(a)Mandatory Provisions. The plan of conversion shall provide as follows:

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Terms Used In Tennessee Code 45-3-1108

  • Association: means a capital stock or mutual savings and loan association. See Tennessee Code 45-3-104
  • Capital stock association: means an association, the ownership of which rests in the holders of shares of capital stock, who may receive dividends on their shares, and who have the sole right to vote on matters affecting the association. See Tennessee Code 45-3-104
  • Commissioner: means the commissioner of financial institutions. See Tennessee Code 45-3-104
  • Deposit: means a deposit of money, bonds or other things of value, creating a debtor-creditor relationship. See Tennessee Code 45-1-103
  • deposit account: means that part of the deposit liability of an association that is credited to the account of the holder. See Tennessee Code 45-3-104
  • Depositor: means the holder of a deposit account in an association. See Tennessee Code 45-3-104
  • Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • Federal association: means a savings and loan association operating under the laws and regulations of the United States. See Tennessee Code 45-3-104
  • Mutual association: means an association, the ownership of which rests in members, who receive interest on their deposit accounts, and who have the sole right to vote on all matters affecting the association. See Tennessee Code 45-3-104
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Stockholder: means the holder of one (1) or more shares of any class of capital stock of a capital stock association organized and operating pursuant to this chapter. See Tennessee Code 45-3-104
(1) Each depositor shall receive a deposit account in the converted association equal in amount to the depositor’s account in the converting association; provided, that if the conversion contemplates a purchase of capital stock by deposit account holders in the converting association, then the plan may provide that all or a proportionate part of each deposit account, if the deposit account holder so elects, shall be credited or otherwise applied to the purchase of stock in the capital stock association;
(2) In the event of a conversion from a state mutual association or federal association to a state capital stock association, no capital stock shall be issued to any deposit account holder free of charge, and each deposit account holder shall be entitled to receive rights to purchase the capital stock;
(3) In the event of a conversion from a state capital stock association to a state mutual association or federal association, the plan of conversion shall show how the rights of the stockholders to a return of capital shall be effected;
(4) The plan of conversion shall show with particularity the business purpose to be accomplished by the conversion; and
(5) The plan of conversion shall contain other information and be in the form required by the commissioner to enable the commissioner to determine whether the plan is fair and equitable and that the interests of deposit account holders, creditors, stockholders, or members and the public are adequately protected.
(b)Permissive Provisions. A plan of conversion shall not be considered unfair or inequitable merely because it contains provisions that provide that:

(1) Deposit account holders shall have a right to purchase shares of capital stock at the fair market value thereof;
(2) Deposit account holders shall or shall not have preemptive rights to all stock proposed to be issued;
(3) Stockholders shall have the option of accepting a redemption of their shares of stock in return for cash or other property or that the value of the shares of stock may be converted into one (1) or more deposit accounts in the name of the stockholder;
(4) Employment contracts are provided for officers and employees of the converted association; or
(5) Not more than fifteen percent (15%) of the capital stock proposed to be issued pursuant to the plan of conversion is reserved by the association for stock options for officers and employees.
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