SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Information to be Included in Statements Filed Pursuant to Rule 13d-1(a) and
Amendments Thereto Filed Pursuant to Rule 13d-2(a)
(Amendment No. ____)
RIDGEWOOD FINANCIAL, INC.
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(Name of Issuer)
Common Stock $.10 Par Value
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(Title of Class of Securities)
76623N 10 6
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(CUSIP Number)
Samuel J. Malizia, Esquire
Malizia, Spidi, Sloane & Fisch, P.C.
1301 K Street, N.W., Suite 700 East
Washington, D.C. 20005
(202) 434-4660
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 7, 1999
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(Date of Event Which Requires Filing of
This Statement)
If the filing person has previously filed a Statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box |_|.
Note. Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
(Continued on following pages.)
(Page 1 of 9)
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CUSIP No. 76623N 10 6 13D Page 2 of 9 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Ridgewood Financial, MHC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
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7 SOLE VOTING POWER
NUMBER OF
SHARES 1,685,400
BENEFICIALLY
OWNED BY ------------------------------------------------------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH 0
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9 SOLE DISPOSITIVE POWER
1,685,400
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,685,400
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
53.0% (based on 3,180,000 outstanding shares)
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14 TYPE OF REPORTING PERSON
HC
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Item 1. Security and Issuer
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The class of equity securities to which this Statement relates
is the common stock, $0.10 par value per share (the "Common
Stock"), of Ridgewood Financial, Inc. (the "Issuer"), the principal
executive office of which is located at 55 North Broad Street,
Ridgewood, New Jersey 07450.
Item 2. Identity and Background
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The name and business address of the company filing this Statement is
Ridgewood Financial, MHC, 55 North Broad Street, Ridgewood, New Jersey 07450
(the "MHC"). The MHC is a mutual holding company chartered as a corporation
under the laws of the state of New Jersey.
Pursuant to General Instruction C of Schedule 13D, the following
information is being provided with respect to each executive officer and
director of the MHC ("Insiders"):
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Directors
Name Occupation
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Michael W. Azzara President of The Valley Hospital and the
Valley Health System, Inc.
Nelson Fiordalisi Executive Vice President and Chief
Operating Officer of the Issuer
Jerome Goodman Certified Public Accountant, partner of
Flackman, Goodman & Potter PA
Bernard J. Hoogland Vice President of Ridgewood Associates
John Kandravy Attorney, partner of Shanley & Fisher,
P.C., trustee and Vice Chairman of The
Valley Hospital
Robert S. Monteith Retired - former President of a
subsidiary of the Issuer
Susan E. Naruk President, Chief Executive Officer of the
Issuer
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Directors (continued)
Name Occupation
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Paul W. Thornwall Attorney, owner of Thornwall Law Firm
John J. Repetto Real Estate Manager for Marron
Enterprises
Executive Officers Who Are Not Directors
Name Occupation
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John Scognamiglio Senior Vice President, Chief Financial
Officer of Issuer
Jean M. Miller Senior Vice President, Chief Lending
Officer of Issuer
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The business address of each Insider is the same as the address of the
MHC and the Issuer. During the last five years, neither the MHC nor the Insiders
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), nor has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction which resulted in such persons
being subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws. All of the
Insiders are U.S. Citizens.
Item 3. Service and Amount of Funds or Other Consideration
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The MHC acquired the Common Stock in connection with the
mutual holding company reorganization of Ridgewood Savings Bank of New Jersey
(the "Bank") and related multiple tier ownership structure involving the Issuer.
The MHC was provided working capital from its affiliate, the Bank, and the MHC
formed the Issuer
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and the Issuer sold shares at $7.00 per share in a registered
offering that resulted in the ownership by the MHC of the Issuer of
53% of the outstanding common stock of the Issuer. The MHC was not
required to provide payment to the Issuer in return for obtaining
53% of the resulting issued and outstanding shares. See Item 4.
Item 4. Purpose of Transaction
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On January 7, 1999, the Bank, a New Jersey-chartered mutual savings
bank, completed its mutual holding company reorganization (the "Reorganization")
pursuant to federal and state law, whereby the Bank became the wholly owned
subsidiary of the Issuer. In connection with the Reorganization, the MHC, the
Issuer's mutual holding company, acquired 1,685,400 outstanding shares, or 53%,
of common stock of the Issuer. The remaining 1,494,600 outstanding shares, or
47%, of the common stock of the Issuer were sold in a subscription offering at
$7.00 per share. The Reorganization was effected in accordance with the
requirements of the Board of Governors of the Federal Reserve System (the
"FRB"), the Federal Deposit Insurance Corporation (the "FDIC") and the New
Jersey Department of Banking and Insurance (the "NJDBI") and the MHC, Issuer and
Bank remain subject to significant limitations on future issuances of stock and
related matters.
As holding company of the Issuer, the MHC, from time to time, may
explore potential actions and transactions which may be advantageous to the
Issuer and its stockholders, including possible mergers, acquisitions and other
business combinations. However, any such actions and transactions are subject to
significant regulatory oversight by one or more of the FDIC, FRB and NJDBI.
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Other than as the Issuer's mutual holding company and majority
stockholder, the MHC has no current plans or proposals which relate to or would
result in:
(a) the acquisition by any person of additional securities of
the Issuer, or the disposition of securities of the
Issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of
its subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies
on the board;
(e) any material change in the present capitalization or
dividend policy of the Issuer;
(f) any other material change in the Issuer's business or
corporate structure;
(g) changes in the Issuer's Certificate of Incorporation, Bylaws
or instruments corresponding thereto or other actions which
may impede the acquisition of control of the Issuer by any
persons;
(h) causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer
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quotation system of a registered national securities
association;
(i) a class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act; or
(j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
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(a) The MHC owns beneficially an aggregate of 1,685,400 shares of the
Issuer's Common Stock, constituting 53.0% of the number of shares of such Common
Stock outstanding on the date hereof. Of this entire amount, the MHC has sole
power to vote and dispose of such shares of Common Stock. Information with
respect to the number and percentage of shares owned by Insiders has been filed
with the SEC pursuant to Section 16(a) of the Exchange Act.
(b) No other person is known to have the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the sale of, the
shares held by the MHC. Information with respect to the voting and dispositive
power of Insiders with respect to the Issuer's Common Stock has been filed with
the SEC pursuant to Section 16(a) of the Exchange Act.
(c) Other than its acquisition of the Common Stock of the Issuer
described in Item 3 and 4, the MHC has not effected any transaction in the
Issuer's Common Stock within the past 60 days. Information with respect to
transactions by Insiders with respect to the Issuer's Common Stock has been or
will be filed with the SEC pursuant to Section 16(a) of the Exchange Act.
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(d) No person or entity, other than the MHC, has the right to receive,
or the power to direct the receipt of, dividends from, or the proceeds from the
sale of, the shares of the Issuer's Common Stock reported in this Schedule.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understanding or Relationships
With Respect to Securities of the Issuer
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As of the date of this Schedule, neither the MHC nor any of the
Insiders is a party to any contract, arrangement, understanding or relationship
among themselves or with any other person with respect to any securities of the
Issuer, including but not limited to transfer or voting of any of the Common
Stock, finder's fees, joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, division of profits or loss, the giving or
withholding of proxies, or otherwise subject to a contingency the occurrence of
which would give another person voting or investment power over the Common
Stock.
Item 7. Material to be Filed as Exhibits
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Exhibit 1 - Plan of Reorganization and Stock Issuance.
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SIGNATURE
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Ridgewood Financial, MHC
By: /s/ SUSAN E. NARUK
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Susan E. Naruk
President
February 11, 1999
EXHIBIT 1
PLAN OF REORGANIZATION AND STOCK ISSUANCE
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EXHIBIT A
PLAN OF REORGANIZATION AND STOCK ISSUANCE
FROM A STATE MUTUAL SAVINGS BANK
TO A STATE MUTUAL SAVINGS BANK HOLDING COMPANY
OF
RIDGEWOOD SAVINGS BANK OF NEW JERSEY
ADOPTED BY THE BOARD OF DIRECTORS
ON
June 22, 1998
as amended October 26, 1998
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TABLE OF CONTENTS
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1. Introduction...........................................................................................A-1
2. Definitions............................................................................................A-1
3. Business Purposes for the Reorganization...............................................................A-6
4. Method of Reorganization and Certain Effects of the Reorganization.....................................A-7
5. Conditions to Implementation of the Reorganization.....................................................A-9
6. Ratification by Depositors............................................................................A-10
7. Stock Offering Documents..............................................................................A-11
8. Stock Offering........................................................................................A-11
9. Subscription Rights of Eligible Account Holders (First Priority)......................................A-13
10. Subscription Rights of Employee Plans (Second Priority)...............................................A-13
11. Subscription Rights of Supplemental Eligible Account Holders (Third Priority).........................A-13
12. Subscription Rights of Current Depositors (Fourth Priority)...........................................A-14
13. Community Offering....................................................................................A-15
14. Public Offering and Syndicated Public Offering........................................................A-15
15. Limitation on Purchases...............................................................................A-16
16. Payment for Common Stock..............................................................................A-18
17. Manner of Exercising Subscription Rights Through Order Forms..........................................A-19
18. Undelivered, Defective or Late Order Forms: Insufficient Payment......................................A-20
19. Restrictions on Resale or Subsequent Disposition......................................................A-20
20. Certificate of Incorporation and Bylaws of the Mutual Holding Company.................................A-21
21. Certificate of Incorporation and Bylaws of the Stock Holding Company..................................A-21
22. Certificate of Incorporation and Bylaws of the Stock Bank.............................................A-21
23. Status of Deposit Accounts and Loans Subsequent to Reorganization.....................................A-21
24. Minority Stock Offering...............................................................................A-22
25. Conversion of Mutual Holding Company to Stock Form....................................................A-22
26. Establishment of Liquidation Account..................................................................A-23
27. Interpretation........................................................................................A-23
28. Amendment or Termination of the Plan..................................................................A-24
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1. Introduction
The Board of Directors of Ridgewood Savings Bank of New Jersey (the
"Bank") has adopted this Plan of Reorganization and Stock Issuance from a State
Mutual Savings Bank to a State Mutual Savings Bank Holding Company (the "Plan")
pursuant to which the Bank proposes to reorganize from a New Jersey-chartered
mutual savings bank into the mutual holding company structure (the
"Reorganization") pursuant to the laws of the State of New Jersey, the
regulations of the Commissioner, the regulations of the FDIC, and other
applicable laws and regulations. A principal part of the Reorganization is (i)
the formation of the Mutual Holding Company as a New Jersey state mutual savings
bank holding company (ii) the formation of a capital stock corporation as a
wholly owned subsidiary of the Mutual Holding Company (the "Stock Holding
Company"), and (iii) the conversion of the Bank to a New Jersey-chartered state
stock savings bank (the "Stock Bank") which will be a wholly owned subsidiary of
the Stock Holding Company as long as the Mutual Holding Company is in existence.
Subsequent to the Reorganization, the Mutual Holding Company will always own at
least a majority of the Stock Holding Company's common stock so long as the
Mutual Holding Company is in existence.
In adopting the Plan, the Board of Directors has determined that the
Reorganization is advisable and in the best interests of the Bank, its
depositors and the community. The Reorganization is subject to the approval of
the Commissioner and the FRB and the non-objection of the FDIC, and must be
adopted by a two-thirds vote of the Board of Directors. In addition, the
Reorganization is subject to ratification by the Depositors of the Bank.
2. Definitions
As used in this Plan, the terms set forth below have the following
meanings:
Account Holder: The term Account Holder means any Person
holding a Savings Account in the Bank.
Acting in Concert: The Term "Acting in Concert" means (i)
knowing participation in a joint activity or interdependent conscious parallel
action towards a common goal whether or not pursuant to an express agreement;
(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; or
(iii) a person or company which acts in concert with another person or company
("other party") shall also be deemed to be acting in concert with any person or
company who is also acting in concert with that other party, except that any
tax-qualified employee stock benefit plan will not be deemed to be acting in
concert with its trustee or a person who serves in a similar capacity solely for
the purpose of determining whether stock held by the trustee and stock held by
the plan will be aggregated. In addition, two or more Persons who have a joint
account will be deemed to be acting in concert.
Associate: The term Associate when used to indicate a
relationship with any person, means (i) any corporation or organization (other
than 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 percent or more of any class of equity securities, (ii) any trust or other
estate in which such person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity except that for
the purposes of Sections 10 and 15 hereof, the term "Associate" does not include
any 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,
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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 Bank or the Holding Company, or any of its parents or
subsidiaries.
Bank: Ridgewood Savings Bank of New Jersey.
BHCA: The Bank Holding Company Act of 1956, as amended.
BHCA Application: The application filed with the FRB to obtain
FRB approval of acquisition of the Bank by the Mutual Holding Company and the
Stock Holding Company.
BMA: The Bank Merger Act.
Capital Stock: Any and all authorized stock of the Stock
Holding Company.
Certificate of Incorporation of the Bank: The Bank's New
Jersey mutual savings bank certificate of incorporation.
Certificate of Incorporation of the Mutual Holding Company:
The Mutual Holding Company's New Jersey mutual savings bank holding company
certificate of incorporation.
Certificate of Incorporation of the Stock Holding Company: The
certificate of incorporation of the Stock Holding Company.
Commissioner: The Commissioner of Banking and Insurance of the
State of New Jersey.
Common Stock: Common Stock issued by the Stock Holding
Company.
Community Offering: The term Community Offering, if
applicable, means the offering for sale to certain members of the general public
directly by the Stock Bank, of any shares not subscribed for in the Subscription
Offering.
Current Depositors: Persons who have a Savings or Deposit
Account of at least $50 at the Bank as of the Date of Record.
Date of Record: The date established by the Bank for
determining which Depositors are given the opportunity to vote on the
ratification of Plan.
Department: The New Jersey Department of Banking and
Insurance.
Deposit Account(s): Withdrawable deposit(s) in the Bank,
including certificates of deposit and demand accounts.
Depositor: Each holder of a Deposit Account as of the Date of
Record established by the Board of Directors.
Effective Date: The Effective Date of the Reorganization,
which shall be the date of consummation of the Reorganization and Offering in
accordance with this Plan and the applicable rules and regulations.
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Eligible Account Holder: The term Eligible Account Holder
means any Person holding a Qualifying Deposit in a Savings Account at the Bank
on the Eligibility Record Date.
Eligibility Record Date: The term Eligibility Record Date
means the date for determining Eligible Account Holders in the Bank and is the
close of business on May 31, 1997.
Employee: A person who is an Employee of the Bank at the date
of the Reorganization.
Employee Plans: The term Employee Plans means the
Tax-Qualified Employee Stock Benefit Plans, including the Employee Stock
Ownership Plan, approved by the Board of Directors of the Bank.
Estimated Valuation Range: The term Estimated Valuation Range
means the range of the estimated pro forma market value of the Common Stock as
determined by the Independent Appraiser prior to the Subscription Offering and
as it may be amended from time to time thereafter.
ESOP: An employees' stock ownership plan with its related
trust, that meets the requirements to be "qualified" under Section 401 of the
Internal Revenue Code of 1986, as amended.
FDIC: The Federal Deposit Insurance Corporation.
FRB: The Board of Governors of the Federal Reserve System.
HOLA: The Home Owners' Loan Act of 1933, as amended.
Independent Appraiser: The term Independent Appraiser means an
appraiser retained by the Bank to prepare an appraisal of the pro forma market
value of the Common Stock.
Interim: The New Jersey interim stock savings bank organized
by the Mutual Holding Company in order to consummate the Reorganization.
Local Community: The term local community means the
incorporated cities and the counties in which the Bank has offices.
Majority Interest: Greater than fifty percent (50%) of the
combined voting power or value of all classes of stock of the Stock Holding
Company.
Merger Application: The application filed with the FDIC to
obtain FDIC approval of the Reorganization.
Minority Ownership Interest: The percentage representing the
number of shares of common stock of the Stock Holding Company held by persons
other than the Mutual Holding Company divided by the total number of shares of
common stock of the Stock Holding Company outstanding.
Minority Stock Offering: One or more offers and sales of
common stock by the Stock Holding Company, after which offering the Mutual
Holding Company continues to own a majority of the outstanding shares of Voting
Stock of the Stock Holding Company.
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Minority Stockholder: Any owner of the Stock Holding Company's
common stock other than the Mutual Holding Company.
Mutual Holding Company: The state-chartered mutual savings
bank holding company organized in the Reorganization.
Mutual Bank: Ridgewood Savings Bank of New Jersey in the
mutual form of organization.
New Jersey Application: The notice or application filed with
the Department to obtain the Department approval of the Reorganization.
Non-Voting Stock: Non-Voting Stock means any Capital Stock
other than Voting Stock.
Notice of Reorganization: The Notice of Mutual Holding Company
Reorganization, to be submitted by the Bank to the Department to notify the
Department of the Reorganization.
Officer: An executive officer of the Bank which includes the
Chairman, President, Chief Executive Officer, Executive Vice President, Senior
Vice President and Vice Presidents in charge of principal business functions,
and any other person participating in major policy making functions of the Bank.
Order Form: The term Order Form means any form together with
attached cover letter, sent by the Bank to any Person containing among other
things a description of the alternatives available to such Person under the Plan
and by which any such Person may make elections regarding subscriptions for
Common Stock in the Subscription and Community Offerings.
Participants: The term Participants means the Eligible Account
Holders, Employee Plans, Supplemental Eligible Account Holders and Current
Depositors.
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 Reorganization from a State Mutual Savings
Bank to a State Mutual Savings Bank Holding Company, pursuant to which the Bank
shall organize a mutual holding company structure and become the wholly owned
subsidiary of the Stock Holding Company, and an indirect subsidiary of the
Mutual Holding Company.
Preferred Stock: Preferred Stock authorized pursuant to the
Stock Holding Company's articles of incorporation.
Public Offering: The term Public Offering means the offering
for sale through the Underwriter to the general public of any shares of Common
Stock not subscribed for in the Subscription Offering.
Purchase Price: The term Purchase Price means the per share
price at which the Common Stock will be sold in accordance with the terms
hereof.
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Qualifying Deposit: The term Qualifying Deposit means the
balance of each Savings Account of $50 or more in the Bank at the close of
business on the Eligibility Record Date or Supplemental Eligibility Record Date.
Savings Accounts with total deposit balances of less than $50 shall not
constitute a Qualifying Deposit.
Reorganization: The reorganization of the Bank into the mutual
holding company structure and the creation of the Mutual Holding Company, the
Stock Bank and the Stock Holding Company pursuant to this Plan.
SAIF: The Savings Association Insurance Fund, which is
administered by the FDIC.
Savings Account(s): Withdrawable deposits in the Bank
including certificates of deposit and demand accounts.
SEC: The Securities and Exchange Commission.
Special Meeting of Depositors: The Special Meeting of
Depositors and any adjournment thereto, which may be called for the purpose of
ratifying the Plan.
Stock Bank: The newly organized New Jersey-chartered stock
savings bank established as part of the Reorganization and which will be wholly
owned by the Stock Holding Company.
Stock Holding Company: The capital stock corporation that will
own 100% of the Stock Bank's common stock and initially will be wholly owned by
the Mutual Holding Company.
Subscription Offering: The term Subscription Offering means
the offering of Common Stock of the Stock Holding Company for purchase through
Order Forms to Participants.
Supplemental Eligibility Record Date: The term Supplemental
Eligibility Record Date means the close of business on the last day of the
calendar quarter preceding the approval of the Plan by the Department.
Supplemental Eligible Account Holder: The term Supplemental
Eligible Account Holder means a holder of a Qualifying Deposit in the Bank
(other than an officer or director or their Associates) at the close of business
on the Supplemental Eligibility Record Date.
Syndicated Community Offering: The term Syndicated Community
Offering means the offering of Common Stock following the Subscription and
Community Offerings through a syndicate of broker-dealers.
Tax-Qualified Employee Stock Benefit Plan: The term
Tax-Qualified Employee Stock Benefit Plan means any defined benefit plan or
defined contribution plan, such as an employee stock ownership plan, stock bonus
plan, profit-sharing plan or other plan, which, with its related trust, meets
the requirements to be "qualified" under Section 401 of the Internal Revenue
Code.
Underwriter: The term Underwriter means the investment banking
firm or firms through which the Common Stock will be offered and sold in the
Public Offering.
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Voting Stock:
(1) Voting Stock means common stock or preferred stock, or
similar interests if the shares by statute, certificate of incorporation or in
any manner, entitle the holder: (i) to vote for or to select directors of the
issuer; and (ii) to vote on or to direct the conduct of the operations or other
significant policies of the issuer.
(2) Notwithstanding anything in paragraph (1) above, preferred
stock is not "Voting Stock" if: (i) voting rights associated with the preferred
stock are limited solely to the type customarily provided by statute with regard
to matters that would significantly and adversely affect the rights or
preferences of the preferred stock, such as the issuance of additional amounts
or classes of senior securities, the modification of the terms of the preferred
stock, the dissolution of the issuer, or the payment of dividends by the issuer
when preferred dividends are in arrears; (ii) the Preferred Stock represents an
essentially passive investment or financing device and does not otherwise
provide the holder with control over the issuer; and (iii) the preferred stock
does not at the time entitle the holder, by statute, charter, or otherwise, to
select or to vote for the selection of directors of the issuer.
(3) Notwithstanding anything in paragraphs (1) and (2) above,
"Voting Stock" shall be deemed to include preferred stock and other securities
that, upon transfer or otherwise, are convertible into Voting Stock or
exercisable to acquire Voting Stock where the holder of the stock, convertible
security or right to acquire Voting Stock has the preponderant economic risk in
the underlying Voting Stock. Securities immediately convertible into Voting
Stock at the option of the holder without payment of additional consideration
shall be deemed to constitute the Voting Stock into which they are convertible;
other convertible securities and rights to acquire Voting Stock shall not be
deemed to vest the holder with the preponderant economic risk in the underlying
Voting Stock if the holder has paid less than 50% of the consideration required
to directly acquire the Voting Stock and has no other economic interest in the
underlying Voting Stock.
3. Business Purposes for the Reorganization
The Bank has several business purposes for effecting the proposed
Reorganization. The Reorganization will structure the Bank in the stock form,
which is used by commercial banks, most major business corporations and the
majority of savings banks and savings associations. Formation of the Stock Bank
as a wholly owned capital stock savings bank subsidiary of the Stock Holding
Company will permit the Stock Holding Company to issue Capital Stock and infuse
the proceeds into the Stock Bank, which is a source of capital not available to
mutual savings banks. At the same time, the Bank's mutual form of ownership will
be preserved in the Mutual Holding Company, and the Mutual Holding Company, as a
mutual corporation, will at all times control at least a majority of the Voting
Stock of the Stock Holding Company so long as the Mutual Holding Company remains
in existence. The Reorganization will enable the Bank to achieve many of the
benefits of a stock company without a loss of control and independence that
sometimes follows standard conversions from mutual to stock form. The Bank is
committed to being an independent community-oriented institution, and to meeting
the financial and credit needs of the communities in which it operates. The
Board of Directors believes that the mutual holding company structure is best
suited for this purpose, particularly since standard mutual-to-stock conversions
often result in the sale of locally based savings institutions to larger
regional commercial banks.
Formation of the Stock Holding Company is expected to facilitate
acquisitions and the diversification of the Bank's activities, although the Bank
currently has no diversification or acquisition plans. The Stock Holding Company
will have the ability to acquire other financial institutions and non-financial
institutions which may be owned and operated separate from the Bank. For
economic, legal
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liability and tax purposes, it may also be advantageous to have assets held by
the Stock Holding Company instead of the Bank.
The mutual holding company structure will give the Stock Holding
Company flexibility to issue Capital Stock in Minority Stock Offerings at
various times and in varying amounts as market conditions permit, rather than in
a single stock offering. This will better enable the Stock Holding Company to
reinvest the proceeds of any such Minority Stock Offering in a safe and sound
manner. The sale of Capital Stock at appropriate times, coupled with the
accumulation of earnings (net of dividends) from year to year, represents a
means for the orderly preservation and expansion of the Bank's capital base, and
allows flexibility to respond to sudden and unanticipated capital needs.
The formation of the Mutual Holding Company will allow the Mutual
Holding Company and/or the Stock Holding Company to borrow funds, on a secured
and unsecured basis, and to issue debt to the public or in a private placement.
The proceeds of any such borrowings or debt issuance may be contributed to the
Stock Bank as core capital for regulatory capital purposes. No determination has
been made to borrow funds or issue debt at the present time, and there can be no
assurance when, if ever, any such borrowing or debt issuance would occur, or
whether it would be consummated on terms satisfactory to the Mutual Holding
Company or the Stock Holding Company.
4. Method of Reorganization and Certain Effects of the Reorganization
A. Organization of the Mutual Holding Company, the Stock Holding
Company and the Stock Bank.
A principal part of the Reorganization will be the organization of the
Stock Bank which will be a wholly owned subsidiary of the Stock Holding Company.
The Reorganization is expected to be effected in the following manner, or in any
manner approved by the Commissioner that is consistent with the purposes of this
Plan and applicable laws and regulations.
1. The Bank will organize the Mutual Holding Company, which will
initially exist as an interim stock subsidiary of the Bank.
2. The Mutual Holding Company will organize the Stock Holding
Company under state law as a wholly owned subsidiary.
3. The Mutual Holding Company will organize Interim as a wholly
owned New Jersey stock savings bank subsidiary.
4. The Bank will convert to the capital stock form of
organization by exchanging its charter for that of a New
Jersey stock savings bank (becoming the Stock Bank).
5. Interim will merge with and into the Stock Bank with the Stock
Bank as the surviving entity, and the Mutual Holding Company
will become sole stockholder of the Stock Bank.
6. The Mutual Holding Company will contribute the capital stock
of the Stock Bank to the Stock Holding Company, and the Stock
Bank will become a wholly owned subsidiary of the Stock
Holding Company.
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Based upon tax, regulatory, economic or other business reasons, the
Reorganization can eliminate the Middle-Tier Stock Holding Company or otherwise
be revised without any further depositor ratification. At the conclusion of the
Reorganization, the Stock Bank will be the wholly owned subsidiary of the Stock
Holding Company, and the Stock Holding Company will be majority owned by the
Mutual Holding Company.
B. Ownership and Operation of the Mutual Holding Company
The Mutual Holding Company will be a mutual corporation organized under
New Jersey law. As a mutual corporation, the Mutual Holding Company will have no
stockholders. The Mutual Holding Company will own between 50.1% and 100% of the
Voting Stock of the Stock Holding Company, and will be required to own at least
a majority of the Voting Stock of the Stock Holding Company so long as the
Mutual Holding Company remains in existence. The Mutual Holding Company will
have a board of directors which is expected initially to consist of all of the
members of the board of directors of the Bank. It is expected that management of
the Mutual Holding Company will consist initially of the senior management
person of the Bank.
The rights and powers of the Mutual Holding Company will be defined by
the Mutual Holding Company's Certificate of Incorporation and Bylaws and by the
statutory and regulatory provisions applicable to bank holding companies under
Federal and New Jersey law. Depositors who have liquidation rights in the Bank
immediately prior to the Reorganization will continue to have such rights in the
Mutual Holding Company after the Reorganization for so long as they maintain
deposit accounts in the Stock Bank after the Reorganization. Initially, the sole
business of the Mutual Holding Company will be the ownership of at least a
majority of the voting stock of the Stock Holding Company. The Board of
Directors will continue to have the sole voting rights to govern the Mutual
Holding Company, just as they do now for the Bank.
The Bank will apply to the Commissioner to have the Mutual Holding
Company receive or retain (as the case may be) $200,000, in connection with the
Reorganization. The Stock Holding Company may distribute additional capital to
the Mutual Holding Company following the Reorganization subject to applicable
state and federal regulations regarding capital distributions.
C. Ownership and Operation of the Stock Holding Company
The Stock Holding Company will be a capital stock corporation organized
under New Jersey law. The Mutual Holding Company initially will be the sole
stockholder of the Stock Holding Company, and so long as the Mutual Holding
Company is in existence, the Mutual Holding Company will be required to own at
least a majority of the Voting Stock of the Stock Holding Company. However, the
Stock Holding Company may issue any amount of Non-Voting Stock to persons other
than the Mutual Holding Company, and will be authorized to undertake one or more
Minority Stock Offerings provided the aggregate amount of Voting Stock sold in
such Minority Stock Offerings of less than a majority in the aggregate of the
total outstanding Voting Stock of the Stock Holding Company, subject to any
required regulatory approvals. The Stock Holding Company will own 100% of the
Voting Stock of the Stock Bank so long as the Mutual Holding Company is in
existence.
The initial members of the board of directors of the Stock Holding
Company will be the existing members of the board of directors of the Bank.
Thereafter, the holders of shares of the Stock Holding Company's Voting Stock
will elect the members of the Board of Directors of the Stock Holding Company
for three year terms with approximately one-third of the members of the Stock
Holding Company's board of directors elected annually.
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The Stock Holding Company will be able to exercise all of the powers
authorized to a New Jersey corporation, subject to the restrictions applicable
to savings bank holding companies under the BHCA and New Jersey law. Initially,
the sole business activity of the Stock Holding Company will be the ownership of
100% of the Voting Stock of the Bank.
The Bank will apply to the Commissioner to have the Stock Holding
Company receive or retain (as the case may be) up to one-half of the net
proceeds raised in connection with the Minority Stock Offering. The Stock Bank
may distribute additional capital to the Stock Holding Company following the
Reorganization, subject to applicable state and Federal regulations governing
capital distributions.
D. Ownership and Operation of the Stock Bank
The Stock Bank will be a capital stock savings bank organized under New
Jersey Law. The initial members of the Board of Directors of the Stock Bank will
be the existing Board of Directors of the Bank. Thereafter, the Stock Holding
Company, as the sole stockholder of the Stock Bank, will elect the members of
the Stock Bank's Board of Directors for three year terms with approximately
one-third of the directors up for election each year. The present management of
the Bank will continue as the management of the Stock Bank following the
Reorganization.
The Stock Bank will be authorized to exercise any and all powers,
rights and privileges of, and shall be subject to all limitations applicable to,
capital stock savings banks under New Jersey law. The Reorganization will not
result in any reduction of the amount of retained earnings (other than the
assets of the Bank retained by, or distributed to, the Mutual Holding Company or
the Stock Holding Company), undivided profits, and general loss reserves that
the Bank had prior to the Reorganization. Such retained earnings and general
loss reserves will be accounted for by the Mutual Holding Company, the Stock
Holding Company and the Stock Bank on a consolidated basis in accordance with
generally accepted accounting principles.
All insured deposit accounts of the Stock Bank will continue to be
federally insured up to the legal maximum by the FDIC in the same manner as
deposit accounts existing in the Bank immediately prior to the Reorganization.
All loans and other borrowings from the Bank shall retain the same status with
the Stock Bank after the Reorganization as they had with the Bank immediately
prior to the Reorganization.
So long as the Mutual Holding Company is in existence, the Stock
Holding Company will be required to own 100% of the Voting Stock of the Stock
Bank. The Stock Bank may issue any amount of Non-Voting Stock to persons other
than the Stock Holding Company.
E. Expenses of the Reorganization
The Bank shall use its best efforts to assure that expenses incurred by
it in connection with the Reorganization shall be reasonable.
5. Conditions to Implementation of the Reorganization
Consummation of the Reorganization is expressly conditioned upon prior
occurrence of the following:
A. Approval of the Plan by the affirmative vote of two thirds of
the Board of Directors of the Bank.
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B. Ratification of the Plan by the Depositors at the Special Meeting of
Depositors.
C. Approval by the Commissioner of the Plan, the certificate of
incorporation and bylaws of the Stock Bank and the Mutual
Holding Company, and all other transactions contemplated by
the Plan for which approval is required by the Commissioner.
D. Submission of the FDIC Notice to the FDIC and the Bank either
(i) receives a notice of intent not to object from the FDIC,
or (ii) 60 days (subject to extension for an additional 60
days) have passed following the acceptance of a complete FDIC
Notice by the FDIC.
E. Approval by the FRB pursuant to the BHCA for the Stock Holding
Company to become a bank holding company by owning or
acquiring 100% of the common stock of the Stock Bank to be
issued in connection with the Reorganization.
F. Approval by the FRB pursuant to the BHCA for the Mutual
Holding Company to become a bank holding company by owning or
acquiring 100% of the common stock of the Stock Holding
Company to be issued in connection with the Reorganization.
G. Approval by the FDIC pursuant to the BMA of the merger of
Interim with the Stock Bank or the transfer by the Bank to the
Stock Bank of substantially all of the Bank's assets and all
of its liabilities, including all of the deposit accounts of
the Bank, and if necessary approval by the FDIC of insurance
of accounts of the Stock Bank.
H. Receipt by the Bank of either a private letter ruling from the
Internal Revenue Service or an opinion of the Bank's counsel
as to the federal income tax consequences of the
Reorganization to the Mutual Holding Company, the Stock
Holding Company, the Stock Bank and the Bank.
I. Receipt by the Bank of either a private letter ruling of the
New Jersey Department of Revenue or an opinion of counsel or
the Bank's independent public accountants as to the New Jersey
income tax consequences of the Reorganization to the Mutual
Holding Company, the Stock Holding Company, the Stock Bank and
the Bank.
J. For regulatory, economic, timing or other business reasons,
the Board of Directors may elect to eliminate the Stock
Holding Company, as a middle tier, between the Mutual Holding
Company and Stock Bank.
The Bank intends to consummate the Reorganization as soon as possible
after all of the above approvals are obtained.
6. Ratification by Depositors
Pursuant to the laws of the State of New Jersey, the voting rights of
the Bank are held exclusively by the Board of Directors, which is required to
adopt the Plan by a vote of not less than two-thirds of its entire membership.
The FDIC has issued Regulations, under which all state savings banks are
generally required to have plans to reorganize from mutual to stock form
approved by Depositors. Accordingly, the Bank is expected to seek special
proxies from depositors to ratify the Plan. Subsequent to the approval of the
Plan by the Department, a Special Meeting of Depositors is expected to be
scheduled. At least ten days but not more than sixty days prior to the Special
Meeting, the Savings Bank
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is expected to distribute proxy solicitation materials to all Depositors as of a
Date of Record twenty to sixty days prior to the Special Meeting.
Each Depositor as of the Date of Record shall receive one vote for
every $100 of deposits at the Bank. The Bank shall seek ratification of the Plan
by an affirmative vote of not less than a majority of the votes outstanding.
7. Stock Offering Documents
The Stock Holding Company and Bank intend to commence a Minority Stock
Offering concurrent with the formation of the Mutual Holding Company. The Stock
Holding Company and the Bank may also commence one or more stock offerings
following the Reorganization. The Stock Holding Company and the Bank may close
the Minority Stock Offering before the Effective Date, provided that the offer
and sale of the Common Stock shall be conditioned upon the receipt of all
required regulatory approvals and depositor ratification. The Bank may send
Participants a Summary of the Reorganization and require Participants, to return
to the Bank by a reasonable date certain a postage prepaid card or other written
communication requesting receipt of the Stock Offering Prospectus. The Stock
Holding Company and Bank shall not distribute the final Minority Stock Offering
Prospectus until such Offering Prospectus has been approved for use by the
Department.
Any shares of Common Stock sold in the Minority Stock Offering that are
not subscribed for in the Subscription Offering may be offered for sale in the
Community Offering, if any, as provided in this Plan and may be offered in a
Public Offering or Syndicated Public Offering, as provided herein, if necessary
and feasible. The Subscription Offering may be commenced prior to the Special
Meeting of Depositors and, in that event, the Community Offering, if any, or
Public Offering may also be commenced prior to the Special Meeting of
Depositors.
The Stock Holding Company and Bank may elect to pay fees on either a
fixed fee or commission basis or combination thereof to an investment banking
firm which assists it in the sale of the Common Stock in the Minority Stock
Offering.
The Stock Holding Company and Bank may also elect to offer to pay fees
on a per share basis to brokers who assist Persons in determining to purchase
shares in the Syndicated Public Offering.
Within the time period required by applicable laws and regulations, the
Stock Holding Company will register the Common Stock issued in connection with
the Minority Stock Offering pursuant to the Securities Exchange Act of 1934 and
will not deregister the Common Stock 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 Stock Holding Company. In
addition, the Stock Holding Company will use its best efforts to encourage and
assist a market-maker to establish and maintain a market for the Common Stock
and to list the Common Stock on a national or regional securities exchange or
The Nasdaq Stock Market, Inc.
8. Stock Offering
A. Number of Shares. The number of shares and price per share of Common
Stock to be offered pursuant to the Plan shall be initially determined by the
Board of Directors of the Bank in conjunction with the determination of the
Independent Appraiser. The number of shares to be offered will be on a
minimum-maximum basis within a range determined by the Board of Directors (the
"Offering Range") and may be adjusted at or immediately subsequent to the
completion of the Minority Stock
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Offering without notifying Participants and without a resolicitation of
subscriptions. The number of shares to be offered or Offering Range may be
subsequently adjusted at or immediately subsequent to the completion of the
Minority Stock Offering for any reason, including a change in the appraisal. The
total number of shares of Common Stock that may be issued to persons other than
the Mutual Holding Company at the close of the Minority Stock Offering must be
less than 50% of the issued and outstanding shares of the Stock Holding Company.
B. Independent Evaluation and Purchase Price of Shares. All shares of
Common Stock sold in the Minority Stock Offering shall be sold at a uniform
price per share, referred to in this Plan as the "Purchase Price". The Purchase
Price and number of shares shall be determined by the Board of Directors of the
Bank immediately prior to the simultaneous completion of all such sales
contemplated by this Plan on the basis of the estimated pro forma market value
of the Bank and the fact that the shares offered represent a minority interest
in the Stock Bank. However, the estimated pro forma market value of the Bank and
the value of shares representing a specified minority interest in the Stock
Holding Company must be determined by an Independent Appraiser (the "Independent
Evaluation"). Therefore, the Independent Evaluation and the resulting Purchase
Price may reflect a discount to the valuation applied to a standard
mutual-to-stock conversion. The aggregate purchase price for the Common Stock
will not be inconsistent with such market value of the Bank. The Independent
Evaluation shall be determined for such purpose by an Independent Appraiser on
the basis of such appropriate factors as are not inconsistent with Department
regulations. The total amount of Common Stock that may be issued to persons
other than the Mutual Holding Company must be less than 50% of the outstanding
stock of the Stock Holding Company. The Common Stock to be issued in the
Minority Stock Offering shall be fully paid and nonassessable.
C. Minority Ownership Percentage. Based upon the Independent
Appraiser's valuation of the Bank as updated prior to the commencement of the
Minority Stock Offering, the Board of Directors will establish the minimum and
maximum ownership percentage applicable to the Minority Stock Offering
("Ownership Range"). The final minority ownership percentages or interest will
be determined by the Bank as follows: (a) the product of (x) the total number of
shares of Common Stock to be issued and sold and (y) the Purchase Price shall be
by divided by (b) the estimated aggregate pro forma market value of the Bank
immediately after the Minority Stock Offering as determined by the Independent
Appraiser, expressed in terms of a specific aggregate dollar amount upon the
closing of the Minority Stock Offering or sale of all the Common Stock.
D. Method of Offering Shares. Subject to the discretion of the Bank and
the limitations set forth herein, the opportunity to purchase Common Stock will
be given at no cost to: (i) Eligible Account Holders, (ii) Tax-Qualified
Employee Plans, (iii) Supplemental Eligible Account Holders, and (iv) Current
Depositors pursuant to priorities established by the Board of Directors. The
Minority Stock Offering shall be conducted on a minimum-maximum basis, setting
forth the minimum and maximum amount of stock that must be offered and sold
before closing. The Bank and the Stock Holding Company, in their absolute
discretion, have the right to refuse in part or in whole any order for stock
sold in the Minority Stock Offering either at the time of receipt or as soon as
practicable following the termination of the Minority Stock Offering in
accordance with the Plan of Reorganization. The Bank shall be entitled to retain
an adviser and pay fees to assisting brokers in connection with the Minority
Stock Offering. The shares of Common Stock may be offered on a minimum - maximum
basis. The priorities for the purchase of Common Stock are as set forth below:
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9. Subscription Rights of Eligible Account Holders (First Priority)
A. Each Eligible Account Holder shall receive, without payment,
nontransferable subscription rights to subscribe for shares of Common Stock
equal to the greater of: (i) the maximum established for the Community Offering;
(ii) one-tenth of one percent of the Common Stock offered; or (iii) 15 times the
product (rounded down to the next whole number) obtained by multiplying the
total number of shares of Common Stock offered by a fraction of which the
numerator is the amount of the Qualifying Deposit of such Eligible Account
Holder and the denominator is the total amount of Qualifying Deposits of all
Eligible Account Holders but in no event greater than the maximum purchase
limitation specified in Section 15 hereof. All such purchases are subject to the
maximum and minimum purchase limitations specified in Section 15.
B. In the event that Eligible Account Holders exercise Subscription
Rights for a number of shares of Common Stock in excess of the total number of
such shares eligible for subscription, the shares of Common Stock shall be
allocated among the subscribing Eligible Account Holders so as to permit each
subscribing Eligible Account Holder, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation of Common Stock
equal to the lesser of 100 shares or the number of shares subscribed for by the
Eligible Account Holder. Any shares remaining after that allocation 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 or all subscriptions
satisfied.
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 twelve (12) months preceding the Eligibility Record Date
shall be subordinated to the Subscription Rights of all other Eligible Account
Holders.
10. Subscription Rights of Employee Plans (Second Priority)
Subject to the availability of sufficient shares after filling
subscription orders of Eligible Account Holders under Section 9, the Employee
Plans shall receive without payment nontransferable subscription rights to
purchase in the Subscription Offering the number of shares of Common Stock
requested by such Plans, subject to the purchase limitations set forth in
Section 15.
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 Stock
Holding Company or the Bank.
11. Subscription Rights of Supplemental Eligible Account Holders (Third
Priority)
A. In the event that the Eligibility Record Date is more than 15 months
prior to the date of the latest amendment to the application filed prior to
Department approval, then, and only in that event, each Supplemental Eligible
Account Holder shall receive, without payment, nontransferable subscription
rights entitling such Supplemental Eligible Account Holder to purchase that
number of shares of Common Stock which is equal to the greater of: (i) the
maximum purchase limitation established for the Community Offering; (ii)
one-tenth of 1% of the Common Stock Offered; and (iii) or 15 times the product
(rounded down to the next whole number) obtained by multiplying the total number
of shares of
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Common Stock to be issued by a fraction of which the numerator is the amount of
the Qualifying Deposit of the Supplemental Eligible Account Holder and the
denominator is the total amount of the Qualifying Deposits of all Supplemental
Eligible Account Holders. All such purchases are subject to the maximum and
minimum purchase limitations in Section 15.
B. Subscription rights received pursuant to this Category shall be
subordinated to the subscription rights received by Eligible Account Holders and
by the Employee Plans.
C. Any subscription rights to purchase shares of Common Stock received
by an Eligible Account Holder in accordance with Section 9 shall reduce to the
extent thereof the subscription rights to be distributed pursuant to this
Section.
D. In the event of an oversubscription for shares of Common Stock
pursuant to this Section, shares of Common Stock shall be allocated among the
subscribing Supplemental Eligible Account Holders as follows:
(1) Shares of Common Stock shall be
allocated so as to permit each such Supplemental
Eligible Account Holder, to the extent possible, to
purchase a number of shares of Common Stock
sufficient to make his total allocation (including
the number of shares of Common Stock, if any,
allocated in accordance with Section 9) equal to 100
shares of Common Stock or the total amount of his
subscription, whichever is less.
(2) Any shares of Common Stock not allocated
in accordance with subparagraph (1) above shall be
allocated among the subscribing Supplemental Eligible
Account Holders on an equitable basis, related to the
amounts of their respective Qualifying Deposits as
compared to the total Qualifying Deposits of all
subscribing Supplemental Eligible Account Holders.
12. Subscription Rights of Current Depositors (Fourth Priority)
A. Each Current Depositor shall receive, without payment,
nontransferable subscription rights to subscribe for shares of Common Stock in
an amount equal to the greater of the maximum purchase limitation established
for the Community Offering or one-tenth of one percent of the Common Stock
offered, subject to the maximum and minimum purchase limitations specified in
Section 15, which will be allocated only after first allocating to Eligible
Account Holders, the Employee Plans and Supplemental Eligible Account Holders
all shares of Common Stock subscribed for pursuant to Sections 9, 10 and 11
above.
B. In the event that such Current Depositors subscribe for a number of
shares of Common Stock which, when added to the shares of Common Stock
subscribed for by the Eligible Account Holders, the Employee Plans and the
Supplemental Eligible Account Holders is in excess of the total number of shares
of Common Stock being issued, the subscriptions of such Current Depositors will
be allocated among the subscribing Current Depositors so as to permit each
subscribing Current Depositor, to the extent possible, to purchase a number of
shares sufficient to make his total allocation of Common Stock equal to the
lesser of 100 shares or the number of shares subscribed for by the Current
Depositor. Any shares remaining will be allocated among the subscribing Current
Depositors whose subscriptions remain unsatisfied on a 100 shares (or whatever
lesser amount is available) per order basis until all orders have been filled or
the remaining shares have been allocated.
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13. Community Offering
If less than the total number of shares of Common Stock to be
subscribed for in the Minority Offering are sold in the Subscription Offering,
it is expected that shares remaining unsubscribed may be made available for
purchase in the Community Offering to certain members of the general public,
which may subscribe together with any Associate or group of persons Acting in
Concert for up to that number of shares of Common Stock as shall equal $200,000
divided by the Purchase Price per share, subject to the maximum and minimum
purchase limitations specified in Section 15. The shares may be made available
in the Community Offering through a direct community marketing program which may
provide for utilization of a broker, dealer, consultant or investment banking
firm, experienced and expert in the sale of savings institution securities. In
the Community Offering, if any, shares will be available for purchase by the
general public with preference given first to natural persons residing in the
Local Community and second, to natural persons residing in the State of New
Jersey ("Community Purchasers"). The Bank shall make distribution of the Common
Stock to be sold in the Community Offering in such a manner as to promote a wide
distribution of Common Stock.
If the Community Purchasers in the Community Offering (if any), whose
orders would otherwise be accepted, subscribe for more shares than are available
for purchase, the shares available to them will be allocated among persons
submitting orders in the Community Offering in an equitable manner as determined
by the Board of Directors. The Bank may establish all terms and conditions of
such offer.
The Community Offering, if any, may commence simultaneously with,
during or subsequent to the completion of the Subscription Offering and if
commenced simultaneously with or during the Subscription Offering the Community
Offering may be limited to Community Purchases. The Community Offering, if any,
must be completed within 45 days after the completion of the Subscription
Offering unless otherwise extended by the Department.
The Bank, in its absolute discretion, reserves the right to reject any
or all orders in whole or in part which are received in the Community Offering,
at the time of receipt or as soon as practicable following the completion of the
Community Offering.
14. Public Offering and Syndicated Public Offering
Any shares of Common Stock not sold in the Subscription Offering or in
the Community Offering, if any, may then be sold through the Underwriter to the
general public at the Purchase Price in the Public Offering, subject to such
terms, conditions and procedures as may be determined by the Board of Directors
of the Bank, in a manner that will achieve the widest distribution of the Common
Stock and subject to the right of the Bank, in its absolute discretion, to
accept or reject in whole or in part all subscriptions in the Public Offering.
In the Public Offering, if any, any person together with any Associate or group
of persons Acting in Concert may purchase up to the maximum purchase limitation
established for the Community Offering, subject to the maximum and minimum
purchase limitations specified in Section 15. Shares purchased by any Person
together with any Associate or group of persons Acting in Concert pursuant to
Section 13 shall be counted toward meeting the maximum purchase limitation
specified for this Section. Provided that the Subscription Offering has
commenced, the Bank may commence the Public Offering at any time after the
mailing to the Current Depositors of the Proxy Statement to be used in
connection with the Special Meeting of Depositors, provided that the completion
of the offer and sale of the Common Stock shall be conditioned upon the
ratification of this Plan by the Current Depositors. It is expected that the
Public Offering, if any, will commence just prior to, or as soon as practicable
after, the termination of the Subscription Offering. The Public Offering shall
be
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completed within 45 days after the termination of the Subscription Offering,
unless such period is extended as provided above.
Shares of Common Stock not subscribed for in the Subscription Offering,
Community Offering, if any, and Public Offering may be sold in a Syndicated
Public Offering, subject to such terms, conditions and procedures as may be
determined by the Board of Directors of the Bank, in a manner that will achieve
the widest distribution of the Common Stock subject to the right of the Bank and
the Underwriter, in their absolute discretion, to accept or reject in whole or
in part all subscriptions in the Syndicated Public Offering. In the Syndicated
Public Offering, any person together with any Associate or group of persons
Acting in Concert may purchase up to the maximum purchase limitation established
for the Public Offering, subject to the maximum and minimum purchase limitations
specified in Section 15. Shares purchased by any Person together with any
Associate or group of persons Acting in Concert pursuant to Section 13 shall be
counted toward meeting the maximum purchase limitation specified for this
Section. Provided that the Subscription Offering has commenced, the Bank may
commence the Syndicated Public Offering at any time after the mailing to the
Current Depositors of the Proxy Statement to be used in connection with the
Special Meeting of Depositors, provided that the completion of the offer and
sale of the Common Stock shall be conditioned upon the ratification of this Plan
by the Current Depositors. If the Syndicated Public Offering is not sooner
commenced pursuant to the provisions of the preceding sentence, the Syndicated
Public Offering will be commenced as soon as practicable following the date upon
which the Subscription Offering and Community Offering, if any, terminate.
If for any reason a Public Offering or Syndicated Public Offering of
shares of Common Stock not sold in the Subscription and Community Offerings can
not be effected, other purchase arrangements will be made for the sale of
unsubscribed shares by the Bank, if possible. Such other purchase arrangements
will be subject to the approval of the Department and the FDIC. Common Stock not
sold to persons in the Subscription Offering will be sold in any of the
Community Offering, the Public Offering or the Syndicated Public Offering or a
combination of these offerings, subject to the feasibility of the manner of sale
being demonstrated to the Department and the FDIC, unless a determination by the
Stock Holding Company to not conduct any of the Community Offering, Public
Offering and Syndicated Public Offering is not objected to by the Department and
the FDIC.
15. Limitation on Purchases
The following limitations shall apply to all purchases of shares of
Common Stock in the Minority Stock Offering:
A. The maximum number of shares of Common Stock which may be purchased
in the Subscription Offering by any person (or persons through a single account)
in the First Priority, Third Priority and Fourth Priority shall not exceed such
number of shares as shall equal $200,000 divided by the Purchase Price.
B. The maximum number of shares of Common Stock which may be subscribed
for or purchased in all categories in the Minority Stock Offering by any Person
(or persons through a single account) or Participant together with any Associate
or group of persons Acting in Concert shall not exceed such number of shares as
shall equal $200,000 divided by the Purchase Price per share, except for
Employee Plans, which in the aggregate may subscribe for up to 10% of the Common
Stock issued in the Minority Stock Offering.
C. The maximum number of shares of Common Stock which may be purchased
in all categories in the conversion by Officers and Directors of the Bank and
their Associates in the aggregate
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shall not exceed 31% of the total number of shares of Common Stock issued in the
Minority Stock Offering.
D. A minimum of 100 shares of Common Stock must be purchased by each
Person purchasing shares in the conversion to the extent those shares are
available; provided, however, that the minimum number of shares requirement will
not apply if the number of shares of Common Stock purchased times the price per
share exceeds $500, in which case a lower minimum number of shares may be set as
long as that minimum, multiplied by the price per share, does not exceed $500.
E. If the number of shares of Common Stock otherwise allocable pursuant
to Sections 9 through 14, inclusive, to any Person or that Person's Associates
would be in excess of the maximum number of shares permitted as set forth above,
the number of shares of Common Stock allocated to each such person shall be
reduced to the lowest limitation applicable to that Person, and then the number
of shares allocated to each group consisting of a Person and that Person's
Associates shall be reduced so that the aggregate allocation to that Person and
his Associates complies with the above maximums, and such maximum number of
shares shall be reallocated among that Person and his Associates in proportion
to the shares subscribed by each (after first applying the maximums applicable
to each Person, separately).
F. Depending upon market or financial conditions, the Board of
Directors of the Bank, without further approval of the Members, may decrease or
increase the purchase limitations in this Plan, provided that the maximum
purchase limitations may not be increased to a percentage in excess of 5% of the
Minority Stock Offering. If the Bank increases the maximum purchase limitations,
the Bank is only required to resolicit Persons who subscribed for the maximum
purchase amount and may, in the sole discretion of the Bank, resolicit certain
other large subscribers. For purposes of this Section 15, the Trustees of the
Bank 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 Trustees of the
Bank.
G. In the event of an increase in the total number of shares offered in
the Minority Stock Offering due to an increase in the maximum of the Estimated
Valuation Range of up to 15% (the "Adjusted Maximum") the additional shares will
be used in the following order of priority: (i) in the event that there is an
oversubscription at the Eligible Account Holder level, to fill unfilled
subscriptions of Eligible Account Holders; (ii) in the event that there is an
oversubscription at the Employee Plan level, fill the Employees Plan's
subscription up to 10% of the Adjusted Maximum; (iii) in the event that there is
an oversubscription at the Supplemental Eligible Account Holder level, to fill
unfilled subscriptions of Supplemental Eligible Account Holders; (iv) in the
event that there is an oversubscription at the Current Depositor level, to fill
unfilled subscriptions of Current Depositors; and (v) to fill unfilled
Subscriptions in the Community Offering, with preference given to Persons
residing in the Local Community.
H. Each Person purchasing Common Stock in the Minority Stock Offering
shall be deemed to confirm that such purchase does not conflict with the above
purchase limitations contained in this Plan.
I. For a period of three years following the Reorganization, no
Officer, Director or their Associates shall purchase, without the prior written
approval of the Department, any outstanding shares of common stock of the Bank,
except from a registered broker-dealer. This provision shall not apply to
negotiated transactions involving more than one percent of the outstanding
shares of common stock of the Bank, the exercise of any options pursuant to a
stock option plan or purchases of common stock of the Bank, made by or held by
any Tax-Qualified Employee Stock Benefit Plan or Non-Tax Qualified Employee
Stock Benefit Plan of the Bank (including the Employee Plans) which may be
attributable to any Officer or Trustee. 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
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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.
16. Payment for Common Stock
All payments for Common Stock subscribed for in the Subscription,
Community (if any), Public and Syndicated Public Offerings (if applicable) must
be delivered in full to the Bank, together with a properly completed and
executed original Order Form, or purchase order in the case of the Syndicated
Public Offering, on or prior to the expiration date specified on the Order Form
or purchase order, as the case may be, unless such date is extended by the Bank;
provided, however, that if the Employee Plans subscribes for shares during the
Subscription Offering, the Employee Plan will not be required to pay for the
shares at the time they subscribe but rather may pay for such shares of Common
Stock upon consummation of the Reorganization. The Bank may make scheduled
discretionary contributions to an Employee Plan provided such contributions do
not cause the Bank to fail to meet its regulatory capital requirement.
Notwithstanding the foregoing, the Bank and the Stock Holding Company
shall have the right, in their sole discretion, to permit institutional
investors to submit contractually irrevocable orders in the Community (if any),
Public or Syndicated Public Offering and to thereafter submit payment for the
Common Stock for which they are subscribing in the Community (if any), Public or
Syndicated Public Offering at any time prior to the completion of the
Reorganization. However, this right of the Stock Holding Company and the Bank is
subject to (1) the right of natural persons with a preference in the Community
Offering, to the extent a Community Offering is held and (2) the offer and sale
of Common Stock in a manner that will achieve the widest distribution of Common
Stock.
Payment for Common Stock subscribed for shall be made either in cash
(if delivered in person), check or money order. Alternatively, subscribers in
the Subscription, Community (if any) and Public Offerings may pay for the shares
subscribed for by authorizing the Bank on the Order Form to make a withdrawal
from the subscriber's Savings Account at the Bank in an amount equal to the
purchase price of such shares. Such authorized withdrawal, whether from a
savings passbook or certificate account, 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
Savings Account but may not be used by the subscriber until the Common Stock has
been sold or the 45-day period (or such longer period as may be approved by the
Department) following the Subscription Offering has expired, whichever occurs
first. 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
Purchase Price per share. Interest will continue to be earned on any amounts
authorized for withdrawal until such withdrawal is given effect. Interest will
be paid by the Bank at not less than the passbook annual rate on payments for
Common Stock received in cash or by money order or check. 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, Community (if
any), Public and Syndicated Public Offerings will be refunded to them with
interest. In case of amounts authorized for withdrawal from Savings Accounts,
refunds will be made by canceling the authorization for withdrawal.
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The Bank is prohibited by regulation from making any loans or granting
any lines of credit for the purchase of stock in the Reorganization, and
therefore, will not do so.
17. Manner of Exercising Subscription Rights Through Order Forms
As soon as practicable after the Offering Prospectus prepared by the
Stock Holding Company and the Bank has been authorized for use by the
Department, Order Forms will be distributed to the Participants at their last
known addresses appearing on the records of the Bank for the purpose of
subscribing to shares of Common Stock in the Subscription Offering and will be
made available for use in the Community Offering. Notwithstanding the foregoing,
the Bank may elect to send Order Forms only to those Persons who request them
after such notice as is approved by the Department and is adequate to apprise
the Participants of the pendency of the Subscription Offering has been given.
Such notice may be included with the proxy statement for the Special Meeting and
may also be included in a notice of the pendency of the Reorganization and the
Special Meeting sent to all Eligible Account Holders in accordance with
regulations of the Department.
Each Order Form will be preceded or accompanied by the Offering
Prospectus describing the Bank, the Common Stock and the Subscription, Community
and Syndicated Community Offerings. 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, which date shall be not less than twenty (20), nor more than forty-five
(45) days, following the date on which the Order Forms are mailed by the Bank,
and which date will constitute the termination of the Subscription Offering;
B. The purchase price per share for shares of Common Stock to be sold
in the Subscription, Community (if any), Public and Syndicated Public Offerings;
C. A description of the minimum and maximum number of shares of Common
Stock which may be subscribed for pursuant to the exercise of Subscription
Rights or otherwise purchased in the Community (if any), Public or Syndicated
Public Offerings;
D. Instructions as to how the recipient of the Order Form is to
indicate thereon the number of shares of Common Stock 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 Offering Prospectus, as the case may be, prior to execution
of the Order Form.
F. A statement to the effect that all subscription rights are
nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering within the subscription period such properly
completed and executed Order Form, together with cash (if delivered in person),
check or money order in the full amount of the purchase price as specified in
the Order Form for the shares of Common Stock for which the recipient elects to
subscribe in the Subscription Offering (or by authorizing on the Order Form that
the Bank withdraw said amount from the subscriber's Savings Account at the Bank)
to the Bank; and
G. A statement to the effect that the executed Order Form, once
received by the Bank, may not be modified or amended by the subscriber without
the consent of the Bank.
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Notwithstanding the above, the Bank reserves the right in its sole
discretion to accept or reject orders received on photocopied or facsimiled
order forms or whose payment is to be made by wire transfer.
18. Undelivered, Defective or Late Order Forms: Insufficient Payment
In the event Order Forms (a) are not delivered and are returned to the
Bank by the United States Postal Service or the Bank is unable to locate the
addressee, (b) are not received back by the Bank or are received by the Bank
after the expiration date specified thereon, (c) are defectively filled out or
executed, (d) are not accompanied by the full required payment, or, in the case
of institutional investors in the Community (if any), Public or Syndicated
Public Offering, by delivering irrevocable orders together with a legally
binding commitment to pay in cash, check, money order or wire transfer the full
amount of the purchase price prior to 48 hours before the completion of the
conversion for the shares of Common Stock subscribed for (including cases in
which savings 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 Bank 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 Bank may specify. The interpretation of
the Bank of terms and conditions of the Plan and of the Order Forms will be
final, subject to the authority of the Department.
19. Restrictions on Resale or Subsequent Disposition
A. All shares of Common Stock purchased by Directors or Officers of the
Bank in the Minority Stock Offering shall be subject to the restriction that,
except as provided in Section B, below, or as may be approved by the Department,
no interest in such shares may be sold or otherwise disposed of for value for a
period of one (1) year following the date of purchase.
B. The restriction on disposition of shares of Common Stock set forth
in Section A above shall not apply to the following:
(i) Any exchange of such shares in connection with a merger or
acquisition involving the Bank or the Holding Company, which has been approved
by the Department; 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 shares of Common Stock subject to restrictions
on resale or subsequent disposition, each of the following provisions shall
apply;
(i) Each certificate representing shares restricted within the
meaning of Section A, above, 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 Bank 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
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(iii) Any shares of capital stock of the Bank issued with
respect to a stock dividend, stock split, or otherwise with respect to ownership
of outstanding shares of Common Stock subject to the restriction on transfer
hereunder shall be subject to the same restriction as is applicable to such
Common Stock.
20. Certificate of Incorporation and Bylaws of the Mutual Holding Company
As part of the Reorganization, the Certificate of Incorporation and
Bylaws of the Mutual Holding Company shall be adopted under the name of
Ridgewood Financial, MHC to operate as a New Jersey mutual holding company. A
copy of the proposed Certificate of Incorporation and Bylaws of the Mutual
Holding Company, Stock Holding Company and the Stock Bank are required to be
provided only to those depositors requesting them. By their ratification of the
Plan, the Depositors of the Bank shall have approved and adopted the Certificate
and Bylaws of the Mutual Holding Company.
21. Certificate of Incorporation and Bylaws of the Stock Holding Company
As part of the Reorganization, a Certificate of Incorporation and
Bylaws of the Stock Holding Company shall be adopted pursuant to New Jersey law.
By their ratification of the Plan, Depositors shall have approved and adopted
the Certificate of Incorporation and Bylaws of the Stock Holding Company. The
number of shares of Common Stock authorized under the Stock Holding Company
Certificate of Incorporation will exceed the shares of Common Stock to be issued
to the Mutual Holding Company in the Reorganization. The Certificate of
Incorporation may include any provision authorized under New Jersey law.
22. Certificate of Incorporation and Bylaws of the Stock Bank
As part of the Reorganization, a Certificate of Incorporation and
Bylaws of the Stock Bank shall be adopted to authorize the Stock Bank to operate
as a New Jersey-chartered stock savings bank. By their ratification of the Plan,
Depositors shall have approved and adopted the Certificate of Incorporation and
Bylaws of the Stock Bank. The number of total shares of Common Stock authorized
under the Stock Bank Certificate of Incorporation will exceed the shares of
Common Stock to be issued to the Stock Holding Company in the Reorganization.
The Certificate of Incorporation may contain provisions that, for a period of
five years from the effective date of the Certificate of Incorporation, (i)
prohibit any person from acquiring beneficial ownership of greater than 10% of
the Common Stock of the Stock Bank held by those other than the Stock Holding
Company, except for the Stock Holding Company and Non- Tax-Qualified and
Tax-Qualified Employee Stock Benefit Plans; and (ii) prohibit persons other than
the Board of Directors of the Stock Bank or committees of the Board of Directors
of the Stock Bank from calling special meetings of the stockholders of the Stock
Bank. Prior to completion of the Reorganization, the Certificate of
Incorporation and Bylaws may be amended in accordance with the provisions and
limitations for amending the Plan under Paragraph 28.
23. Status of Deposit Accounts and Loans Subsequent to Reorganization
All Deposit Accounts in the Bank shall retain the same status after the
Reorganization as these accounts had prior to the Reorganization, except that
each Deposit Account holder shall retain, without payment, a withdrawable
Deposit Account or accounts in the Stock Bank after the Reorganization, equal in
amount to the withdrawable value of such holder's Deposit Account or accounts
prior to the Reorganization. All Deposit Accounts which are transferred to the
Stock Bank will continue to be insured on the same terms up to the applicable
limits of FDIC insurance coverage. All loans shall retain the same status with
the Stock Bank after the Reorganization as they had with the Bank prior to the
Reorganization.
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24. Minority Stock Offering
The Stock Holding Company will be authorized, subject to Commissioner
and applicable regulatory approvals, to undertake one or more Minority Stock
Offerings, simultaneous with, or following completion of, the Reorganization.
Depositors will be offered subscription rights in any Minority Stock Offering;
however a Minority Stock Offering will not require the approval of Depositors.
25. Conversion of Mutual Holding Company to Stock Form
Once the Reorganization is completed, the Mutual Holding Company may,
if approved by the NJDB and the appropriate federal banking agencies, elect to
convert to the stock form of ownership pursuant to applicable State and federal
law. The terms and conditions of such a conversion cannot be determined at this
time and there is no assurance when, if ever, such a conversion will occur. If
the conversion does not occur, the Mutual Holding Company will always own a
majority of the Common Stock of the Stock Holding Company.
If the Mutual Holding Company converts to stock form, either on a
stand-alone basis or in the context of a conversion-merger ("Conversion
Transaction"), under applicable law, shares of stock issued in connection with
the Conversion Transaction shall be subject to subscription rights granted to
eligible account holders at the time of the transaction. In addition, pursuant
to applicable federal law and regulation and NJDB regulations or policies, in
the Conversion Transaction, the shares of stock held by the stockholders of the
Stock Bank or the Stock Holding Company shall be exchanged for shares of the
converted Mutual Holding Company in a proportion established by independent
appraisals of the Mutual Holding Company, the Stock Holding Company, and the
Stock Bank. If, in a Conversion Transaction, the stockholders of the Stock Bank
or the Stock Holding Company do not receive, for any reason, shares of the
converted Mutual Holding Company (or its successor) on such proportionate basis,
the Holding Company (or its successor) shall be obligated to purchase all shares
not owned by its simultaneously with the closing of such Conversion Transaction
at the fair market value of such shares, determined as if such shares had such
exchange rights, as determined by the independent appraisals. Moreover, in the
event that the Mutual Holding Company converts to stock form in a Conversion
Transaction, any options or other convertible securities held by any Officer,
Director, or Employee of the Stock Bank or the Stock Holding Company,
convertible into shares of the Stock Bank or the Stock Holding Company shall be
convertible into shares of the converted Mutual Holding Company (or its
successor), provided, that any exchange ratio shall provide the holder of such
options or convertible securities with shares at least equal in value to those
exchanged; provided, further however, that if such shares cannot be so
converted, the holders of such options or other convertible securities shall be
entitled to receive cash payment for such options and other convertible
securities in an amount equal to the appraised value of the underlying
securities represented by such options or other convertible securities.
In any Conversion Transaction, stockholders of the Stock Holding
Company other than the Mutual Holding Company ("Minority Stockholders"), if any,
will be entitled to maintain the same percentage ownership interest in the Stock
Holding Company after the Conversion Transaction as their ownership interest in
the Stock Holding Company immediately prior to the Conversion Transaction,
subject only to certain adjustments (i.e., waiver of dividends and the transfer
of assets held solely by the Mutual Holding Company to the resulting stock
company) that may be required by the FDIC or FRB. These adjustments may result
in a decrease of ownership interest of the Minority Stockholders.
Each certificate representing shares of Common Stock of the Stock Bank
or the Stock Holding Company shall bear a legend giving appropriate notice of
the provisions applicable to a Conversion Transaction.
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26. Establishment of Liquidation Account
The Bank shall establish at the time of Reorganization a liquidation
account in an amount equal to its net worth as of the latest practicable date
prior to the Reorganization. The liquidation account will be maintained by the
Stock Bank for the benefit of the Eligible Account Holders and Supplemental
Eligible Account Holders who continue to maintain their Savings Accounts at the
Stock Bank. Each Eligible Account Holder and Supplemental Eligible Account
Holder shall, with respect to his Savings Account, hold a related inchoate
interest in a portion of the liquidation account balance, in relation to his
Savings Account balance at the Eligibility Record Date and Supplemental
Eligibility Record Date or to such balance as it may be subsequently reduced, as
hereinafter provided.
In the unlikely event of a complete liquidation of the Stock Bank (and
only in such event), following all liquidation payments to creditors (including
those to Account Holders to the extent of their Savings 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 Savings Account then held,
before any liquidation distribution may be made to any holders of the Stock
Bank's capital stock. No merger, consolidation, purchase of bulk assets with
assumption of Savings Accounts and other liabilities, or similar transactions
with an FDIC institution, in which the Stock 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 Savings Account held by an
Eligible Account Holder or 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 such Eligible Account Holder's
and Supplemental Eligible Account Holder's Qualifying Deposit and the
denominator of which is the total amount of all Qualifying Deposits of all
Eligible Account Holders and Supplemental Eligible Account Holders in the Bank.
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 annual closing date, commencing on
or after the effective date of Reorganization, the deposit balance in the
Savings Account of an Eligible Account Holder or Supplemental Eligible Account
Holder is less than the lesser of (i) the balance in the Savings Account at the
close of business on any other annual closing date subsequent to the Eligibility
Record Date or Supplemental Eligibility Record Date, as applicable, or (ii) the
amount of the Qualifying Deposit in such Savings Account, the subaccount balance
of such Savings 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 Savings Account. If any such Savings 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 Stock Bank.
27. Interpretation
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Bank
shall be final, subject to the authority of the Commissioner.
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28. Amendment or Termination of the Plan
If necessary or desirable, the terms of the Plan may be amended by a
two-thirds vote of the Bank's Board of Directors, with the concurrence of the
Commissioner and the FDIC, at any time prior to or after submission of the Plan
to Depositors for ratification. The Plan may be terminated at any time, before
or after Depositor ratification, by a two-thirds vote of the Board of Directors.
0035RIDG\POC.MHC
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