of
Directors. The
valuation shall be updated
during the Conversion
as market and financial
conditions warrant and as may be required by the OTS.
B. Based upon the independent
valuation, the Initial Purchase Price and
the number (or range) of shares of
Conversion Stock ("Offering Range") to be
offered in the Offerings shall be established. The Actual Purchase Price and
the
total number of shares of Conversion
Stock to be issued in the Offerings
shall
be determined upon conclusion of the Offerings, subject to review by the OTS
and
in consultation with the Independent Appraiser.
C. Subject to the approval of
the OTS, the Estimated Price Range may be
in