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Exhibit 2.2
PLAN OF CONVERSION AND REORGANIZATION
OF
HARRIS FINANCIAL, MHC
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TABLE OF CONTENTS
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1. INTRODUCTION .................................................... 1
2. DEFINITIONS ..................................................... 1
3. PROCEDURES FOR CONVERSION ....................................... 6
4. HOLDING COMPANY APPLICATIONS AND APPROVALS ...................... 8
5. SALE OF SUBSCRIPTION SHARES ..................................... 8
6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES ................ 9
7. RETENTION OF CONVERSION PROCEEDS BY THE HOLDING COMPANY ......... 9
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS
(FIRST PRIORITY) ................................................ 10
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY) ......... 10
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS
(THIRD PRIORITY) ................................................ 10
11. SUBSCRIPTION RIGHTS OF OTHER DEPOSITORS (FOURTH PRIORITY) ....... 11
12. COMMUNITY OFFERING AND MERGER SHARES ............................ 11
13. SYNDICATED COMMUNITY OFFERING/UNDERWRITTEN PUBLIC OFFERING ...... 12
14. LIMITATION ON PURCHASES ......................................... 12
15. PAYMENT FOR SUBSCRIPTION SHARES ................................. 13
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS .... 14
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT
PAYMENT ......................................................... 15
18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES ............... 15
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT ............................ 15
20. VOTING RIGHTS OF STOCKHOLDERS ................................... 16
21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION ................ 16
22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS
FOLLOWING THE CONVERSION ........................................ 17
23. TRANSFER OF DEPOSIT ACCOUNTS .................................... 17
24. REGISTRATION AND MARKETING ...................................... 17
25. TAX RULINGS OR OPINIONS ......................................... 18
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26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS ................... 18
27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY ......... 18
28. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK .................... 19
29. CHARTER AND BYLAWS .............................................. 19
30. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE ................... 19
31. EXPENSES OF CONVERSION .......................................... 19
32. AMENDMENT OR TERMINATION OF PLAN ................................ 19
33. CONDITIONS TO CONVERSION ........................................ 20
34. INTERPRETATION .................................................. 20
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EXHIBIT A AGREEMENT OF MERGER BETWEEN HARRIS FINANCIAL, INC. AND
HARRIS SAVINGS BANK
EXHIBIT B AGREEMENT OF MERGER BETWEEN HARRIS FINANCIAL, MHC AND
HARRIS SAVINGS BANK
EXHIBIT C AGREEMENT OF MERGER BETWEEN HARRIS SAVINGS BANK AND
HARRIS INTERIM SAVINGS BANK
EXHIBIT D ARTICLES OF INCORPORATION OF THE HOLDING COMPANY
EXHIBIT E BYLAWS OF THE HOLDING COMPANY
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PLAN OF CONVERSION AND REORGANIZATION OF
HARRIS FINANCIAL, MHC
1. INTRODUCTION
This Plan of Conversion and Reorganization (the "Plan") provides for the
conversion of Harris Financial, MHC, a 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 Harris
Financial, Inc., a stock corporation (the "Mid-Tier Holding Company") which owns
100% of the common stock of Harris Savings Bank (the "Bank"), a stock savings
bank which is headquartered in Harrisburg, Pennsylvania. A new Pennsylvania (or
Delaware) 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 issue Holding Company Common Stock in the Conversion
and Merger. The purpose of the Conversion is to convert the Mutual Holding
Company to the capital stock form of organization, which will, among other
things, permit the Holding Company to acquire the Acquiree Corporation in the
Merger. The Holding Company will offer its Common Stock 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,
Syndicated Community Offering or Underwritten Public Offering will be at the
sole discretion of the Board of Directors of the Bank and the Holding Company.
As part of the Conversion and the Exchange Offering, each Minority Stockholder
will receive Holding Company Common Stock in exchange for Minority Shares. The
Conversion will have no impact on depositors, borrowers or customers of the
Bank. After the Conversion, the Bank's insured savings deposits will continue to
be insured by the FDIC to the extent provided by applicable law.
Prior to the closing of the Conversion and the Offering, the Bank will
convert to a federal savings bank regulated by the OTS, and the Mutual Holding
Company and Mid-Tier Holding Company will convert to federal mutual holding
companies regulated by the OTS. As a result, this Plan provides for the
conversion of a federal mutual holding company to stock form. This Plan has been
adopted by the Board of Trustees of the Mutual Holding Company, and will be
ratified by the Board of Directors of the Mutual Holding Company upon completion
of the Charter Conversion. This Plan must also be approved by (i) a majority of
the total number of votes entitled to be cast by Voting Depositors at a Special
Meeting of Depositors to be called for that purpose, and (ii) at least two-
thirds of the outstanding common stock of the Mid-Tier Holding Company at the
Special Meeting of Stockholders, including at least a majority of the votes
cast, in person or by proxy, by Minority Stockholders. This Plan must be
approved by the OTS before it is presented to Voting Depositors 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.
Acquiree Corporation - York Financial Corp., the savings and loan holding
company and its subsidiary federal savings association that will be merged into
the Holding Company at the closing of, or immediately following, the Conversion.
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
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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 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.
The appraisal upon which the Appraised Value Range is based may be an appraisal
of the Holding Company, or of the Holding Company and any Acquiree Corporation.
Associate - The term Associate when used to indicate a relationship with
any person, means (i) any corporation or organization (other than the Mid-Tier
Holding Company, the Bank or a majority-owned subsidiary of the Bank) of which
such person is an 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
except that for the purposes of this Plan relating to subscriptions in the
offering, the term "Associate" does not include any Non-Tax-Qualified Employee
Stock Benefit Plan or any Tax-Qualified Employee Stock Benefit Plan in which a
person has a substantial beneficial interest or serves as a trustee or in a
similar fiduciary capacity, 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 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 Mid-Tier Holding Company, the
Bank or the Holding Company, or any of its parents or subsidiaries.
Bank - Harris Savings Bank, Harrisburg, Pennsylvania and any successor
thereto resulting from the Charter Conversion.
Bank Merger - The merger of Interim with the Bank as set forth in this
Plan.
Bank Regulators - The applicable Federal or state bank regulatory agency or
agencies responsible for reviewing and approving the Conversion and/or the
Merger, including the ownership of the Bank by the Holding Company. It is
expected that the OTS will be the only Bank Regulator with authority to approve
this Plan, the Conversion, the Offering and/or the Merger.
Charter Conversion - The conversion of (i) the Bank's charter to a federal
savings bank regulated by the OTS, (ii) the Mid-Tier Holding Company to a
corporation regulated or chartered by the OTS, and (iii) the Mutual Holding
Company to a federal mutual holding company chartered and regulated by the OTS.
Code - The Internal Revenue Code of 1986, as amended.
Community - The counties in which the Bank or Acquiree Corporation
maintains one or more branch offices as of the date hereof.
Community Offering - The offer and issuance of Subscription Shares as
described in Section 12.
Control - (including the terms "controlled by", "controlling" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
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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 all demand deposit
accounts and certificates of deposit.
Director - A member of the Board of Directors of the Bank, the Mid-Tier
Holding Company or the Holding Company, or a member of the Board of Directors or
Trustees of 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, 1998.
Employees - All Persons who are employed by the Bank, the Mid-Tier Holding
Company or the Mutual Holding Company.
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 Bank=s Employee Stock Ownership Plan and related trust.
Exchange Offering - The offering and exchange of Holding Company Common
Stock for Mid-Tier Holding Company Common Stock held by Minority Stockholders
immediately prior to the Conversion.
Exchange Ratio - The rate at which shares of 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, adjusted by (i) any adjustment due to dividends
waived or assets held by the Mutual Holding Company but only if required by any
regulatory authority, (ii) the payment of cash in lieu of issuing fractional
shares of Holding Company Common Stock, and (iii) any shares of Holding Company
Common Stock purchased by the Minority Stockholders in 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.
Holding Company - The Pennsylvania or Delaware corporation formed for the
purpose of acquiring all of the shares of capital stock of the Bank in
connection with the Conversion. Shares of Holding Company Common Stock will be
issued in the Conversion to Participants and others in the Conversion.
Holding Company Common Stock - The common stock, par value $.01 per share,
of the Holding Company.
Independent Appraiser - The appraiser retained by the Mutual Holding
Company and the Bank to prepare an appraisal of the pro forma market value of
the Conversion Stock.
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Interim - The interim 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 Account Holders in exchange for their interest in the
Mutual Holding Company in connection with the Conversion.
Majority Ownership Interest - The percentage of the common stock of the
Mid-Tier Holding Company held by the Mutual Holding Company, as adjusted upward
(only if required by any regulatory authority) to reflect dividends waived, or
assets held, by the Mutual Holding Company.
Merger - The merger of the Acquiree Corporation into the Holding Company
(or a subsidiary thereof) with the Holding Company as the resulting corporation,
which shall occur upon consummation of the Conversion or immediately thereafter.
Merger Shares - Any shares of Holding Company Common Stock issued to
stockholders of Acquiree Corporation in consideration of the Merger.
MHC Merger - The merger of the Mutual Holding Company with the Bank as set
forth in this Plan.
Mid-Tier Holding Company - Harris Financial, Inc., the Pennsylvania
corporation that owns 100% of the Bank=s Common Stock and any successor thereto
resulting from the Charter Conversion.
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, held by persons other than the
Mutual Holding Company.
Minority Ownership Interest - The percentage of the Mid-Tier Holding
Company's common stock held by stockholders other than the Mutual Holding
Company immediately prior to the completion of the Conversion.
Minority Stockholder - Any owner of Minority Shares.
Mutual Holding Company - Harris Financial, MHC, the mutual holding company
of the Mid-Tier Holding Company, and any successor thereto resulting from the
Charter Conversion.
Offering - The offering and issuance, pursuant to this Plan, of Holding
Company Common Stock in a Subscription Offering, Community Offering, Syndicated
Community Offering or Underwritten Public Offering, as the case may be. The term
"Offering" includes any shares of Holding Company Common Stock that (i) are
offered for sale but not purchased in the Subscription Offering and Community
Offering, and (ii) are issued to stockholders of Acquiree Corporation in
consideration of the Merger. The term "Offering" does not include the Holding
Company Common Stock issued in exchange for Minority Shares pursuant to this
Plan.
Offering Range - The range of the number of shares of Holding Company 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, divided by the Subscription Price.
Officer - An executive officer of the Bank, the Mid-Tier Holding Company,
the Holding Company or the Mutual Holding Company as appropriate in the context,
which includes the Chief Executive Officer, President, Senior Vice Presidents,
Executive Vice President in charge of principal business functions, Secretary
and Controller and any Person performing functions similar to those performed by
the foregoing persons.
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Order Form - Any form (together with any cover letter and acknowledgments)
sent by the Bank to any Participant or 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 Depositor - Any person holding a Deposit Account on the Voting Record
Date who is not an Eligible Account Holder or Supplemental Eligible Account
Holder.
OTS - The Office of Thrift Supervision, a division of the United States
Department of Treasury.
Participant - Any Eligible Account Holder, Employee Plan, Supplemental
Eligible Account Holder, or Other Depositor.
Person - An individual, a corporation, a partnership, an association, a
joint-stock company, a trust (including Individual Retirement Accounts and KEOGH
Accounts), any unincorporated organization, a government or political
subdivision thereof or any other entity.
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,
and (ii) a Supplemental Eligible Account Holder at the close of business on the
Supplemental Eligibility Record Date, provided such aggregate balance is not
less than $50.
Resident - Any person who occupies a dwelling within the Community, has a
present intent to remain within the Community for a period of time, and
manifests the genuineness of that intent by establishing an ongoing physical
presence within the Community together with an indication that such presence
within the Community is something other than merely transitory in nature. To the
extent the person is a corporation or other business entity, the principal place
of business or headquarters shall be in the Community. To the extent a person is
a personal benefit plan, the circumstances of the beneficiary shall apply with
respect to this definition. In the case of all other benefit plans,
circumstances of the trustee shall be examined for purposes of this definition.
The 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 Participant
must be a "Resident" for purposes of determining whether such person "resides"
in the Community as such term is used in this Plan.
SEC - The Securities and Exchange Commission.
Special Meeting of Depositors - The special meeting of Voting Depositors
and any adjournments thereof held to consider and vote upon this Plan.
Special Meeting of Stockholders - The special meeting of stockholders of
the Mid-Tier Holding Company and any adjournments thereof held to consider and
vote upon the Plan.
Subscription Offering - The offering of Subscription Shares to
Participants.
Subscription Price - The price per Subscription Share to be paid by
Participants and others in the Offering. The Subscription Price will be
determined by the Board of Directors of the Holding Company and fixed prior to
the commencement of the Subscription Offering.
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Subscription Shares - Shares of Holding Company Common Stock offered for
sale in the Offering including Merger Shares issued as described in Section 12.
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 Bank and their Associates, holding a Qualifying Deposit on the
Supplemental Eligibility Record Date, who is not an Eligible Account Holder.
Supplemental Eligibility Record Date - The date for determining
Supplemental Eligible Account Holders, which shall be the last day of the
calendar quarter preceding OTS approval of the application for conversion.
Syndicated Community Offering - The offering of Subscription Shares, at the
sole discretion of the Holding Company, following the Subscription and Community
Offerings through a syndicate of broker-dealers.
Tax-Qualified Employee Stock Benefit Plan - Any defined benefit plan or
defined contribution plan, such as an employee stock ownership plan, stock bonus
plan, profit-sharing plan or other plan, which, with its related trust, meets
the requirements to be "qualified" under 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.
Underwritten Public Offering - 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 pursuant to Section 13.
Underwriter - Any one or more investment banking firms that agrees 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, or issued to stockholders of Acquiree
Corporation.
Voting Depositor - 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 Depositors and/or the Special
Meeting of Stockholders.
3. PROCEDURES FOR CONVERSION
A. After approval of the Plan by the Board of Directors of the Bank and
the Board of Trustees of 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 Board of Directors of the Bank and the
Board of Trustees of the Mutual Holding Company and the submission of the Plan
to the Bank Regulators for approval 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 depositors. The Mutual Holding Company also will publish a notice
of the filing with the Bank Regulators of an application to convert in
accordance with the provisions of the Plan.
B. Promptly following approval by the Bank Regulators, the Plan will be
submitted to a vote of (i) Voting Depositors at the Special Meeting of
Depositors, and (ii) the Stockholders of the Mid-Tier Holding Company at the
Special Meeting of Stockholders. The Mutual Holding Company will mail to all
Voting Depositors, 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 Depositors at the Special Meeting of
Depositors. The Holding Company also will mail to all Participants either a
Prospectus and Order Form for the purchase of Subscription Shares
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or a letter informing them of their right to receive a Prospectus and Order Form
and a postage prepaid card to request such materials, subject to other
provisions of this Plan. In addition, all Participants will receive, or be given
the opportunity to request by either returning a postage prepaid card which will
be distributed with the proxy statement or by letter addressed to the Bank=s
Secretary, a copy of the Plan as well as the articles of incorporation or bylaws
of the Holding Company. Upon approval of the Plan by at least (i) a majority of
the total number of votes entitled to be cast by Voting Depositors, (ii) two-
thirds of the outstanding common stock of the Mid-Tier Holding Company, and
(iii) a majority vote of Minority Stockholders present in person or by proxy,
the Mutual Holding Company, the Holding Company and the Bank will take all other
necessary steps pursuant to applicable laws and regulations to consummate the
Conversion and Offering. The Conversion must be completed within 24 months of
the approval of the Plan by Voting Depositors, unless a longer time period is
permitted by governing laws and regulations.
C. The Conversion will be effected as follows, or in any other manner
which is consistent with the purposes of this Plan and applicable laws and
regulations, including a merger of the Mutual Holding Company into the Mid-Tier
Holding Company followed immediately by the Offering. 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
Board of Directors of the Mutual Holding Company and the Board of Directors of
the Bank, and applicable federal and state regulations and policy. Approval of
the Plan by Voting Depositors and stockholders of the Mid-Tier Holding Company
also shall constitute approval of each of the transactions necessary to
implement the Plan.
(1) The Bank will establish the Holding Company as a first-tier
Pennsylvania-chartered stock holding company subsidiary.
(2) Holding Company will charter Interim.
(3) The Mid-Tier Holding Company will convert to an interim stock
savings bank (which shall continue to be referred to as the "Mid-Tier
Holding Company") 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 Minority
Stockholders will constructively receive, shares of Bank common stock in
exchange for their Mid-Tier Holding Company common stock.
(4) Contemporaneously with 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") 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 person's interest in the Mutual Holding
Company.
(5) Immediately after the MHC Merger and the Mid-Tier 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. Constructive shareholders 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) Immediately after the Bank Merger, the Holding Company will sell
the Subscription Shares in the Offering.
D. 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
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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.
E. The Holding Company shall also seek to register the Conversion Stock
with the SEC and any appropriate state securities authorities. In addition, if
required by applicable law and regulations, the Board of Directors of the Bank
and 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.
F. All assets, rights, interests, privileges, powers, franchises and
property (real, personal and mixed) of the Mid-Tier 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. 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 immediately prior to the Conversion, including liabilities
for all debts, obligations and contracts of the Mid-Tier Holding Company,
matured or unmatured, whether accrued, absolute, contingent or otherwise and
whether or not reflected or reserved against on balance sheets, books or
accounts or records of the Mid-Tier Holding Company.
G. The Articles of Incorporation of the Holding Company (the
"Certificate") shall read in the form of Exhibit D.
H. 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 Board of Directors of the Mutual 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 Holding
Company shall make timely applications to the Bank Regulators 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 Depositors. The Holding Company Common
Stock will not be insured by the FDIC. The Bank will not knowingly lend funds or
otherwise extend credit to any Person to purchase shares of Holding Company
Common Stock.
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. The Subscription Offering may begin prior to the Special Meeting of
Depositors and, in that event, the Community Offering also may begin prior to
the Special Meeting of Depositors. The offer and sale of Holding Company Common
Stock prior to the Special Meeting of Depositors,
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however, is subject to the approval of the Plan by Voting Depositors and
stockholders of the Mid-Tier Holding Company.
If feasible, any shares of Holding Company Common Stock remaining after the
Subscription Offering, and the Community Offering should one be conducted, will
be sold in a Syndicated Community Offering or Underwritten Public Offering, or
in any manner that will achieve the widest distribution of the Holding Company
Common Stock. The Syndicated Community Offering and/or Underwritten Public
Offering may be conducted in addition to, or instead of, a Community Offering.
The issuance of Holding Company Common Stock in any Subscription Offering and
any Community Offering will be consummated simultaneously on the date the sale
of Holding Company Common Stock in the Syndicated Community Offering or
Underwritten Public 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 (or a range thereof) 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 and Community
Offerings, and will be based on the Appraised Value Range and the Subscription
Price. The Offering Range will be equal to the Appraised Value Range multiplied
by the Majority Ownership Percentage. 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. 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 Bank and the Mutual Holding
Company shall establish, if all required regulatory approvals are obtained.
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 Bank, 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,
extend the Conversion and establish a new Subscription Price and/or Appraised
Value Range, extend, reopen or hold a new Offering, or take such other action as
the 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 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 facilitate
the possible expansion
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through acquisitions of financial service organizations, possible
diversification into other related businesses and for 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 federal and state regulations and policy.
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)
A. Each Eligible Account Holder shall have nontransferable subscription
rights to subscribe for in the Subscription Offering up to the greater of $5.0
million of Holding Company Common Stock 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 Holder's Qualifying Deposit and the
denominator is the total amount of Qualifying Deposits of all Eligible Account
Holders, in each case on the Eligibility Record Date, subject to the provisions
of Section 14.
B. In the event that Eligible Account Holders exercise subscription rights
for a number of Subscription Shares in excess of the total number of such shares
eligible for subscription, the Subscription Shares shall be allocated among the
subscribing Eligible Account Holders so as to permit each subscribing Eligible
Account Holder to purchase a number of shares sufficient to make his or her
total allocation of Subscription Shares equal to the lesser of 100 shares or the
number of shares for which such Eligible Account Holder has subscribed. Any
remaining shares will be allocated among the subscribing Eligible Account
Holders whose subscriptions remain unsatisfied in the proportion that the amount
of the Qualifying Deposit of each Eligible Account Holder whose subscription
remains unsatisfied bears to the total amount of the Qualifying Deposits of all
Eligible Account Holders whose subscriptions remain unsatisfied. If the amount
so allocated exceeds the amount subscribed for by any one or more Eligible
Account Holders, the excess shall be reallocated (one or more times as
necessary) among those Eligible Account Holders whose subscriptions are still
not fully satisfied on the same principle until all available shares have been
allocated.
C. Subscription rights as Eligible Account Holders received by Directors
and Officers and their Associates which 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.
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 8% 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.
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 $5.0 million of Holding Company Common Stock or fifteen times the
product (rounded down to the next whole number) obtained by multiplying the
number of shares Subscription Shares offered in the Offering by a fraction of
which the numerator is the amount of the Supplemental Eligible Account Holder's
Qualifying Deposit and the denominator is the total amount of Qualifying
Deposits of all Supplemental Eligible Account Holders, in each case on the
Supplemental Eligibility Record Date, subject to the
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availability of sufficient shares after filling in full all subscription orders
of the Eligible Account Holders and Employee Plans and to the purchase
limitations specified in Section 14.
B. In the event that Supplemental Eligible Account Holders exercise
subscription rights for a number of Subscription Shares in excess of the total
number of such shares eligible for subscription, the Subscription Shares shall
be allocated among the subscribing Supplemental Eligible Account Holders so as
to permit each such subscribing Supplemental Eligible Account Holder, to the
extent possible, to purchase a number of shares sufficient to make his or her
total allocation of Subscription Shares equal to the lesser of 100 shares or the
number of shares for which each such Supplemental Eligible Account Holder has
subscribed. Any remaining shares will be allocated among the subscribing
Supplemental Eligible Account Holders whose subscriptions remain unsatisfied in
the proportion that the amount of the Qualifying Deposit of each such
Supplemental Eligible Account Holder bears to the total amount of the Qualifying
Deposits of all Supplemental Eligible Account Holders whose subscriptions remain
unsatisfied. If the amount so allocated exceeds the amount subscribed for by
any one or more Supplemental Eligible Account Holders, the excess shall be
reallocated (one or more times as necessary) among those Supplemental Eligible
Account Holders whose subscriptions are still not fully satisfied on the same
principle until all available shares have been allocated.
11. SUBSCRIPTION RIGHTS OF OTHER DEPOSITORS (FOURTH PRIORITY)
A. Each Other Depositor shall have nontransferable subscription rights to
subscribe for in the Subscription Offering up to $5.0 million of the Holding
Company Common Stock subject to the availability of sufficient shares after
filling in full all subscription orders of Eligible Account Holders, Employee
Plans and Supplemental Eligible Account Holders and to the purchase limitations
specified in Section 14.
B. In the event that such Other Depositors 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 Depositors in proportion
to the amounts of their relative subscriptions.
12. COMMUNITY OFFERING AND MERGER SHARES
A. If subscriptions are not received for all Subscription Shares offered
for sale in the Subscription Offering, shares for which subscriptions have not
been received may be issued for sale in the Community Offering through a direct
community marketing program which may use a broker, dealer, consultant or
investment banking firm experienced and expert in the sale of savings
institutions securities. Such entities may be compensated on a fixed fee basis
or on a commission basis, or a combination thereof. Any shares offered for sale
in the Community Offering will be available for purchase by the general public
with preference given to persons residing in the Community, Minority
Stockholders of the Mid-Tier Holding Company and stockholders of the Acquiree
Corporation who are stockholders of record as of a date selected by management
of the Bank. The Holding Company shall use its 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, which are received in the Community Offering. Any Person
may purchase up to $5.0 million of Holding Company Common Stock in the Community
Offering, subject to the purchase limitations specified in Section 14.
B. If subscriptions totaling at least the minimum of the Offering Range
are not received in the Subscription Offering and Community Offering, then
unsubscribed Subscription Shares may be issued to stockholders of the Acquiree
Corporation in exchange for their shares of the Acquiree Corporation or in any
other manner that facilitates the completion of the Merger, provided that total
Merger Shares, including Merger Shares issued pursuant to this Section 12B, are
less than 50% of the outstanding Common Stock of the Holding Company immediately
after the closing of the Conversion and Merger. Subscription Shares may only be
issued as Merger Shares in order to achieve the minimum of the Offering Range.
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13. SYNDICATED COMMUNITY OFFERING/UNDERWRITTEN PUBLIC OFFERING
If feasible, the Board of Directors may determine to offer Subscription
Shares not issued in the Subscription Offering, in a Syndicated Community
Offering and/or through an Underwriter in an Underwritten Public Offering, all
subject to such terms, conditions and procedures as may be determined by the
Holding Company, in a manner that will achieve the widest distribution of the
Holding Company Common Stock, subject to the right of the Holding Company to
accept or reject in whole or in part any subscriptions in the Syndicated
Community Offering. In the case of an Underwritten Public Offering,
Subscription Shares will be sold to an Underwriter for resale in an Underwritten
Public Offering. The price to be paid by the Underwriter for Subscription
Shares will be equal to the aggregate price at which such shares were offered in
the Subscription Offering, less the amount of an underwriting discount, which
will be negotiated by the Holding Company and the Underwriter. In the
Syndicated Community Offering and/or Underwritten Public Offering, any Person
may purchase up to $5.0 million of Holding Company Common Stock, subject to the
purchase limitations specified in Section 14.
Provided that the Subscription Offering has begun, the Holding Company may
begin the Syndicated Community Offering or Underwritten Public Offering at any
time, provided that the completion of the offer and sale of the Holding Company
Common Stock will be conditioned upon the approval of the Plan by Voting
Depositors. If the Syndicated Community Offering or Underwritten Public
Offering does not begin pursuant to the provisions of the preceding sentence,
such offering will begin as soon as practicable following the date upon which
the Subscription and Community Offerings terminate. The provisions of Section 14
shall not be applicable to sales to Underwriters in an Underwritten Public
Offering for purposes of such an offering, but shall be applicable to the sales
by the Underwriters to the public.
If for any reason a Syndicated Community Offering or an Underwritten Public
Offering of shares of Holding Company Common Stock not sold in the Subscription
and Community Offerings cannot be effected, or in the event that any
insignificant residue of shares of Holding Company Common Stock is not sold in
the Subscription and Community Offerings or in the Syndicated Community or
Underwritten Public Offering, if possible, the Holding Company will make other
arrangements for the disposition of unsubscribed shares aggregating at least the
minimum of the Offering Range. Such other purchase arrangements will be subject
to receipt of any required approval of the Bank Regulators.
14. LIMITATION ON PURCHASES
The following limitations shall apply to all purchases and issuances of
shares of Conversion Stock:
A. The maximum dollar amount of Holding Company Common Stock which 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 5% of the shares of Holding Company Common Stock issued in the
Offering, except that the Employee Plans may subscribe for up to 8% of the
Holding Company Common Stock issued in the Offering (including shares issued in
the event of an increase in the maximum of the Offering Range of 15%).
B. The maximum number of shares of Holding Company Common Stock which 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.
C. A minimum of 25 shares of Holding Company Common Stock must be
purchased by each Person purchasing shares in the Offering to the extent those
shares are available; provided, however, that in the event the minimum number of
shares of Holding Company Common Stock purchased times the price per share
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 Board.
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D. The maximum dollar amount of Holding Company Common Stock which may be
subscribed for or purchased in the Offering by any Person or Participant
together with any Associate or group of Persons Acting in Concert, combined with
Exchange Shares received by any such Person or Participant together with any
Associate or group of Persons Acting in Concert, shall not exceed 5.0% of the
Holding Company Common Stock issued in the Conversion except for the Employee
Plans which may subscribe for up to 8% of the Holding Company Common Stock
issued in the Offering (including shares issued in the event of an increase in
the maximum of the Offering Range of 15%).
If the number of shares of Holding Company Common Stock otherwise allocable
pursuant to Sections 8 through 13, inclusive, to any Person or that Person's
Associates would be in excess of the maximum number of shares permitted as set
forth above, the number of shares of 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 Person's Associates shall be reduced so that the aggregate
allocation to that Person and his or her Associates complies with the above
limits.
Depending upon market or financial conditions, the Board of Directors of
the Holding Company, with the receipt of any required approvals of the Bank
Regulators and without further approval of Voting Depositors, may decrease or
increase the purchase limitations in this Plan, provided that the maximum
purchase limitations may not be increased to a percentage in excess of 5% of the
shares issued in the Offering except as provided below. If the Holding Company
increases the maximum purchase limitations, the Holding Company is only required
to resolicit Persons who subscribed for the maximum purchase amount and may, in
the sole discretion of the Holding Company resolicit certain other large
subscribers. In the event that the maximum purchase limitation is increased to
5% of the shares issued in the Offering, such limitation may be further
increased to 9.99%, provided that orders for 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 Conversion Stock in the event that the purchase limitation is so
increased will be determined by the Board of Directors of the Holding Company in
its sole discretion.
In the event of an increase in the total number of shares offered in the
Subscription Offering due to an increase in the maximum of the Offering Range of
up to 15% (the "Adjusted Maximum"), the additional shares will be used to fill
the Employee Plans orders and then will be allocated in accordance with the
priorities set forth in this Plan.
For purposes of this Section 14, the Directors of the Bank, the Mid-Tier
Holding Company and the Holding Company shall not be deemed to be Associates or
a group affiliated with each other or otherwise Acting in Concert solely as a
result of their being Directors of the Bank, the Mid-Tier Holding Company or the
Holding Company.
Each Person purchasing Holding Company Common Stock in the Conversion shall
be deemed to confirm that such purchase does not conflict with the above
purchase limitations contained in this Plan.
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.
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
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withdrawal, shall be without penalty as to premature withdrawal. If the
authorized withdrawal is from a certificate account, and the remaining balance
does not meet the applicable minimum balance requirement, the certificate shall
be canceled at the time of withdrawal, without penalty, and the remaining
balance will earn interest at the passbook rate. Funds for which a withdrawal is
authorized will remain in the subscriber's Deposit Account but may not be used
by the subscriber during the Subscription and Community Offerings. Thereafter,
the withdrawal will be given effect only to the extent necessary to satisfy the
subscription (to the extent it can be filled) at the Subscription Price per
share. Interest will continue to be earned on any amounts authorized for
withdrawal until such withdrawal is given effect. Interest on funds received
will be paid by the Bank at not less than the passbook rate on payments for
Holding Company Common Stock. Such interest will be paid from the date payment
is received by the Bank until consummation or termination of the Conversion. If
for any reason the Conversion 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 Conversion, and therefore,
will not do so.
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the Prospectus prepared by the Holding Company
and Bank has been declared effective by the SEC, Order Forms will be distributed
to the Eligible Account Holders, Employee Plans, Supplemental Eligible Account
Holders and Other Depositors at their last known addresses appearing on the
records of the Bank for the purpose of subscribing for shares of Holding Company
Common Stock in the Subscription Offering and will be made available for use by
those Persons to whom a Prospectus is delivered. Notwithstanding the foregoing,
the Bank may elect to send Order Forms only to those Persons who request them
after receipt of such notice in a form approved by the Bank Regulators and which
is adequate to apprise the Eligible Account Holders, Employee Plans,
Supplemental Eligible Account Holders and Other Depositors of the pendency of
the Subscription Offering. Such notice may be included with the proxy statement
for the Special Meeting of Depositors and also may be included in the notice of
the pendency of the Conversion and the Special Meeting of Depositors sent to all
Eligible Account Holders in accordance with regulations and policy of the Bank
Regulators.
Each Order Form will be preceded or accompanied by a prospectus describing
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 Bank
or the Holding Company, which date shall be not less than twenty 20, nor more
than 45 days, following the date on which the Order Forms are mailed by the
Holding Company, and which date will constitute the termination of the
Subscription Offering unless extended;
B. The Subscription Price per share for shares of 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 Subscription and Community Offering;
D. Instructions as to how the recipient of the Order Form is to indicate
thereon the number of Subscription Shares for which such person elects to
subscribe and the available alternative methods of payment therefor;
E. An acknowledgment that the recipient of the Order Form has received a
final copy of the prospectus prior to execution of the Order Form;
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F. A statement to the effect that all subscription rights are
nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering to the Holding Company within the subscription
period such properly completed and executed Order Form, together with payment in
the full amount of the aggregate purchase price as specified in the Order Form
for the shares of Holding Company Common Stock for which the recipient elects to
subscribe in the Subscription Offering (or by authorizing on the Order Form that
the Bank withdraw said amount from the subscriber's Deposit Account at the
Bank); and
G. A statement to the effect that the executed Order Form, once received
by the Holding Company, may not be modified or amended by the subscriber without
the consent of the Holding Company.
Notwithstanding the above, the Holding Company reserves the right in its
sole discretion to accept or reject orders received on photocopied or
facsimilied order forms.
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT
In the event Order Forms (a) are not delivered and are returned to the
Holding Company or the Bank by the United States Postal Service, (b) are not
received back by the Holding Company or are received by the Holding Company
after the expiration date specified thereon, (c) are defectively filled out or
executed, (d) are not accompanied by the full required payment, unless waived by
the Holding Company, for the shares of 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 (e)
are not mailed pursuant to a "no mail" order placed in effect by the account
holder, the subscription rights of the Person to whom such rights have been
granted will lapse as though such Person failed to return the completed Order
Form within the time period specified thereon; provided, however, that the
Holding Company may, but will not be required to, waive any immaterial
irregularity on any Order Form or require the submission of corrected Order
Forms or 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.
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 shares of Holding Company Common Stock in the Subscription
Offering if such Person resides in a foreign country; or in a State of the
United States with respect to which all 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 shares of Holding Company Common Stock to such Persons would require the
Holding Company under the securities laws of such state, to register as a
broker, dealer, salesman or agent or to register or otherwise qualify its
securities for sale in such state; and (C) such registration or qualification
would be impracticable for reasons of cost or otherwise.
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT
The Bank shall establish at the time of the MHC Merger, a Liquidation
Account in an amount equal to the greater of: (a) the sum of (i) the percentage
of the outstanding shares of the common stock of the Mid-Tier Holding Company
owned by the Mutual Holding Company multiplied by the Mid-Tier Holding Company's
total stockholders' equity as reflected in the latest statement of financial
condition contained in the final Prospectus used in the Conversion, and (ii) the
restricted retained earnings account that reflects certain dividends waived by
the Mutual Holding Company; or (b) the retained earnings of the Bank at the time
the Bank completed its mutual holding company reorganization. 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
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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 Bank's capital stock.
No merger, consolidation, purchase of bulk assets with assumption of Deposit
Accounts and other liabilities, or similar transactions with an FDIC-insured
institution, in which the 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 and Supplemental Eligible Account Holder shall be determined by
multiplying the opening balance in the Liquidation Account by a fraction, the
numerator of which is the amount of the Qualifying Deposits of such account
holder and the denominator of which is the total amount of all Qualifying
Deposits of all Eligible Account Holders and Supplemental Account Holders. Such
initial subaccount balance shall not be increased, but shall be subject to
downward adjustment as described below.
If, at the close of business on any December 31 annual closing date,
commencing on or after the effective date of the Conversion, the deposit balance
in the Deposit Account of an Eligible Account Holder or Supplemental Eligible
Account Holder is less than the lesser of (i) the balance in the Deposit Account
at the close of business on any other annual closing date subsequent to the
Eligibility Record Date or Supplemental Eligibility Record Date, or (ii) the
amount of the Qualifying Deposit in such Deposit Account as of the Eligibility
Record Date or Supplemental Eligibility Record Date, the subaccount balance for
such Deposit Account shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of
such downward adjustment, the subaccount balance shall not be subsequently
increased, notwithstanding any subsequent increase in the deposit balance of the
related Deposit Account. If any such Deposit Account is closed, the related
subaccount shall be reduced to zero.
The creation and maintenance of the Liquidation Account shall not operate
to restrict the use or application of any of the net worth 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 net worth to be
reduced below (i) the amount required for the Liquidation Account; or (ii) the
net worth requirements of the Bank contained in federal and state regulations.
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
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:
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(i) 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
(ii) Any disposition of such shares following the death of the
person to whom such shares were initially sold under the terms of the Plan.
C. With respect to all Subscription Shares subject to restrictions on
resale or subsequent disposition, each of the following provisions shall apply:
(i) Each certificate representing shares restricted by this section
shall bear a legend prominently stamped on its face giving notice of the
restriction;
(ii) 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
(iii) 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 Conversion Stock.
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.
17
<PAGE>
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 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.
C. The Holding Company and the Bank are authorized to enter into
employment agreements with their executive officers.
D. The Holding Company and the Bank are authorized to adopt stock option
plans, restricted stock grant plans and other Non-Tax-Qualified Employee Stock
Benefit Plans, provided that such plans conform to any applicable requirements
of federal and state regulations.
27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY
A. 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 an equity security of the Bank without the prior written consent
of the OTS.
B. The Articles of Incorporation of the Holding Company may contain a
provision stipulating that in no event shall any record owner of any outstanding
shares of Holding Company Common Stock who beneficially owns
18
<PAGE>
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 and certain notice requirements.
C. For the purposes of this section:
(i) The term "person" includes an individual, a firm, a corporation
or other entity;
(ii) 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;
(iii) The term "acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise; and
(iv) 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. (S) 8c(a)(10).
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) the federal or state regulatory capital requirements.
29. CHARTER AND BYLAWS
By voting to adopt this Plan, Voting Depositors 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 (or similar documents) shall be filed with Bank
Regulators with respect to the MHC Merger, the Mid-Tier Merger and the Bank
Merger. The Articles of Combination shall be filed after all requisite
regulatory, depositor 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
shares of Holding Company Common Stock sold in the Offering 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.
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 Depositors and Mid-Tier Holding
19
<PAGE>
Company 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 Depositors and Mid-Tier
Holding Company stockholders with the approval of the Bank Regulators shall not
necessitate further approval by Voting Depositors unless otherwise required by
the Bank Regulators. This Plan may be terminated by the Board of Directors of
the Mutual Holding Company at any time prior to the Special Meeting of
Depositors and the Special 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 Depositors 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, 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 offered in the Conversion; and
C. 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: March 27, 2000, amended June 22, 2000.
20
<PAGE>
EXHIBIT A
AGREEMENT OF MERGER BETWEEN
HARRIS FINANCIAL, INC. AND HARRIS SAVINGS BANK
<PAGE>
EXHIBIT A
FORM OF
AGREEMENT OF MERGER BETWEEN
HARRIS FINANCIAL, INC. AND HARRIS SAVINGS BANK
THIS AGREEMENT OF MERGER (the "Mid-Tier Merger Agreement") dated as of ____
__, 2000, is made by and between Harris Financial, Inc., a federal corporation
(the "Mid-Tier Holding Company"), Harris Savings Bank, a federal savings bank
(the "Bank"), and Harris Interim Savings Bank I, an interim federal savings bank
("Interim I").
R E C I T A L S :
1. The Mid-Tier Holding Company is a federal corporation which owns 100%
of the common stock of Harris Savings Bank (the "Bank"). As of the date hereof,
the Mid-Tier Holding Company has authorized capital stock consisting of
20,000,000 shares of common stock and 10,000,000 shares of preferred stock, of
which there are _________ shares of common stock and no shares of preferred
stock issued and outstanding.
2. Contemporaneously with the transactions contemplated by this Mid-Tier
Merger Agreement, the Mid-Tier Holding Company will exchange its charter for
that of Interim I and Interim I shall merge with and into the Bank with the Bank
as the surviving entity.
3. At least two-thirds of the members of the boards of directors of the
Bank and the Mid-Tier Holding Company have approved this Mid-Tier Merger
Agreement whereby Interim I shall be merged with and into the Bank with the Bank
as the surviving or resulting institution (the "Mid-Tier Merger"), and have
authorized the execution and delivery thereof.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
1. Merger. At and on the Effective Date of the Mid-Tier Merger, (i) the
Mid-Tier Holding Company shall exchange its charter for that of Interim I, and
will merge with and into the Bank with the Bank as the resulting entity (the
"Resulting Institution"), and (ii) the Minority Stockholders of the Mid-Tier
Holding Company shall constructively receive shares of Bank common stock in
exchange for their Mid-Tier Holding Company common stock and the Mutual Holding
Company shall receive shares of Bank common stock in exchange for its Mid-Tier
Holding Company common stock.
2. Effective Date. The Mid-Tier Merger shall not be effective until and
unless it is approved by the Office of Thrift Supervision (the "OTS") after
approval by at least (i) two-thirds of the outstanding common stock of the Mid-
Tier Holding Company, (ii) a majority vote of the Minority Stockholders present
in person or by proxy at a meeting of stockholders, and (iii) a majority of
Voting Depositors, and the Articles of Combination shall have been filed with
the OTS with respect to the Mid-Tier Merger. Approval of the Plan by the Voting
Depositors shall constitute approval of the Mid-Tier Merger Agreement by the
Voting Depositors.
3. Name. The name of the Resulting Institution shall be Harris Savings
Bank.
4. Offices. The main banking office of the Resulting Institution shall be
235 North Second Street, Harrisburg, Pennsylvania. The branch offices of the
Bank that were in lawful operation prior to the Mid-Tier Merger shall be
operated as branch offices of the Bank.
5. Directors and Officers. The directors and officers of the Bank
immediately prior to the Effective Date shall be the directors and officers of
the Resulting Institution after the Effective Date.
6. Rights and Duties of the Resulting Institution. At the Effective Date,
the Mid-Tier Holding Company shall convert to Interim I, which shall be merged
with and into the Bank with the Bank as the Resulting Institution.
A-1
<PAGE>
The business of the Resulting Institution shall be that of a federal savings
bank as provided in its Charter. All assets, rights, interests, privileges,
powers, franchises and property (real, personal and mixed) of the Mid-Tier
Holding Company and Interim I shall be automatically transferred to and vested
in the Resulting Institution by virtue of the Mid-Tier Merger without any deed
or other document of transfer. The Resulting Institution, 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 Bank, the Mid-Tier Holding Company and Interim I. The
Resulting Institution shall be responsible for all of the liabilities,
restrictions and duties of every kind and description of the Mid-Tier Holding
Company, the Bank and Interim I, immediately prior to the Merger, including
liabilities for all debts, obligations and contracts of the Mid-Tier Holding
Company, the Bank and Interim I, 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, the Bank and Interim I. The stockholders of the Bank shall possess all
voting rights with respect to the shares of stock of the Interim I and the Mid-
Tier Holding Company. All rights of creditors and other obligees and all liens
on property of the Bank, the Mid-Tier Holding Company and Interim I shall be
preserved and shall not be released or impaired.
7. Other Terms. All terms used in this Mid-Tier Merger Agreement shall,
unless defined herein, have the meanings set forth in the Plan). The Plan is
incorporated herein by this reference and made a part hereof to the extent
necessary or appropriate to effect and consummate the terms of this Mid-Tier
Merger Agreement and the Conversion.
IN WITNESS WHEREOF, the Mid-Tier Holding Company, Interim I and the Bank
have caused this Mid-Tier Merger Agreement to be executed as of the date first
above written.
Harris Financial, Inc.
(a federal corporation)
ATTEST:
____________________________________ By:________________________________
Richard C. Ruben, Corporate Secretary Charles C. Pearson, Jr., President
Harris Savings Bank
(a federal savings bank)
ATTEST:
____________________________________ By:________________________________
Richard C. Ruben, Corporate Secretary Charles C. Pearson, Jr., President
ATTEST: Harris Interim Savings Bank I
(in formation)
_____________________________________ By:________________________________
Richard C. Ruben, Corporate Secretary Charles C. Pearson, Jr., President
A-2
<PAGE>
EXHIBIT B
AGREEMENT OF MERGER BETWEEN
HARRIS FINANCIAL, MHC AND HARRIS SAVINGS BANK
<PAGE>
EXHIBIT B
FORM OF
AGREEMENT OF MERGER BETWEEN
HARRIS FINANCIAL, MHC AND HARRIS SAVINGS BANK
THIS AGREEMENT OF MERGER (the "MHC Merger Agreement"), dated as of ____ __,
2000, is made by and between Harris Financial, MHC, a federal corporation (the
"Mutual Holding Company"), Harris Savings Bank, a federal savings bank (the
"Bank"), and Harris Interim Savings Bank II, an interim federal savings bank
("Interim II").
R E C I T A L S :
1. The Mutual Holding Company is a federal corporation which owns a
majority of the common stock of Harris Savings Bank (the "Bank") as a result of
the merger of Harris Financial, Inc., a federal corporation, into the Bank (the
"Mid-Tier Merger") immediately prior to the merger provided for in this MHC
Merger Agreement.
2. Contemporaneously with the transactions contemplated by this MHC Merger
Agreement, the Mutual Holding Company will exchange its charter for that of
Interim II and Interim II shall merge with and into the Bank with the Bank as
the resulting entity.
3. At least two-thirds of the members of the boards of directors of the
Bank and the Mutual Holding Company have approved this MHC Merger Agreement
whereby Interim II shall be merged with and into the Bank with the Bank as the
surviving or resulting institution (the "MHC Merger"), and authorized the
execution and delivery thereof.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
1. Merger. At and on the Effective Date of the MHC Merger, (i) the Mutual
Holding Company shall exchange its charter for that of Interim II, and will
merge with and into the Bank with the Bank as the resulting entity (the
"Resulting Institution"), whereupon shares of Bank common stock owned by the
Mutual Holding Company shall be canceled. As part of the MHC Merger, each
Eligible Account Holder and Supplemental Eligible Account Holder [as defined in
the Plan of Conversion and Reorganization (the "Plan")], shall automatically
receive an interest in the Liquidation Account established in the Bank, in
exchange for such person's interest in the Mutual Holding Company set forth in
the Plan.
2. Effective Date. The MHC Merger shall not be effective until and unless
it is approved by the Office of Thrift Supervision (the "OTS") after approval by
at least (i) two-thirds of the outstanding common stock of the Mid-Tier Holding
Company, (ii) a majority vote of the Minority Stockholders present in person or
by proxy at a meeting of stockholders, and (iii) a majority of Voting
Depositors, and the Articles of Combination shall have been filed with the OTS
with respect to the MHC Merger. Approval of the Plan by the Voting Depositors
shall constitute approval of the MHC Merger Agreement by the Voting Depositors.
3. Name. The name of the Resulting Institution shall be Harris Savings
Bank.
4. Offices. The main banking office of the Resulting Institution shall be
235 North Second Street, Harrisburg, Pennsylvania. The branch offices of the
Bank that were in lawful operation prior to the MHC Merger shall be operated as
branch offices of the Bank.
5. Directors and Officers. The directors and officers of the Bank
immediately prior to the Effective Date shall be the directors and officers of
the Resulting Institution after the Effective Date.
6. Rights and Duties of the Resulting Institution. At the Effective Date,
the MHC Holding Company shall convert to Interim II, which shall be merged with
and into the Bank with the Bank as the Resulting Institution.
B-1
<PAGE>
The business of the Resulting Institution shall be that of a federal savings
bank as provided in its Charter. All assets, rights, interests, privileges,
powers, franchises and property (real, personal and mixed) of the Mutual Holding
Company and Interim II shall be automatically transferred to and vested in the
Resulting Institution by virtue of the MHC Merger without any deed or other
document of transfer. The Resulting Institution, 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 Bank, the Mutual Holding Company and Interim II. The
Resulting Institution shall be responsible for all of the liabilities,
restrictions and duties of every kind and description of the Mutual Holding
Company, the Bank and Interim II, immediately prior to the Merger, including
liabilities for all debts, obligations and contracts of the Mutual Holding
Company, the Bank and Interim II, 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 Mutual Holding
Company, the Bank and Interim II. The stockholders of the Bank shall possess all
voting rights with respect to the shares of stock of the Bank. All rights of
creditors and other obligees and all liens on property of the Mutual Holding
Company and Interim II shall be preserved and shall not be released or impaired.
7. Other Terms. All terms used in this MHC Merger Agreement shall, unless
defined herein, have the meanings set forth in the Plan). The Plan is
incorporated herein by this reference and made a part hereof to the extent
necessary or appropriate to effect and consummate the terms of this MHC Merger
Agreement and the Conversion.
IN WITNESS WHEREOF, the Mutual Holding Company, Interim II and the Bank
have caused this MHC Merger Agreement to be executed as of the date first above
written.
Harris Financial, Inc.
(a federal corporation)
ATTEST:
_____________________________________ By:________________________________
Richard C. Ruben, Corporate Secretary Charles C. Pearson, Jr., President
Harris Savings Bank
(a federal savings bank)
ATTEST:
_____________________________________ By:________________________________
Richard C. Ruben, Corporate Secretary Charles C. Pearson, Jr., President
ATTEST: Harris Interim Savings Bank II
(information)
_____________________________________ By:________________________________
Richard C. Ruben, Corporate Secretary Charles C. Pearson, Jr., President
B-2
<PAGE>
EXHIBIT C
FORM OF AGREEMENT OF MERGER BETWEEN
HARRIS SAVINGS BANK
AND HARRIS INTERIM SAVINGS BANK
<PAGE>
EXHIBIT C
FORM OF AGREEMENT OF MERGER BETWEEN
HARRIS SAVINGS BANK
AND HARRIS INTERIM SAVINGS BANK
THIS AGREEMENT OF MERGER (the "Bank Merger Agreement") dated as of ___ __,
2000, is made by and between Harris Savings Bank, a federal savings bank (the
"Bank"), New Harris Financial Inc., a Pennsylvania corporation (the "Holding
Company"), and Harris Interim Savings Bank III, an interim federal savings bank
("Interim III").
R E C I T A L S :
1. The Bank is a federal savings bank that prior to the transactions
contemplated by this Bank Merger Agreement and the Plan of Conversion and
Reorganization of Harris Financial, MHC (the "Plan"), was a wholly-owned
subsidiary of Harris Financial, Inc. (the "Mid-Tier Holding Company"), a federal
corporation.
2. The Holding Company was formed as a wholly-owned subsidiary of the Bank
to facilitate and effect the Conversion.
3. The Holding Company has organized Interim III as a wholly-owned
subsidiary to effect and facilitate the Conversion.
4. Contemporaneously with the transactions contemplated by this Bank
Merger Agreement, (i) the Mid-Tier Holding Company shall convert to Harris
Interim Savings Bank I, an interim federal savings bank and merge with and into
the Bank (the "Mid-Tier Merger") with the Bank as the resulting entity, and (ii)
the Minority Stockholders shall constructively receive, and the Mutual Holding
Company shall receive, shares of Bank common stock in exchange for their Mid-
Tier Holding Company common stock.
5. At least two-thirds of the members of the boards of directors of the
Bank and Interim III have approved this Bank Merger Agreement under which
Interim III shall be merged with and into the Bank with the Bank as the
surviving or resulting institution (the "Bank Merger"), and authorized the
execution and delivery thereof.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
1. Merger. At and on the Effective Date of the Bank Merger and
contemporaneously with the Mid-Tier Merger, Interim III will merge with and into
the Bank with the Bank as the surviving entity (the "Resulting Institution").
Stockholders of the Bank will exchange the shares of Bank common stock that they
either actually or constructively received in the Mid-Tier Merger for Holding
Company Common Stock. As a result of the Bank Merger, the Holding Company will
own 100% of the common stock of the Bank.
2. Stock Offering. Contemporaneously with the Bank Merger, the Holding
Company will sell shares of its common stock in a subscription offering as
described in the Plan.
3. Effective Date. The Bank Merger shall not be effective until and
unless it is approved by the Office of Thrift Supervision (the "OTS") after
approval by at least (i) two-thirds of the outstanding common stock of the Mid-
Tier Holding Company, (ii) a majority of the shares held by Minority
Stockholders, and (iii) a majority of the Voting Depositors, and the Articles of
Combination shall have been filed with the OTS with respect to the Bank Merger.
Approval of the Plan by the Voting Depositors shall constitute approval of this
Bank Merger Agreement by the Voting Depositors.
C-1
<PAGE>
4. Name. The name of the Resulting Institution shall be Harris Savings
Bank.
5. Offices. The main banking office of the Resulting Institution shall be
235 North Second Street, Harrisburg, Pennsylvania. The branch offices of the
Bank that were in lawful operation prior to the Merger shall be operated as
branch offices of the Bank.
6. Directors and Officers. The directors and officers of the Bank
immediately prior to the Effective Date shall be the directors and officers of
the Resulting Institution after the Effective Date.
7. Rights and Duties of the Resulting Institution. At the Effective Date,
Interim III shall be merged with and into the Bank with the Bank as the
Resulting Institution. The business of the Resulting Institution shall be that
of a federal savings bank as provided in its Charter. All assets, rights,
interests, privileges, powers, franchises and property (real, personal and
mixed) of Interim III shall be automatically transferred to and vested in the
Resulting Institution by virtue of such Merger without any deed or other
document of transfer. The Resulting Institution, 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 Interim III. The Resulting Institution shall be responsible
for all of the liabilities, restrictions and duties of every kind and
description of both Interim III and the Bank immediately prior to the Bank
Merger, including liabilities for all debts, obligations and contracts of
Interim and the Bank, 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 Interim III or the Bank. The
stockholders of the Resulting Institution shall possess all voting rights with
respect to the shares of stock of the Bank and Interim III. All rights of
creditors and other obligees and all liens on property of Interim III and the
Bank shall be preserved and shall not be released or impaired.
1. Other Terms. All terms used in this Bank Merger Agreement shall,
unless defined herein, have the meanings set forth in the Plan. The Plan is
incorporated herein by this reference and made a part hereof to the extent
necessary or appropriate to effect and consummate the terms of the Bank Merger
Agreement and the Conversion.
IN WITNESS WHEREOF, the Bank and Interim have caused this Bank Merger
Agreement to be executed as of the date first above written.
Harris Savings Bank
(a federal savings bank)
ATTEST:
______________________________________ By: _______________________________
Richard C. Ruben, Corporate Secretary Charles C. Pearson, Jr., President
Harris Interim Savings Bank III
(a federal savings bank)
ATTEST:
______________________________________ By: _______________________________
Richard C. Ruben, Corporate Secretary Charles C. Pearson, Jr., President
New Harris Financial, Inc.
(a Pennsylvania corporation)
ATTEST:
______________________________________ By: _______________________________
Richard C. Ruben, Corporate Secretary Charles C. Pearson, Jr., President
C-2
<PAGE>
EXHIBIT D
ARTICLES OF INCORPORATION
OF
NEW HARRIS FINANCIAL, INC.
<PAGE>
EXHIBIT D
ARTICLES OF INCORPORATION
OF
NEW HARRIS FINANCIAL, INC.
ARTICLE I
NAME
The name of the corporation is New Harris Financial, Inc. (hereinafter
referred to as the "Corporation").
ARTICLE II
REGISTERED OFFICE
The address of the initial registered office of the Corporation in the
Commonwealth of Pennsylvania is 235 North Second Street, Harrisburg, PA 17101.
ARTICLE III
NATURE OF BUSINESS
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the Business Corporation Law of
1988, as amended, of the Commonwealth of Pennsylvania (the "BCL"). The
Corporation is incorporated under the provisions of the BCL.
ARTICLE IV
CAPITAL STOCK
A. Authorized Amount. The total number of shares of capital stock which
the Corporation has authority to issue is 110,000,000, of which 10,000,000 shall
be serial preferred stock, par value $.01 per share (hereinafter the "Preferred
Stock"), and 100,000,000 shall be common stock, par value $.01 per share
(hereinafter the "Common Stock"). Except to the extent required by governing
law, rule or regulation, the shares of capital stock may be issued from time to
time by the Board of Directors without further approval of stockholders. The
Corporation shall have the authority to purchase its capital stock out of funds
lawfully available therefor.
B. Common Stock. Except as provided in this Article IV (or in any
resolution or resolutions adopted by the Board of Directors pursuant hereto),
the exclusive voting power of the Corporation shall be vested in the Common
Stock, with each holder thereof being entitled to one vote for each share of
such Common Stock standing in the holder's name on the books of the Corporation.
Subject to any rights and preferences of any class of stock having preference
over the Common Stock, holders of Common Stock shall be entitled to such
dividends as may be declared by the Board of Directors out of funds lawfully
available therefor. Upon any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, holders of Common
Stock shall be entitled to receive pro rata the remaining assets of the
Corporation after the holders of any class of stock having preference over the
Common Stock have been paid in full any sums to which they may be entitled.
C. Authority of Board to Fix Terms of Preferred Stock. The Board of
Directors shall have the full authority permitted by law to divide the
authorized and unissued shares of Preferred Stock into series and to fix by
resolution full, limited, multiple or fractional, or no voting rights, and such
designations, preferences, qualifications, privileges, limitations,
restrictions, options, conversion rights, and other special or relative rights
of the Preferred Stock or any series thereof that may be desired.
D. Preemptive Rights. Except as may be provided in a resolution or
resolutions of the Board of Directors providing for the issue of any series of
Preferred Stock, no holder of shares of capital stock of the
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Corporation as such shall have any preemptive or preferential right to purchase
or subscribe to any part of any new or additional issue of capital stock of any
class whatsoever of the Corporation, or of securities convertible into capital
stock of any class whatsoever, whether now or hereafter authorized or issued.
ARTICLE V
INCORPORATOR
The name of the sole incorporator is Harris Savings Bank, the mailing
address of the sole incorporator is 235 North Second Street, Harrisburg, PA
17101, and the number and class of shares for which the sole incorporator has
subscribed is 100 shares of common stock.
ARTICLE VI
DIRECTORS
A. Directors and Number of Directors. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
Except as otherwise increased from time to time by the exercise of the rights of
the holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation to elect additional directors, the
number of directors of the Corporation shall be as set forth in the
Corporation's Bylaws, as may be amended from time to time.
B. Classification and Term. The Board of Directors, other than those who
may be elected by the holders of any class or series of stock having preference
over the Common Stock as to dividends or upon liquidation, shall be divided into
three classes as nearly equal in number as possible, with one class to be
elected annually. The term of office of the initial directors shall be as
follows: the term of directors of the first class shall expire at the first
annual meeting of stockholders after the effective date of these Articles of
Incorporation; the term of office of the directors of the second class shall
expire at the second annual meeting of stockholders after the effective date of
these Articles of Incorporation; and the term of office of the third class shall
expire at the third annual meeting of stockholders after the effective date of
these Articles of Incorporation; and, as to directors of each class, when their
respective successors are elected and qualified. At each annual meeting of
stockholders, directors elected to succeed those whose terms are expiring shall
be elected for a term of office to expire at the third succeeding annual meeting
of stockholders (except to the extent necessary to ensure that the Board of
Directors shall be divided into three classes as nearly equal in number as
possible) and when their respective successors are elected and qualified.
C. No Cumulative Voting. Stockholders of the Corporation shall not be
permitted to cumulate their votes for the election of directors.
D. Vacancies. Except as otherwise fixed pursuant to the provisions of
Article IV hereof relating to the rights of the holders of any class or series
of stock having preference over the Common Stock as to dividends or upon
liquidation to elect directors, any vacancy occurring in the Board of Directors,
including any vacancy created by reason of an increase in the number of
directors, shall be filled by a majority vote of the directors then in office,
whether or not a quorum is present, or by a sole remaining director, and any
director so chosen shall serve until the term of the class to which he was
appointed shall expire and until his successor is elected and qualified. When
the number of directors is changed, the Board of Directors shall determine the
class or classes to which the increased or decreased number of directors shall
be apportioned, provided that no decrease in the number of directors shall
shorten the term of any incumbent director.
E. Removal. Except as otherwise required by law, and subject to the
rights of any class or series of stock having preference over the Common Stock
as to dividends or upon liquidation to elect directors, any director (including
persons elected by directors to fill vacancies in the Board of Directors) may be
removed from office by stockholders only for cause and only upon the affirmative
vote of not less than a majority of the total votes eligible to be cast by
stockholders at a duly constituted meeting of stockholders called expressly for
such purpose. Cause for removal shall exist only if the director whose removal
is proposed has been either declared of unsound mind by an
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order of a court of competent jurisdiction, convicted of a felony or of an
offense punishable by imprisonment for a term of more than one year by a court
of competent jurisdiction, or deemed liable by a court of competent jurisdiction
for gross negligence or misconduct in the performance of such director's duties
to the Corporation.
ARTICLE VII
MEETINGS OF STOCKHOLDERS; ACTION WITHOUT A MEETING
A. Special Meeting of Stockholders. Except as otherwise required by law
and subject to the rights of the holders of any class or series of Preferred
Stock, special meetings of stockholders may be called only by the Board of
Directors of the Corporation pursuant to a resolution approved by the
affirmative vote of a majority of the directors then in office.
B. Action Without a Meeting. An action permitted to be taken by the
stockholders of the Corporation at a meeting of stockholders may be taken
without a meeting only if a unanimous written consent setting forth the action
so taken is signed by all stockholders who would be entitled to vote at a
meeting for such purpose and such consent is filed with the Secretary of the
Corporation as part of the corporate records.
C. Advance Notice by Stockholders. Advance notice of stockholder
nominations for the election of Directors and of business to be brought by
stockholders before any meeting of the stockholders of the Corporation shall be
given in the manner provided in the Bylaws of the Corporation.
ARTICLE VIII
LIABILITY OF DIRECTORS AND OFFICERS
A. Personal Liability for Monetary Damages. The personal liabilities of
the directors and officers of the Corporation for monetary damages for conduct
in their capacities as such shall be eliminated to the fullest extent permitted
by the BCL as it exists on the effective date of these Articles of Incorporation
or as such law may be thereafter in effect, and in no event shall a director be
personally liable, as such, for monetary damages for any action taken unless the
director has breached or failed to perform the duties of his office under the
BCL and the breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness. This section A of Article VIII shall not apply to
the responsibility or liability of a director pursuant to any criminal statute,
or the liability of a director for the payment of taxes pursuant to Federal,
State, or local law.
B. Amendments. No amendment, modification or repeal of this Article VIII,
nor the adoption of a provision of these Articles of Incorporation inconsistent
with this Article VIII, shall adversely affect the rights provided hereby with
respect to any claim, issue or matter in any proceeding that is based in any
respect on any alleged action or failure to act prior to such amendment,
modification, repeal or adoption.
ARTICLE IX
RESTRICTIONS ON OFFERS AND ACQUISITIONS OF
THE CORPORATIONS' EQUITY SECURITIES
A. Definitions.
(a) Acquire. The term "Acquire" includes every type of acquisition,
whether effected by purchase, exchange, operation of law or otherwise.
(b) Acting in Concert. The term "Acting in Concert" means (a) knowing
participation in a joint activity or conscious parallel action towards a common
goal whether or not pursuant to an express agreement, or (b) 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.
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(c) Affiliate. An "Affiliate" of, or a Person "affiliated with" a
specified Person, means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with the Person specified.
(d) Associate. The term "Associate" used to indicate a relationship with
any Person means:
(i) Any corporation or organization (other than the Corporation or a
Subsidiary of the Corporation), or any subsidiary or parent thereof, 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 or equity
securities;
(ii) Any trust or other estate in which such Person has a 10% or
greater beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity, provided, however, such term shall not
include any employee stock benefit plan of the Corporation or a Subsidiary
of the Corporation in which such Person has a 10% or greater beneficial
interest or serves as a trustee or in a similar fiduciary capacity.
(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 of
officer of the Corporation or a Subsidiary of the Corporation (or any
subsidiary or parent thereof); or
(iv) Any investment company registered under the Investment Company
Act of 1940 for which such Person or any Affiliate or Associate of such
Person serves as investment advisor.
(e) Beneficial Owner (including Beneficially Owned). A Person shall be
considered the "Beneficial Owner" of any shares of stock (whether or not owned
of record):
(i) With respect to which such Person or any Affiliate or Associate of
such Person directly or indirectly has or shares (A) voting power,
including the power to vote or to direct the voting of such shares of
stock, and/or (B) investment power, including the power to dispose of or to
direct the disposition of such shares of stock;
(ii) Which such Person or any Affiliate or Associate of such Person
has (A) the right to acquire (whether such right is exercisable immediately
or only after the passage of time) pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, and/or (B) the right to vote
pursuant to any agreement, arrangement or understanding (whether such right
is exercisable immediately or only after the passage of time); or
(iii) Which are Beneficially Owned within the meaning of (i) or (ii)
of this Article IX(A)(e) by any other Person with which such first-
mentioned Person or any of its Affiliates or Associates either (A) has any
agreement, arrangement or understanding, written or oral, with respect to
acquiring, holding, voting or disposing of any shares of stock of the
Corporation or any Subsidiary of the Corporation or acquiring, holding or
disposing of all or substantially all, or any Substantial part, of the
assets or business of the Corporation or a Subsidiary of the Corporation,
or (B) is Acting in Concert. For the purpose only of determining whether a
Person is the Beneficial Owner of a percentage specified in this Article IX
of the outstanding Voting Shares, such shares shall be deemed to include
any Voting Shares which may be issuable pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants, options or otherwise and which are deemed to be
Beneficially Owned by such Person pursuant to the foregoing provisions of
this Article IX(A)(e), but shall not include any other Voting Shares which
may be issuable in such manner.
(f) Offer. The term "Offer" shall mean every offer to buy or acquire,
solicitation of an offer to sell, tender offer or request or invitation for
tender of, a security or interest in a security for value; provided that the
term
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"Offer" shall not include (i) inquiries directed solely to the management
of the Corporation and not intended to be communicated to stockholders which are
designed to elicit an indication of management's receptivity to the basic
structure of a potential acquisition with respect to the amount of cash and or
securities, manner of acquisition and formula for determining price, or (ii)
non-binding expressions of understanding or letters of intent with the
management of the Corporation regarding the basic structure of a potential
acquisition with respect to the amount of cash and or securities, manner of
acquisition and formula for determining price.
(g) Person. The term "Person" shall mean any individual, partnership,
corporation, association, trust, group or other entity. When two or more Persons
act as a partnership, limited partnership, syndicate, association or other group
for the purpose of acquiring, holding or disposing of shares of stock, such
partnership, syndicate, associate or group shall be deemed a "Person".
(h) Substantial Part. The term "Substantial Part" as used with reference
to the assets of the Corporation or of any Subsidiary means assets having a
value of more than 10% of the total consolidated assets of the Corporation and
its Subsidiaries as of the end of the Corporation's most recent fiscal year
ending prior to the time the determination is being made.
(i) Subsidiary. "Subsidiary" means any corporation of which a majority
of any class of equity security is owned, directly or indirectly, by the Person
in question.
(j) Voting Shares. "Voting Shares" shall mean shares of the Corporation
entitled to vote generally in an election of directors.
(k) Certain Determinations With Respect to Article IX. A majority of the
directors shall have the power to determine for the purposes of this Article IX,
on the basis of information known to them and acting in good faith: (A) the
number of Voting Shares of which any Person is the Beneficial Owner; (B) whether
a Person is an Affiliate or Associate of another; (C) whether a Person has an
agreement, arrangement or understanding with another as to the matters referred
to in the definition of "Beneficial Owner" as hereinabove defined; and (D) such
other matters with respect to which a determination is required under this
Article IX.
(l) Directors, Officers or Employees. Directors, officers or employees
of the Corporation or any Subsidiary thereof shall not be deemed to be a group
with respect to their individual acquisitions of any class of equity securities
of the Corporation solely as a result of their capacities as such.
B. Restrictions. No Person shall directly or indirectly Offer to acquire
or acquire the Beneficial Ownership of (i) more than 10% of the issued and
outstanding shares of any class of an equity security of the Corporation, or
(ii) any securities convertible into, or exercisable for, any equity securities
of the Corporation if, assuming conversion or exercise by such Person of all
securities of which such Person is the Beneficial Owner which are convertible
into, or exercisable for, such equity securities (but no securities convertible
into, or exercisable for, such equity securities of which such Person is not the
Beneficial Owner), such Person would be the Beneficial Owner of more than 10% of
any class of any equity security of the Corporation.
C. Exclusions. The foregoing restrictions shall not apply to (i) any
Offer with a view toward public resale made exclusively to the Corporation by
underwriters or a selling group acting on its behalf, (ii) any tax qualified
employee benefit plan or arrangement established by the Corporation or a
Subsidiary of the Corporation and any trustee of such a plan or arrangement, and
(iii) any other Offer or acquisition approved in advance by the affirmative vote
of 80% of the members of the Corporation's Board of Directors then in office.
D. Remedies. In the event that shares are acquired in violation of this
Article IX, all shares Beneficially Owned by any Person in excess of 10% shall
be considered "Excess Shares" and shall not be counted as shares entitled to
vote and shall not be voted by any Person or counted as Voting Shares in
connection with any matters submitted to stockholders for a vote.
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ARTICLE X
AMENDMENT
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation, in the manner now or
hereafter prescribe by law, and all rights conferred upon stockholders herein
are granted subject to this reservation. No amendment, addition, alteration,
change or repeal of these Articles of Incorporation shall be made unless it is
first approved by the Board of Directors of the Corporation pursuant to a
resolution adopted by the affirmative vote of a majority of the directors then
in office, and, to the extent required by applicable law, thereafter is approved
by the holders of a majority (except as provided below) of the shares of the
Corporation entitled to vote generally in an election of directors, voting
together as a single class, as well as such additional vote of the Preferred
Stock as may be required by the provisions of any series thereof.
Notwithstanding anything contained in these Articles of Incorporation to the
contrary, the affirmative vote of the holders of at least 75% of the shares of
the Corporation entitled to vote generally in an election of directors, voting
together as a single class, as well as such additional vote of the Preferred
Stock as may be required by the provisions of any series thereof, shall be
required to amend, adopt, alter, change or repeal any provision of Articles VI,
VII, VIII, IX and X hereof which is not approved by the affirmative vote of 80%
of the Corporation's Board of Directors then in office.
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the Business Corporation Law of
1988, as amended, of the Commonwealth of Pennsylvania through these Articles of
Incorporation, has caused these Articles of Incorporation to be signed by its
President and Chief Executive Officer, who hereby declares and certifies that
the facts herein stated are true and who has hereunto set his hand this 23rd day
of March, 2000.
ATTEST HARRIS SAVINGS BANK
/s/ Richard C. Ruben By: /s/ Charles C. Pearson, Jr.
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Richard C. Ruben, Secretary Charles C. Pearson, Jr., President and Chief
Executive Officer
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EXHIBIT E
NEW HARRIS FINANCIAL, INC.
BYLAWS
<PAGE>
EXHIBIT E
NEW HARRIS FINANCIAL, INC.
BYLAWS
ARTICLE I
OFFICES
1.1 Registered Office and Registered Agent. The registered office of New
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Harris Financial, Inc. (the "Corporation") shall be located in the Commonwealth
of Pennsylvania at such place as may be fixed from time to time by the Board of
Directors upon filing of such notices as may be required by law, and the
registered agent shall have a business office identical with such registered
office.
1.2 Other Offices. The Corporation may have other offices within or
-------------
outside the Commonwealth of Pennsylvania at such place or places as the Board of
Directors may from time to time determine.
ARTICLE II
STOCKHOLDERS' MEETINGS
2.1 Place of Meeting. All meetings of the stockholders shall be held at
----------------
such place within or without the Commonwealth of Pennsylvania as shall be
determined by the Board of Directors.
2.2 Annual and Special Meetings. The annual meeting of the stockholders
---------------------------
for the election of directors and for the transaction of such other business as
may properly come before the meeting shall be held each year on the third
Tuesday of April at the hour of 3:00 p.m. if not a legal holiday, and if a legal
holiday, then on the day following, at the same hour, or at such other date and
time as may be determined by the Board of Directors and stated in the notice of
such meeting. Special meetings of stockholders may be called only by the Board
of Directors pursuant to a resolution approved by the affirmative vote of a
majority of the directors then in office.
2.3 Organization and Conduct. Each meeting of the stockholders shall be
------------------------
presided over by the President, or if the President is not present, by any
Executive or Senior Vice President or such other person as the directors may
determine. The Secretary, or in his absence a temporary Secretary, shall act as
secretary of each meeting of the stockholders. In the absence of the Secretary
and any temporary Secretary, the chairman of the meeting may appoint any person
present to act as secretary of the meeting. The chairman of any meeting of the
stockholders, unless prescribed by law or regulation or unless the Board of
Directors has otherwise determined, shall determine the order of the business
and the procedure at the meeting, including such regulation of the manner of
voting and the conduct of discussions as shall be deemed appropriate by him in
his sole discretion.
2.4 Notice.
------
(a) Written notice of every meeting of stockholders shall be given by, or
at the direction of, the Secretary of the Corporation or other authorized person
to each stockholder of record entitled to vote at the meeting at least (i) ten
days prior to the date named for a meeting that will consider a fundamental
change under Chapter 19 of the Pennsylvania Business Corporation Law ("BCL"), or
any successor thereto, or (ii) five days prior to the date named for a meeting
in any other case. A notice of meeting shall specify the place, date and hour
of the meeting and in the case of a special meeting the general nature of the
business to be transacted thereat, as well as any other information required by
law.
(b) When a meeting of stockholders is adjourned, it shall not be necessary
to give any notice of the adjourned meeting or of the business to be transacted
at an adjourned meeting, other than by announcement at the meeting at which the
adjournment is taken, unless the Board of Directors fixes a new record date for
the adjourned
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meeting or notice of the business to be transacted is required to be given by
applicable law and such notice previously has not been given.
2.5 Record Date. The Board of Directors may fix in advance a record date
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for the purpose of determining stockholders entitled to notice of or to vote at
any meeting of stockholders, or any adjournment thereof, such date to be not
more than ninety (90) days and not less than (i) ten (10) days in the case of a
meeting that will consider a fundamental change under Chapter 19 of the BCL, or
any successor thereto, or (ii) five (5) days in the case of a meeting for any
other purpose, prior to the date of the meeting established by the Board of
Directors.
2.6 Voting List. The office or agent having charge of the transfer books
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for shares of the Corporation shall make a complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
with the address of and number of shares held by each. The list shall be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any stockholder during the whole time of the meeting for
the purposes thereof.
2.7 Quorum. Except as otherwise required by law:
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(a) The presence in person or by proxy of stockholders entitled to vote at
least a majority of the votes that all stockholders are entitled to cast on a
particular matter to be acted upon at a meeting of stockholders (after giving
effect to Article IX of the Corporation's Articles of Incorporation) shall
constitute a quorum for the purposes of consideration and action on the matter.
Where a separate vote by a class or classes is required, a majority of the
shares of such class or classes present in person or represented by proxy shall
constitute a quorum entitled to take action with respect to that vote on that
matter. If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shares of stock entitled to vote who
are present, in person or by proxy, may adjourn the meeting to another place,
date, or time. If a notice of any adjourned special meeting of stockholders is
sent to all stockholders entitled to vote thereat, stating that it will be held
with those present constituting a quorum, then except as otherwise required by
law, those present at such adjourned meeting shall constitute a quorum, and all
matters shall be determined by a majority of the votes cast at such meeting.
(b) The stockholders present at a duly organized meeting can continue to
do business until adjournment notwithstanding the general withdrawal of enough
stockholders to leave less than a quorum.
2.8 Voting of Shares.
----------------
(a) Except as otherwise provided in these Bylaws or to the extent that
voting rights of the shares of any class or classes are limited or denied by the
Articles of Incorporation, each stockholder, on each matter submitted to a vote
at a meeting of stockholders, shall have one vote for each share of stock
registered in his name on the books of the Corporation.
(b) Except as otherwise provided by the Articles of Incorporation, by law
or by paragraph (c) of this Section 2.8, any corporate action to be taken by
vote of the stockholders of the Corporation shall be authorized by receiving the
affirmative vote of a majority of the votes cast by all stockholders entitled to
vote thereon and, if any stockholders are entitled to vote thereon as a class,
upon receiving the affirmative vote of a majority of the votes cast by
stockholders entitled to vote as a class.
(c) Directors are to be elected by a plurality of votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present. If,
at any meeting of the stockholders, due to a vacancy or vacancies or otherwise,
directors of more than one class of the Board of Directors are to be elected,
each class of directors to be elected at the meeting shall be elected in a
separate election by a plurality vote.
2.9 Proxies. Every stockholder entitled to vote at a meeting of
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stockholders may authorize another person to act for him by a proxy duly
executed by the stockholder or his duly authorized attorney-in-fact. The
presence of,
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or vote or other action at a meeting of stockholders, by a proxy of a
stockholder shall constitute the presence of, or vote or other action by the
stockholder for all purposes. No proxy shall be valid after three years from the
date of execution unless a longer time is expressly provided therein.
2.10 Proposals. At an annual meeting of the stockholders, only such
---------
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, or (b) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be timely a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not later than ninety (90) days
prior to the anniversary date of the mailing of proxy materials by the
Corporation in connection with the immediately preceding annual meeting of
stockholders of the Corporation or, in the case of the first annual meeting of
stockholders of the Corporation, no later than ninety (90) days prior to the
date of the annual meeting. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting, (b) the name and address, as they appear on the Corporation's
books, of the stockholder proposing such business, (c) the class and number of
shares of the Corporation which are beneficially owned by the stockholder, and
(d) any material interest of the stockholder in such business. The chairman of
an annual meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting in accordance
with the provisions of this Article II, Section 2.10, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted. This provision is not a
limitation on any other applicable laws and regulations.
2.11 Judges of Election.
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(a) For each meeting of stockholders, the Board of Directors may appoint
judges of election, who need not be stockholders, to act at the meeting or any
adjournment thereof. If judges of election are not so appointed, the presiding
officer of the meeting may, and on the request of any stockholder shall, appoint
judges of election at the meeting. The number of judges shall be one or three. A
person who is a candidate for office to be filled at the meeting shall not act
as a judge.
(b) The judges of election shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the authenticity, validity and effect of proxies,
receive votes or ballots, hear and determine all challenges and questions in any
way arising in connection with the right to vote, count and tabulate all votes,
determine the result and do such acts as may be proper to conduct the election
or vote with fairness to all stockholders. The judges of election shall perform
their duties impartially, in good faith, to the best of their ability and as
expeditiously as is practical. If there are three judges of election, the
decision, act or certificate of a majority shall be effective in all respects as
the decision, act or certificate of all.
ARTICLE III
BOARD OF DIRECTORS
3.1 Number and Powers. The business affairs of the Corporation shall be
-----------------
managed under the direction of a Board of Directors of not less than five (5)
nor more than twenty (20), as set from time to time by resolution of the Board
of Directors. Directors need not be stockholders or residents of the
Commonwealth of Pennsylvania. In addition to the powers and authorities
expressly conferred upon it by these Bylaws and the Articles of Incorporation,
all such powers of the Corporation as are not by statute or by the Corporation's
Articles of Incorporation or by these Bylaws directed or required to be
exercised or done by the stockholders may be exercised by or under the authority
of the Board of Directors.
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3.2 Classification and Terms. The classification and terms of the
------------------------
directors shall be as set forth in the Corporation's Articles of Incorporation,
which provisions are incorporated herein with the same effect as if they were
set forth herein.
3.3 Vacancies. All vacancies in the Board of Directors shall be filled in
---------
the manner provided in the Corporation's Articles of Incorporation, which
provisions are incorporated herein with the same effect as if they were set
forth herein.
3.4 Removal of Directors. Directors may be removed in the manner provided
--------------------
in the Corporation's Articles of Incorporation, which provisions are
incorporated herein with the same effect as if they were set forth herein.
3.5 Regular Meetings. Regular meetings of the Board of Directors or any
----------------
committee may be held without notice at the principal place of business of the
Corporation or at such other place or places, either within or without the
Commonwealth of Pennsylvania, as the Board of Directors or such committee, as
the case may be, may from time to time appoint or as may be designated in the
notice of the meeting. A regular meeting of the Board of Directors shall be held
without notice immediately after the annual meeting of stockholders.
3.6 Special Meetings.
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(a) Special meetings of the Board of Directors may be called at any
time by the President, Chairman of the Board, or by a majority of the authorized
number of directors, to be held at the principal place of business of the
Corporation or at such other place or places as the Board of Directors or the
person or persons calling such meeting may from time to time designate. Written
notice of all special meetings of the Board of Directors shall be given to each
director by five days' service of the same. Such notice need not specify the
business to be transacted at, nor the purpose of, the meeting.
(b) Special meetings of any committee may be called at any time by
such person or persons and with such notice as shall be specified for such
committee by the Board of Directors, or in the absence of such specification, in
the manner and with the notice required for special meetings of the Board of
Directors.
3.7 Action of Directors by Communications Equipment. One or more persons
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may participate in a meeting of directors, or of a committee thereof, by means
of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other.
3.8 Quorum of and Action by Directors. A majority of the Board of
---------------------------------
Directors then in office shall be necessary at all meetings to constitute a
quorum for the transaction of business and the acts of a majority of the
directors present and voting at a meeting at which a quorum is present shall be
the acts of the Board of Directors. Every director of the Corporation shall be
entitled to one vote.
3.9 Registering Dissent. A director who is present at a meeting of the
-------------------
Board of Directors or of a committee thereof, at which action on a corporate
matter is taken on which the director is generally competent to act, shall be
presumed to have assented to such action unless his dissent is entered in the
minutes of the meeting, or unless he files his written dissent to such action
with the person acting as the secretary of the meeting before the adjournment
thereof, or unless he delivers his dissent in writing to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
3.10 Action by Directors Without a Meeting. Any action which may be taken
-------------------------------------
at a meeting of the directors, or of a committee thereof, may be taken without a
meeting if prior or subsequent to the action a consent or consents in writing
setting forth the action so taken or to be taken is signed by all of the
directors in office, or by all of the members of the committee as the case may
be, and filed with the Secretary of the Corporation. Such consent shall have the
same effect as a unanimous vote.
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3.11 Compensation of Directors. The Board of Directors shall have the
-------------------------
authority to fix the compensation of directors for their services as directors
and a director may be a salaried officer of the Corporation.
3.12 Nominations of Directors. Subject to the rights of holders of any
------------------------
class or series of stock having a preference over the common stock as to
dividends or upon liquidation, nominations for the election of directors may be
made by the Board of Directors or committee appointed by the Board of Directors
or by any stockholder entitled to vote generally in an election of directors.
However, any stockholder entitled to vote generally in an election of directors
may nominate one or more persons for election as directors at a meeting only if
written notice of such stockholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United States
mail, postage prepaid to the Secretary of the Corporation not later than (i)
ninety (90) days prior to the anniversary date of the mailing of proxy materials
by the Corporation in connection with the immediately preceding annual meeting
of stockholders of the Corporation or, in the case of the first annual meeting
of stockholders of the Corporation, no later than ninety (90) days prior to the
annual meeting, and (ii) with respect to an election to be held at a special
meeting of stockholders for the election of directors, the close of business on
the tenth (10th) day following the date on which notice of such meeting is first
given to stockholders. Each such notice shall set forth: (a) the name and
address of the stockholder who intends to make the nomination and of the person
or persons to be nominated; (b) a representation that the stockholder is a
holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all arrangements
or understandings between the stockholder and each nominee and any arrangements
or understandings between the stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholders; (d) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission; and (e) the consent of each nominee to serve
as a director of the Corporation if so elected. The presiding officer of the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedures.
3.13 Retirement Age.
--------------
(a) Except as set forth in (b) below, the compulsory retirement age for
Directors shall be 70: no person having attained the age of 70 shall be elected
a member of the Board. No Director shall serve beyond the annual meeting of
Directors immediately following the attainment of such age. Whenever any person
who is a Director becomes ineligible because of age to serve as a Director, he
or she shall be eligible for election as a Director Emeritus provided he or she
has been a member of this Board or of a Board of a corporation merged into this
corporation for a period of 10 years or more and has not attained the age of 75
prior to his or her election and shall retire not later than the date of the
annual meeting of the Board of Directors following his or her attainment of the
age of 75.
(b) For persons who were Directors of Harris Savings Bank (the "Bank") and
who attained age 65 prior to the 1996 annual meeting of the Bank, the compulsory
retirement age shall be 72. Directors Emeritus of the Bank who reached age 75
prior to the 1996 annual meeting of the Bank's Board of Directors may be
appointed to one additional one-year term. The "grandfathering" provisions of
this section (b) and all references in the Bylaws to this section (b) shall be
removed from the Bylaws automatically without further vote when no longer
applicable.
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
4.1 Executive Committee.
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(a) The Board of Directors may appoint from the Board of Directors an
Executive Committee of not less than three (3) members, and may delegate to such
committee, except as otherwise provided by law or the Articles of Incorporation,
the powers of the Board of Directors in the management of the business and
affairs of the Corporation in the intervals between meetings of the Board of
Directors in all cases in which specific directions shall not have been given by
the Board, as well as the power to authorize the seal of the Corporation to be
affixed to all papers which may
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require it, provided, however, that the Executive Committee shall not have the
power or authority of the Board of Directors with respect to the following: the
submission to stockholders of any action requiring approval of stockholders by
law; the creation or filling of vacancies in the Board of Directors; the
adoption, amendment or repeal of the Articles of Incorporation or these Bylaws;
the amendment or repeal of any resolution of the Board of Directors that by its
terms is amendable or repealable only by the Board of Directors; action on
matters committed by these Bylaws or resolution of the Board of Directors to
another committee of the Board of Directors; the declaration of dividends; and
approval of a transaction in which any member of the Executive Committee,
directly or indirectly, has any material beneficial interest.
(b) Meetings of the Executive Committee shall be held at such times and
places as the Chairman of the Executive Committee may determine. The Executive
Committee, by a vote of a majority of its members, may appoint a Chairman and
fix its rules of procedure, determine its manner of acting and specify what
notice, if any, of meetings shall be given, except as otherwise set forth in
these Bylaws or as the Board of Directors shall by resolution otherwise provide.
(c) The Executive Committee shall keep minutes of all business transacted
by it. All completed action by the Executive Committee shall be reported to the
Board of Directors at its meeting next succeeding such action or at its meeting
held in the month following the taking of such action, and shall be subject to
revision or alteration by the Board of Directors.
4.2 Audit Committee. The Board of Directors shall designate not less than
---------------
three (3) members of the Board of Directors who are not employed by the
Corporation to constitute an Audit Committee, which shall receive and evaluate
internal and independent auditor's reports, monitor the Corporation's adherence
in accounting and financial reporting to generally accepted accounting
principles and perform such other duties as may be delegated to it by the Board
of Directors. Meetings of the Audit Committee shall be held at such times and
places as the Chairman of the Audit Committee may determine. The Audit
Committee, by a vote of a majority of its members, may fix its rules of
procedure, determine its manner of acting and specify what notice, if any, of
meetings shall be given, except as otherwise set forth in these Bylaws or as the
Board of Directors shall by resolution otherwise provide.
4.3 Other Committees. The Board may, by resolutions passed by a majority
----------------
of the Board of Directors, designate members of the Board to constitute other
committees, which shall in each case consist of one or more directors and shall
have and may execute such powers as may be determined and specified in the
respective resolutions appointing them. A majority of all the members of any
such committee may fix its rules of procedure, determine its manner of acting
and fix the time and place of its meetings and specify what notice thereof, if
any, shall be given, except as otherwise set forth in these Bylaws or as the
Board of Directors shall by resolution otherwise provide.
4.4 Term. A majority of the Board of Directors shall have the power to
----
change the membership of any committee of the Board of Directors at any time, to
fill vacancies therein and to discharge any such committee or to remove any
member thereof, either with or without cause, at any time.
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ARTICLE V
OFFICERS
5.1 Designations. The Board of Directors shall annually appoint a Chairman
------------
or Co-Chairmen of the Board, a President a Secretary, a Treasurer and such other
officers as the Board of Directors may from time to time deem appropriate.
5.2 Powers and Duties. The officers of the Corporation shall have such
-----------------
authority and perform such duties as are specified in these Bylaws and as the
Board of Directors may from time to time authorize or determine. In the absence
of action by the Board of Directors, the officers shall have such powers and
duties as generally pertain to their respective offices.
5.3 Chairman of the Board. The Chairman or Co-Chairmen of the Board, who
---------------------
shall be chosen from among the directors, shall preside at all meetings of the
Board of Directors and stockholders. He shall supervise the carrying out of the
policies adopted or approved by the Board of Directors.
5.4 President. The President shall in the absence of the Chairman of the
---------
Board preside at all meetings of the Board of Directors and stockholders. The
President shall have general executive powers and shall have and may exercise
any and all other powers and duties pertaining by law, regulations or practice
to the office of President, or imposed by these Bylaws.
5.5 Secretary. The Secretary shall keep the minutes of the meetings of the
---------
stockholders and the Board of Directors and shall give notice of all such
meetings as required in these bylaws, the Corporation=s Articles of
Incorporation or by law. The Secretary shall have custody of such minutes, the
seal of the Corporation and the stock certificate records of the Corporation,
except to the extent some other person is authorized to have custody and
possession thereof by a resolution of the Board of Directors.
5.6 Treasurer. The Treasurer shall keep, or cause to be kept, the fiscal
---------
accounts of the Corporation, including an account of all monies received or
disbursed.
5.7 Term; Removal. Each officer of the Corporation shall hold office for a
-------------
term of one year and until his successor has been selected and qualified or
until his earlier death, resignation or removal. Any officer or agent of the
Corporation may be removed at any time, with or without cause, by the Board of
Directors, but such removal shall be without prejudice to the contract rights,
if any, of the person so removed. Election or appointment of an officer or agent
shall not of itself create contract rights.
5.8 Compensation. The officers of the Corporation shall receive such
------------
salary or compensation as may be determined by or under authority of the Board
of Directors.
5.9 Delegation. In the case of absence or inability to act of any officer
----------
of the Corporation and of any person herein authorized to act in his place, the
Board of Directors may from time to time delegate the powers or duties of such
officer to any other officer or any director or other person whom it may select.
5.10 Vacancies. Vacancies in any office arising from any cause may be
---------
filled by the Board of Directors at any regular or special meeting of the Board.
5.11 Bonds. The Board of Directors may, by resolution, require any and all
-----
of the officers to give bonds to the Corporation, with sufficient surety or
sureties, conditioned for the faithful performance of the duties of their
respective offices, and to comply with such other conditions as may from time to
time be required by the Board of Directors.
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ARTICLE VI
INDEMNIFICATION
6.1 Third Party Actions. The Corporation shall indemnify any person who
-------------------
was or is a party, or is threatened to be made a party, to any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation), by reason of the fact that he is or was a director or officer of
the Corporation, or is or was serving at the request of the Corporation as a
representative of another domestic or foreign corporation for profit or not-for-
profit, partnership, joint venture, trust or other enterprise, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation and, with
respect to any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful, provided that the Corporation shall not be liable for any
amounts which may be due to any such person in connection with a settlement of
any action or proceeding effected without its prior written consent or any
action or proceeding initiated by any such person (other than an action or
proceeding to enforce rights to indemnification hereunder).
6.2 Derivative and Corporate Actions. The Corporation shall indemnify any
--------------------------------
person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a representative of another domestic or foreign corporation
for profit or not-for-profit, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees) actually and reasonably
incurred by him in connection with the defense or settlement of the action if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Corporation, provided that the Corporation
shall not be liable for any amounts which may be due to any such person in
connection with a settlement of any action or proceeding affected without its
prior written consent. Indemnification shall not be made under this Section 6.2
in respect of any claim, issue or matter as to which the person has been
adjudged to be liable to the Corporation unless and only to the extent that the
court of common pleas of the judicial district embracing the county in which the
registered office of the Corporation is located or the court in which the action
was brought determines upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, the person is fairly
and reasonably entitled to indemnity for the expenses that the court of common
pleas or other court deems proper.
6.3 Mandatory Indemnification. To the extent that a representative of the
-------------------------
Corporation has been successful on the merits or otherwise in defense of any
action or proceeding referred to in Section 6.1 or Section 6.2 or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
6.4 Procedure for Effecting Indemnification. Unless ordered by a court,
---------------------------------------
any indemnification under Section 6.1 or Section 6.2 shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the representative is proper in the circumstances because he
has met the applicable standard of conduct set forth in those sections. The
determination shall be made:
(1) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to the action or proceeding;
(2) if such a quorum is not obtainable, or if obtainable and a majority
vote of a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion; or
(3) by the stockholders.
6.5 Advancing Expenses. Expenses (including attorneys' fees) incurred in
------------------
defending any action or proceeding referred to in this Article VI shall be paid
by the Corporation in advance of the final disposition of the
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action or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined that he
is not entitled to be indemnified by the Corporation as authorized in this
Article VI or otherwise.
6.6 Insurance. The Corporation shall have the power to purchase and
---------
maintain insurance on behalf of any person who is or was a representative of the
Corporation or is or was serving at the request of the Corporation as a
representative of another domestic or foreign corporation for profit or not-for-
profit, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against that liability under the provisions of this
Article VI.
6.7 Modification. The duties of the Corporation to indemnify and to
------------
advance expenses to a director or officer provided in this Article VI shall be
in the nature of a contract between the Corporation and each such person, and no
amendment or repeal of any provision of this Article VI shall alter, to the
detriment of such person, the right of such person to the advance of expenses or
indemnification related to a claim based on an act or failure to act which took
place prior to such amendment or repeal.
ARTICLE VII
CAPITAL STOCK
7.1 Certificates. Certificates of stock shall be issued in numerical
------------
order, and each stockholder shall be entitled to a certificate signed by the
President or a Vice President, and the Secretary or the Treasurer, or in such
other manner as the Corporation may determine and may be sealed with the seal of
the Corporation or a facsimile thereof. The signatures of such officers may be
facsimiles if the certificate is manually signed on behalf of a transfer agent,
or registered by a registrar, other than the Corporation itself or an employee
of the Corporation. If an officer who has signed or whose facsimile signature
has been placed upon such certificate ceases to be an officer before the
certificate is issued, it may be issued by the Corporation with the same effect
as if the person were an officer on the date of issue. Each certificate of stock
shall state:
(a) that the Corporation is incorporated under the laws of the
Commonwealth of Pennsylvania;
(b) the name of the person to whom issued;
(c) the number and class of shares and the designation of the series,
if any, which such certificate represents; and
(d) the par value of each share represented by such certificate, or a
statement that such shares are without par value.
7.2 Transfers.
---------
(a) Transfers of stock shall be made only upon the stock transfer
books of the Corporation, kept at the registered office of the Corporation or at
its principal place of business, or at the office of its transfer agent or
registrar, and before a new certificate is issued the older certificate shall be
surrendered for cancellation. The Board of Directors may, by resolution, open a
share register in any state of the United States, and may employ an agent or
agents to keep such register, and to record transfers of shares therein.
(b) Shares of stock shall be transferred by delivery of the
certificates therefor, accompanied either by an assignment in writing on the
back of the certificate or an assignment separate from the certificate, or by a
written power of attorney to sell, assign and transfer the same, signed by the
holder of said certificate. No shares of stock shall be transferred on the books
of the Corporation until the outstanding certificates therefor have been
surrendered to the Corporation.
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7.3 Registered Owner. Registered stockholders shall be treated by the
----------------
Corporation as the holders in fact of the stock standing in their respective
names and the Corporation shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as expressly provided
below or by the laws of the Commonwealth of Pennsylvania. The Board of Directors
may adopt by resolution a procedure whereby a stockholder of the Corporation may
certify in writing to the Corporation that all or a portion of the shares
registered in the name of such stockholder are held for the account of a
specified person or persons. The resolution shall set forth:
(a) The classification of shareholder who may certify;
(b) The purpose or purposes for which the certification may be made;
(c) The form of certification and information to be contained
therein;
(d) If the certification is with respect to a record date, the time
after the record date within which the certification must be
received by the Corporation; and
(e) Such other provisions with respect to the procedure as are deemed
necessary or desirable.
Upon receipt by the Corporation of a certification complying with the above
requirements, the persons specified in the certification shall be deemed, for
the purpose or purposes set forth in the certification, to be the holders of
record of the number of shares specified in place of the stockholder making the
certification.
7.4 Mutilated, Lost or Destroyed Certificates. In case of any mutilation,
-----------------------------------------
loss or destruction of any certificate of stock, another may be issued in its
place upon receipt of proof of such mutilation, loss or destruction. The Board
of Directors may impose conditions on such issuance and may require the giving
of a satisfactory bond or indemnity to the Corporation in such sum as they might
determine, or establish such other procedures as they deem necessary.
7.5 Fractional Shares of Scrip. The Corporation may: (a) issue fractions
--------------------------
of a share which shall entitle the holder to exercise voting rights, to receive
dividends thereon, and to participate in any of the assets of the Corporation in
the event of liquidation; (b) arrange for the disposition of fractional
interests by those entitled thereto; (c) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such shares are
determined; or (d) issue scrip in registered or bearer form which shall entitle
the holder to receive a certificate for a full share upon the surrender of such
scrip aggregating a full share.
ARTICLE VIII
FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Corporation shall end on the 31st day of December of
each year. The Corporation shall be subject to an annual audit as of the end of
its fiscal year by independent public accountants appointed by and responsible
to the Board of Directors or the Audit Committee of the Board of Directors. The
appointment of such accountants shall be subject to annual ratification by the
stockholders.
ARTICLE IX
DIVIDENDS AND FINANCE
9.1 Dividends. Dividends may be declared by the Board of Directors and
---------
paid by the Corporation in accordance with the conditions and subject to the
limitations imposed by the laws of the Commonwealth of Pennsylvania. The Board
of Directors may declare dividends payable only to stockholders of record at the
close of business on any business day not more than (90) days prior to the date
on which the dividend is paid.
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9.2 Depositories. The monies of the Corporation shall be deposited in the
------------
name of the Corporation in such bank or banks or trust company or trust
companies as the Board of Directors shall designate, and shall be drawn out only
by check or other order for payment of money signed by such persons and in such
manner as may be determined by resolution of the Board of Directors.
ARTICLE X
NOTICES
10.1 Notice. Whenever written notice is required to be given to any person
------
pursuant to these Bylaws, it may be given to the person either personally or by
courier service, or by sending a copy thereof by first class or express mail,
postage prepaid, or by facsimile transmission, to his address (or to his
facsimile number), in the case of stockholders, appearing on the books of the
Corporation or, in the case of directors, supplied by them to the Corporation
for the purpose of notice or, in the case of the Corporation, at the address of
its principal executive offices. If the notice is sent by mail, it shall be
deemed to have been given to the person entitled thereto when deposited in the
United States mail.
10.2 Written Waiver of Notice. Whenever any written notice is required to
------------------------
be given under these Bylaws, a waiver thereof in writing, signed by the person
or persons entitled to the notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of the notice. Neither the
business to be transacted at, nor the purpose of a meeting need be specified in
the waiver of notice of the meeting.
10.3 Waiver of Notice by Attendance. Attendance of a person at any meeting
------------------------------
shall constitute a waiver of notice of the meeting except where a person attends
a meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.
ARTICLE XI
SEAL
The corporate seal of the Corporation shall be in such form and bear such
inscription as may be adopted by resolution of the Board of Directors, or by
usage of the officers on behalf of the Corporation.
ARTICLE XII
BOOKS AND RECORDS
The Corporation shall keep correct and complete books and records of
account and shall keep minutes and proceedings of meetings of its stockholders
and Board of Directors; and it shall keep at its registered office or principal
place of business, or at the office of its transfer agent or registrar, a record
of its stockholders, giving the names and addresses of all stockholders and the
number and class of the shares held by each. Any books, records and minutes may
be in written form or any other form capable of being converted into written
form within a reasonable time.
ARTICLE XIII
AMENDMENTS
The Board of Directors, unless otherwise prohibited by law, or stockholders
may adopt, alter, amend or repeal the Bylaws of the Corporation. Such action by
the Board of Directors shall require the affirmative vote of a majority of the
directors then in office at any regular or special meeting of the Board of
Directors. Such action by the stockholders shall require the affirmative vote of
the holders of at least 75% of the shares of the Corporation entitled to vote
generally in an election of directors, voting together as a single class, as
well as such additional vote of the Preferred Stock as may be required by the
provisions of any series thereof.
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