EXHIBIT 2
PLAN OF CONVERSION AND REORGANIZATION
OF
FINGER LAKES FINANCIAL CORPORATION, MHC
TABLE OF CONTENTS
1. INTRODUCTION.................................................................................... 1
2. DEFINITIONS..................................................................................... 1
3. PROCEDURES FOR CONVERSION....................................................................... 6
4. HOLDING COMPANY APPLICATIONS AND APPROVALS...................................................... 8
5. SALE OF SUBSCRIPTION SHARES..................................................................... 8
6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES................................................ 8
7. RETENTION OF CONVERSION PROCEEDS BY THE HOLDING COMPANY......................................... 9
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)................................ 9
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)......................................... 10
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY)................... 10
11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)......................................... 10
12. COMMUNITY OFFERING (FIFTH PRIORITY)............................................................ 11
13. SYNDICATED COMMUNITY OFFERING.................................................................. 11
14. LIMITATION ON PURCHASES........................................................................ 12
15. PAYMENT FOR CONVERSION STOCK................................................................... 13
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS................................... 14
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT................................ 15
18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES.............................................. 15
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT........................................................... 15
20. VOTING RIGHTS OF STOCKHOLDERS................................................................. 16
21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION............................................... 16
22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE CONVERSION............ 17
23. TRANSFER OF DEPOSIT ACCOUNTS................................................................... 17
24. REGISTRATION AND MARKETING..................................................................... 17
25. TAX RULINGS OR OPINIONS........................................................................ 17
26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS.................................................. 18
27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY........................................ 18
28. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK................................................... 19
29. CHARTER AND BYLAWS............................................................................. 19
30. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE.................................................. 19
31. EXPENSES OF CONVERSION......................................................................... 20
32. AMENDMENT OR TERMINATION OF PLAN............................................................... 20
33. CONDITIONS TO CONVERSION....................................................................... 20
34. INTERPRETATION................................................................................. 20
EXHIBIT A AGREEMENT OF MERGER BETWEEN FINGER LAKES FINANCIAL CORP. AND THE
SAVINGS BANK OF THE FINGER LAKES
EXHIBIT B AGREEMENT OF MERGER BETWEEN FINGER LAKES FINANCIAL CORPORATION,
M.H.C. AND THE SAVINGS BANK OF THE FINGER LAKES
EXHIBIT C AGREEMENT OF MERGER BETWEEN THE SAVINGS BANK OF THE FINGER LAKES
AND FINGER LAKES INTERIM SAVINGS BANK
EXHIBIT D CERTIFICATE OF INCORPORATION OF THE HOLDING COMPANY
EXHIBIT E BYLAWS OF HOLDING COMPANY
PLAN OF CONVERSION AND REORGANIZATION OF
Finger Lakes Financial Corporation, MHC
1. INTRODUCTION
This Plan of Conversion and Reorganization (the "Plan") provides for the
conversion of Finger Lakes Financial Corporation, MHC, a federal mutual holding
company (the "Mutual Holding Company") into the capital stock form of
organization (as converted, the "Holding Company"). The Mutual Holding Company
currently owns a majority of the common stock of Finger Lakes Financial Corp., a
federally-chartered stock holding company (the "Mid-Tier Holding Company") that
owns 100% of the common stock of The Savings Bank of the Finger Lakes (the
"Bank"), a federal stock savings bank which is headquartered in Geneva, New
York. The purpose of the Conversion is to convert the Mutual Holding Company to
the capital stock form of organization, which will provide the Holding Company
and the Bank with greater flexibility and capital resources to respond to
changing regulatory and market conditions and to effect corporate transactions,
including mergers and acquisitions. The Holding Company will offer Holding
Company Common Stock upon the terms and conditions set forth herein to Eligible
Account Holders, the Employee Plans established by the Bank or the Holding
Company, Supplemental Eligible Account Holders, Other Members and other persons
according to the respective priorities set forth in this Plan. Any shares not
subscribed for by the foregoing classes of persons will be offered for sale to
certain members of the public directly by the Holding Company through a
Community Offering or a Syndicated Community Offering or through an underwritten
firm commitment public offering, or through a combination thereof. As part of
the Conversion, each Minority Stockholder will receive Holding Company Common
Stock in exchange for Minority Shares. The Conversion will result in the voting
interests of the Mutual Holding Company's members being transferred to persons
who purchase Conversion Stock in the Offering. The Conversion will have no
impact on depositors, borrowers or customers of the Bank. After the Conversion,
the Bank will continue to be regulated by the OTS as its chartering authority.
The Bank also will continue to be a member of the Federal Home Loan Bank System
and all its insured savings deposits will continue to be insured by the FDIC to
the extent provided by applicable law.
This Plan has been adopted by the Board of Directors of the Mutual Holding
Company, and must also be approved by (i) a majority of the total number of
votes entitled to be cast by Voting Members of the Mutual Holding Company at a
Special Meeting of Members to be called for that purpose, and (ii) at least two-
thirds of the outstanding common stock of the Mid-Tier Holding Company at the
Special Meeting of Stockholders, including at least a majority of the votes
cast, in person or by proxy, by Minority Stockholders. Prior to the submission
of this Plan to the Voting Members and stockholders of the Mid-Tier Holding
Company for consideration, the Plan must be approved by the OTS.
2. DEFINITIONS
For the purposes of this Plan, the following terms have the following
meanings:
Account Holder Any Person holding a Deposit Account in the Bank.
Acting in Concert The term Acting in Concert means (i) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement; or (ii) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise. A
person 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 taxqualified 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.
Adjusted Majority Ownership Interest - The percentage of the common stock
of the Mid-Tier Holding Company held by the Mutual Holding Company, as adjusted
to reflect the Dividend Waiver Adjustment.
Adjusted Minority Ownership Interest - The Minority Ownership Interest as
adjusted by the Dividend Waiver Adjustment.
Affiliate - Any person that controls, is controlled by, or is under common
control with another person.
Appraised Value Range The range of the estimated consolidated pro forma
market value of the Holding Company, which shall also be equal to the estimated
pro forma market value of the total number of shares of Conversion Stock to be
issued in the Conversion, as determined by the Independent Appraiser prior to
the Subscription Offering and as it may be amended from time to time thereafter.
The maximum and minimum of the Appraised Value Range will vary within 15% above
and 15% below, respectively, the midpoint of the Appraised Value Range.
Associate The term Associate when used to indicate a relationship with
any person, means (i) any corporation or organization (other than the Mid-Tier
Holding Company, the Bank or a majorityowned 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 this Plan relating to subscriptions in
the offering the term (Pound) "Associate" does not include any NonTaxQualified
Employee Stock Benefit Plan or any TaxQualified Employee Stock Benefit Plan in
which a person has a substantial beneficial interest or serves as a trustee or
in a similar fiduciary capacity, and except that for purposes of aggregating
total shares that may be held by Officers and Directors the term (Pound)
"Associate" does not include any TaxQualified Employee Stock Benefit Plan, and
(iii) any relative or spouse of such person, or any relative of such spouse, who
has the same home as such person or who is a Director or Officer of the Mid-Tier
Holding Company, the Bank or the Holding Company, or any of their parents or
subsidiaries.
Bank The Savings Bank of the Finger Lakes.
Bank Merger - The merger of Interim with the Bank as set forth in this
Plan.
Code - The Internal Revenue Code of 1986, as amended.
Community - The New York Counties of Ontario, Seneca, Tompkins, and Cayuga.
Community Offering The offering for sale to certain members of the
general public directly by the Holding Company of any shares not subscribed for
in the Subscription Offering.
Control - (including the terms [controlled by], [controlling] and [under
common control with]) means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or
otherwise.
Conversion - The conversion and reorganization of the Mutual Holding
Company to stock form pursuant to this Plan, and all steps incident or necessary
thereto, including the Exchange Offer and the Offering.
Conversion Stock - The Subscription Shares and the Exchange Shares issued
in the Conversion.
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Deposit Account The term Deposit Account means any withdrawable account
as defined in Section 561.42 of the Rules and Regulations of the OTS, and shall
include all demand deposit accounts and certificates of deposit.
Director A member of the Board of Directors of the Bank, the Mid-Tier
Holding Company, the Holding Company or the Mutual Holding Company, as
appropriate in the context.
Dividend Waiver Adjustment - The adjustment to the number of shares of Holding
Company Common Stock issued in the Conversion to Minority Stockholders to
reflect (i) the cumulative effect of the aggregate amount of dividends waived by
the Mutual Holding Company, and (ii) the market value of assets of the Mutual
Holding Company other than common stock of the Mid-Tier Holding Company.
The adjustment referred to in (i) above requires that the Minority
Ownership Interest be adjusted by multiplying it by a fraction, the numerator of
which is the Mid-Tier Holding Company stockholders' equity at the time of the
Conversion less the aggregate amount of dividends waived by the Mutual Holding
Company and the denominator of which is the Mid-Tier Holding Company
stockholders' equity at the time of the Conversion.
The adjustment referred to in (ii) above would further adjust the Minority
Ownership Interest by multiplying the results obtained in (i) above by a
fraction, the numerator of which is the pro forma market value of the Holding
Company less the market value of assets of the Mutual Holding Company other than
Mid-Tier Holding Company common stock and the denominator of which is the pro
forma market value of the Holding Company.
Eligible Account Holder - Any Person holding a Qualifying Deposit on the
Eligibility Record Date for purposes of determining subscription rights and
establishing subaccount balances in the Liquidation Account.
Eligibility Record Date The date for determining Eligible Account Holders
of the Bank which is December 31, 1998.
Employees All Persons who are employed by the Bank, the Mid-Tier Holding
Company or the Mutual Holding Company.
Employee Plans Any TaxQualified Employee Stock Benefit Plan of the Bank,
including any ESOP and 401(k) Plan.
ESOP - An Employee Stock Ownership Plan and related trust established by
the Bank or the Holding Company.
Exchange Offer - The offer of Holding Company Common Stock to Minority
Stockholders in exchange for Minority Shares.
Exchange Ratio - The rate at which shares of Holding Company Common Stock
are exchanged for Minority Shares upon consummation of the Conversion. The
Exchange Ratio shall be determined as of the closing of the Conversion and shall
be the rate that will result in the Minority Stockholders owning in the
aggregate the same percentage of the outstanding shares of Holding Company
Common Stock immediately upon completion of the Conversion as the percentage of
Mid-Tier Holding Company common stock owned by them in the aggregate immediately
prior to the consummation of the Conversion, before giving effect to (i) the
Dividend Waiver Adjustment, (ii) the payment of cash in lieu of issuing
fractional shares of Holding Company Common Stock, and (iii) any shares of
Holding Company Common Stock purchased by the Minority Stockholders in the
Conversion.
Exchange Shares - Shares of Holding Company Common Stock issued to
Minority Stockholders in exchange for Minority Shares.
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FDIC The Federal Deposit Insurance Corporation.
Holding Company The Delaware (or other state) corporation formed for the
purpose of acquiring all of the shares of capital stock of the Bank in
connection with the Conversion. Shares of Holding Company Common Stock will be
issued in the Conversion to Participants and others in the Conversion.
Holding Company Common Stock - The common stock, par value $.01 per share,
of the Holding Company.
Independent Appraiser The appraiser retained by the Mutual Holding
Company and the Bank to prepare an appraisal of the pro forma market value of
the Conversion Stock.
Interim - The interim federal savings bank subsidiary of the Holding
Company established to effect the Conversion.
Liquidation Account - One or more accounts established in accordance with
12 C.F.R. 563b.3(f) and OTS policy.
Member Any Person or entity who qualifies as a member of the Mutual
Holding Company pursuant to its charter and bylaws.
MHC Merger - The conversion of the Mutual Holding Company into an interim
federal stock savings bank and subsequent merger with and into the Bank as set
forth in this Plan.
Mid-Tier Holding Company - Finger Lakes Financial Corp., the federal
holding company that owns 100% of the Bank's Common Stock.
Mid-Tier Merger - The conversion of the Mid-Tier Holding Company into an
interim federal stock savings bank and subsequent merger with and into the Bank
as set forth in this Plan.
Minority Shares - Any outstanding common stock of the Mid-Tier Holding
Company, or shares of common stock of the Mid-Tier Holding Company issuable upon
the exercise of options or grant of stock awards, held by persons other than the
Mutual Holding Company.
Minority Ownership Interest - The percentage of the Mid-Tier Holding
Company's common stock held by stockholders other than the Mutual Holding
Company immediately prior to the completion of the Conversion.
Minority Stockholder - Any owner of Minority Shares immediately prior to
the closing of the Conversion.
Mutual Holding Company - Finger Lakes Financial Corporation, MHC, the
mutual holding company of the Bank.
OTS The Office of Thrift Supervision of the Department of the Treasury or
any successor thereto.
Offering - The offering for sale, pursuant to this Plan, of Holding Company
Common Stock in a Subscription Offering, Community Offering, and Syndicated
Community Offering (or underwritten public offering), as the case may be. The
term (Pound) "Offering" does not include the Holding Company Common Stock issued
in exchange for Minority Shares pursuant to this Plan.
Offering Range - The number of shares of Holding Company Stock offered for
sale in the Offering multiplied by the subscription price. The Offering Range
shall be equal to the Appraised Value Range multiplied by the Adjusted Majority
Ownership Percentage.
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Officer An executive officer of the Bank, the Mid-Tier Holding Company,
the Holding Company or the Mutual Holding Company as appropriate in the context,
which includes the Chief Executive Officer, President, Senior Vice Presidents,
Executive Vice President in charge of principal business functions, Secretary
and Controller and any Person performing functions similar to those performed by
the foregoing persons.
Order Form Any form (together with any attached cover letter and/or
certifications or acknowledgments), sent by the Bank to any Participant or
Person containing among other things a description of the alternatives available
to such Person under the Plan and by which any such Person may make elections
regarding subscriptions for Conversion Stock in the Subscription Offering.Other
Member Any Member on the Voting Record Date who is not an Eligible Account
Holder or Supplemental Eligible Account Holder.
Participant Any Eligible Account Holder, Employee Plan, Supplemental
Eligible Account Holder, or Other Member.
Person An individual, a corporation, a partnership, an association, a
jointstock company, a trust (including Individual Retirement Accounts and KEOGH
Accounts), any unincorporated organization, a government or political
subdivision thereof or any other entity.
Plan This Plan of Conversion and Reorganization of the Mutual Holding
Company as it exists on the date hereof and as it may hereafter be amended in
accordance with its terms.
Prospectus - The one or more documents used in offering the Conversion
Stock in the Offering and the Exchange Shares.
Qualifying Deposit The aggregate balance of all Deposit Accounts in the
Bank of (i) an Eligible Account Holder at the close of business on the
Eligibility Record Date, provided such aggregate balance is not less than $50,
and (ii) a Supplemental Eligible Account Holder at the close of business on the
Supplemental Eligibility Record Date, provided such aggregate balance is not
less than $50.
Resident - Any person who occupies a dwelling within the Community, has a
present intent to remain within the Community for a period of time, and
manifests the genuineness of that intent by establishing an ongoing physical
presence within the Community together with an indication that such presence
within the Community is something other than merely transitory in nature. To
the extent the person is a corporation or other business entity, the principal
place of business or headquarters shall be in the Community. To the extent a
person is a personal benefit plan, the circumstances of the beneficiary shall
apply with respect to this definition. In the case of all other benefit plans,
circumstances of the trustee shall be examined for purposes of this definition.
The Mutual Holding Company and the Bank may utilize deposit or loan records or
such other evidence provided to it to make a determination as to whether a
person is a resident. In all cases, however, such a determination shall be in
the sole discretion of the Mutual Holding Company and the Bank. A Participant
must be a (Pound) "Resident" for purposes of determining whether such person
(Pound) "resides" in the Community as such term is used in this Plan.
SEC The Securities and Exchange Commission.
Share Exchange - The Exchange of Minority Shares for Holding Company Common
Stock in the Conversion.
Special Meeting of Members The special meeting of members of the Mutual
Holding Company and any adjournments thereof held to consider and vote upon this
Plan.
Special Meeting of Stockholders - The special meeting of stockholders of
the Mid-Tier Holding Company and any adjournments thereof held to consider and
vote upon the Plan.
Subscription Offering The offering of Subscription Shares to
Participants.
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Subscription Price - The price per Subscription Share to be paid by
Participants in the Subscription Offering and Persons in the Community Offering.
The Subscription Price will be determined by the Board of Directors of the
Mutual Holding Company and fixed prior to the commencement of the Subscription
Offering.
Subscription Shares - Shares of Holding Company Common Stock issued in the
Offering. Subscription Shares do not include Exchange Shares.
Supplemental Eligible Account Holder - Any Person, other than Directors and
Officers of the Bank and their Associates, holding a Qualifying Deposit on the
Supplemental Eligibility Record Date, who is not an Eligible Account Holder.
Supplemental Eligibility Record Date - The date for determining
Supplemental Eligible Account Holders, which shall be the last day of the
calendar quarter preceding OTS approval of the application for conversion.
Syndicated Community Offering The offering of Conversion Stock following
the Subscription and Community Offerings through a syndicate of
brokerdealers.
TaxQualified Employee Stock Benefit Plan Any defined benefit plan or
defined contribution plan, such as an employee stock ownership plan, stock bonus
plan, profitsharing plan or other plan, which, with its related trust, meets the
requirements to be (Pound) "qualified" under Section 401 of the Internal Revenue
Code. The Bank may make scheduled discretionary contributions to a taxqualified
employee stock benefit plan, provided such contributions do not cause the Bank
to fail to meet its regulatory capital requirement. A (Pound) "NonTaxQualified
Employee Stock Benefit Plan (Pound)" is any defined benefit plan or defined
contribution plan which is not so qualified.
Voting Member Any Person who at the close of business on the Voting
Record Date is entitled to vote as a member of the Mutual Holding Company
pursuant to its charter and bylaws.
Voting Record Date The date fixed by the Directors in accordance with OTS
regulations for determining eligibility to vote at the Special Meeting of
Members and/or the Special Meeting of Stockholders.
3. PROCEDURES FOR CONVERSION
A. After approval of the Plan by the Board of Directors of the Bank and
the Mutual Holding Company, the Plan shall be submitted together with all other
requisite material to the OTS for its approval. Notice of the adoption of the
Plan by the Board of Directors of the Bank and the Mutual Holding Company and
the submission of the Plan to the OTS for its approval will be published in a
newspaper having general circulation in each community in which an office of the
Bank is located and copies of the Plan will be made available at each office of
the Bank for inspection by the Members. Upon receipt of notice from the OTS to
do so, the Mutual Holding Company also will cause to be published a notice of
the filing with the OTS of an application to convert in accordance with the
provisions of the Plan.
B. Promptly following approval by the OTS, the Plan will be submitted to
a vote of (i) the Voting Members at the Special Meeting of Members, and (ii) the
Stockholders of the Mid-Tier Holding Company at the Special Meeting of
Stockholders. The Mutual Holding Company will mail to all Members as of the
Voting Record Date, at their last known address appearing on the records of the
Bank, a proxy statement in either long or summary form describing the Plan which
will be submitted to a vote of the Members at the Special Meeting of Members.
The Mid-Tier Holding Company also will mail to all stockholders as of the Voting
Record Date, a proxy statement describing the Plan and the Conversion, which
will be submitted to a vote of stockholders at the special meeting of
stockholders. The Holding Company will also mail to all Participants either a
Prospectus and Order Form for the purchase of Subscription Shares or a letter
informing them of their right to receive a Prospectus and Order Form and a
postage prepaid card to request such materials, subject to other provisions
of
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this Plan. In addition, all Participants will receive, or be given the
opportunity to request by either returning a postage prepaid card which will be
distributed with the proxy statement or by letter addressed to the Bank's
Secretary, a copy of the Plan as well as the certificate of incorporation or
bylaws of the Holding Company. Upon approval of the Plan by (i) a majority of
the total number of votes entitled to be cast by the Voting Members, (ii) at
least two-thirds of the outstanding common stock of the Mid-Tier Holding
Company, and (iii) a majority vote of Minority Stockholders present in person or
by proxy, the Mutual Holding Company, the Holding Company and the Bank will take
all other necessary steps pursuant to applicable laws and regulations to
consummate the Conversion and Offering. The Conversion must be completed within
24 months of the approval of the Plan by the Voting Members, unless a longer
time period is permitted by governing laws and regulations.
C. The Conversion will be effected as follows, or in any other manner
which is consistent with the purposes of this Plan and applicable laws and
regulations. The choice of which method to use to effect the Conversion will be
made by the Board of Directors of the Mutual Holding Company immediately prior
to the closing of the Conversion. Each of the steps set forth below shall be
deemed to occur in such order as is necessary to consummate the Conversion
pursuant to the Plan, the intent of the Board of Directors of the Mutual Holding
Company and the Bank, and OTS regulations. Approval of the Plan by the Members
and stockholders of the Mid-Tier Holding Company shall also constitute approval
of each of the transactions necessary to implement the Plan.
(1) The Bank will establish the Holding Company as a first-tier
Delaware chartered stock holding company subsidiary.
(2) Holding Company will charter Interim.
(3) The Mid-Tier Holding Company will convert into or exchange its
charter for an interim federal stock savings bank (which shall continue to
be referred to as the "Mid-Tier Holding Company") and will merge with and
into the Bank (the "Mid-Tier Merger") with the Bank as the resulting entity
pursuant to the Agreement of Merger attached hereto as Exhibit A between
the Mid-Tier Holding Company and the Bank, whereby the Mid-Tier Holding
Company stockholders will constructively receive shares of Bank common
stock in exchange for their Mid-Tier Holding Company common stock.
(4) The Mutual Holding Company will exchange its charter for an
interim stock savings bank charter and simultaneously merge with and into
the Bank (the "MHC Merger") pursuant to the Agreement of Merger attached
hereto as Exhibit B between the Mutual Holding Company and the Bank,
whereby the shares of common stock of the Bank constructively held by the
Mutual Holding Company will be canceled and each Eligible Account Holder
and Supplemental Eligible Account Holder will receive an interest in a
Liquidation Account of the Bank in exchange for such person's interest in
the Mutual Holding Company.
(5) Contemporaneously with the MHC Merger, Interim will merge with
and into the Bank with the Bank as the surviving entity (the "Bank Merger")
pursuant to the Agreement of Merger attached hereto as Exhibit C between
the Bank and Interim. Constructive shareholders of the Bank (i.e., Minority
Stockholders), will exchange the shares of Bank common stock that they
constructively received in the Mid-Tier Merger for Holding Company Common
Stock.
(6) Contemporaneously with the Bank Merger, the Holding Company will
sell the Subscription Shares in the Offering.
D. As part of the Conversion, each of the Minority Shares shall
automatically, without further action of the holder thereof, be converted into
and become the right to receive Holding Company Common Stock based upon the
Exchange Ratio. The basis for exchange of Minority Shares for Holding Company
Common Stock shall be fair and reasonable. Options to purchase shares of Mid-
Tier Holding Company common stock which are outstanding immediately prior to the
consummation of the Conversion shall be converted into options to purchase
shares of Holding Company Common Stock, with the number of shares subject to the
option and the exercise price
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per share to be adjusted based upon the Exchange Ratio so that the aggregate
exercise price remains unchanged, and with the duration of the option remaining
unchanged.
E. Concurrently with the filing of the Conversion Application with the
OTS, the Holding Company shall also seek to register the Conversion Stock with
the SEC and any appropriate state securities authorities. In addition, if
required by applicable law and regulations, the Board of Directors of the Bank
and the Mid-Tier Holding Company shall prepare preliminary proxy materials as
well as other applications and information for review by the SEC and the OTS in
connection with the solicitation of stockholder approval of the Plan.
F. The Certificate of Incorporation of the Holding Company (the
"Certificate") shall read substantially in the form of Exhibit D.
G. The home office and branch offices of the Bank shall be unaffected by
the Conversion. The executive offices of the Holding Company shall be located
at the current offices of the Mutual Holding Company.
4. HOLDING COMPANY APPLICATIONS AND APPROVALS
The Board of Directors of the Holding Company and the Mutual Holding
Company will take all necessary steps to convert the Mutual Holding Company to
stock form, form the Holding Company and complete the Offering. The Holding
Company shall make timely applications for any requisite regulatory approvals,
including an Application on Form AC and a Holding Company Application on Form H-
(e)1 or H-(e)1-S, to be filed with the OTS and a Registration Statement to be
filed with the SEC.
5. SALE OF SUBSCRIPTION SHARES
The Subscription Shares will be offered simultaneously in the Subscription
Offering to the Participants in the respective priorities set forth in this
Plan. The Subscription Offering may begin as early as the mailing of the Proxy
Statement for the Special Meeting of Members. The Holding Company Common Stock
will not be insured by the FDIC. The Bank will not knowingly lend funds or
otherwise extend credit to any Person to purchase shares of Holding Company
Common Stock.
Any shares of Holding Company Common Stock not subscribed for in the
Subscription Offering will be offered for sale in the Community Offering. The
Subscription Offering may be commenced prior to the Special Meeting of Members
and, in that event, the Community Offering may also be commenced prior to the
Special Meeting of Members. The offer and sale of Holding Company Common Stock
prior to the Special Meeting of Members shall, however, be conditioned upon
approval of the Plan by the Voting Members and stockholders of the Mid-Tier
Holding Company.
If feasible, any shares of Holding Company Common Stock remaining after the
Subscription and Community Offerings, will be sold in a Syndicated Community
Offering in a manner that will achieve the widest distribution of the Holding
Company Common Stock. The sale of all Holding Company Common Stock subscribed
for in the Subscription and Community Offerings will be consummated
simultaneously on the date the sale of Holding Company Common Stock in the
Syndicated Community Offering is consummated and only if all unsubscribed for
Holding Company Common Stock is sold.
6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES
The total number of shares (or a range thereof) of Holding Company Common
Stock to be offered in the Conversion will be determined jointly by the Boards
of Directors of the Bank, the Mid-Tier Holding Company and the Holding Company
immediately prior to the commencement of the Subscription and Community
Offerings, and will be based on the Appraised Value Range divided by the
Subscription Price. The Offering Range will be equal to the Appraised Value
Range multiplied by the Adjusted Majority Ownership Interest. The estimated pro
forma consolidated market value of the Holding Company will be subject to
adjustment within the Appraised Value Range if necessitated by market or
financial conditions, with the approval of the OTS, if necessary, and the
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maximum of the Appraised Value Range may be increased by up to 15% subsequent to
the commencement of the Subscription and Community Offerings to reflect changes
in market and financial conditions. The number of shares of Conversion Stock
issued in the Conversion will be equal to the estimated pro forma consolidated
market value of the Holding Company, as may be amended, divided by the
Subscription Price, and the number of Subscription Shares sold in the Offering
will be equal to the product of (i) the estimated pro forma consolidated market
value of the Holding Company, as may be amended, divided by the Subscription
Price, and (ii) the Adjusted Majority Ownership Interest.
In the event that the Subscription Price multiplied by the number of shares
of Conversion Stock to be issued in the Conversion is below the minimum of the
Appraised Value Range, or materially above the maximum of the Appraised Value
Range, resolicitation of purchasers may be required, provided that up to a 15%
increase above the maximum of the Appraised Value Range will not be deemed
material so as to require a resolicitation. Any such resolicitation shall be
effected in such manner and within such time as the Bank and the Mutual Holding
Company shall establish, with the approval of the OTS if required.
Notwithstanding the foregoing, shares of Conversion Stock will not be
issued unless, prior to the consummation of the Conversion, the Independent
Appraiser confirms to the Bank, the Mutual Holding Company, the Holding Company
and to the OTS that, to the best knowledge of the Independent Appraiser, nothing
of a material nature has occurred which, taking into account all relevant
factors, would cause the Independent Appraiser to conclude that the number of
shares of Conversion Stock issued in the Conversion multiplied by the
Subscription Price is incompatible with its estimate of the aggregate
consolidated pro forma market value of the Holding Company. An increase in the
aggregate value of the Conversion Stock by up to 15% above the maximum of the
Appraised Value Range, would not be deemed to be material. If such confirmation
is not received, the Holding Company may cancel the Subscription and Community
Offerings and/or the Syndicated Community Offering, extend the Conversion,
establish a new Subscription Price and/or Appraised Value Range, extend, reopen
or hold new Subscription and Community Offerings and/or Syndicated Community
Offering or take such other action as the OTS may permit.
The Holding Company Common Stock to be issued in the Conversion shall be
fully paid and nonassessable.
7. RETENTION OF CONVERSION PROCEEDS BY THE HOLDING COMPANY
The Holding Company will apply to the OTS to retain up to 50% of the
proceeds of the Offering. The Holding Company believes that the Offering
proceeds will provide economic strength to the Holding Company and the Bank in a
highly competitive financial services industry and would facilitate the possible
expansion through acquisitions of other financial institutions, possible
diversification into other related businesses and for other business and
investment purposes, including the possible payment of dividends and future
repurchases of the Holding Company Common Stock as permitted by the OTS.
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)
A. Each Eligible Account Holder shall receive, without payment,
nontransferable subscription rights to subscribe in the Subscription Offering
for a number of shares equal to up to the greater of 5% of the Subscription
Shares, .10% of the total offering for shares, or fifteen times the product
(rounded down to the next whole number) obtained by multiplying the number of
shares of Subscription Shares issued in the Conversion by a fraction of which
the numerator is the amount of the Eligible Account Holder's Qualifying Deposit
and the denominator is the total amount of Qualifying Deposits of all Eligible
Account Holders, in each case on the Eligibility Record Date, subject to the
provisions of Section 14.
B. In the event that Eligible Account Holders exercise subscription
rights for a number of Subscription Shares in excess of the total number of such
shares eligible for subscription, the Subscription Shares shall be allocated
among the subscribing Eligible Account Holders so as to permit each subscribing
Eligible Account Holder to purchase a number of shares sufficient to make his or
her total allocation of Subscription
9
Shares equal to the lesser of 100 shares or the number of shares for which such
Eligible Account Holder has subscribed. Any remaining shares will be allocated
among the subscribing Eligible Account Holders whose subscriptions remain
unsatisfied in the proportion that the amount of the Qualifying Deposit of each
Eligible Account Holder whose subscription remains unsatisfied bears to the
total amount of the Qualifying Deposits of all Eligible Account Holders whose
subscriptions remain unsatisfied. If the amount so allocated exceeds the amount
subscribed for by any one or more Eligible Account Holders, the excess shall be
reallocated (one or more times as necessary) on the same basis among those
Eligible Account Holders whose subscriptions are still not fully satisfied until
all available shares have been allocated.
C. Subscription rights of Directors, Officers and their Associates as
Eligible Account Holders 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.
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)
The Employee Plans of the Holding Company and the Bank shall receive,
without payment, subscription rights to purchase in the aggregate up to 8% of
the Holding Company Common Stock offered in the Subscription Offering, including
any shares of Holding Company Common Stock to be issued in the Offering as a
result of an increase in the maximum of the Offering Range after commencement of
the Subscription Offering and prior to completion of the Conversion. Consistent
with applicable laws and regulations and practices and policies of the OTS, the
Employee Plans may use funds contributed by the Holding Company or the Bank
and/or borrowed from an independent financial institution to exercise such
subscription rights, and the Holding Company and the Bank may make scheduled
discretionary contributions thereto, provided that such contributions do not
cause the Holding Company or the Bank to fail to meet any applicable regulatory
capital requirements. The Employee Plans shall not be deemed to be Associates
or Affiliates of or Persons Acting in Concert with any Director or Officer of
the Holding Company or the Bank.
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD
PRIORITY)
A. Each Supplemental Eligible Account Holder shall receive, without
payment, nontransferable subscription rights to subscribe in the Subscription
Offering for a number of shares equal to up to the greater of 5% of the
Subscription Shares, or fifteen times the product (rounded down to the next
whole number) obtained by multiplying the number of shares of Subscription
Shares issued in the Conversion by a fraction of which the numerator is the
amount of the Supplemental Eligible Account Holder's Qualifying Deposit and the
denominator is the total amount of Qualifying Deposits of all Supplemental
Eligible Account Holders, in each case on the Supplemental Eligibility Record
Date, subject to the availability of sufficient shares after filling in full all
subscription orders of the Eligible Account Holders and Employee Plans and to
the purchase limitations specified in Section 14.
B. In the event that Supplemental Eligible Account Holders exercise
subscription rights for a number of Subscription Shares in excess of the total
number of such shares eligible for subscription, the Subscription Shares shall
be allocated among the subscribing Supplemental Eligible Account Holders so as
to permit each such subscribing Supplemental Eligible Account Holder, to the
extent possible, to purchase a number of shares sufficient to make his or her
total allocation of Subscription Shares equal to the lesser of 100 shares or the
number of shares for which each such Supplemental Eligible Account Holder has
subscribed. Any remaining shares will be allocated among the subscribing
Supplemental Eligible Account Holders whose subscriptions remain unsatisfied in
the proportion that the amount of the Qualifying Deposit of each such
Supplemental Eligible Account Holder bears to the total amount of the Qualifying
Deposits of all Supplemental Eligible Account Holders whose subscriptions remain
unsatisfied. If the amount so allocated exceeds the amount subscribed for by
any one or more Supplemental Eligible Account Holders, the excess shall be
reallocated (one or more times as necessary) among those Supplemental Eligible
Account Holders whose subscriptions are still not fully satisfied on the same
principle until all available shares have been allocated or all subscriptions
satisfied.
10
11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)
A. Each Other Member shall receive, without payment, nontransferable
subscription rights to subscribe in the Subscription Offering for a number of
Subscription Shares equal to up to the greater of 5% of the Subscription Shares,
or .10% of the total offering of shares, subject to the purchase limitation
specified in Section 14.
B. In the event that such Other Members subscribe for a number of
Subscription Shares which, when added to the Subscription Shares subscribed for
by the Eligible Account Holders, Employee Plans and Supplemental Eligible
Account Holders, is in excess of the total number of Subscription Shares to be
issued, the subscriptions of such Other Members will be allocated to Other
Members in proportion to the amounts of their relative subscriptions.
12. COMMUNITY OFFERING (FIFTH PRIORITY)
If less than the total number of shares of Holding Company Common Stock to
be subscribed for in the Offering are sold in the Subscription Offering, shares
remaining unsubscribed for may be made available for purchase in the Community
Offering to certain members of the general public. In the Community Offering,
any person together with any Associate or group of persons Acting in Concert may
purchase up to 5% of the Subscription Shares, subject to the purchase
limitations specified herein. The shares may be made available in the Community
Offering through a direct community marketing program which may provide for a
broker, dealer, consultant or investment banking firm experienced and expert in
the sale of savings institutions securities. Such entities may be compensated
on a fixed fee basis or on a commission basis, or a combination thereof. Shares
offered in the Community Offering will be available for purchase by the general
public with preference given first to Minority Stockholders and then to natural
persons residing in the Community, in each case in proportion to the amounts of
the subscriptions. Any excess of shares may be made available for purchase by
the general public. The Holding Company shall make the distribution of the
Conversion Stock to be sold in the Community Offering in such a manner as to
promote a wide distribution of Conversion Stock. The Holding Company reserves
the right to reject any or all orders, in whole or in part, which are received
in the Community Offering. The number of shares of Conversion Stock that any
person may purchase in the Community Offering shall be subject to the purchase
limitations specified in Section 14; provided, however, that the shares
purchased in the Subscription Offering by any person together with an Associate
or group of persons acting in concert shall be counted toward meeting the
maximum purchase limitations found in this Section and provided further that
orders shall first be filled up to a maximum of two percent of the subscription
shares and thereafter remaining shares shall be allocated on an equal number of
shares basis per order until all orders have been filled.
13. SYNDICATED COMMUNITY OFFERING
If feasible, the Board of Directors may determine to offer Subscription
Shares not subscribed for in the Subscription and Community Offerings in a
Syndicated Community Offering, subject to such terms, conditions and procedures
as may be determined by the Holding Company, in a manner that will achieve the
widest distribution of the Holding Company Common Stock subject to the right of
the Bank to accept or reject in whole or in part any subscriptions in the
Syndicated Community Offering. In the Syndicated Community Offering, any person
together with any Associate or group of Persons acting in concert may purchase
up to 5% of the Subscription Shares, subject to the purchase limitations
specified in Section 14; provided, however, that the shares purchased in the
Subscription Offering by any Person together with an Associate or group of
Persons acting in concert shall be counted toward meeting the maximum purchase
limitation found in this Section. Provided that if the Subscription Offering
has begun, the Bank may begin the Syndicated Community Offering at any time
after the mailing to the Members of the Proxy Statement to be used in connection
with the Special Meeting of Members, provided that the completion of the offer
and sale of the Conversion Stock shall be conditioned upon the approval of this
Plan by the Voting Members. If the Syndicated Community Offering does not begin
pursuant to the provisions of the preceding sentence, the Syndicated Community
Offering will begin as soon as practicable following the date upon which the
Subscription and Community Offerings terminate.
11
Alternatively, if a Syndicated Community Offering is not held, the Bank
shall have the right to sell any Subscription Shares remaining following the
Subscription and Community Offerings in an underwritten firm commitment public
offering. The provisions of Section 14 shall not be applicable to sales to
underwriters for purposes of such an offering but shall be applicable to the
sales by the underwriters to the public. The price to be paid by the
underwriters in such an offering shall be equal to the Subscription Price less
an underwriting discount to be negotiated among such underwriters and the Bank,
which will in no event exceed an amount deemed to be acceptable by the OTS.
If for any reason a Syndicated Community Offering or an underwritten firm
commitment public offering of shares of Conversion Stock not sold in the
Subscription and Community Offerings cannot be effected, or in the event that
any insignificant residue of shares of Conversion Stock is not sold in the
Subscription and Community Offerings or in the Syndicated Community or
underwritten firm commitment public offering, other arrangements will be made
for the disposition of unsubscribed shares by the Bank, if possible. Such other
purchase arrangements will be subject to the approval of the OTS.
14. LIMITATION ON PURCHASES
The following limitations shall apply to all purchases of shares of
Conversion Stock:
A. The maximum number of Subscription Shares which may be subscribed for
or purchased in all categories in the Offering by any Person or Participant
together with any Associate or group of Persons Acting in Concert shall not
exceed 5% of the Subscription Shares, except for the Employee Plans which may
subscribe for up to 8% of the Holding Company Common Stock offered in the
Subscription Offering (including shares issued in the event of an increase in
the maximum of the Offering Range of 15%); provided, however, that, in the event
the maximum purchase limitation is increased, orders for Subscription Shares in
the Community Offering and in the Syndicated Offering (or, alternatively, an
underwritten firm commitment public offering), if any, shall, as determined by
the Bank, first be filled to a maximum of 1,000 shares and thereafter remaining
shares shall be allocated, on an equal number of shares basis per order until
all orders have been filled.
B. The maximum number of shares of Holding Company Common Stock which may
be purchased in all categories of the Offering by Officers and Directors of the
Bank and their Associates in the aggregate, when combined with Exchange Shares
received by such persons, shall not exceed 25% of the Conversion Stock offered
in the Conversion.
C. The maximum number of Subscription Shares which may be subscribed for
or purchased in all categories in the Offering by any Person or Participant
together with any Associate or group of Persons Acting in Concert, together with
Exchange Shares received in the Share Exchange by any such Person, or
Participant together with any Associate or group of Persons Acting in Concert,
shall not exceed 5% of the shares issued in the Conversion. Pursuant to this
limitation, certain depositors who are also stockholders of the Mid-Tier Holding
Company may not be permitted to purchase Holding Company Conversion Stock in the
Offering.
D. A minimum of 25 shares of Holding Company Common Stock must be
purchased by each Person purchasing shares in the Offering to the extent those
shares are available; provided, however, that in the event the minimum number of
shares of Holding Company Common Stock purchased times the price per share
exceeds $500, then such minimum purchase requirement shall be reduced to such
number of shares which when multiplied by the price per share shall not exceed
$500, as determined by the Board.
If the number of shares of Holding Company Common Stock otherwise allocable
pursuant to Sections 8 through 13, inclusive, to any Person or that Person's
Associates would be in excess of the maximum number of shares permitted as set
forth above, the number of shares of Holding Company Common Stock allocated to
each such person shall be reduced to the lowest limitation applicable to that
Person, and then the number of shares allocated to each group consisting of a
Person and that Person's Associates shall be reduced so that the aggregate
allocation to that Person and his or her Associates complies with the above
limits, and such maximum number of shares shall be reallocated among that Person
and his or her Associates as they may agree, or in the absence of an
12
agreement, in proportion to the shares subscribed by each (after first applying
the maximums applicable to each Person, separately).
Depending upon market or financial conditions, the Board of Directors of
the Holding Company, with the approval of the OTS and without further approval
of the Members, may decrease or further increase the purchase limitations in
this Plan, provided that the maximum purchase limitations may not be increased
to a percentage in excess of 5% of the shares issued in the Conversion except as
provided below. If the Holding Company increases the maximum purchase
limitations, the Holding Company is only required to resolicit Persons who
subscribed for the maximum purchase amount and may, in the sole discretion of
the Holding Company resolicit certain other large subscribers. In the event that
the maximum purchase limitation is increased to 5% of the shares issued in the
Conversion, such limitation may be further increased to 9.99%, provided that
orders for Holding Company Common Stock exceeding 5% of the shares of Conversion
Stock issued in the Conversion shall not exceed in the aggregate 10% of the
total shares of Conversion Stock issued in the Conversion. Requests to purchase
additional shares of the Conversion Stock in the event that the purchase
limitation is so increased will be determined by the Board of Directors of the
Holding Company in its sole discretion. In the event of an increase in the total
number of shares offered in the Subscription Offering due to an increase in the
maximum of the Offering Range of up to 15% (the "Adjusted Maximum"), the
additional shares will be used in the following order of priority: (i) to fill
the Employee Plans' subscription to the Adjusted Maximum; (ii) in the event that
there is an oversubscription at the Eligible Account Holder, Supplemental
Eligible Account Holder, Other Member, or Minority Stockholder levels, to fill
unfulfilled subscriptions of such subscribers according to such respective
priorities exclusive of the Adjusted Maximum; and (iii) to fill unfulfilled
subscriptions in the Community Offering exclusive of the Adjusted Maximum with
preference given first to Minority Stockholders and then to natural persons
residing in the Community.
For purposes of this Section 14, the Directors of the Bank, the Mid-Tier
Holding Company and the Holding Company shall not be deemed to be Associates or
a group affiliated with each other or otherwise Acting in Concert solely as a
result of their being Directors of the Bank, the Mid-Tier Holding Company or the
Holding Company.
Each Person purchasing Holding Company Common Stock in the Conversion shall
be deemed to confirm that such purchase does not conflict with the above
purchase limitations contained in this Plan.
15. PAYMENT FOR CONVERSION STOCK
All payments for Holding Company Common Stock subscribed for in the
Subscription, Community and Syndicated Community Offerings must be delivered in
full to the Holding Company, together with a properly completed and executed
Order Form and certification or acknowledgment form, or purchase order in the
case of the Syndicated Community Offering, on or prior to the expiration date of
the Offering; provided, however, that if the Employee Plans subscribe for shares
during the Subscription Offering, such plans will not be required to pay for the
shares at the time they subscribe but rather may pay for such shares of Holding
Company Common Stock subscribed for by such plans at the Subscription Price upon
consummation of the Conversion. Notwithstanding the foregoing, the Holding
Company shall have the right, in its sole discretion, to permit institutional
investors to submit contractually irrevocable orders in the Offering and to
thereafter submit payment by wire transfer for the Holding Company Common Stock
for which they are subscribing in the Offering at any time prior to 48 hours
before the completion of the Conversion, unless such 48 hour period is waived by
the Holding Company in its sole discretion.
Payment for Holding Company Common Stock subscribed for shall be made
either in cash (if delivered in person), check, money order, certified or
teller's check or bank draft. Alternatively, subscribers in the Subscription and
Community Offerings may pay for the shares for which they have subscribed by
authorizing the Bank on the Order Form to make a withdrawal from the
subscriber's Deposit Account at the Bank in an amount equal to the Subscription
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
13
certificate shall be canceled at the time of withdrawal, without penalty, and
the remaining balance will earn interest at the passbook rate. Funds for which a
withdrawal is authorized will remain in the subscriber's Deposit Account but may
not be used by the subscriber during the Subscription and Community Offerings.
Thereafter, the withdrawal will be given effect only to the extent necessary to
satisfy the subscription (to the extent it can be filled) at the Subscription
Price per share. Interest will continue to be earned on any amounts authorized
for withdrawal until such withdrawal is given effect. Interest will be paid by
the Bank at not less than the passbook annual rate on payments for Holding
Company Common Stock received in cash or by 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 and Syndicated
Community Offerings will be refunded to them with interest. In case of amounts
authorized for withdrawal from Deposit Accounts, refunds will be made by
canceling the authorization for withdrawal. The Bank is prohibited by regulation
from knowingly making any loans or granting any lines of credit for the purchase
of stock in the Conversion, and therefore, will not do so.
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the Prospectus prepared by the Holding Company
and Bank has been declared effective by the SEC, Order Forms will be distributed
to the Eligible Account Holders, Employee Plans, Supplemental Eligible Account
Holders and Other Members at their last known addresses appearing on the records
of the Bank for the purpose of subscribing for shares of Holding Company Common
Stock in the Subscription Offering and will be made available for use by those
Persons entitled to purchase in the Community Offering. Notwithstanding the
foregoing, the Bank may elect to send Order Forms only to those Persons who
request them after receipt of such notice in a form approved by the OTS and
which is adequate to apprise the Eligible Account Holders, Employee Plans,
Supplemental Eligible Account Holders and Other Members of the pendency of the
Subscription Offering. Such notice may be included with the proxy statement for
the Special Meeting of Members and the proxy statement for the Special Meeting
of Stockholders and may also be included in the notice of the pendency of the
Conversion and the Special Meeting of Members sent to all Eligible Account
Holders in accordance with regulations of the OTS.
Each Order Form will be preceded or accompanied by a prospectus describing
the Holding Company, the Bank, the Holding Company Common Stock and the
Subscription and 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
Holding Company, which date shall be not less than twenty (20), nor more than
fortyfive (45) days, following the date on which the Order Forms are mailed by
the Holding Company, and which date will constitute the termination of the
Subscription Offering;
B. The Subscription Price per share for shares of Holding Company Common
Stock to be sold in the Subscription and Community Offerings;
C. A description of the minimum and maximum number of Subscription Shares
which may be subscribed for pursuant to the exercise of subscription rights or
otherwise purchased in the Community Offering;
D. Instructions as to how the recipient of the Order Form is to indicate
thereon the number of Subscription Shares for which such person elects to
subscribe and the available alternative methods of payment therefor;
E. An acknowledgment that the recipient of the Order Form has received a
final copy of the prospectus prior to execution of the Order Form;
F. A statement to the effect that all subscription rights are
nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering to the Holding Company within the subscription
period such properly completed and executed Order Form, together with payment in
the full amount
14
of the aggregate purchase price as specified in the Order Form for the shares of
Holding Company Common Stock for which the recipient elects to subscribe in the
Subscription Offering (or by authorizing on the Order Form that the Bank
withdraw said amount from the subscriber's Deposit Account at the Bank);
and
G. A statement to the effect that the executed Order Form, once received
by the Holding Company, may not be modified or amended by the subscriber without
the consent of the Holding Company.
Notwithstanding the above, the Holding Company reserves the right in its
sole discretion to accept or reject orders received on photocopied or
facsimilied order forms.
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT
In the event Order Forms (a) are not delivered and are returned to the
Holding Company or the Bank by the United States Postal Service or the Holding
Company is unable to locate the addressee, (b) are not received back by the
Holding Company or are received by the Holding Company after the expiration date
specified thereon, (c) are defectively filled out or executed, (d) are not
accompanied by the full required payment, or, in the case of institutional
investors in the Community 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 Subscription Price prior to 48 hours before the
completion of the Conversion, unless waived by the Holding Company, for the
shares of Holding Company Common Stock subscribed for (including cases in which
deposit accounts from which withdrawals are authorized are insufficient to cover
the amount of the required payment), or (e) are not mailed pursuant to a "no
mail" order placed in effect by the account holder, the subscription rights of
the Person to whom such rights have been granted will lapse as though such
Person failed to return the completed Order Form within the time period
specified thereon; provided, however, that the Holding Company may, but will not
be required to, waive any immaterial irregularity on any Order Form or require
the submission of corrected Order Forms or the remittance of full payment for
subscribed shares by such date as the Holding Company may specify. The
interpretation of the Holding Company of terms and conditions of this Plan and
of the Order Forms will be final, subject to the authority of the OTS.
18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
The Holding Company will make reasonable efforts to comply with the
securities laws of all States in the United States in which Persons entitled to
subscribe for shares of Holding Company Common Stock pursuant to this Plan
reside. However, no such Person will be issued subscription rights or be
permitted to purchase shares of Holding Company Common Stock in the Subscription
Offering if such Person resides in a foreign country; or in a State of the
United States with respect to which any of the following apply: (A) a small
number of Persons otherwise eligible to subscribe for shares under the Plan
reside in such state; (B) the issuance of subscription rights or the offer or
sale of shares of Holding Company Common Stock to such Persons would require the
Holding Company under the securities laws of such state, to register as a
broker, dealer, salesman or agent or to register or otherwise qualify its
securities for sale in such state; (C) such registration or qualification would
be impracticable for reasons of cost or otherwise.
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT
The Bank shall establish at the time of the MHC Merger a liquidation
account in an amount equal to the greater of: (a) the sum of (i) the percentage
of the outstanding shares of the common stock of the Mid-Tier Holding Company
owned by the Mutual Holding Company prior to the Mid-Tier Merger multiplied by
the Mid-Tier Holding Company's total stockholders' equity as reflected in the
latest statement of financial condition contained in the final Prospectus
utilized in the Conversion, and (ii) the restricted retained earnings account
that reflects certain dividends waived by the Mutual Holding Company; or (b) the
retained earnings of the Bank at the time the Bank underwent its mutual holding
company reorganization. Following the Conversion, the Liquidation Account will
be maintained by the Bank for the benefit of the Eligible Account Holders and
Supplemental Eligible Account Holders who continue to maintain their Deposit
Accounts at the Bank. Each Eligible Account Holder and Supplemental Eligible
Account Holder shall, with respect to his Deposit Account,
15
hold a related inchoate interest in a portion of the liquidation account
balance, in relation to his Deposit Account balance at the Eligibility Record
Date or Supplemental Eligibility Record Date, respectively, or to such balance
as it may be subsequently reduced, as hereinafter provided.
In the unlikely event of a complete liquidation of the Bank (and only in
such event), following all liquidation payments to creditors (including those to
Account Holders to the extent of their Deposit Accounts) each Eligible Account
Holder and Supplemental Eligible Account Holder shall be entitled to receive a
liquidating distribution from the Liquidation Account, in the amount of the then
adjusted subaccount balance for his Deposit Account then held, before any
liquidation distribution may be made to any holders of the Bank's capital stock.
No merger, consolidation, purchase of bulk assets with assumption of Deposit
Accounts and other liabilities, or similar transactions with an FDIC insured
institution, in which the Bank is not the surviving institution, shall be deemed
to be a complete liquidation for this purpose. In such transactions, the
liquidation account shall be assumed by the surviving institution.
The initial subaccount balance for a Deposit Account held by an Eligible
Account Holder and Supplemental Eligible Account Holder shall be determined by
multiplying the opening balance in the Liquidation Account by a fraction, the
numerator of which is the amount of the Qualifying Deposits of such account
holder and the denominator of which is the total amount of all Qualifying
Deposits of all Eligible Account Holders and Supplemental Eligible Account
Holders. Such initial subaccount balance shall not be increased, but shall be
subject to downward adjustment as described below. If, at the close of business
on any December 31 annual closing date, commencing on or after the effective
date of the Conversion, the deposit balance in the Deposit Account of an
Eligible Account Holder or Supplemental Eligible Account Holder is less than the
lesser of (i) the balance in the Deposit Account at the close of business on any
other annual closing date subsequent to the Eligibility Record Date or
Supplemental Eligibility Record Date, or (ii) the amount of the Qualifying
Deposit in such Deposit Account as of the Eligibility Record Date or
Supplemental Eligibility Record Date, the subaccount balance for such Deposit
Account shall be adjusted by reducing such subaccount balance in an amount
proportionate to the reduction in such deposit balance. In the event of such
downward adjustment, the subaccount balance shall not be subsequently increased,
notwithstanding any subsequent increase in the deposit balance of the related
Deposit Account. If any such Deposit Account is closed, the related subaccount
shall be reduced to zero.
The creation and maintenance of the Liquidation Account shall not operate
to restrict the use or application of any of the net worth accounts of the Bank,
except that the Bank shall not declare or pay a cash dividend on, or repurchase
any of, its capital stock if the effect thereof would cause its net worth to be
reduced below (i) the amount required for the Liquidation Account; or (ii) the
net worth requirements of the Bank contained in Part 567 of the Rules and
Regulations of the OTS.
20. VOTING RIGHTS OF STOCKHOLDERS
Following consummation of the Conversion, voting rights with respect to the
Bank shall be held and exercised exclusively by the holders of its capital
stock. The holders of the voting capital stock of the Holding Company shall
have the exclusive voting rights with respect to the Holding Company.
21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
A. All Subscription Shares purchased by Directors or Officers of the
Holding Company or the Bank in the Offering shall be subject to the restriction
that, except as provided in this Section or as may be approved by the OTS, no
interest in such shares may be sold or otherwise disposed of for value for a
period of one year following the date of purchase in the Offering.
B. The restriction on disposition of Subscription Shares set forth above
in this Section shall not apply to the following:
(i) Any exchange of such shares in connection with a merger or
acquisition involving the Bank or the Holding Company, as the case may be,
which has been approved by the OTS; and
16
(ii) Any disposition of such shares following the death of the
person to whom such shares were initially sold under the terms of the Plan.
C. With respect to all Subscription Shares subject to restrictions on
resale or subsequent disposition, each of the following provisions shall apply:
(i) Each certificate representing shares restricted by this section
shall bear a legend prominently stamped on its face giving notice of the
restriction;
(ii) Instructions shall be issued to the stock transfer agent for
the Holding Company not to recognize or effect any transfer of any
certificate or record of ownership of any such shares in violation of the
restriction on transfer; and
(iii) Any shares of capital stock of the Holding Company issued with
respect to a stock dividend, stock split, or otherwise with respect to
ownership of outstanding Subscription Shares subject to the restriction on
transfer hereunder shall be subject to the same restriction as is
applicable to such Conversion Stock.
22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE
CONVERSION
For a period of three years following the Conversion, no Officer, Director
or their Associates shall purchase, without the prior written approval of the
OTS, any outstanding shares of Holding Company Common Stock except from a
broker dealer registered with the SEC. This provision shall not apply to
negotiated transactions involving more than 1% of the outstanding shares of
Holding Company Common Stock, the exercise of any options pursuant to a stock
option plan or purchases of Holding Company Common Stock made by or held by any
Tax Qualified Employee Stock Benefit Plan or Non Tax Qualified Employee Stock
Benefit Plan of the Bank or the Holding Company (including the Employee Plans)
which may be attributable to any Officer or Trustee. As used herein, the term
(pound) "negotiated transaction (pound)" means a transaction in which the
securities are offered and the terms and arrangements relating to any sale are
arrived at through direct communications between the seller or any person acting
on its behalf and the purchaser or his investment representative. The term
"investment representative" shall mean a professional investment advisor acting
as agent for the purchaser and independent of the seller and not acting on
behalf of the seller in connection with the transaction.
23. TRANSFER OF DEPOSIT ACCOUNTS
Each person holding a Deposit Account at the Bank at the time of Conversion
shall retain an identical Deposit Account at the Bank following Conversion in
the same amount and subject to the same terms and conditions (except as to
voting and liquidation rights).
24. REGISTRATION AND MARKETING
Within the time period required by applicable laws and regulations, the
Holding Company will register the securities issued in connection with the
Conversion pursuant to the Securities Exchange Act of 1934 (or will be a
successor issuer that succeeds to the registration of the Mid-Tier Holding
Company) and will not deregister such securities for a period of at least three
years thereafter, except that the maintenance of registration for three years
requirement may be fulfilled by any successor to the Bank or any holding company
of the Bank. In addition, the Bank or Holding Company will use its best efforts
to encourage and assist a market maker to establish and maintain a market for
the Conversion Stock and to list those securities on a national or regional
securities exchange or the Nasdaq Stock Market.
17
25. TAX RULINGS OR OPINIONS
Consummation of the Conversion is expressly conditioned upon prior receipt
by the Mutual Holding Company, the Mid-Tier Holding Company and the Bank of
either a ruling or an opinion of counsel with respect to federal tax laws, and
either a ruling, an opinion of counsel, or a letter of advice from their tax
advisor with respect to New York tax laws, to the effect that consummation of
the transactions contemplated by the Conversion and this Plan will not result in
a taxable reorganization under the provisions of the applicable codes or
otherwise result in any adverse tax consequences to the Mutual Holding Company,
the Mid-Tier Holding Company, the Holding Company or the Bank, or the account
holders receiving subscription rights before or after the Conversion, except in
each case to the extent, if any, that subscription rights are deemed to have
value on the date such rights are issued.
26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS
A. The Holding Company and the Bank are authorized to adopt Tax-Qualified
Employee Stock Benefit Plans in connection with the Conversion, including
without limitation, an ESOP. Existing as well as any newly created Tax-
Qualified Employee Stock Benefit Plans may purchase shares of Conversion Stock
in the Conversion, to the extent permitted by the terms of such benefit plans
and this Plan.
B. As a result of the Conversion, the Holding Company shall be deemed to
have ratified and approved the all stock benefit plans maintained by the Bank
and the Mid-Tier Holding Company and shall have agreed to issue (and reserve for
issuance) Holding Company Common Stock in lieu of common stock of the Mid-Tier
Holding Company pursuant to the terms of such benefit plans. Upon consummation
of the Conversion, the Mid-Tier Holding Company common stock held by such
benefit plans shall be converted into Holding Company Common Stock based upon
the Exchange Ratio. Also upon consummation of the Conversion, (i) all rights to
purchase, sell or receive Mid-Tier Holding Company common stock and all rights
to elect to make payment in Mid-Tier Holding Company common stock under any
agreement between the Bank or the Mid-Tier Holding Company and any Director,
Officer or Employee thereof or under any plan or program of the Bank or the Mid-
Tier Holding Company shall automatically, by operation of law, be converted into
and shall become an identical right to purchase, sell or receive Holding Company
Common Stock and an identical right to make payment in Holding Company Common
Stock under any such agreement between the Bank or the Mid-Tier Holding Company
and any Director, Officer or Employee thereof or under such plan or program of
the Bank, and (ii) rights outstanding under the any stock option plan of the
Bank or the Mid-Tier Holding Company shall be assumed by the Holding Company and
thereafter shall be rights only for shares of Holding Company Common Stock, with
each such right being for a number of shares of Holding Company Common Stock
based upon the Exchange Ratio and the number of shares of Mid-Tier Holding
Company common stock that were available thereunder immediately prior to
consummation of the Conversion, with the price adjusted to reflect the Exchange
Ratio but with no change in any other term or condition of such right.
C. The Holding Company and the Bank are authorized to enter into
employment agreements with their executive officers.
D. The Holding Company and the Bank are authorized to adopt stock option
plans, restricted stock grant plans and other Non-Tax-Qualified Employee Stock
Benefit Plans, provided that such plans conform to any applicable requirements
of OTS regulators.
27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY
A. In accordance with OTS regulations, for a period of three years from
the date of consummation of the Conversion, no Person, other than the Holding
Company, shall directly or indirectly offer to acquire or acquire the beneficial
ownership of more than 10% of any class of an equity security of the Bank
without the prior written consent of the OTS.
18
B. (i) The charter of the Bank may contain a provision stipulating
that no person, except the Holding Company, for a period of five years following
the closing date of the Conversion, shall directly or indirectly offer to
acquire or acquire the beneficial ownership of more than 10% of any class of an
equity security of the Bank, without the prior written approval of the OTS. In
addition, such charter may also provide that for a period of five years
following the closing date of the Conversion, shares beneficially owned in
violation of the above described charter provision shall not be entitled to vote
and shall not be voted by any person or counted as voting stock in connection
with any matter submitted to stockholders for a vote. In addition, special
meetings of the stockholders relating to changes in control or amendment of the
charter may only be called by the Board of Directors, and shareholders shall not
be permitted to cumulate their votes for the election of directors.
(ii) The Certificate of Incorporation of the Holding Company will
contain a provision stipulating that in no event shall any record owner of any
outstanding shares of Holding Company Common Stock who beneficially owns in
excess of 10% of such outstanding shares be entitled or permitted to any vote in
respect to any shares held in excess of 10%. In addition, the Certificate of
Incorporation and Bylaws of the Holding Company contain provisions which provide
for staggered terms of the directors, noncumulative voting for directors,
limitations on the calling of special meetings, a fair price provision for
certain business combinations and certain notice requirements.
C. For the purposes of this section:
(i) The term "person" includes an individual, a firm, a corporation
or other entity;
(ii) The term "offer" includes every offer to buy or acquire,
solicitation of an offer to sell, tender offer for, or request or
invitation for tenders of, a security or interest in a security for
value;
(iii) The term "acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise; and
(iv) The term "security" includes nontransferable subscription
rights issued pursuant to a plan of conversion as well as a "security" as
defined in 15 U.S.C. (S) 8c(a)(10).
28. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
A. The Holding Company shall comply with any applicable OTS regulation in
the repurchase of any shares of its capital stock during the first three years
following consummation of the Conversion.
B. The Bank shall not declare or pay a cash dividend on, or repurchase
any of, its capital stock if the effect thereof would cause its regulatory
capital to be reduced below (i) the amount required for the liquidation account
or (ii) the federal regulatory capital requirement in Section 567.2 of the Rules
and Regulations of the OTS. Otherwise, the Bank may declare dividends or make
capital distributions in accordance with applicable law and regulations,
including 12 C.F.R. Section 563.134 or its successor.
29. CHARTER AND BYLAWS
By voting to adopt this Plan, Members of the Mutual Holding Company will be
voting to adopt a Stock Certificate of Incorporation and Bylaws for a Delaware
corporation attached as Exhibits D and E to this Plan.
30. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE
The Effective Date of the Conversion shall be the date upon which the
Articles of Combination shall be filed with the OTS with respect to the MHC
Merger, the Mid-Tier Merger and the Bank Merger. The Articles of Combination
shall be filed with the OTS after all requisite regulatory, member and
stockholder approvals have been obtained, all applicable waiting periods have
expired, and sufficient subscriptions and orders for Subscription Shares have
been received. The Closing of the sale of all Subscription Shares sold in the
Subscription Offering,
19
Community Offering and/or Syndicated Community Offering shall occur
simultaneously on the effective date of the Closing.
31. EXPENSES OF CONVERSION
The Mutual Holding Company, the Mid-Tier Holding Company, the Bank and the
Holding Company may retain and pay for the services of legal, financial and
other advisors to assist in connection with any or all aspects of the
Conversion, including the Offering, and such parties shall use their best
efforts to assure that such expenses shall be reasonable.
32. AMENDMENT OR TERMINATION OF PLAN
If deemed necessary or desirable, this Plan may be substantively amended as
a result of comments from regulatory authorities or otherwise at any time prior
to solicitation of proxies from Members and Bank stockholders to vote on this
Plan by the Board of Directors of the Mutual Holding Company, and at any time
thereafter by the Board of Directors of the Mutual Holding Company with the
concurrence of the OTS. Any amendment to this Plan made after approval by the
Members and Bank stockholders with the approval of the OTS shall not necessitate
further approval by the Members unless otherwise required by the OTS. This Plan
may be terminated by the Board of Directors of the Mutual Holding Company at any
time prior to the Special Meeting of Members and the Special Meeting of
Stockholders to vote on this Plan, and at any time thereafter with the
concurrence of the OTS.
By adoption of the Plan, the Members of the Mutual Holding Company
authorize the Board of Directors of the Mutual Holding Company to amend or
terminate the Plan under the circumstances set forth in this Section.
33. CONDITIONS TO CONVERSION
Consummation of the Conversion pursuant to this Plan is expressly
conditioned upon the following:
A. Prior receipt by the Mutual Holding Company, the Mid-Tier Holding
Company, and the Bank of rulings of the United States Internal Revenue Service
and the New York State taxing authorities, or opinions of counsel or tax
advisers as described in Section 26 hereof;
B. The sale of the Subscription Shares offered in the Conversion; and
C. The completion of the Conversion within the time period specified in
Section 3 of this Plan.
34. INTERPRETATION
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Bank
shall be final, subject to the authority of the OTS.
Dated: January 31, 2000, and amended on August 21, 2000.
20
EXHIBIT A
AGREEMENT OF MERGER BETWEEN
FINGER LAKES FINANCIAL CORP. AND THE SAVINGS BANK OF THE FINGER LAKES
FORM OF AGREEMENT OF MERGER BETWEEN
FINGER LAKES FINANCIAL CORP. (A FEDERAL CORPORATION)
AND THE SAVINGS BANK OF THE FINGER LAKES
THIS AGREEMENT OF MERGER (this "Merger Agreement") dated as of
_____________, 2000, is made by and between Finger Lakes Financial Corp., a
federal corporation (the "Mid-Tier Holding Company"), The Savings Bank of the
Finger Lakes (the "Bank") and Finger Lakes Interim Savings Bank I, an interim
federal savings bank ("Interim I").
R E C I T A L S :
1. The Mid-Tier Holding Company is a federal company which owns 100% of
the common stock of The Savings Bank of the Finger Lakes (the "Bank"). As of the
date hereof, the Mid-Tier Holding Company has authorized capital stock
consisting of 20,000,000 shares of common stock and 10,000,000 shares of
preferred stock, of which there are 3,570,000 shares of common stock and no
shares of preferred stock issued and outstanding.
2. Contemporaneously with the transactions contemplated by this Merger
Agreement, the Mid-Tier Holding Company will convert to or exchange its charter
for a federal interim savings bank which shall merge with and into the Bank with
the Bank as the surviving entity (the "Mid-Tier Merger"). Mid-Tier Holding
Company stockholders shall constructively receive shares of Bank common stock in
exchange for their Mid-Tier Holding Company common stock.
3. At least two-thirds of the members of the boards of directors of the
Bank and the Mid-Tier Holding Company have approved this Merger Agreement under
which the Mid-Tier Holding Company shall be merged with and into the Bank with
the Bank as the surviving or resulting institution, and authorized the execution
and delivery thereof.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
1. Merger. At and on the Effective Date (as defined below) , (i) the Mid-
Tier Holding Company shall convert into Interim I, and will merge with and into
the Bank (the "Mid-Tier Merger") with the Bank as the resulting entity, and (ii)
the Mid-Tier Holding Company stockholders shall constructively receive shares of
Bank common stock in exchange for their Mid-Tier Holding Company common
stock.
2. Effective Date. The Mid-Tier Merger shall not be effective until and
unless it is approved by the Director of the Office of Thrift Supervision (the
"OTS") after approval by at least two-thirds of the outstanding common stock of
the Mid-Tier Holding Company, a majority vote of the Minority Stockholders, and
the Articles of Combination shall have been filed with the OTS with respect to
the Mid-Tier Merger.
3. Name. The name of the Resulting Institution shall be The Savings Bank
of the Finger Lakes.
4. Offices. The main banking office of the Resulting Institution shall
be 470 Exchange Street, Geneva, New York. The branch offices of the Bank that
were in lawful operation prior to the Merger shall be operated as branch offices
of the Bank.
5. Directors and Officers. The directors and officers of the Bank
immediately prior to the Effective Date shall be the directors and officers of
the Resulting Institution after the Effective Date.
6. Rights and Duties of the Resulting Institution. At the Effective Date,
the Mid-Tier Holding Company shall convert to Interim I, which shall be merged
with and into the Bank (the "Resulting Institution").
A-1
The business of the Resulting Institution shall be that of a federal savings
bank as provided in its Charter. All assets, rights, interests, privileges,
powers, franchises and property (real, personal and mixed) of the Mid-Tier
Holding Company shall be automatically transferred to and vested in the
Resulting Institution through Interim I by virtue of such Merger without any
deed or other document of transfer. The Resulting Institution, without any order
or action on the part of any court or otherwise and without any documents of
assumption or assignment, shall hold and enjoy all of the properties, franchises
and interests, including appointments, powers, designations, nominations and all
other rights and interests as the agent or other fiduciary in the same manner
and to the same extent as such rights, franchises, and interests and powers were
held or enjoyed by the Mid-Tier Holding Company. The Resulting Institution shall
be responsible for all of the liabilities, restrictions and duties of every kind
and description of the Mid-Tier Holding Company, immediately prior to the Mid-
Tier Merger, including liabilities for all debts, obligations and contracts of
the Mid-Tier Holding Company, matured or unmatured, whether accrued, absolute,
contingent or otherwise and whether or not reflected or reserved against on
balance sheets, books or accounts or records of the Mid-Tier Holding Company.
The stockholders of the Bank shall possess all voting rights with respect to the
shares of stock of the Bank. All rights of creditors and other obligees and all
liens on property of the Mid-Tier Holding Company shall be preserved and shall
not be released or impaired.
7. Other Terms. All terms used in this Merger Agreement shall, unless
defined herein, have the meanings set forth in the Plan. The Plan is
incorporated herein by this reference and made a part hereof to the extent
necessary or appropriate to effect and consummate the terms of this Merger
Agreement and the Conversion.
IN WITNESS WHEREOF, the Mid-Tier Holding Company, Interim I and the Bank
have caused this Merger Agreement to be executed as of the date first above
written.
Finger Lakes Financial Corp.
(a federal corporation)
ATTEST:
By:_______________________________ _______________________________________
Terry L. Hammond, Corporate Secretary G. Thomas Bowers, President
The Savings Bank of the Finger Lakes
(a federal savings bank)
ATTEST:
By:_______________________________ _______________________________________
Terry L. Hammond, Corporate Secretary G. Thomas Bowers, President
ATTEST: Finger Lakes Interim Savings Bank I
(in formation)
__________________________________ By: ___________________________________
Terry L. Hammond, Corporate Secretary G. Thomas Bowers, President
A-2
EXHIBIT B
AGREEMENT OF MERGER BETWEEN FINGER LAKES FINANCIAL CORPORATION, M.H.C.
AND SAVINGS BANK OF THE FINGER LAKES
FORM OF AGREEMENT OF MERGER BETWEEN
FINGER LAKES FINANCIAL CORPORATION, MHC
AND THE SAVINGS BANK OF THE FINGER LAKES
THIS AGREEMENT OF MERGER (this "Merger Agreement") dated as of ___________,
2000, is made by and between Finger Lakes Financial Corporation, M.H.C., a
federal mutual holding company (the "Mutual Holding Company"), The Savings Bank
of the Finger Lakes (the "Bank"), and Finger Lakes Interim Savings Bank II, an
interim federal savings bank ("Interim II").
R E C I T A L S :
1. The Mutual Holding Company is a federal mutual holding company with no
authorized shares of capital stock.
2. After the merger of the Finger Lakes Financial Corp., a federal mid-
tier holding company (the "Mid-Tier Holding Company") into the Bank; the
majority of the shares of common stock of the Bank will be owned by the Mutual
Holding Company, and the remainder of the shares of common stock of the Bank
will be constructively owned by the Bank's employees, directors and the public
(the "Minority Stockholders").
3. Contemporaneously with the transactions contemplated by this Merger
Agreement, the Mutual Holding Company will convert to or exchange its charter
for a federal interim savings bank which shall merge with and into the Bank with
the Bank as the surviving entity (the "MHC Merger"). Each Eligible Account
Holder and Supplemental Eligible Account Holder (as defined in the Plan of
Conversion and Reorganization (the "Plan") will receive as interest in a
liquidation account ("Liquidation Account") of the Bank in exchange for such
person's interest in the Mutual Holding Company.
4. At least two-thirds of the members of the boards of directors of the
Bank and the Mutual Holding Company have approved this Merger Agreement and the
MHC Merger (as described below) and authorized the execution and delivery
thereof.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
1. Merger. At and on the Effective Date (as defined below), (i) the
Mutual Holding Company shall convert into Interim II and will merge with and
into the Bank (the "MHC Merger") with the Bank as the surviving or resulting
institution (the "Resulting Institution"), (ii) each share of Bank common stock
owned by the Mutual Holding Company shall be canceled, and (iii) each Eligible
Account Holder and Supplemental Eligible Account Holder shall automatically
receive an interest in the Liquidation Account, which shall be established in
the Bank, in exchange for such person's interest in the Mutual Holding Company
as set forth in the Plan.
2. Effective Date. The MHC Merger shall not be effective until and
unless it is approved by the Director of the Office of Thrift Supervision (the
"OTS") after approval by (i) two-thirds of the outstanding common stock of the
Bank, (ii) a majority vote of Minority Stockholders present in person or by
proxy at a meeting of stockholders, and (iii) a majority of the members of the
Mutual Holding Company, and the Articles of Combination shall have been filed
with the OTS with respect to the MHC Merger. Approval of the Plan by the
members of the Mutual Holding Company shall also constitute approval of this
Merger Agreement.
3. Name. The name of the Resulting Institution shall be The Savings Bank
of the Finger Lakes.
B-1
4. Offices. The headquarters of the Resulting Institution shall be 470
Exchange Street, Geneva, New York. The offices of the Bank that were in lawful
operation prior to the MHC Merger shall continue to be operated as the branch
offices of the Bank.
5. Directors and Officers. The directors and officers of the Bank
immediately prior to the Effective Date shall be the directors and officers of
the Resulting Institution after the Effective Date.
6 Rights and Duties of the Resulting Institution. At the Effective
Date, the Mutual Holding Company shall convert to Interim II, which shall merge
with and into the Bank with the Bank as the Resulting Institution. The business
of the Resulting Institution shall be that of a federal savings bank as provided
in its Charter. All assets, rights, interests, privileges, powers, franchises
and property (real, personal and mixed) of the Mutual Holding Company shall be
automatically transferred to and vested in the Resulting Institution by virtue
of such Merger without any deed or other document of transfer. The Resulting
Institution, without any order or action on the part of any court or otherwise
and without any documents of assumption or assignment, shall hold and enjoy all
of the properties, franchises and interests, including appointments, powers,
designations, nominations and all other rights and interests as the agent or
other fiduciary in the same manner and to the same extent as such rights,
franchises, and interests and powers were held or enjoyed by the Mutual Holding
Company. The Resulting Institution shall be responsible for all of the
liabilities, restrictions and duties of every kind and description of both the
Mutual Holding Company immediately prior to the MHC Merger, including
liabilities, debts, obligations and contracts of the Mutual Holding Company,
matured or unmatured, whether accrued, absolute, contingent or otherwise and
whether or not reflected or reserved against on balance sheets, books or
accounts or records of the Mutual Holding Company. The stockholders of the Bank
shall possess all voting rights with respect to the shares of stock of the Bank.
All rights of creditors and other obligees and all liens on property of either
the Mutual Holding Company shall be preserved and shall not be released or
impaired.
7. Other Terms. All terms used in this Merger Agreement shall, unless
defined herein, have the meanings set forth in the Plan. The Plan is
incorporated herein by this reference and made a part hereof to the extent
necessary or appropriate to effect and consummate the terms of this Merger
Agreement and the Conversion.
IN WITNESS WHEREOF, the Mutual Holding Company and the Bank have caused
this Agreement to be executed as of the date first above written.
Finger Lakes Financial Corporation, M.H.C.
(a federal mutual holding company)
ATTEST:
By: _________________________________ _______________________________________
Terry L. Hammond, Corporate Secretary G. Thomas Bowers, President
The Savings Bank of the Finger Lakes
(a federal stock bank)
ATTEST:
By: _________________________________ ______________________________________
Terry L. Hammond, Corporate Secretary G. Thomas Bowers, President
B-2
ATTEST: Finger Lakes Interim Savings Bank II
By: _________________________________ _______________________________________
Terry L. Hammond, Corporate Secretary G. Thomas Bowers, President
B-3
EXHIBIT C
AGREEMENT OF MERGER
BETWEEN THE SAVINGS BANK OF THE FINGER LAKES
AND FINGER LAKES INTERIM SAVINGS BANK
FORM OF AGREEMENT OF MERGER BETWEEN
THE SAVINGS BANK OF THE FINGER LAKES
AND FINGER LAKES INTERIM SAVINGS BANK
THIS AGREEMENT OF MERGER (this "Merger Agreement") dated as of
__________________, 2000, is made by and between The Savings Bank of the Finger
Lakes, a federal savings bank (the "Bank") and Finger Lakes Interim Savings
Bank, an interim federal savings Bank ("Interim").
R E C I T A L S :
1. The Bank is a federal savings bank that prior to the transactions
contemplated by this Merger Agreement and the Plan of Conversion and
Reorganization of Finger Lakes Financial Corp. (the "Plan"@) was a wholly owned
subsidiary of Finger Lakes Financial Corp. (the "Mid-Tier Holding Company"), a
federal corporation. The Mid-Tier Holding Company was a majority-owned
subsidiary of Finger Lakes Financial Corporation, MHC (the "Mutual Holding
Company")
2. Contemporaneously with the transactions contemplated by this Merger
Agreement, (i) the Mid-Tier Holding Company shall convert into Finger Lakes
Interim Savings Bank I, an interim federal savings bank ("Interim I") and merge
with and into the Bank (the "Mid-Tier Merger") with the Bank as the resulting
entity, and (ii) the Mid-Tier Holding Company stockholders shall constructively
receive shares of Bank common stock in exchange for their Mid-Tier Holding
Company common stock, (iii) the Mutual Holding Company will convert to or
exchange its charter for a federal interim savings bank which shall merge with
and into the Bank with the Bank as the surviving entity, and (iv) each Eligible
Account Holder and Supplemental Eligible Account Holder (as defined in the Plan
of Conversion and Reorganization of Finger Lakes Financial Corp. (the "plan"))
shall have received an interest in a Liquidation Account of the Bank in exchange
for such person's interest in the Mutual Holding Company.
3. At least two-thirds of the members of the boards of directors of the
Bank and Interim have approved this Bank Merger Agreement under which Interim
shall be merged with and into the Bank with the Bank as the surviving or
resulting institution, and authorized the execution and delivery thereof.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
1. Merger. At and on the Effective Date (as defined below) of the Bank
Merger and contemporaneously with the Mid-Tier Merger, and the MHC Merger (i)
Interim will merge with and into the Bank with the Bank as the surviving or
resulting institution ("Resulting Institution"), whereby (ii) constructive
shareholders of the Bank (i.e., Minority Stockholders immediately prior to the
Conversion) will exchange the shares of Bank common stock that they
constructively received in the Mid-Tier Merger for Holding Company Common
Stock.
2. Stock Offering. Contemporaneously with the Bank Merger, Finger Lakes
Financial Corp., a Delaware Corporation, shall sell shares of its common stock
in a subscription offering as described in the Plan.
3. Effective Date. The Bank Merger shall not be effective until and
unless it is approved by the Director of the Office of Thrift Supervision (the
"OTS") after approval by at least two-thirds of the outstanding common stock of
the Mid-Tier Holding Company, including at least a majority of the shares held
by Minority Stockholders, and the Articles of Combination shall have been filed
with the OTS with respect to the Mid-Tier Merger.
4. Name. The name of the Resulting Institution shall be The Savings Bank
of the Finger Lakes.
C-1
5. Offices. The main banking office of the Resulting Institution shall
be 470 Exchange Street, Geneva, New York. The branch offices of the Bank that
were in lawful operation prior to the Merger shall be operated as branch offices
of the Bank.
6. Directors and Officers. The directors and officers of the Bank
immediately prior to the Effective Date shall be the directors and officers of
the Resulting Institution after the Effective Date.
7. Rights and Duties of the Resulting Institution. At the Effective
Date, Interim shall be merged with and into the Bank (the "Resulting
Institution"). The business of the Resulting Institution shall be that of a
federal savings bank as provided in its Charter. All assets, rights, interests,
privileges, powers, franchises and property (real, personal and mixed) of
Interim shall be automatically transferred to and vested in the Resulting
Institution by virtue of the Bank Merger without any deed or other document of
transfer. The Resulting Institution, without any order or action on the part of
any court or otherwise and without any documents of assumption or assignment,
shall hold and enjoy all of the properties, franchises and interests, including
appointments, powers, designations, nominations and all other rights and
interests as the agent or other fiduciary in the same manner and to the same
extent as such rights, franchises, and interests and powers were held or enjoyed
by Interim. The Resulting Institution shall be responsible for all of the
liabilities, restrictions and duties of every kind and description of Interim,
immediately prior to the Bank Merger, including liabilities for all debts,
obligations and contracts of Interim, matured or unmatured, whether accrued,
absolute, contingent or otherwise and whether or not reflected or reserved
against on balance sheets, books or accounts or records of Interim. The
stockholders of the Bank shall possess all voting rights with respect to the
shares of stock of the Bank. All rights of creditors and other obligees and all
liens on property of Interim shall be preserved and shall not be released or
impaired.
8. Other Terms. All terms used in this Merger Agreement shall, unless
defined herein, have the meanings set forth in the Plan. The Plan is
incorporated herein by this reference and made a part hereof to the extent
necessary or appropriate to effect and consummate the terms of the Merger
Agreement and the Conversion.
IN WITNESS WHEREOF, the Bank and Interim have caused this Merger Agreement
to be executed as of the date first above written.
The Savings Bank of the Finger Lakes
(a federal savings bank)
ATTEST:
By: ___________________________________ ____________________________________
Terry L. Hammond, Corporate Secretary G. Thomas Bowers, President
Finger Lakes Interim Savings Bank
(a federal savings bank)
ATTEST:
By: __________________________________ __________________________________
Terry L. Hammond, Corporate Secretary G. Thomas Bowers, President
EXHIBIT D
CERTIFICATE OF INCORPORATION OF THE HOLDING COMPANY
CERTIFICATE OF INCORPORATION
OF
FINGER LAKES FINANCIAL CORP.
FIRST: The name of the Corporation is Finger Lakes Financial Corp.
-----
(hereinafter referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in the
------
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of the registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
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activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
FOURTH:
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A. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is _______________ (____________)
consisting of:
1. ______________ (_______________) shares of Preferred Stock, par
value one cent ($.01) per share (the "Preferred Stock"); and
2. ______________ (__________________) shares of Common Stock, par
value one cent ($.01) per share (the "Common Stock").
B. The Board of Directors is authorized, subject to any limitations
prescribed by law, to provide for the issuance of the shares of Preferred Stock
in series, and by filing a certificate pursuant to the applicable law of the
State of Delaware (such certificate being hereinafter referred to as a
"Preferred Stock Designation"), to establish from time to time the number of
shares to be included in each such series, and to fix the designation, powers,
preferences, and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof. The number of authorized
shares of Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the terms of any Preferred Stock Designation.
C. 1. Notwithstanding any other provision of this Certificate of
Incorporation, in no event shall any record owner of any outstanding Common
Stock which is beneficially owned, directly or indirectly, by a person who, as
of any record date for the determination of stockholders entitled to vote on any
matter, beneficially owns in excess of 10% of the then outstanding shares of
Common Stock (the "Limit"), be entitled, or permitted to any vote in respect of
the shares held in excess of the Limit. The number of votes which may be cast by
any record owner by virtue of the provisions hereof in respect of Common Stock
beneficially owned by such person owning shares in excess of the Limit shall be
a number equal to the total number of votes which a single record owner of all
Common Stock owned by such person would be entitled to cast, multiplied by a
fraction, the numerator of which is the number of shares of such class or series
which are both beneficially owned by such person and owned of record by such
record owner and the denominator of which is the total number of shares of
Common Stock beneficially owned by such person owning shares in excess of the
Limit.
D-1
2. The following definitions shall apply to this Section C of this
Article FOURTH:
(a) "Affiliate" shall have the meaning ascribed to it in
Rule 12b2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on the date of
filing of this Certificate of Incorporation.
(b) "Beneficial ownership" shall be determined pursuant to
Rule 13d3 of the General Rules and Regulations under the
Securities Exchange Act of 1934 (or any successor rule or
statutory provision), or, if said Rule 13d3 shall be
rescinded and there shall be no successor rule or statutory
provision thereto, pursuant to said Rule 13d3 as in effect
on the date of filing of this Certificate of Incorporation;
provided, however, that a person shall, in any event, also
be deemed the "beneficial owner" of any Common Stock:
(1) which such person or any of its affiliates
beneficially owns, directly or indirectly; or
(2) which such person or any of its affiliates has (i)
the right to acquire (whether such right is exercisable
immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding
(but shall not be deemed to be the beneficial owner of
any voting shares solely by reason of an agreement,
contract, or other arrangement with this Corporation to
effect any transaction which is described in any one or
more of clauses of Section A of Article EIGHTH) or upon
the exercise of conversion rights, exchange rights,
warrants, or options or otherwise, or (ii) sole or
shared voting or investment power with respect thereto
pursuant to any agreement, arrangement, understanding,
relationship or otherwise (but shall not be deemed to
be the beneficial owner of any voting shares solely by
reason of a revocable proxy granted for a particular
meeting of stockholders, pursuant to a public
solicitation of proxies for such meeting, with respect
to shares of which neither such person nor any such
Affiliate is otherwise deemed the beneficial owner); or
(3) which is beneficially owned, directly or
indirectly, by any other person with which such first
mentioned person or any of its Affiliates acts as a
partnership, limited partnership, syndicate or other
group pursuant to any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of
this Corporation;
and provided further, however, that (1) no Director or
Officer of this Corporation (or any Affiliate of any such
Director or Officer) shall, solely by reason of any or all
of such Directors or Officers acting in their capacities as
such, be deemed, for any purposes hereof, to beneficially
own any Common Stock beneficially owned by another such
Director or Officer (or any Affiliate thereof), and (2)
neither any employee stock ownership plan or similar plan of
this Corporation or any subsidiary of this Corporation, nor
any trustee with respect thereto or any Affiliate of such
trustee (solely by reason of such capacity of such trustee),
shall be deemed, for any purposes hereof, to beneficially
own any Common Stock held under any such plan. For purposes
of computing the percentage beneficial ownership of Common
Stock of a person the outstanding Common Stock shall include
shares deemed owned by such person through application of
this subsection but shall not include any other Common Stock
which may be issuable by this Corporation pursuant to any
agreement, or upon exercise of
D-2
conversion rights, warrants or options, or otherwise. For
all other purposes, the outstanding Common Stock shall
include only Common Stock then outstanding and shall not
include any Common Stock which may be issuable by this
Corporation pursuant to any agreement, or upon the exercise
of conversion rights, warrants or options, or otherwise.
(c) A "person" shall mean any individual, firm, corporation, or
other entity.
3. The Board of Directors shall have the power to construe and apply the
provisions of this section and to make all determinations necessary or desirable
to implement such provisions, including but not limited to matters with respect
to (i) determining the number of shares of Common Stock beneficially owned by
any person, (ii) determining whether a person is an affiliate of another, (iii)
determining whether a person has an agreement, arrangement, or understanding
with another as to the matters referred to in the definition of beneficial
ownership, (iv) determining the application of any other definition or operative
provision of the section to the given facts, or (v) any other matter relating to
the applicability or effect of this section.
4. The Board of Directors shall have the right to demand that any person
who is reasonably believed to beneficially own Common Stock in excess of the
Limit (or holds of record Common Stock beneficially owned by any person in
excess of the Limit) supply the Corporation with complete information as to (i)
the record owner(s) of all shares beneficially owned by such person who is
reasonably believed to own shares in excess of the Limit, (ii) any other factual
matter relating to the applicability or effect of this section as may reasonably
be requested of such person.
5. Except as otherwise provided by law or expressly provided in this
section, the presence, in person or by proxy, of the holders of record of shares
of capital stock of the Corporation entitling the holders thereof to cast a
majority of the votes (after giving effect, if required, to the provisions of
this section) entitled to be cast by the holders of shares of capital stock of
the Corporation entitled to vote shall constitute a quorum at all meetings of
the stockholders, and every reference in this Certificate of Incorporation to a
majority or other proportion of capital stock (or the holders thereof) for
purposes of determining any quorum requirement or any requirement for
stockholder consent or approval shall be deemed to refer to such majority or
other proportion of the votes (or the holders thereof) then entitled to be cast
in respect of such capital stock giving effect to the provisions of this Article
FOURTH.
6. Any constructions, applications, or determinations made by the Board
of Directors pursuant to this section in good faith and on the basis of such
information and assistance as was then reasonably available for such purpose
shall be conclusive and binding upon the Corporation and its stockholders.
7. In the event any provision (or portion thereof) of this section shall
be found to be invalid, prohibited or unenforceable for any reason, the
remaining provisions (or portions thereof) of this section shall remain in full
force and effect, and shall be construed as if such invalid, prohibited or
unenforceable provision had been stricken herefrom or otherwise rendered
inapplicable, it being the intent of this Corporation and its stockholders that
such remaining provision (or portion thereof) of this section remain, to the
fullest extent permitted by law, applicable and enforceable as to all
stockholders, including stockholders owning an amount of stock over the Limit,
notwithstanding any such finding.
FIFTH: The following provisions are inserted for the management of the
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business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its Directors and stockholders:
A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the powers
and authority expressly conferred upon them by statute or by this
Certificate of Incorporation or the Bylaws of the Corporation, the
Directors are hereby
D-3
empowered to exercise all such powers and do all such acts and things as
may be exercised or done by the Corporation.
B. The Directors of the Corporation need not be elected by written ballot
unless the Bylaws so provide.
C. Any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting
of stockholders of the Corporation and may not be effected by any consent
in writing by such stockholders.
D. Special meetings of stockholders of the Corporation may be called only
by the Board of Directors pursuant to a resolution adopted by a majority of
the total number of authorized directorships whether or not there exist any
vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption (the "Whole Board") or as
otherwise provided in the Bylaws.
SIXTH:
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A. The number of Directors shall be fixed from time to time exclusively
by the Board of Directors pursuant to a resolution adopted by a majority of the
Whole Board. The Directors shall be divided into three classes, with the term
of office of the first class to expire at the first annual meeting of
stockholders, the term of office of the second class to expire at the annual
meeting of stockholders one year thereafter and the term of office of the third
class to expire at the annual meeting of stockholders two years thereafter with
each director to hold office until his or her successor shall have been duly
elected and qualified. At each annual meeting of stockholders following such
initial classification and election, Directors elected to succeed those
Directors whose terms expire shall be elected for a term of office to expire at
the third succeeding annual meeting of stockholders after their election with
each director to hold office until his or her successor shall have been duly
elected and qualified.
B. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of Directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the Directors
then in office, though less than a quorum, and Directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of office of the class to which they have been chosen expires. No decrease
in the number of Directors constituting the Board of Directors shall shorten the
term of any incumbent Director.
C. Advance notice of stockholder nominations for the election of
Directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.
D. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, any Director, or the entire Board of Directors, may be removed
from office at any time, but only for cause and only by the affirmative vote of
the holders of at least 80 percent of the voting power of all of the
thenoutstanding shares of capital stock of the Corporation entitled to vote
generally in the election of Directors (after giving effect to the provisions of
Article FOURTH of this Certificate of Incorporation ("Article FOURTH")), voting
together as a single class.
SEVENTH: The Board of Directors is expressly empowered to adopt, amend or
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repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the
Bylaws of the Corporation by the Board of Directors shall require the approval
of a majority of the Whole Board. The stockholders shall also have power to
adopt, amend or repeal the Bylaws of the Corporation; provided, however, that,
in addition to any vote of the holders of
D-4
any class or series of stock of the Corporation required by law or by this
Certificate of Incorporation, the affirmative vote of the holders of at least 80
percent of the voting power of all of the thenoutstanding shares of the capital
stock of the Corporation entitled to vote generally in the election of Directors
(after giving effect to the provisions of Article FOURTH), voting together as a
single class, shall be required to adopt, amend or repeal any provisions of the
Bylaws of the Corporation.
EIGHTH:
------
A. In addition to any affirmative vote required by law or this
Certificate of Incorporation, and except as otherwise expressly provided in this
section:
1. any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with (i) any Interested Stockholder (as
hereinafter defined) or (ii) any other corporation (whether or not itself
an Interested Stockholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an Interested
Stockholder; or
2. any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Stockholder, or any Affiliate of any Interested Stockholder, of
any assets of the Corporation or any Subsidiary having an aggregate Fair
Market Value (as hereinafter defined) equaling or exceeding 25% or more of
the combined assets of the Corporation and its Subsidiaries; or
3. the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Stockholder or any
Affiliate of any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate Fair Market
Value (as hereinafter defined) equaling or exceeding 25% of the combined
Fair Market Value of the thenoutstanding common stock of the Corporation
and its Subsidiaries, except to an employee benefit plan of the Corporation
or any Subsidiary thereof; or
4. the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of an Interested Stockholder; or
5. any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise involving an
Interested Stockholder) which has the effect, directly or indirectly, of
increasing the proportional share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any Subsidiary which
is directly or indirectly owned by an Interested Stockholder or any
Affiliate of an Interested Stockholder;
shall require the affirmative vote of the holders of at least 80% of the
voting power of the thenoutstanding shares of stock of the Corporation entitled
to vote in the election of Directors (the "Voting Stock") (after giving effect
to the provisions of Article FOURTH), voting together as a single class. Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law or by any other
provisions of this Certificate of Incorporation or any Preferred Stock
Designation or in any agreement with any national securities exchange or
otherwise.
The term "Business Combination" as used in this Article EIGHTH shall mean
any transaction which is referred to in any one or more of paragraphs 1 through
5 of Section A of this Article EIGHTH.
B. The provisions of Section A of this Article EIGHTH shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only the affirmative vote of the majority of
D-5
the outstanding shares of capital stock entitled to vote, or such vote as is
required by law or by this Certificate of Incorporation, if, in the case of any
Business Combination that does not involve any cash or other consideration being
received by the stockholders of the Corporation solely in their capacity as
stockholders of the Corporation, the condition specified in the following
paragraph 1 is met or, in the case of any other Business Combination, all of the
conditions specified in either of the following paragraphs 1 or 2 are met:
1. The Business Combination shall have been approved by two-
thirds of the Disinterested Directors (as hereinafter defined).
2. All of the following conditions shall have been met:
(a) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business
Combination of consideration other than cash to be received
per share by the holders of Common Stock in such Business
Combination shall at least be equal to the higher of the
following:
(1) (if applicable) the Highest Per Share Price (as
hereinafter defined), including any brokerage
commissions, transfer taxes and soliciting dealers'
fees, paid by the Interested Stockholder or any of its
Affiliates for any shares of Common Stock acquired by
it (i) within the twoyear period immediately prior to
the first public announcement of the proposal of the
Business Combination (the "Announcement Date"), or (ii)
in the transaction in which it became an Interested
Stockholder, whichever is higher.
(2) the Fair Market Value per share of Common Stock on
the Announcement Date or on the date on which the
Interested Stockholder became an Interested Stockholder
(such latter date is referred to in this Article EIGHTH
as the "Determination Date"), whichever is higher.
(b) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business
Combination of consideration other than cash to be received
per share by holders of shares of any class of outstanding
Voting Stock other than Common Stock shall be at least equal
to the highest of the following (it being intended that the
requirements of this subparagraph (b) shall be required to
be met with respect to every such class of outstanding
Voting Stock, whether or not the Interested Stockholder has
previously acquired any shares of a particular class of
Voting Stock):
(1) (if applicable) the Highest Per Share Price (as
hereinafter defined), including any brokerage
commissions, transfer taxes and soliciting dealers'
fees, paid by the Interested Stockholder for any shares
of such class of Voting Stock acquired by it (i) within
the twoyear period immediately prior to the
Announcement Date, or (ii) in the transaction in which
it became an Interested Stockholder, whichever is
higher;
(2) (if applicable) the highest preferential amount per
share to which the holders of shares of such class of
Voting Stock are entitled in the event of any voluntary
or involuntary liquidation, dissolution or winding up
of the Corporation; and
(3) the Fair Market Value per share of such class of
Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher.
D-6
(c) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including
Common Stock) shall be in cash or in the same form as the
Interested Stockholder has paid for shares of such class of
Voting Stock. If the Interested Stockholder has previously
paid for shares of any class of Voting Stock with varying
forms of consideration, the form of consideration to be
received per share by holders of shares of such class of
Voting Stock shall be either cash or the form used to
acquire the largest number of shares of such class of Voting
Stock previously acquired by the Interested Stockholder. The
price determined in accordance with subparagraph B.2 of this
Article EIGHTH shall be subject to appropriate adjustment in
the event of any stock dividend, stock split, combination of
shares or similar event.
(d) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such
Business Combination: (1) except as approved by a majority
of the Disinterested Directors, there shall have been no
failure to declare and pay at the regular date therefor any
full quarterly dividends (whether or not cumulative) on any
outstanding stock having preference over the Common Stock as
to dividends or liquidation; (2) there shall have been (i)
no reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any subdivision
of the Common Stock), except as approved by a majority of
the Disinterested Directors, and (ii) an increase in such
annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding
shares of the Common Stock, unless the failure to so
increase such annual rate is approved by a majority of the
Disinterested Directors; and (3) neither such Interested
Stockholder or any of its Affiliates shall have become the
beneficial owner of any additional shares of Voting Stock
except as part of the transaction which results in such
Interested Stockholder becoming an Interested Stockholder.
(e) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall
not have received the benefit, directly or indirectly
(except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the
Corporation, whether in anticipation of or in connection
with such Business Combination or otherwise.
(f) A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall
be mailed to stockholders of the Corporation at least 30
days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is
required to be mailed pursuant to such Act or subsequent
provisions).
C. For the purposes of this Article EIGHTH:
1. A "Person" shall include an individual, a group acting in
concert, a corporation, a partnership, an association, a joint venture, a
pool, a joint stock company, a trust, an unincorporated organization or
similar company, a syndicate or any other group formed for the purpose of
acquiring, holding or disposing of securities.
2. "Interested Stockholder" shall mean any person (other than the
Corporation or any holding company or Subsidiary thereof) who or which:
D-7
(a) is the beneficial owner, directly or indirectly, of more
than 10% of the voting power of the outstanding Voting Stock; or
(b) is an Affiliate of the Corporation and at any time within
the two year period immediately prior to the date in question was
the beneficial owner, directly or indirectly, of 10% or more of
the voting power of the then outstanding Voting Stock; or
(c) is an assignee of or has otherwise succeeded to any shares of
Voting Stock which were at any time within the two year period
immediately prior to the date in question beneficially owned by
an Interested Stockholder, if such assignment or succession shall
have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning
of the Securities Act of 1933.
3. For purposes of this Article EIGHTH, "beneficial ownership" shall
be determined in the manner provided in Section C of Article FOURTH hereof.
4. "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on the date of
filing of this Certificate of Incorporation.
5. "Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in paragraph 2 of this section, the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
6. "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Stockholder and was a
member of the Board of Directors prior to the time that the Interested
Stockholder became an Interested Stockholder, and any Director who is
thereafter chosen to fill any vacancy of the Board of Directors or who is
elected and who, in either event, is unaffiliated with the Interested
Stockholder and in connection with his or her initial assumption of office
is recommended for appointment or election by a majority of Disinterested
Directors then on the Board of Directors.
7. "Fair Market Value" means: (a) in the case of stock, the highest
closing sales price of the stock during the 30 day period immediately
preceding the date in question of a share of such stock on the National
Association of Securities Dealers Automated Quotation System or any system
then in use, or, if such stock is admitted to trading on a principal United
States securities exchange registered under the Securities Exchange Act of
1934, Fair Market Value shall be the highest sales price reported during
the 30 day period preceding the date in question, or, if no such quotations
are available, the Fair Market Value on the date in question of a share of
such stock as determined by the Board of Directors in good faith, in each
case with respect to any class of stock, appropriately adjusted for any
dividend or distribution in shares of such stock or any stock split or
reclassification of outstanding shares of such stock into a greater number
of shares of such stock or any combination or reclassification of
outstanding shares of such stock into a smaller number of shares of such
stock, and (b) in the case of property other than cash or stock, the Fair
Market Value of such property on the date in question as determined by the
Board of Directors in good faith.
8. Reference to "Highest Per Share Price" shall in each case with
respect to any class of stock reflect an appropriate adjustment for any
dividend or distribution in shares of such stock or any stock split or
reclassification of outstanding shares of such stock into a greater number
of shares of such stock or any combination or reclassification of
outstanding shares of such stock into a smaller number of shares of such
stock.
D-8
9. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as used
in subparagraphs (a) and (b) of paragraph 2 of Section B of this Article
EIGHTH shall include the shares of Common Stock and/or the shares of any
other class of outstanding Voting Stock retained by the holders of such
shares.
D. A majority of the Directors of the Corporation shall have the power
and duty to determine for the purposes of this Article EIGHTH, on the basis of
information known to them after reasonable inquiry (a) whether a person is an
Interested Stockholder; (b) the number of shares of Voting Stock beneficially
owned by any person; (c) whether a person is an Affiliate or Associate of
another; and (d) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the Corporation or any Subsidiary in any Business
Combination has an aggregate Fair Market Value equaling or exceeding 25% of the
combined Fair Market Value of the common stock of the Corporation and its
Subsidiaries. A majority of the Directors shall have the further power to
interpret all of the terms and provisions of this Article EIGHTH.
E. Nothing contained in this Article EIGHTH shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law. F.
Notwithstanding any other provisions of this Certificate of Incorporation or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class or
series of the Voting Stock required by law, this Certificate of Incorporation or
any Preferred Stock Designation, the affirmative vote of the holders of at least
80 percent of the voting power of all of the then outstanding shares of the
Voting Stock, voting together as a single class, shall be required to alter,
amend or repeal this Article EIGHTH.
NINTH: The Board of Directors of the Corporation, when evaluating any offer
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of another Person (as defined in Article EIGHTH hereof) to (A) make a tender or
exchange offer for any equity security of the Corporation, (B) merge or
consolidate the Corporation with another corporation or entity or (C) purchase
or otherwise acquire all or substantially all of the properties and assets of
the Corporation, may, in connection with the exercise of its judgment in
determining what is in the best interest of the Corporation and its
stockholders, give due consideration to all relevant factors, including, without
limitation, the social and economic effect of acceptance of such offer on the
Corporation's present and future customers and employees and those of its
Subsidiaries (as defined in Article EIGHTH hereof); on the communities in which
the Corporation and its Subsidiaries operate or are located; on the ability of
the Corporation to fulfill its corporate objectives as a savings bank holding
company and on the ability of its subsidiary savings bank to fulfill the
objectives of a stock savings bank under applicable statutes and regulations.
TENTH:
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A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent or in any other capacity while serving as a Director, Officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that,
D-9
except as provided in Section C hereof with respect to proceedings to enforce
rights to indemnification, the Corporation shall indemnify any such indemnitee
in connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.
B. The right to indemnification conferred in Section A of this Article
TENTH shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a Director or Officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section or otherwise. The rights to indemnification and to the advancement
of expenses conferred in Sections A and B of this Article TENTH shall be
contract rights and such rights shall continue as to an indemnitee who has
ceased to be a Director, Officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article TENTH is not paid in
full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in
any such suit, or in a suit brought by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking the Corporation shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by
the indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article TENTH or otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article TENTH shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any Director, Officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
D-10
F. The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article TENTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
ELEVENTH: A Director of this Corporation shall not be personally liable to
--------
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (i) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the Director derived an improper
personal benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the personal
liability of Directors, then the liability of a Director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
Director of the Corporation existing at the time of such repeal or modification.
TWELFTH: The Corporation reserves the right to amend or repeal any
-------
provision contained in this Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights conferred upon
stockholders are granted subject to this reservation; provided, however, that,
notwithstanding any other provision of this Certificate of Incorporation or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any vote of the holders of any class or series of the stock of the
Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least 80 percent of the voting power of
all of the thenoutstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of Directors (after giving effect to
the provisions of Article FOURTH), voting together as a single class, shall be
required to amend or repeal this Article TWELFTH, Section C of Article FOURTH,
Sections C or D of Article FIFTH, Article SIXTH, Article SEVENTH, or Article
EIGHTH.
D-11
EXHIBIT E
BYLAWS OF THE HOLDING COMPANY
FINGER LAKES FINANCIAL CORP.
BYLAWS
ARTICLE I STOCKHOLDERS
----------------------
Section 1. Annual Meeting.
--------- --------------
An annual meeting of the stockholders, for the election of Directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such place, on such
date, and at such time as the Board of Directors shall each year fix, which date
shall be within thirteen (13) months subsequent to the later of the date of
incorporation or the last annual meeting of stockholders.
Section 2. Special Meetings.
--------- ----------------
Subject to the rights of the holders of any class or series of preferred
stock of the Corporation, special meetings of stockholders of the Corporation
may be called by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of Directors which the Corporation would have if
there were no vacancies on the Board of Directors (hereinafter the "Whole
Board").
Section 3. Notice of Meetings.
--------- ------------------
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the Delaware General Corporation Law or the Certificate of Incorporation of the
Corporation).
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty (30) days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 4. Quorum.
--------- ------
At any meeting of the stockholders, the holders of a majority of all of the
shares of the stock entitled to vote at the meeting, present in person or by
proxy (after giving effect to the Article FOURTH of the Corporation's
Certificate of Incorporation), shall constitute a quorum for all purposes,
unless or except to the extent that the presence of a larger number may be
required by law. Where a separate vote by a class or classes is required, a
majority of the shares of such class or classes present in person or represented
by proxy shall constitute a quorum entitled to take action with respect to that
vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date,
or time.
If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting a quorum, then except as otherwise required by
E-1
law, those present at such adjourned meeting shall constitute a quorum, and all
matters shall be determined by a majority of the votes cast at such
meeting. Section 5. Organization.
--------- ------------
Such person as the Board of Directors may have designated or, in the
absence of such a person, the Chairman of the Board of the Corporation or, in
his or her absence, the Chief Executive Officer or, in his or her absence, such
person as may be chosen by the holders of a majority of the shares entitled to
vote who are present, in person or by proxy, shall call to order any meeting of
the stockholders and act as chairman of the meeting. In the absence of the
Secretary of the Corporation, the secretary of the meeting shall be such person
as the chairman appoints.
Section 6. Conduct of Business.
--------- -------------------
(a) The chairman of any meeting of stockholders shall determine the order
of business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him or her in order.
The date and time of the opening and closing of the polls for each matter upon
which the stockholders will vote at the meeting shall be announced at the
meeting.
(b) At any annual meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting: (i) by or at the
direction of the Board of Directors or: (ii) by any stockholder of the
Corporation who is entitled to vote with respect thereto and who complies with
the notice procedures set forth in this Section 6(b). For business to be
properly brought before an annual meeting by a stockholder, the business must
relate to a proper subject matter for stockholder action and the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered or mailed to
and received at the principal executive offices of the Corporation not less than
ninety (90) days prior to the date of the annual meeting; provided, however,
that in the event that less than one hundred (100) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received not later than the close of
business on the 10th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter such
stockholder proposes to bring before the annual meeting: (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting; (ii) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
business; (iii) the class and number of shares of the Corporation's capital
stock that are beneficially owned by such stockholder; and (iv) any material
interest of such stockholder in such business. Notwithstanding anything in these
Bylaws to the contrary, no business shall be brought before or conducted at an
annual meeting except in accordance with the provisions of this Section 6(b).
The Officer of the Corporation or other person presiding over the annual meeting
shall, if the facts so warrant, determine and declare to the meeting that
business was not properly brought before the meeting in accordance with the
provisions of this Section 6(b) and, if he or she should so determine, he or she
shall so declare to the meeting and any such business so determined to be not
properly brought before the meeting shall not be transacted.
At any special meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting by or at the direction
of the Board of Directors.
(c) Only persons who are nominated in accordance with the procedures set
forth in these Bylaws shall be eligible for election as Directors. Nominations
of persons for election to the Board of Directors of the Corporation may be made
at a meeting of stockholders at which Directors are to be elected only: (i) by
or at the direction of the Board of Directors or; (ii) by any stockholder of the
Corporation entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth in this Section 6(c). Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made by timely notice in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice shall be delivered or mailed
to and received
E-2
at the principal executive offices of the Corporation not less than ninety (90)
days prior to the date of the meeting; provided, however, that in the event that
less than one hundred (100) days' notice or prior disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such stockholder's notice shall set forth: (i)
as to each person whom such stockholder proposes to nominate for election or
reelection as a Director, all information relating to such person that is
required to be disclosed in solicitations of proxies for the election of
Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934 (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
Director if elected); and (ii) as to the stockholder giving notice (x) the name
and address, as they appear on the Corporation's books, of such stockholder and
(y) the class and number of shares of the Corporation's capital stock that are
beneficially owned by such stockholder. At the request of the Board of Directors
any person nominated by the Board of Directors for election as a Director shall
furnish to the Secretary of the Corporation that information required to be set
forth in a stockholder's notice of nomination which pertains to the nominee. No
person shall be eligible for election as a Director of the Corporation unless
nominated in accordance with the provisions of this Section 6(c). The Officer of
the Corporation or other person presiding at the meeting shall, if the facts so
warrant, determine that a nomination was not made in accordance with such
provisions and, if he or she should so determine, he or she shall declare to the
meeting and the defective nomination shall be disregarded.
Section 7. Proxies and Voting.
--------- ------------------
At any meeting of the stockholders, every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing or by a
transmission permitted by law filed in accordance with the procedure established
for the meeting. Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to this paragraph
may be substituted or used in lieu of the original writing or transmission for
any and all purposes for which the original writing or transmission could be
used, provided that such copy, facsimile telecommunication or other reproduction
shall be a complete reproduction of the entire original writing or transmission.
All voting, including on the election of Directors but excepting where
otherwise required by law or by the governing documents of the Corporation, may
be by a voice vote; provided, however, that upon demand therefor by a
stockholder entitled to vote or by his or her proxy, a stock vote shall be
taken. Every stock vote shall be taken by ballots, each of which shall state the
name of the stockholder or proxy voting and such other information as may be
required under the procedure established for the meeting. The Corporation shall,
in advance of any meeting of stockholders, appoint one or more inspectors to act
at the meeting and make a written report thereof. The Corporation may designate
one or more persons as alternate inspectors to replace any inspector who fails
to act. If no inspector or alternate is able to act at a meeting of
stockholders, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability.
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by the Certificate of Incorporation or by law, all
other matters shall be determined by a majority of the votes present and cast at
a properly called meeting of stockholders.
Section 8. Stock List.
--------- ----------
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be open to the examination of any such stockholder, for any
purpose germane to the meeting, during ordinary business hours for a period of
at least ten (10) days prior to the meeting, either at a place
E-3
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or if not so specified, at the place where the
meeting is to be held.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
Section 9. Consent of Stockholders in Lieu of Meeting.
--------- ------------------------------------------
Subject to the rights of the holders of any class or series of preferred
stock of the Corporation, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or special meeting
of stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders.
ARTICLE II BOARD OF DIRECTORS
---------- -------------------
Section 1. General Powers, Number and Term of Office.
--------- -----------------------------------------
The business and affairs of the Corporation shall be under the direction of
its Board of Directors. The number of Directors who shall constitute the Whole
Board shall be such number as the Board of Directors shall from time to time
have designated by resolution. The Board of Directors shall annually elect a
Chairman of the Board from among its members who shall, when present, preside at
its meetings.
The Directors, other than those who may be elected by the holders of any
class or series of Preferred Stock, shall be divided, with respect to the time
for which they severally hold office, into three classes, with the term of
office of the first class to expire at the first annual meeting of stockholders,
the term of office of the second class to expire at the annual meeting of
stockholders one year thereafter and the term of office of the third class to
expire at the annual meeting of stockholders two years thereafter, with each
Director to hold office until his or her successor shall have been duly elected
and qualified. At each annual meeting of stockholders, commencing with the
first annual meeting, Directors elected to succeed those Directors whose terms
then expire shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders after their election, with each
Director to hold office until his or her successor shall have been duly elected
and qualified.
Section 2. Vacancies and Newly Created Directorships.
--------- -----------------------------------------
Subject to the rights of the holders of any class or series of preferred
stock, and unless the Board of Directors otherwise determines, newly created
Directorships resulting from any increase in the authorized number of Directors
or any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the Directors then in office, though less than a
quorum, and Directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office of the class to which
they have been elected expires and until such Director's successor shall have
been duly elected and qualified. No decrease in the number of authorized
Directors constituting the Board shall shorten the term of any incumbent
Director.
Section 3. Regular Meetings.
--------- ----------------
Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all Directors. A
notice of each regular meeting shall not be required.
Section 4. Special Meetings.
--------- ----------------
E-4
Special meetings of the Board of Directors may be called by a majority of
the Directors then in office (rounded up to the nearest whole number) or by the
Chairman of the Board or by the President and Chief Executive Officer and shall
be held at such place, on such date, and at such time as they or he or she shall
fix. Notice of the place, date, and time of each such special meeting shall be
given to each Director by whom it is not waived by mailing written notice not
less than five (5) days before the meeting or be telegraphing or telexing or by
facsimile transmission of the same not less than twentyfour (24) hours before
the meeting. Unless otherwise indicated in the notice thereof, any and all
business may be transacted at a special meeting.
Section 5. Quorum.
--------- ------
At any meeting of the Board of Directors, a majority of the Whole Board
shall constitute a quorum for all purposes. If a quorum shall fail to attend any
meeting, a majority of those present may adjourn the meeting to another place,
date, or time, without further notice or waiver thereof.
Section 6. Participation in Meetings By Conference Telephone
--------- -------------------------------------------------
Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
Section 7. Conduct of Business.
--------- -------------------
At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the Directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
Section 8. Powers.
--------- ------
The Board of Directors may, except as otherwise required by law, exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, including, without limiting the generality of the foregoing,
the unqualified power:
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or otherwise acquire any property, rights or privileges on
such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form as it may
determine, of written obligations of every kind, negotiable or nonnegotiable,
secured or unsecured, and to do all things necessary in connection
therewith;
(4) To remove any Officer of the Corporation with or without cause, and
from time to time to devolve the powers and duties of any Officer upon any other
person for the time being;
(5) To confer upon any Officer of the Corporation the power to appoint,
remove and suspend subordinate Officers, employees and agents;
(6) To adopt from time to time such stock, option, stock purchase, bonus
or other compensation plans for Directors, Officers, employees and agents of the
Corporation and its subsidiaries as it may determine;
E-5
(7) To adopt from time to time such insurance, retirement, and other
benefit plans for Directors, Officers, employees and agents of the Corporation
and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, not inconsistent with these
Bylaws, for the management of the Corporation's business and affairs.
Section 9. Compensation of Directors.
--------- -------------------------
Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as Directors,
including, without limitation, their services as members of committees of the
Board of Directors.
ARTICLE III COMMITTEES
------------------------
Section 1. Committee of the Board of Directors.
--------- -----------------------------------
The Board of Directors, by a vote of a majority of the Whole Board, may
from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for those committees and any others provided for herein,
elect a Director or Directors to serve as the member or members, designating, if
it desires, other Directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. Any committee so
designated may exercise the power and authority of the Board of Directors to
declare a dividend, to authorize the issuance of stock or to adopt a certificate
of ownership and merger pursuant to Section 253 of the Delaware General
Corporation Law if the resolution which designates the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his or her place, the member or members of the committee present at
the meeting and not disqualified from voting, whether or not he or she or they
constitute a quorum, may by unanimous vote appoint another member of the Board
of Directors to act at the meeting in the place of the absent or disqualified
member.
Section 2. Conduct of Business.
--------- -------------------
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; a majority of the members shall
constitute a quorum, and all matters shall be determined by a majority vote of
the members present, subject to a quorum being present. Action may be taken by
any committee without a meeting if all members thereof consent thereto in
writing, and the writing or writings are filled with the minutes of the
proceedings of such committee.
Section 3. Nominating Committee.
--------- --------------------
The Board of Directors shall appoint a Nominating Committee of the Board,
consisting of not less than three (3) members, one of which shall be the
Chairman of the Board. The Nominating Committee shall have authority (a) to
review any nominations for election to the Board of Directors made by a
stockholder of the Corporation pursuant to Section 6(c) (ii) of Article I of
these Bylaws in order to determine compliance with such Bylaw provision and (b)
to recommend to the Whole Board nominees for election to the Board of Directors
to replace those Directors whose terms expire at the annual meeting of
stockholders next ensuing.
ARTICLE IV OFFICERS
---------- ---------
Section 1. Generally.
--------- ---------
(a) The Board of Directors as soon as may be practicable after the annual
meeting of stockholders shall choose a Chairman of the Board, a President and
Chief Executive Officer, one or more Vice Presidents, and a
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Secretary and from time to time may choose such other Officers as it may deem
proper. The Chairman of the Board shall be chosen from among the Directors. Any
number of offices may be held by the same person.(b) The term of office of all
Officers shall be until the next annual election of Officers and until their
respective successors are chosen, but any Officer may be removed from office at
any time by the affirmative vote of two-thirds of the authorized number of
Directors then constituting the Board of Directors, or removed by an Officer
pursuant to authority delegated by the Board to such Officer in accordance with
Section 8(5) of Article II
(c) All Officers chosen by the Board of Directors shall each have such
powers and duties as generally pertain to their respective offices, subject to
the specific provisions of this Article IV. Such Officers shall also have such
powers and duties as from time to time may be conferred by the Board of
Directors or by any committee thereof.
Section 2. Chairman of the Board.
--------- ---------------------
The Chairman of the Board shall, subject to the provisions of these Bylaws
and to the direction of the Board of Directors, serve in a general executive
capacity and, when present, shall preside at all meetings of the Board of
Directors. The Chairman of the Board shall perform all duties and have all
powers which are commonly incident to the office of Chairman of the Board or
which are delegated to him or her by the Board of Directors. He or she shall
have power to sign all stock certificates, contracts and other instruments of
the Corporation which are authorized.
Section 3. President and Chief Executive Officer.
--------- -------------------------------------
The President and Chief Executive Officer (the "President") shall have
general responsibility for the management and control of the business and
affairs of the Corporation and shall perform all duties and have all powers
which are commonly incident to the offices of President and Chief Executive
Officer or which are delegated to him or her by the Board of Directors. Subject
to the direction of the Board of Directors, the President shall have power to
sign all stock certificates, contracts and other instruments of the Corporation
which are authorized and shall have general supervision of all of the other
Officers (other than the Chairman of the Board), employees and agents of the
Corporation.
Section 4. Vice President.
--------- --------------
The Vice President or Vice Presidents shall perform the duties of the
President in his or her absence or during his disability to act. In addition,
the Vice Presidents shall perform the duties and exercise the powers usually
incident to their respective offices and/or such other duties and powers as may
be properly assigned to them by the Board of Directors, the Chairman of the
Board or the President. A Vice President or Vice Presidents may be designated
as Executive Vice President or Senior Vice President or any such designation as
the Board of Directors, Chairman of the Board or President deems appropriate.
Section 5. Secretary.
--------- ---------
The Secretary or an Assistant Secretary shall issue notices of meetings,
shall keep their minutes, shall have charge of the seal and the corporate books,
shall perform such other duties and exercise such other powers as are usually
incident to such offices and/or such other duties and powers as are properly
assigned thereto by the Board of Directors, the Chairman of the Board or the
President.
Section 6. Assistant Secretaries and Other Officers.
--------- ----------------------------------------
The Board of Directors may appoint one or more Assistant Secretaries and
such other Officers who shall have such powers and shall perform such duties as
are provided in these Bylaws or as may be assigned to them by the Board of
Directors, the Chairman of the Board or the President.
E-7
Section 7. Action with Respect to Securities of Other Corporations.
--------- -------------------------------------------------------
Unless otherwise directed by the Board of Directors, the President or any
Officer of the Corporation authorized by the President shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other corporation in which the Corporation may hold securities and otherwise to
exercise any and all rights and powers which the Corporation may possess by
reason of its ownership of securities in such other corporation.
ARTICLE V STOCK
--------- ------
Section 1. Certificates of Stock.
--------- ---------------------
Each stockholder shall be entitled to a certificate signed by, or in the
name of the Corporation by, the Chairman of the Board or the President, and by
the Secretary or an Assistant Secretary, or any Treasurer or Assistant
Treasurer, certifying the number of shares owned by him or her. Any or all of
the signatures on the certificate may be by facsimile.
Section 2. Transfers of Stock.
--------- ------------------
Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 4 of Article V of these Bylaws,
an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
Section 3. Record Date.
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In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held, and, for determining stockholders entitled to
receive payment of any dividend or other distribution or allotment of rights or
to exercise any rights of change, conversion or exchange of stock or for any
other purpose, the record date shall be at the close of business on the day on
which the Board of Directors adopts a resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 4. Lost, Stolen or Destroyed Certificates.
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In the event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
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Section 5. Regulations.
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The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.
ARTICLE VI NOTICES
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Section 1. Notices.
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Except as otherwise specifically provided herein or required by law, all
notices required to be given to any stockholder, Director, Officer, employee or
agent shall be in writing and may in every instance be effectively given by hand
delivery to the recipient thereof, by depositing such notice in the mails,
postage paid, or by sending such notice by prepaid telegram or mailgram or other
courier. Any such notice shall be addressed to such stockholder, Director,
Officer, employee or agent at his or her last known address as the same appears
on the books of the Corporation. The time when such notice is received, if hand
delivered, or dispatched, if delivered through the mails or by telegram or
mailgram or other courier, shall be the time of the giving of the notice.
Section 2. Waivers.
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A written waiver of any notice, signed by a stockholder, Director, Officer,
employee or agent, whether before or after the time of the event for which
notice is to be given, shall be deemed equivalent to the notice required to be
given to such stockholder, Director, Officer, employee or agent. Neither the
business nor the purpose of any meeting need be specified in such a waiver.
ARTICLE VII MISCELLANEOUS
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Section 1. Facsimile Signatures.
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In addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these Bylaws, facsimile signatures of any Officer or
Officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
Section 2. Corporate Seal.
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The Board of Directors may provide a suitable seal, containing the name of
the Corporation, which seal shall be in the charge of the Secretary. If and when
so directed by the Board of Directors or a committee thereof, duplicates of the
seal may be kept and used by the Comptroller or by an Assistant Secretary or an
assistant to the Comptroller.
Section 3. Reliance upon Books, Reports and Records.
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Each Director, each member of any committee designated by the Board of
Directors, and each Officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information,
opinions, reports or statements presented to the Corporation by any of its
Officers or employees, or committees of the Board of Directors so designated, or
by any other person as to matters which such Director or committee member
reasonably believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Corporation.
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Section 4. Fiscal Year.
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The fiscal year of the Corporation shall be as fixed by the Board of
Directors.
Section 5. Time Periods.
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In applying any provision of these Bylaws which requires that an act be
done or not be done a specified number of days prior to an event or that an act
be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
ARTICLE VIII AMENDMENT
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The Board of Directors may by a two-thirds vote amend, alter or repeal
these Bylaws at any meeting of the Board, provided notice of the proposed change
is given not less than two days prior to the meeting. The stockholders shall
also have power to amend, alter or repeal these Bylaws at any meeting of
stockholders, provided notice of the proposed change was given in the Notice of
the Meeting; provided, however, that, notwithstanding any other provisions of
these Bylaws or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock Designation or these Bylaws, the
affirmative votes of the holders of at least 80% of the voting power of all the
thenoutstanding shares of the Voting Stock, voting together as a single class,
shall be required to alter, amend or repeal any provisions of these Bylaws.
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