EXHIBIT 2.1 PLAN OF MUTUAL HOLDING COMPANY REORGANIZATION AND STOCK ISSUANCE
(INCLUDING FEDERAL MUTUAL HOLDING COMPANY CHARTER AND BYLAWS OF
WEST ESSEX BANCORP, M.H.C., FEDERAL MHC SUBSIDIARY HOLDING COMPANY
CHARTER AND BYLAWS OF WEST ESSEX BANCORP, INC. AND FEDERAL STOCK
CHARTER AND BYLAWS OF WEST ESSEX BANK)
PLAN OF MUTUAL HOLDING COMPANY REORGANIZATION
AND STOCK ISSUANCE
OF WEST ESSEX BANK
CALDWELL, NEW JERSEY
AS ADOPTED ON:
MARCH 18, 1998
PLAN OF REORGANIZATION AND STOCK ISSUANCE OF
WEST ESSEX BANK
TABLE OF CONTENTS
PAGE
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I. Introduction....................................................... 1
II. Definitions........................................................ 3
III. Plan of Reorganization............................................. 8
A. Certain Effects of Reorganization.............................. 8
B. Special Meeting of Members..................................... 13
C. Conditions to Implementation of Reorganization................. 14
D. Charter and Bylaws of the Stock Savings Bank................... 14
E. Charter and Bylaws of the Stock Holding
Company........................................................ 15
F. Charter and Bylaws of the Mutual Holding Company............... 15
G. Subsequent Conversion of Mutual Holding Company to
Stock Form..................................................... 15
H. Continuity of the Savings Bank and Status of Deposit
Accounts and Loans Subsequent to the Reorganization............ 16
I. Rights of Members of the Mutual Holding Company................ 17
J. Establishment and Funding of Charitable Foundation............. 17
K. Payment of Dividends and Repurchase of Stock................... 18
L. Expenses of Reorganization..................................... 18
M. Interpretation................................................. 18
N. Amendment or Termination of the Plan........................... 19
PAGE
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IV. Stock Issuance Plan................................................ 19
A. Introduction................................................... 19
B. Sale of Common Stock........................................... 19
C. Number of Shares and Purchase Price of Common Stock............ 20
D. Purchase by the Mutual Holding Company or the Stock
Holding Company of the Savings Bank............................ 22
E. Method of Offering Shares...................................... 22
F. Limitations Upon Purchases in the Offering..................... 27
G. Payment for Common Stock....................................... 30
H. Manner of Exercising Subscription Rights Through
Order Forms.................................................... 32
I. Undelivered, Defective or Late Order Forms:
Insufficient Payment........................................... 33
J. Restrictions on Resale or Subsequent Disposition............... 34
K. Voting Rights of Stockholders.................................. 34
L. Transfer of Savings Accounts and Continuity of the
Savings Bank................................................... 35
M. Restrictions on Acquisition of the Savings Bank................ 35
N. Payment of Dividends and Repurchase of Stock................... 36
O. Amendment of Plan.............................................. 36
P. Consummation of the Reorganization............................. 36
Q. Registration and Marketing..................................... 37
R. Residents of Foreign Countries and Certain States.............. 37
S. Expenses of Offering........................................... 37
T. Interpretation................................................. 37
I. INTRODUCTION
The Board of Directors of West Essex Bank, Caldwell, New Jersey (the
"Savings Bank") by a unanimous vote has adopted this Plan of Reorganization
("Reorganization Plan") and Stock Issuance Plan ("Stock Issuance Plan")
collectively referred to as (the "Plan") pursuant to which the Savings Bank
proposes to reorganize from a federally-chartered mutual savings bank into a
federally-chartered mutual holding company (the "Mutual Holding Company")
pursuant to the laws of the United States of America and the rules and
regulations of the Office of Thrift Supervision ("OTS"). A principal part of
the reorganization (the "Reorganization") is the formation of a federally-
chartered capital stock savings bank (the "Stock Savings Bank"), a majority of
the Voting Stock of which will be owned by the Mutual Holding Company at all
times so long as the Mutual Holding Company remains in the mutual form of
organization. In the alternative, the Reorganization may be effected utilizing
a Two-Tier Mutual Holding Company Structure, as described herein, in which case
all of the stock of the Stock Savings Bank would be owned by a stock holding
company ("Stock Holding Company"), a majority of the Voting Stock of which would
be owned by the Mutual Holding Company. The corporate name of the Stock Savings
Bank will be West Essex Bank and its principal office will be located in
Caldwell, New Jersey.
One or more stock offerings of up to 49.99% in the aggregate of the voting
Common Stock of the Stock Savings Bank ("Minority Stock Offering") may be made
simultaneously with, or following the Reorganization, subject to the approval of
the OTS. In addition, the Stock Savings Bank may offer and sell any amount of
preferred stock, subject to applicable laws and regulations. As part of the
Stock Issuance Plan, the Stock Savings Bank intends to offer for sale up to
49.9% of its outstanding Common Stock in a Minority Stock Offering. Any offer
and sale of any equity securities, regardless of when it occurs, will be
conducted in accordance with the applicable rules and regulations of the OTS.
In the event the Savings Bank utilizes the Two-Tier Mutual Holding Company
Structure in connection with the Reorganization, as described herein, certain of
the restrictions and limitations on the issuance of common and preferred stock
by the Stock Savings Bank may also be applicable to the Stock Holding Company
and any such stock issuance would also be subject to applicable rules and
regulations of the Securities and Exchange Commission ("SEC").
In adopting the Plan, the Board of Directors has determined that the
Reorganization is advisable and in the best interest of the Savings Bank and its
depositors and is consistent with the Savings Bank's business plan. The Savings
Bank is committed to being an independent community-based institution and the
Board of Directors believes that the mutual holding company structure is best
suited for this purpose. As a capital stock savings bank subsidiary of the
Mutual Holding Company, the Reorganization will afford the Stock Savings Bank
access to capital sources not legally available to mutual savings banks, while
at the same time preserving the mutual form of ownership within the holding
company structure. Thus, although the Stock Savings Bank or the Stock Holding
Company, if utilized as described below, will be authorized to issue capital
stock to persons other than the Mutual Holding Company, so long as the Mutual
Holding Company is in existence it will at all times own at least a Majority
Interest of the Stock Savings Bank or the Stock Holding Company, if utilized.
Also, the mutual holding company structure, by providing the
flexibility to raise capital through the issuance of stock in a manner designed
to meet the Stock Savings Bank's growth needs rather than in a single offering,
will allow the Stock Savings Bank to avoid over-capitalization. Such access to
the capital markets will make it possible for the Stock Savings Bank to be more
responsive to possible future changes in the regulations of the bank regulatory
agencies mandating higher capital reserves and/or capital ratios.
The Reorganization will structure the Savings Bank in the stock form used
by commercial banks, most major business corporations and an increasing number
of savings banks and savings institutions. As such, the Reorganization will
enable the Savings Bank to enhance its franchise and to compete more effectively
with commercial banks and other financial institutions for new business
opportunities. In addition, the use of the holding company structure will
provide greater organization and operating flexibility to the Savings Bank.
Moreover, the formation of a mutual holding company will allow the Mutual
Holding Company to borrow funds, on a secured or unsecured basis, and to issue
debt to the public or in a private placement. The proceeds of such borrowings
or debt offering could be contributed to the Stock Savings Bank to increase its
capital or could be used by the Mutual Holding Company for other purposes.
However, there are currently no plans to issue debt or borrow funds by the
Mutual Holding Company. The Reorganization may also ease any transition to a
uniform charter should such a charter be required in the future.
In furtherance of the Savings Bank's long term commitment to its community,
the Plan provides for the establishment of a charitable foundation as part of
the Reorganization. The charitable foundation is intended to complement the
Savings Bank's existing community reinvestment activities in a manner that will
allow the Savings Bank's local community to share in the growth and
profitability of the Mutual Holding Company, the Stock Holding Company and the
Savings Bank over the long term. Consistent with the Savings Bank's goal, the
Bank, or if utilized, the Stock Holding Company intends to donate to the
charitable foundation an amount of common stock and/or cash of up to 8.0% of the
aggregate dollar amount of common stock sold in the Minority Stock Offering.
The establishment of the charitable foundation is subject to the approval of the
Voting Members of the Savings Bank. In the event the charitable foundation is
not approved, the Savings Bank may determine to complete the Reorganization
without the charitable foundation.
The Reorganization and Minority Stock Offering are subject to the approval
of the OTS. In addition, the Reorganization also must be approved by the
affirmative vote of a majority of the total votes eligible to be cast by members
of the Savings Bank.
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II. DEFINITIONS
As used in this Plan, the terms set forth below have the following
meanings:
ACCOUNT(S): Withdrawable deposit(s) in the Savings Bank, including
certificates of deposit.
ACCOUNT HOLDER: The term Account Holder means any Person holding an
Account in the Savings Bank.
ACTING IN CONCERT: The term "Acting in Concert" means (i) knowing
participation in a joint activity or interdependent conscious parallel
action towards a common goal whether or not pursuant to an express
agreement; (ii) a combination or pooling of voting or other interests in
the securities of an issuer for a common purpose pursuant to any contract,
understanding, relationship, agreement or other arrangement, whether
written or otherwise; or (iii) a person or company which acts in concert
with another person or company ("other party") shall also be deemed to be
acting in concert with any person or company who is also acting in concert
with that other party, except that any tax-qualified employee stock benefit
plan will not be deemed to be acting in concert with its trustee or a
person who serves in a similar capacity solely for the purpose of
determining whether stock held by the trustee and stock held by the plan
will be aggregated.
ACTUAL PURCHASE PRICE: The term Actual Purchase Price means the per share
price at which the Common Stock is ultimately sold in accordance with the
terms hereof.
AFFILIATE: Any person that controls, is controlled by, or is under common
control with another person.
ASSOCIATE: The term Associate when used to indicate a relationship with
any person, means (i) any corporation or organization (other than the
Savings Bank or a majority-owned subsidiary of the Savings Bank) of which
such person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities,
(ii) any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a
similar fiduciary capacity except that for the purposes of Sections IV.E.2
and IV.F. hereof, the term "Associate" does not include any Non-Tax-
Qualified Employee Stock Benefit Plan or any Tax-Qualified Employee Stock
Benefit Plan in which a person has a substantial beneficial interest or
serves as a trustee or in a similar fiduciary capacity, and except that,
for purposes of aggregating total shares that may be held by Officers and
Directors the term "Associate" does not include any Tax-Qualified Employee
Stock Benefit Plan, and (iii) any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person or who is a
Director or Officer of the Savings Bank, the Stock Holding Company, if
utilized, or the Mutual Holding Company, or any of its parents or
subsidiaries.
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CAPITAL STOCK: Any and all authorized stock of the Stock Savings Bank or
the Stock Holding Company, if utilized, as indicated by the context.
COMMON STOCK: Common stock, par value $.01, issued by the Stock Savings
Bank simultaneously with or after the Reorganization, including securities
convertible into common stock, pursuant to its stock charter, or common
stock, par value $.01, issued by the Stock Holding Company simultaneously
with or after the Reorganization, including securities convertible into
common stock, pursuant to its certificate of incorporation, as indicated by
the context.
COMMUNITY OFFERING: The term Community Offering means the offering for
sale to certain members of the general public directly by the Stock Savings
Bank or the Stock Holding Company, if utilized, of any shares of Common
Stock not subscribed for in the Subscription Offering.
DEPOSITOR: Any person holding an Account in the Savings Bank.
DIRECTOR: A member of the Board of Directors of the Savings Bank and,
where applicable, a member of the Board of Directors of the Mutual Holding
Company, and if utilized and where applicable, a member of the Board of
Directors of the Stock Holding Company.
EFFECTIVE DATE: The effective date of the Reorganization which shall be
the date of consummation of the Reorganization in accordance with this
Plan.
ELIGIBLE ACCOUNT HOLDER: The term Eligible Account Holder means any person
holding a Qualifying Deposit in an Account at the Savings Bank on the
Eligibility Record Date, but shall include only those account holders with
Accounts in place for a minimum of one year prior to adoption of the Stock
Issuance Plan by the Savings Bank's Board of Directors and specifically
shall not include any person who held a deposit in another financial
institution that was transferred to the Savings Bank after the Eligibility
Record Date.
ELIGIBILITY RECORD DATE: The term Eligibility Record Date means the date
for determining Eligible Account Holders in the Savings Bank and is
February 28, 1997.
EMPLOYEE: A person who is an Employee of the Savings Bank at the date of
the Reorganization.
EMPLOYEE PLANS: The term Employee Plans means the Tax-Qualified Employee
Stock Benefit Plans approved by the Board of Directors of the Savings Bank.
ESTIMATED PRICE RANGE: The term Estimated Price Range means the range of
minimum and maximum aggregate values determined by the Board of Directors
of the Savings Bank, within which the aggregate amount of Common Stock sold
in the Offering will fall. The
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Estimated Price Range will be within the estimated pro forma market value
of the Common Stock as determined by the Independent Appraiser prior to the
Subscription Offering and as it may be amended from time to time
thereafter.
FDIC: Federal Deposit Insurance Corporation.
INDEPENDENT APPRAISER: The term Independent Appraiser means an appraiser
retained by the Savings Bank to prepare an appraisal of the pro forma
market value of the Common Stock.
INSIDER: Any officer or director of the Mutual Holding Company, Stock
Holding Company, Savings Bank or Stock Savings Bank or of any affiliate of
such entities, and any person acting in concert with any such officer or
director.
LOCAL COMMUNITY: The term Local Community means Essex, Bergen and Morris
Counties, in the State of New Jersey.
MAJORITY INTEREST: Fifty and one-hundredth of a percent (50.01%) or more
of the combined voting power of all classes of stock of the Stock Savings
Bank or the Stock Holding Company, if utilized.
MEMBERS: Any depositor or borrower that is entitled under the charter of
the mutual Savings Bank to vote on matters affecting the Bank, or any
depositor or borrower that is entitled under the charter of the Mutual
Holding Company to vote on matters affecting the Mutual Holding Company.
MINORITY STOCK OFFERING: The offering of up to 49.9% of the Common Stock
of the Stock Savings Bank, or the Stock Holding Company, if utilized,
simultaneously with or following the Reorganization.
MUTUAL HOLDING COMPANY: The mutual holding company established by the
Savings Bank incident to the Reorganization.
NOTICE OF REORGANIZATION: The Notice of Mutual Holding Company
Reorganization, to be submitted by the Savings Bank to the OTS to notify
the OTS of the Reorganization.
OFFICER: An executive officer of the Savings Bank, the Mutual Holding
Company and the Stock Holding Company, if utilized, as the case may be,
which includes the Chief Executive Officer, President, Executive Vice
Presidents and Senior Vice Presidents in charge of principal business
functions, and any other person participating in major policy making
functions of the Savings Bank, the Mutual Holding Company or the Stock
Holding Company.
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ORDER FORM: The term Order Form means any form together with an attached
cover letter, sent by the Savings Bank or the Stock Holding Company, if
utilized, 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
Common Stock in the Subscription and Community Offerings.
OTHER MEMBER: The term Other Member means any person who is a Member of
the Savings Bank (other than an Eligible Account Holder or Supplemental
Eligible Account Holder) at the close of business on the Voting Record
Date.
OTS: The term OTS means Office of Thrift Supervision of the Department of
the Treasury.
PARTICIPANTS: The term Participants means the Eligible Account Holders,
Employee Plans, Supplemental Eligible Account Holders and Other Members.
PERSON: An individual, a corporation, a partnership, an association, a
joint-stock company, a trust (including Individual Retirement Accounts and
KEOGH Accounts), any unincorporated organization, a government or political
subdivision thereof or any other entity.
PLAN: This Plan of Reorganization and Stock Issuance Plan of the Savings
Bank as it exists on the date hereof and as it may hereafter be amended in
accordance with its terms.
PREFERRED STOCK: Preferred Stock issuable by the Stock Savings Bank
pursuant to its charter, or issuable by the Stock Holding Company pursuant
to its certificate of incorporation, as indicated by the context.
PREFERRED SUBSCRIBERS: The term Preferred Subscribers means those members
of the general public which are natural persons residing in the Savings
Bank's Local Community.
QUALIFYING DEPOSIT: The term Qualifying Deposit means the balance of each
Account of $50 or more in the Savings Bank at the close of business on the
Eligibility Record Date. Accounts with total deposit balances of less than
$50 shall not constitute a Qualifying Deposit.
REORGANIZATION: Collectively, all steps necessary for the Savings Bank to
reorganize into the mutual holding company form of organization in
accordance with the Plan and the provisions of the Home Owners' Loan Act,
as amended (the "HOLA") and Part 575 of the OTS Rules and Regulations
Applicable for Savings Associations.
SAIF: The Savings Association Insurance Fund, which is administered by the
FDIC.
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SAVINGS ACCOUNT: The term Savings Account has the same meaning as in
Section 561.42 of the Rules and Regulations of the OTS and includes
certificates of deposit.
SAVINGS BANK: West Essex Bank, in its current mutual form or in stock
form, following the Reorganization, as indicated by the context.
SEC: The U.S. Securities and Exchange Commission.
SPECIAL MEETING OF MEMBERS: The special meeting and any adjournments
thereof held to consider and vote upon this Plan.
STOCK HOLDING COMPANY: The stock corporation that may be formed by the
Bank in connection with the Reorganization, which would own 100% of the
Voting Stock of the Stock Savings Bank upon the close of the
Reorganization, if the Two-Tier Mutual Holding Company Structure is
utilized.
STOCK ISSUANCE PLAN: The part of the Plan of Reorganization which provides
for the issuance of Common Stock by the Stock Savings Bank through one or
more Minority Stock Offerings.
STOCK SAVINGS BANK: The federally-chartered stock savings bank subsidiary
of the Mutual Holding Company or, if utilized, the Stock Holding Company
resulting from the Reorganization.
SUBSCRIPTION OFFERING: The term Subscription Offering means the offering
of Common Stock for purchase through Order Forms to Participants.
SUBSCRIPTION PRICE: The term Subscription Price means the amount per share
of Common Stock to be paid initially by Participants in the Subscription
Offering and persons in the Community Offering.
SUBSIDIARY: Any company, a majority of whose voting stock is indirectly or
directly owned, controlled or held with power to vote by another company.
SUPPLEMENTAL ELIGIBILITY RECORD DATE: The term Supplemental Eligibility
Record Date means the supplemental record date for determining Supplemental
Eligible Account Holders of the Savings Bank. The Supplemental Eligibility
Record Date shall be the last day of the calendar quarter preceding the
OTS' approval of the notice.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER: The term Supplemental Eligible
Account Holder means any person (other than an Eligible Account Holder)
holding a Qualifying Deposit, except officers, directors and their
associates, as of the Supplemental Eligibility Record Date.
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SYNDICATED COMMUNITY OFFERING PRICE: The term Syndicated Community
Offering means the offering of Common Stock following the Subscription and
Community Offerings through a syndicate of broker-dealers.
TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN: The term Tax-Qualified Employee
Stock Benefit Plan means any defined benefit plan or defined contribution
plan, such as an employee stock ownership plan, stock bonus plan, profit-
sharing plan or other plan, which, with its related trust, meets the
requirements to be "qualified" under Section 401 of the Internal Revenue
Code. A "Non-Tax-Qualified Employee Stock Benefit Plan" is any defined
benefit plan or defined contribution plan which is not so qualified.
VOTING MEMBERS: Those persons qualifying as voting members of the Savings
Bank pursuant to its charter and bylaws.
VOTING RECORD DATE: The date established by the Directors of the Savings
Bank in accordance with OTS regulations for determining eligibility to vote
at the Special Meeting of Members.
VOTING STOCK: Common or preferred stock, or any other type of equity
security, including, without limitation, other securities that are
convertible into common or preferred stock, having voting power for the
election of directors or management of the Stock Savings Bank or the Stock
Holding Company, if utilized.
III. PLAN OF REORGANIZATION
Pursuant to Section 10(o) of the HOLA and 12 C.F.R. Part 575 of the OTS
Regulations, the Reorganization will be accomplished in accordance with the
procedures set forth in this Plan, applicable regulations of the OTS, and as
otherwise may be required by the OTS.
A. CERTAIN EFFECTS OF REORGANIZATION
1. ORGANIZATION OF THE MUTUAL HOLDING COMPANY AND STOCK SAVINGS BANK
A principal part of the Reorganization will be the organization of a
federally-chartered capital stock savings bank subsidiary, of which the
Mutual Holding Company will own a Majority Interest at all times so long as
the Mutual Holding Company remains in the mutual form of organization. The
Savings Bank may utilize a two-tier mutual holding company structure ("Two-
Tier Mutual Holding Company Structure" or "Two-Tier Alternative") whereby
the Savings Bank will incorporate and organize a stock corporation which
will own 100% of the Savings Bank's Voting Stock. If the Two-Tier Mutual
Holding Company Structure is utilized, the Mutual Holding Company would own
a Majority Interest in the stock corporation at all times as long as the
Mutual Holding Company remains in the mutual form of organization.
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The Reorganization will be effected in one of the following ways, or in
any manner approved by the OTS that is consistent with the purposes of this
Plan and applicable laws and regulations. The Savings Bank's intention is
to complete the Reorganization using the Two-Tier Alternative, although it
may elect to use any method at the discretion of the Board consistent with
applicable Regulations and subject to OTS approval.
"MERGER ALTERNATIVE." Under the Merger Alternative: (i) the Savings
Bank will organize an interim federal stock savings bank as a wholly-owned
subsidiary ("Interim One"); (ii) Interim One will organize an interim
federal stock savings bank as a wholly-owned subsidiary ("Interim Two");
(iii) the Savings Bank will convert its charter for a federal stock savings
bank charter to become the Stock Savings Bank and Interim One will exchange
its charter for a federal mutual holding company charter to become the
Mutual Holding Company; (iv) sequentially with step (iii), Interim Two will
merge with and into Stock Savings Bank with Stock Savings Bank as the
resulting institution; and (v) a minimum of 50.01% of the initially issued
stock of Stock Savings Bank will be transferred to Mutual Holding Company
in exchange for membership interests in the mutual Savings Bank which are
conveyed to the Mutual Holding Company. Upon consummation of the
Reorganization, the legal existence of the Savings Bank will not terminate,
but the converted Stock Savings Bank will be a continuation of the Savings
Bank, and all property of the Savings Bank, including its right, title and
interest in and to all property of whatsoever kind and nature, interest and
asset of every conceivable value or benefit then existing or pertaining to
the Savings Bank, or which would inure to the Savings Bank immediately by
operation of law and without the necessity of any conveyance or transfer
and without any further act or deed, will vest in the Stock Savings Bank.
The Stock Savings Bank will have, hold, and enjoy the same in its right and
fully to the same extent as the same was possessed, held, and enjoyed by
the Savings Bank. The Stock Savings Bank will continue to have, succeed to,
and be responsible for all the rights, liabilities and obligations of the
Savings Bank and will maintain its headquarters operations at the Savings
Bank's present location.
"TWO-TIER MUTUAL HOLDING COMPANY STRUCTURE." Under the Two-Tier Mutual
Holding Company Structure: (i) the Savings Bank will organize an interim
federal stock savings bank as a wholly-owned subsidiary ("Interim One");
(ii) Interim One will organize a stock corporation as a wholly-owned
subsidiary ("Stock Holding Company"); (iii) Interim One will organize an
interim federal stock savings bank as a wholly-owned subsidiary ("Interim
Two"); (iv) the Savings Bank will convert its charter to a federal stock
savings bank charter to become the Stock Savings Bank and Interim One will
exchange its charter for a federal mutual holding company charter to become
the Mutual Holding Company; (v) sequentially with step (iv), Interim Two
will merge with and into Stock Savings Bank with Stock Savings Bank as the
resulting institution; (vi) 100% of the issued Common Stock of the Stock
Savings Bank will be transferred to the Mutual Holding Company in exchange
for membership interests in the Savings Bank, in its mutual form, which are
conveyed to the Mutual Holding Company; and (vii) the Mutual Holding
Company will transfer 100% of the issued Common Stock of the Stock Savings
Bank to the Stock Holding Company in a capital
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distribution. Upon consummation of the Reorganization, the legal existence
of the Savings Bank will not terminate, but the converted Stock Savings
Bank will be a continuation of the Savings Bank, and all property of the
Savings Bank, including its right, title and interest in and to all
property of whatsoever kind and nature, interest and asset of every
conceivable value or benefit then existing or pertaining to the Savings
Bank, or which would inure to the Savings Bank immediately by operation of
law and without the necessity of any conveyance or transfer and without any
further act or deed, will vest in the Stock Savings Bank. The Stock Savings
Bank will have, hold, and enjoy the same in its right and fully to the same
extent as the same was possessed, held, and enjoyed by the Savings Bank.
The Stock Savings Bank will continue to have, succeed to, and be
responsible for all the rights, liabilities and obligations of the Savings
Bank and will maintain its headquarters operations at the Savings Bank's
present location.
In connection with Reorganization, the Mutual Holding Company will be
capitalized with One Hundred Thousand Dollars ($100,000), or such greater
amount as may be determined by the Board of Directors of the Savings Bank
subject to the approval of the OTS, to the extent such assets are not
required to be transferred to or retained by the Stock Savings Bank in
order to satisfy capital or reserve requirements of the any applicable
state or federal law or regulation. In the event the Two-Tier Mutual
Holding Company Structure is utilized, the Stock Holding Company will apply
to the OTS to retain up to 50% of the net proceeds of the Minority Stock
Offering, and the Mutual Holding Company would be capitalized with One
Hundred Thousand Dollars ($100,000). The Savings Bank believes that
capitalization of the Mutual Holding Company and, if utilized, the Stock
Holding Company, at this level will provide the Mutual Holding Company and,
if utilized, the Stock Holding Company with economic strength separate and
apart from the Savings Bank and could facilitate future activities by the
Mutual Holding Company and, if utilized, the Stock Holding Company.
2. OPERATION OF THE STOCK SAVINGS BANK
Upon the Effective Date of the Reorganization, the Stock Savings Bank
will be owned by either the Mutual Holding Company and any purchasers in a
Minority Stock Offering, or the Stock Holding Company, if utilized, which
would be its sole stockholder. Those persons who as of the Effective Date
held depository rights with respect to, or other rights as creditors of,
the Savings Bank, shall thereafter have such rights solely with respect to
the Stock Savings Bank. Each deposit account in the Savings Bank at the
Effective Date will become a deposit account in the Stock Savings Bank in
the same amount and upon the same terms and conditions, except that the
holder of each such deposit account will have membership rights with
respect to the Mutual Holding Company rather than the Stock Savings Bank.
Members will not have any voting rights in the Stock Savings Bank. All
insured deposit accounts of the Savings Bank which are transferred to the
Stock Savings Bank will continue to be federally insured up to the legal
maximum by the SAIF in the same
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manner as deposit accounts existing in the Savings Bank immediately prior
to the Reorganization.
All loans and other borrowings from the Savings Bank shall retain the
same status with the Stock Savings Bank after the Reorganization as they
had with the Savings Bank prior to the Reorganization. The Stock Savings
Bank may exercise any and all powers, rights, and privileges of, and shall
be subject to all limitations applicable to, capital stock savings banks
under federal law.
The Board of Directors of the Stock Savings Bank will be the existing
Board of Directors of the Savings Bank. The Board of Directors will be
divided into three classes as nearly equal in number as possible and the
members of each class shall be elected for a term of three years and until
their successors are elected and qualified. One class shall be elected by
ballot annually by the stockholders of the Stock Savings Bank's Common
Stock. Present management of the Savings Bank will continue as the
management of the Stock Savings Bank following the Reorganization.
Following the Reorganization, the Stock Savings Bank will have the
power to issue shares of Capital Stock to persons other than the Mutual
Holding Company. Pursuant to federal law and regulations, unless otherwise
revised or amended, so long as the Mutual Holding Company is in existence,
the Mutual Holding Company will be required to own a Majority Interest in
the Stock Savings Bank. One or more offerings of up to 49.99% in the
aggregate of the total Common Stock of the Stock Savings Bank may be made
in connection with or following the Reorganization, subject to the approval
of the OTS. Any offer and sale of Common Stock or Preferred Stock of the
Stock Savings Bank will be conducted in accordance with federal law,
including 12 C.F.R. Part 563g. In the event the Two-Tier Mutual Holding
Company Structure is utilized, the Stock Holding Company, rather than the
Stock Savings Bank, will have the power to issue shares of Capital Stock to
persons other than the Mutual Holding Company and, to the extent required
by applicable federal laws and regulations, these same restrictions would
be applicable to the Stock Holding Company. The Stock Savings Bank, or the
Stock Holding Company if utilized, currently intends to offer for sale up
to 49.9% of its Common Stock in a Minority Stock Offering.
3. OPERATION OF THE MUTUAL HOLDING COMPANY
Upon the Effective Date, the Stock Savings Bank will be a majority-
owned subsidiary of the Mutual Holding Company or the Stock Holding
Company, if utilized. As part of the Reorganization, the Mutual Holding
Company will not retain assets of the Savings Bank which are to be
transferred to the Stock Savings Bank in order to satisfy capital or
reserve requirements of federal law. All assets, rights, obligations and
liabilities of whatever nature that are not retained by the Mutual Holding
Company shall be deemed to be transferred to the Stock Savings Bank. The
Mutual Holding Company shall continue to possess and may exercise all of
the rights, powers and privileges, and shall be subject to all
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limitations applicable to a federally chartered mutual savings bank and any
applicable federal law limitations; provided, however, that the Mutual
Holding Company shall not possess or exercise any deposit taking powers.
The rights and powers of the Mutual Holding Company will be defined by
the Mutual Holding Company's charter and bylaws and by federal law
governing mutual holding companies. The Mutual Holding Company shall be
subject to the limitation and restrictions imposed on savings and loan
holding companies by Section 10(o)(5) of the HOLA, as amended.
All of the members of the Board of Directors of the Savings Bank will
become Directors of the Mutual Holding Company upon the Reorganization.
Thereafter, approximately one third of the directors of the Mutual Holding
Company will be elected annually by the members of the Mutual Holding
Company who will consist of the former Members of the Savings Bank and
certain persons who become depositors of the Stock Savings Bank after the
Reorganization. Certain senior management persons of the Savings Bank will
assume similar positions with the Mutual Holding Company.
Subsequent to the Reorganization, persons who had membership or
liquidation rights with respect to the Savings Bank under its existing
charter immediately prior to the Reorganization shall continue to have such
rights solely with respect to the Mutual Holding Company. In addition, all
persons who become depositors of the Savings Bank subsequent to the
Reorganization will also have such membership and liquidation rights with
respect to the Mutual Holding Company. In each case, no person who ceases
to be a holder of a deposit account with the Stock Savings Bank shall have
any membership and liquidation rights with respect to the Mutual Holding
Company. Borrowers of the Stock Savings Bank who were borrower members of
the Savings Bank at the time of Reorganization will have the same
membership rights in the Mutual Holding Company as they had in the Savings
Bank immediately prior to the Reorganization, but will not receive
membership rights in connection with any borrowings made after the
Reorganization.
Upon completion of the Reorganization, except for assets retained by
the Mutual Holding Company and any expenses incurred in connection with the
Reorganization, the Reorganization of the Savings Bank into a Mutual
Holding Company will not result in any reduction in the amount of the
reserves, capital and surplus that the Savings Bank had prior to the
Reorganization. Such reserves, capital and surplus will be accounted for
by the Mutual Holding Company, the Stock Holding Company, if utilized, and
the Stock Savings Bank on a consolidated basis in accordance with generally
accepted accounting principles.
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4. OPERATION OF THE STOCK HOLDING COMPANY
If the Two-Tier Alternative is utilized, upon the Effective Date, the
Stock Savings Bank will be a wholly-owned subsidiary of the Stock Holding
Company, and the Stock Holding Company will be a majority-owned subsidiary
of the Mutual Holding Company. As part of the Reorganization, the Stock
Holding Company will apply to the OTS to retain up to 50% of the net
proceeds of the Minority Stock Offering; provided, however, that the Stock
Holding Company will not retain any assets which are to be transferred to
the Stock Savings Bank in order to satisfy capital or reserve requirements
of federal law. The Stock Holding Company shall possess and may exercise
all of the rights, powers and privileges, and shall be subject to all
limitations applicable to a stock corporation under the laws pursuant to
which the corporation is organized and any applicable federal law
limitations.
The rights and powers of the Stock Holding Company will be defined by
the Stock Holding Company's charter and bylaws and by federal law governing
savings and loan holding companies. The Stock Holding Company shall be
subject to the limitations and restrictions imposed on savings and loan
holding companies by Section 10(o)(5) of the HOLA, as amended.
All of the members of the Board of Directors of the Savings Bank will
become Directors of the Stock Holding Company upon the Reorganization.
Thereafter, approximately one third of the directors of the Stock Holding
Company will be elected annually by the stockholders of the Stock Holding
Company. Certain senior management persons of the Savings Bank will assume
similar positions with the Stock Holding Company.
B. SPECIAL MEETING OF MEMBERS
Subsequent to the approval of the Plan by the OTS, the Special Meeting of
Members shall be scheduled in accordance with the Savings Bank's Bylaws.
Promptly after receipt of approval and at least 15 days but not more than 45
days prior to the Special Meeting, the Savings Bank shall distribute proxy
solicitation materials to all Members and beneficial owners of accounts held in
a fiduciary capacity where the beneficial owners possess voting rights as of the
Voting Record Date. The proxy solicitation materials shall include a proxy
statement (the "Proxy Statement"), other documents authorized for use by the
regulatory authorities, and may also include a copy of the Plan. The proxy
materials shall contain the information that is relevant to the action to be
taken by the Members.
Pursuant to the regulations of the OTS, an affirmative vote of not less
than a majority of the total outstanding votes of the Members is required for
approval of the Plan, including adoption of the Charter and Bylaws of the Stock
Savings Bank and the Charter and Bylaws of the Mutual Holding Company. Voting
may be in person or by proxy in accordance with the charter and bylaws of the
Savings Bank. The OTS shall be notified promptly of the actions of the Members.
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C. CONDITIONS TO IMPLEMENTATION OF REORGANIZATION
Consummation of the Reorganization is expressly conditioned upon the
following:
1. Approval of the Plan by a majority of the Board of Directors of the
Savings Bank;
2. Approval of the Notice of Reorganization in writing by the OTS and, if
applicable, approval of the insurance of accounts of the Stock Savings
Bank by the FDIC;
3. Approval of the Reorganization Plan by a majority of the total votes of
Members of the Mutual Savings Bank eligible to be cast at the Special
Meeting of Members, including approval of the Charter and Bylaws of the
Mutual Holding Company and the Charter and Bylaws of the Stock Savings
Bank;
4. If the Two-Tier Alternative is utilized, approval in writing by the OTS
of the Stock Holding Company's Application on Form H-(e)1 or H-(e)1-S,
if available to the Stock Holding Company, and the declaration of
effectiveness by the SEC of a Registration Statement on Form S-1.
5. Satisfaction of all conditions specified or otherwise imposed by the
OTS or, if applicable, the FDIC in connection with approval of the
Notice of Reorganization and Stock Issuance and all transactions
related thereto;
6. Receipt by the Savings Bank of a favorable ruling of the Internal
Revenue Service ("IRS") or an opinion of the Savings Bank's tax advisor
with respect to federal taxation to the effect that consummation of the
Reorganization will not be a taxable event to the Mutual Holding
Company, the Stock Holding Company, if utilized, the Stock Savings Bank
or the Savings Bank's Depositors; and
7. Receipt by the Savings Bank of either a private letter ruling of the
New Jersey Department of Revenue or an opinion of the Savings Bank's
tax advisor with respect to the State taxation to the effect that
consummation of the Reorganization will not be a taxable event to the
Mutual Holding Company, the Stock Holding Company, if utilized, the
Stock Savings Bank or to the Savings Bank's Depositors.
D. CHARTER AND BYLAWS OF THE STOCK SAVINGS BANK
As part of the Reorganization, a charter and bylaws of the Stock Savings
Bank shall be adopted in a form permitted by the OTS to authorize the Stock
Savings Bank to operate as a federally chartered stock savings bank. The name
of the Stock Savings Bank will be "West Essex Bank." The Stock Savings Bank's
Charter may authorize a number of shares of Common Stock greater than the number
of shares that shall be issued to the Mutual Holding Company or the Stock
Holding Company, if utilized, in the Reorganization. To the extent permitted by
the OTS, the
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Charter may also contain provisions that, (i) prohibit any person other than the
Mutual Holding Company or the Stock Holding Company, if utilized, from acquiring
beneficial ownership of greater than 10% of the Common Stock of the Stock
Savings Bank unless approved by a majority of the Directors of the Bank; (ii)
prohibit persons beneficially owning shares in excess of 10%, other than the
Mutual Holding Company or the Stock Holding Company, if utilized, from voting
such shares in connection with any matter submitted to stockholders for a vote;
and (iii) prohibit persons other than the Board of Directors of the Stock
Savings Bank from calling special meetings of the stockholders of the Stock
Savings Bank. The Charter for the Stock Savings Bank may also contain provisions
which allow for the issuance of Preferred Stock in accordance with federal law.
A copy of the proposed Charter and Bylaws of the Stock Savings Bank are attached
hereto and hereby incorporated into this Plan. By their approval of the Plan,
the Board of Directors of the Savings Bank approved the Charter and Bylaws of
the Stock Savings Bank.
E. CHARTER AND BYLAWS OF THE STOCK HOLDING COMPANY
The Charter of the Stock Holding Company, if utilized, will contain a
provision stipulating that in no event shall any record owner of any outstanding
shares of the Stock Holding Company's common stock, other than the Mutual
Holding Company, 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
Stock Holding Company will provide for staggered terms of the directors,
noncumulative voting for directors, limitations on the calling of special
meetings, and certain notice requirements. By their approval of the Plan, the
Board of Directors of the Savings Bank has approved and adopted the Charter and
Bylaws of the Stock Holding Company.
F. CHARTER AND BYLAWS OF THE MUTUAL HOLDING COMPANY
As part of the Reorganization, the Mutual Holding Company will be chartered
as a federal mutual holding company under the name "West Essex Bancorp, M.H.C."
A copy of the proposed Charter and Bylaws are attached hereto and hereby
incorporated into this Plan. By their approval of the Plan, the Board of
Directors of the Savings Bank has approved and adopted the Charter and Bylaws of
the Mutual Holding Company.
G. SUBSEQUENT CONVERSION OF MUTUAL HOLDING COMPANY TO STOCK FORM
If approved by the OTS, following consummation of the Reorganization, the
Mutual Holding Company may elect pursuant to 12 C.F.R. Section 575.12(a), to
convert from the mutual form of ownership to the stock form of ownership. The
terms of such a conversion cannot be determined at this time and there is no
assurance when, if ever, such a conversion will occur. If the Mutual Holding
Company converts to stock form, either directly or in connection with a merger
(a "Conversion Transaction"), the stockholders of the Stock Savings Bank, or the
Stock Holding Company, as the case may be, will be entitled to exchange their
shares of stock in the Stock Savings Bank, or the Stock Holding Company, as the
case may be, for shares of the converted Mutual Holding Company
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or of a stock holding company formed in connection with such Conversion
Transaction (the converted Mutual Holding Company or newly formed holding
company is hereinafter referred to as the "Holding Company") provided, that the
basis for the exchange is fair and reasonable and maintains approximately the
same percentage ownership interest in the newly formed Holding Company after the
Conversion Transaction as such stockholders held in the Stock Savings Bank, or
the Stock Holding Company, as the case may be, immediately prior to the
Conversion Transaction. In the alternative, if in a Conversion Transaction the
stockholders of the Stock Savings Bank, or the Stock Holding Company, as the
case may be, other than the Mutual Holding Company do not receive (i) shares of
the Holding Company or the stock institution resulting from the Conversion
Transaction based upon a fair and reasonable exchange ratio, or (ii) cash from
the resulting institution in an amount equal to the fair market value of their
stock given the circumstances of the Conversion Transaction, the Stock Savings
Bank or the Holding Company may, but shall not be obligated to, purchase all
shares not owned by the Mutual Holding Company simultaneously with the closing
of such Conversion Transaction at the fair market value of such shares. The fair
market value shall be established by an independent appraisal utilized in the
Conversion Transaction. Moreover, in the event that the Mutual Holding Company
converts to stock form in a Conversion Transaction, any options or other
convertible securities held by any officer, director or employee of the Stock
Savings Bank, or the Stock Holding Company, as the case may be, shall be
convertible into shares of the Holding Company; provided, however, that if such
shares cannot be so converted, the holders of such options or other convertible
securities shall be entitled to receive cash payment for such shares in an
amount equal to the offering price of the shares of the Holding Company at the
closing of the Conversion Transaction less the exercise price of such options or
other convertible securities. Any such conversion to stock form will be subject
to the requirements of the HOLA, applicable regulations of the OTS and any other
applicable federal or state law or regulations, and may be subject to adjustment
if required by the OTS, to reflect the cumulative effect of the aggregate amount
of dividends waived by the Mutual Holding Company, if any.
H. CONTINUITY OF THE SAVINGS BANK AND STATUS OF DEPOSIT ACCOUNTS AND LOANS
SUBSEQUENT TO THE REORGANIZATION
Upon the Effective Date of the Reorganization, the Stock Savings Bank will
succeed to all of the assets, rights, powers, franchises, debts, liabilities,
interests, duties and obligations of the Savings Bank before the Reorganization,
including but not limited to, all rights and interests of the Savings Bank in
and to its assets and properties, whether real, personal or mixed.
All Accounts in the Savings Bank shall retain the same status after the
Reorganization as these accounts had prior to Reorganization, except that each
Account Holder shall retain, without payment therefore, a withdrawable deposit
Account or Accounts in the Stock Savings Bank after the Reorganization, equal in
amount to the withdrawable value of such holder's Account or Accounts prior to
the Reorganization. Holders of Accounts in the Stock Savings Bank will not have
any voting rights with respect to the Stock Savings Bank. All Accounts will
continue to be insured by the FDIC up to the applicable limits of insurance
coverage.
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All loans shall retain the same status after the Reorganization as they had
prior to the Reorganization. The amount, interest rate, maturity, and security
for each loan will remain contractually fixed as they existed prior to the
Reorganization. Following the Reorganization, all of such loans will be held by
the Stock Savings Bank.
I. RIGHTS OF MEMBERS OF THE MUTUAL HOLDING COMPANY
Following the Reorganization, all persons who had membership or liquidation
rights with respect to the Savings Bank as of the date of the Reorganization
will continue to have such rights solely with respect to the Mutual Holding
Company. All existing proxies granted by members of the Savings Bank to the
Board of Directors of the Savings Bank shall become the proxies of the Mutual
Holding Company. In addition, all persons who become depositors in the Stock
Savings Bank subsequent to the Reorganization will have membership and
liquidation rights with respect to the Mutual Holding Company. In each case, no
person who ceases to be the holder of a deposit account with the Stock Savings
Bank shall have any membership or liquidation rights with respect to the Mutual
Holding Company. Borrowers of the Stock Savings Bank who were borrower members
of the Savings Bank as of November 16, 1995 and have borrowings outstanding at
the time of Reorganization will have the same membership rights in the Mutual
Holding Company as they had in the Savings Bank immediately prior to the
Reorganization as long as their pre-Reorganization borrowings remain
outstanding, but will not receive membership rights in connection with any
borrowings made after the Reorganization.
J. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION
As part of the Reorganization, the Mutual Holding Company, the Stock
Holding Company and the Savings Bank intend to establish a charitable foundation
that will qualify as an exempt organization under Section 501(c)(3) of the
Internal Revenue Code ( the "Foundation") and to donate to the Foundation common
stock and/or cash of up to 8.0% of the aggregate dollar amount of common stock
sold in the Minority Stock Offering; provided, however, that the actual amount
of common stock to be donated to the Foundation may not exceed the limitations
set forth in Section 4943 of the Internal Revenue Code. The Foundation is
being formed in connection with the Reorganization in order to complement the
Savings Bank's existing community reinvestment activities and to share with the
Savings Bank's local community a part of the Savings Bank's financial success as
a locally headquartered, community minded, financial services institution. The
funding of the Foundation with Common Stock of the Stock Bank, or the Stock
Holding Company, if utilized, accomplishes this goal as it enables the community
to share in the growth and profitability of the Mutual Holding Company, the
Stock Holding Company and the Savings Bank over the long-term.
The Foundation will be dedicated to the promotion of charitable purposes
within the Counties of Essex, Bergen and Morris, New Jersey and neighboring
communities, including, but not limited to, grants or donations to support
housing assistance, scholarships, local education, not-for-profit medical
facilities, not-for-profit community groups and other types of organizations or
civic minded
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projects. The board of directors of the Foundation will be responsible for
establishing the polices of the Foundation with respect to grants or donations,
consistent with the stated purposes of the Foundation. The Foundation will
annually distribute total grants to assist charitable organizations or to fund
projects within its local community of not less than 5% of the average fair
value of Foundation assets each year. In order to serve the purposes for which
it was formed and maintain its 501(c)(3) qualification, the Foundation may sell,
on an annual basis, a limited portion of the Common Stock contributed to it by
the Stock Bank or the Stock Holding Company, as the case may be.
The establishment and funding of the Foundation as part of the
Reorganization is subject to the approval of the Voting Members by an
affirmative vote of a majority of the votes eligible to be cast by Voting
Members in person or by proxy at the Special Meeting. In the event that the
Savings Bank's Members approve this Plan, but not the charitable foundation, the
Savings Bank may determine to complete the Reorganization and Minority Stock
Offering without the establishment of the Foundation and may do so without
amending this Plan or obtaining any further vote of the Savings Bank's Members.
Failure of the Voting Members to approve the Foundation may materially affect
the pro forma market value of the Common Stock sold in the Minority Stock
Offering. In such an event, the Mutual Holding Company, the Stock Holding
Company and the Savings Bank may establish a new Estimated Price Range and
commence a resolicitation of subscribers.
K. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
The Stock Savings 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 set forth
in Section 567.2 of the Rules and Regulations of the OTS. Otherwise, the Stock
Savings Bank may declare dividends, make capital distributions or repurchase its
capital stock in accordance with applicable law and regulations. Subject to the
approval of the OTS, the Mutual Holding Company may waive its right to receive
dividends declared by the Stock Savings Bank or the Stock Holding Company, if
utilized.
L. EXPENSES OF REORGANIZATION
The Savings Bank shall use its best efforts to assure that expenses
incurred by it in connection with the Reorganization and any simultaneous or
subsequent Minority Stock Offering shall be reasonable.
M. INTERPRETATION
All interpretations of this Reorganization Plan and application of its
provisions to particular circumstances by a majority of the Board of Directors
of the Savings Bank shall be final, subject to the authority of the OTS.
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N. AMENDMENT OR TERMINATION OF THE PLAN
If deemed necessary or desirable, the Reorganization Plan may be
substantively amended at any time prior to solicitation of proxies from Members
to vote on the Reorganization Plan by a two-thirds vote of the Savings Bank's
Board of Directors, and at any time thereafter by such vote of such Board of
Directors with the concurrence of the OTS. Any amendment to the Reorganization
Plan made after approval by the Members with the approval of the OTS shall not
necessitate further approval by the Members unless otherwise required by the
OTS. The Reorganization Plan may be terminated by majority vote of the Savings
Bank's Board of Directors at any time prior to the Special Meeting of Members to
vote on the Reorganization Plan, and at any time thereafter with the concurrence
of the OTS.
By adoption of the Plan, the Members of the Savings Bank authorize the
Board of Directors to amend or terminate the Reorganization Plan under the
circumstances set forth in this Section.
IV. STOCK ISSUANCE PLAN
A. INTRODUCTION
The Board of Directors of West Essex Bank, by a unanimous vote, has adopted
this Stock Issuance Plan as part of the Savings Bank's Plan of Reorganization,
pursuant to which the Savings Bank, or the Stock Holding Company, if utilized,
proposes to offer shares of common stock to certain members of the Savings Bank,
the Employee Plans of the Savings Bank, and certain members of the public. For
purposes of this Stock Issuance Plan, capitalized words are as defined in
Section II above.
Concurrently with the Reorganization, the Savings Bank, or the Stock
Holding Company, as the case may be, is offering shares of its Common Stock to
the public in an amount up to 49.9% of its outstanding shares. Pursuant to the
terms set forth herein, the Savings Bank, or the Stock Holding Company, as the
case may be, will offer shares of Common Stock to Eligible Account Holders, the
Employee Plans, Supplemental Eligible Account Holders and Other Members in the
respective priorities set forth in this Stock Issuance Plan (the "Offering").
Any shares of Common Stock not subscribed for by the foregoing classes of
persons will be offered for sale to certain members of the general public, with
preference first given to natural persons residing in the Savings Bank's Local
Community, either directly by the Savings Bank, or the Stock Holding Company, as
the case may be, through a Community Offering, or a Syndicated Community
Offering or through an underwritten firm commitment public offering, or through
a combination thereof.
B. SALE OF COMMON STOCK
The Common Stock will be offered simultaneously in the Subscription
Offering to the Eligible Account Holders, Employee Plans, Supplemental Eligible
Account Holders and Other Members in the respective priorities set forth in this
Stock Issuance Plan. The Subscription Offering
19
may be commenced as early as the mailing of the Proxy Statement for the Special
Meeting of Members and must be commenced in time to complete the Offering within
the time period specified in Section F. below. Any shares of Common Stock not
subscribed for in the Subscription Offering will be offered for sale in the
Community Offering as provided in Section D.5 below. 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 Common Stock prior to the Special Meeting of
Members shall, however, be conditioned upon approval of the Reorganization Plan
by the Voting Members. If feasible, any shares of Common Stock remaining after
the Subscription and Community Offerings may be sold in a Syndicated Community
Offering, as provided in Section D.6 below in a manner that will achieve the
widest distribution of the Common Stock as determined by the Savings Bank. The
sale of all Common Stock subscribed for in the Subscription and Community
Offerings will be consummated simultaneously on the date the sale of Common
Stock in the Syndicated Community Offering is consummated and only if all
unsubscribed shares for Common Stock are sold. The Savings Bank, or the Stock
Holding Company, as the case may be, may elect to offer to pay fees on a per
share basis to brokers who assist Persons in determining to purchase shares in
the Subscription and Community Offerings.
C. NUMBER OF SHARES AND PURCHASE PRICE OF COMMON STOCK
The total number of shares (or range thereof) of Common Stock to be issued
and offered for sale pursuant to the Stock Issuance Plan shall be determined by
the Savings Bank's Board of Directors, or the Stock Holding Company's Board of
Directors, if applicable, immediately prior to the commencement of the
Subscription and Community Offerings, subject to adjustment thereafter if
necessitated by market or financial conditions, with the approval of the OTS, if
necessary. In particular, the total number of shares may be increased by up to
15% of the number of shares offered in the Subscription and Community Offering
if the independent valuation is increased subsequent to the commencement of the
Subscription and Community Offering to reflect changes in market and financial
conditions. The number of shares to be outstanding upon completion of the
Reorganization may be increased if the Bank, or Stock Holding Company, if
utilized, contributes authorized but unissued shares of Common Stock to the
charitable foundation which is proposed to be established by the Savings Bank,
the Mutual Holding Company and the Stock Holding Company in connection with the
Reorganization. The establishment of the charitable foundation is subject to
the approval of the Voting Members, as set forth in Section III.J. The total
number of shares of Common Stock that may be issued to persons other than the
Mutual Holding Company at the close of the Offering must be less than 50% of the
aggregate issued and outstanding shares of the Savings Bank or the Stock Holding
Company, if utilized. The Offering will be conducted in conformity with 12
C.F.R. Parts 563g and 575 of the OTS Regulations.
All shares sold in the Offerings will be sold at a uniform price per share
referred to in this Stock Issuance Plan as the Actual Purchase Price. The
aggregate purchase price for all shares of Common Stock will not be inconsistent
with the estimated consolidated pro forma market value of the Stock Savings Bank
or the Stock Holding Company, as the case may be. The estimated
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consolidated pro forma market value of the Stock Savings Bank or the Stock
Holding Company, as the case may be, will be determined for such purpose by the
Independent Appraiser in accordance with Section 563b.7 of the Conversion
Regulations. Prior to the commencement of the Subscription and Community
Offerings, an Estimated Price Range will be established, which range will vary
within 15% above to 15% below the midpoint of such range. The number of shares
of Common Stock to be issued and the purchase price per share may be increased
or decreased by the Savings Bank or the Stock Holding Company. In the event that
the aggregate purchase price of the Common Stock is below the minimum of the
Estimated Price Range, or materially above the maximum of the Estimated Price
Range, resolicitation of purchasers may be required, provided that up to a 15%
increase above the maximum of the Estimated Price 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 Savings Bank shall
establish, with the approval of the OTS, if required. Up to a 15% increase in
the number of shares to be issued which is supported by an appropriate change in
the estimated pro forma market value of the Stock Savings Bank or the Stock
Holding Company will not be deemed to be material so as to require a
resolicitation of subscriptions.
Based upon the independent valuation as updated prior to the commencement
of the Subscription and Community Offerings, the Board of Directors of the
Savings Bank or the Stock Holding Company, as the case may be, will establish
the minimum and maximum ownership percentage applicable to the Minority Stock
Offering ("Ownership Range"). The final minority ownership interest will be
determined by the Savings Bank or the Stock Holding Company as follows (without
consideration of the effect of any contribution to the charitable foundation):
(a) the product of (x) the total number of shares of Common Stock sold and (y)
the Purchase Price, shall be divided by (b) the estimated aggregate pro forma
market value of the Savings Bank or the Stock Holding Company immediately after
the Offering as determined by the Independent Appraiser, expressed in terms of a
specific aggregate dollar amount rather than as a range, upon the closing of the
Minority Stock Offering or sale of all of the Common Stock.
If there is a Syndicated Community Offering of shares of Common Stock not
subscribed for in the Subscription and Community Offerings, the price per share
at which the Common Stock is sold in such Syndicated Community Offering shall be
the Subscription Price.
Notwithstanding the foregoing, no sale of Common Stock may be consummated
unless, prior to the such consummation, the Independent Appraiser confirms to
the Savings Bank or the Stock 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 aggregate value of the Common Stock
at the Actual Purchase Price is incompatible with its estimate of the aggregate
consolidated pro forma market value of the Savings Bank or the Stock Holding
Company. If such confirmation is not received, the Savings Bank or the Stock
Holding Company may cancel the Minority Stock Offering, extend the Stock
Offering and establish a new price range and/or estimated price range, extend,
reopen or hold a new Minority Stock Offering and/or take such other action as
the OTS may permit.
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The Common Stock to be issued in the Offering shall be fully paid and
nonassessable. The aggregate amount of outstanding Common Stock that may be
owned or controlled by persons other than the Mutual Holding Company parent at
the close of the issuance shall be less than fifty percent (50%) of the Savings
Bank's or the Stock Holding Company's total outstanding Common Stock, as
appropriate.
D. PURCHASE BY THE MUTUAL HOLDING COMPANY OR THE STOCK HOLDING COMPANY OF THE
STOCK OF THE SAVINGS BANK
Upon consummation of the sale of all of the Common Stock, and in the event
that a holding company form of organization is utilized, the Mutual Holding
Company or the Stock Holding Company, if utilized, will purchase from the
Savings Bank all of the capital stock of the Savings Bank to be issued by the
Savings Bank in the Reorganization in exchange for the Offering proceeds that
are not permitted to be retained by the Mutual Holding Company or the Stock
Holding Company.
The Mutual Holding Company will apply to the OTS to retain up to $100,000
of the proceeds of the Offerings. The Stock Holding Company, if utilized, will
apply to the OTS to retain up to 50% of the proceeds of the Offerings. The
Savings Bank believes that the Offering proceeds will provide economic strength
to the Mutual Holding Company, the Stock Holding Company, if utilized, and the
Savings Bank for the future in a highly competitive and regulated environment
and would facilitate expansion through acquisitions, diversification into other
related businesses and for other business and investment purposes, including the
payment of dividends and future repurchases of the Common Stock as permitted by
the OTS.
E. METHOD OF OFFERING SHARES
1. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)
A. Each Eligible Account Holder shall receive, as first priority and
without payment, nontransferable subscription rights to subscribe for shares of
Common Stock equal to an amount up to the greater of: the amount permitted to
be subscribed for in the Community Offering which amount, pursuant to Section
E.5, currently is $350,000 of the Common Stock offered, but which may be
increased to 5% or decreased to less than $350,000; one-tenth of one percent
(.10%) of the total offering of shares of Common Stock; or fifteen times the
product (rounded down to the next whole number) obtained by multiplying the
total number of shares of Common Stock to be issued by a fraction of which the
numerator is the amount of the Qualifying Deposit of the Eligible Account Holder
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
maximum purchase limitation specified in Section F.2 and the minimum purchase
limitation specified in Section F.3 or as such purchase limitations may be
increased or decreased by F.12 and exclusive of an increase in the total number
of shares issued due to an increase in the Estimated Price Range of up to 15%.
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B. In the event that Eligible Account Holders exercise subscription
rights for a number of shares of Common Stock in excess of the total number of
shares eligible for subscription, the shares of Common Stock shall be allocated
among the subscribing Eligible Account Holders so as to permit each subscribing
Eligible Account Holder, to the extent possible, to purchase a number of shares
sufficient to make his or her total allocation of Common Stock equal to the
lesser of 100 shares or the number of shares subscribed for by the Eligible
Account Holder. Any shares remaining after that allocation will be allocated
among the subscribing Eligible Account Holders whose subscriptions remain
unsatisfied in the proportion that the amount of the aggregate Qualifying
Deposits of each Eligible Account Holder whose subscription remains unsatisfied
bears to the total amount of the Qualifying Deposits of all Eligible Account
Holders whose subscriptions remain unsatisfied. If the amount so allocated
exceeds the amount subscribed for by any one or more Eligible Account Holders,
the excess shall be reallocated (one or more times as necessary) among those
Eligible Account Holders whose subscriptions are still not fully satisfied on
the same principle until all available shares have been allocated or all
subscriptions satisfied.
C. Subscription rights as Eligible Account Holders received by
Directors and Officers and their Associates which are based on deposits made by
such persons during the twelve (12) months preceding the Eligibility Record Date
shall be subordinated to the Subscription Rights of all other Eligible Account
Holders.
2. SUBSCRIPTION RIGHTS OF THE EMPLOYEE PLANS (SECOND PRIORITY)
The Employee Plans shall receive, without payment, as a second
priority after the filling of subscriptions of Eligible Account Holders,
nontransferable subscription rights to purchase in the Offering the number of
shares of Common Stock requested by such Plans, subject to the purchase
limitations set forth in Section F. If, after the filling of subscriptions of
Eligible Account Holders, a sufficient number of shares is not available to fill
the subscriptions by such plans, the subscriptions by such plans shall be filled
to the maximum extent possible, provided however that in the event of an
increase in the total number of shares issued due to an increase in the
Estimated Price Range of up to 15%, the additional shares shall be sold to the
Employee Plans, subject to the purchase limitations set forth in Section F.
The Employee Plans shall not be deemed to be an Associate or Affiliate
of or Person Acting in Concert with any Director or Officer of the Mutual
Holding Company, the Stock Holding Company, if utilized, or the Savings Bank.
3. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD
PRIORITY)
A. Each Supplemental Eligible Account Holder shall receive, as third
priority and without payment, nontransferable subscription rights to subscribe
for shares of Common Stock equal to an amount up to the greater of: the amount
permitted to be subscribed for in the Community Offering which amount, pursuant
to Section E.5, currently is $350,000 of the Common Stock offered, but which may
be increased to 5% or decreased to less than $350,000; one-tenth of one
23
percent (.10%) of the total offering of Common Stock; or fifteen times the
product (rounded down to the next whole number) obtained by multiplying the
total number of shares of Common Stock to be issued by a fraction of which the
numerator is the amount of the Qualifying Deposit of the Supplemental Eligible
Account Holder and the denominator is the total amount of the Qualifying
Deposits of all Supplemental Eligible Account Holders in the Savings Bank on the
Supplemental Eligibility Record Date, subject to the maximum purchase limitation
specified in Section F.2 and the minimum purchase limitation specified in
Section F.3 or as such purchase limitations may be increased or decreased by
F.12, and exclusive of an increase in the total number of shares issued due to
an increase in the Estimated Price Range of up to 15%.
B. In the event that Supplemental Eligible Account Holders exercise
subscription rights for a number of shares of Common Stock which, when added to
the shares subscribed for by the Eligible Account Holders and the Employee
Plans, is in excess of the total number of shares eligible for subscription, the
shares of Common Stock shall be allocated among the subscribing Supplemental
Eligible Account Holders so as to permit each subscribing Supplemental Eligible
Account Holder, to the extent possible, to purchase a number of shares
sufficient to make his or her total allocation of Common Stock equal to the
lesser of 100 shares or the number of shares subscribed for by the Supplemental
Eligible Account Holder. Any shares remaining after that allocation will be
allocated among the subscribing Supplemental Eligible Account Holders whose
subscriptions remain unsatisfied in the proportion that the amount of the
aggregate Qualifying Deposits of each Supplemental Eligible Account Holder whose
subscription remains unsatisfied 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.
C. Subscription rights received by an Eligible Account Holder
pursuant to Section 1 shall be applied in partial satisfaction of the
subscription rights to be received as a Supplemental Eligible Account Holder
pursuant to this Section 3.
4. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)
A. Each Other Member shall receive, as fourth priority and without
payment, nontransferable subscription rights to subscribe for shares of Common
Stock equal to an amount up to the greater of: the amount permitted to be
subscribed for in the Community Offering, which amount, pursuant to Section E.5,
currently is $350,000 of the Common Stock offered, but which may be increased to
5% or decreased to less than $350,000; or one-tenth of one percent (.10%) of the
total offering of shares of Common Stock, subject to the maximum purchase
limitation specified in Section F.2 and the minimum purchase limitation
specified in Section F.3 or as such purchase limitations may be increased or
decreased by F.12, and exclusive of an increase in the total number of shares
issued due to an increase in the Estimated Price Range of up to 15%.
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B. In the event that Other Members subscribe for a number of shares
of Common Stock which, when added to the shares subscribed for by the Eligible
Account Holders, the Employee Plans and Supplemental Eligible Account Holders,
is in excess of the total number of shares of Common Stock being issued, the
subscriptions of Other Members will be allocated among the Other Members so as
to permit each subscribing Other Member, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation of the Common
Stock equal to the lesser of 100 shares or the number of shares subscribed for
by the Other Member. Any shares remaining after that allocation will be
allocated among the subscribing Other Members whose subscriptions remain
unsatisfied on a pro rata basis determined by the amount of their respective
unfilled subscriptions. If the amount so allocated exceeds the amount
subscribed for by any one or more Other Members, the excess shall be reallocated
(one or more times as necessary) among those Other Members whose subscriptions
are still not fully satisfied in the same principle until all available shares
have been allocated or all subscriptions satisfied.
5. COMMUNITY OFFERING (FIFTH PRIORITY)
If less than the total number of shares of Common Stock to be
subscribed for in the Offering are sold in the Subscription Offering, shares
remaining unsubscribed for will be made available for purchase in the Community
Offering to certain members of the general public, which may subscribe together
with any Associate or group of persons Acting in Concert for up to $350,000 of
the shares of Common Stock offered subject to the maximum purchase limitation
specified in Section F.3 and the minimum purchase limitation specified in
Section F.2 or as such purchase limitations may be increased or decreased by
F.12, and exclusive of an increase in the total number of shares issued due to
an increase in the Estimated Price Range of up to 15%; provided, however, that
the amount permitted to be purchased in the Community Offering may be increased
to 5% or decreased to less than $350,000 without the resolicitation of
subscribers. The shares may be made available in the Community Offering through
a direct community marketing program which may provide for utilization of a
broker, dealer, consultant or investment banking firm, experienced and expert in
the sale of savings institution securities. Such entities may be compensated on
a fixed fee basis or on a commission basis, or a combination thereof. Any
excess of shares and those not subscribed for by institutional investors will be
available for purchase by the general public with preference given to natural
persons residing in the Savings Bank's Local Community (such natural persons are
hereinafter referred to as "Preferred Subscribers").
To the extent that there are shares remaining after all subscriptions
by institutional investors are filled, if the Preferred Subscribers in the
Community Offering, whose orders would otherwise be accepted, subscribe for more
shares than are available for purchase, the shares available to them will be
allocated among the Preferred Subscribers in the manner which permits each such
person to the extent possible, to purchase the number of shares necessary to
make his or her total allocation of Common Stock equal to the lesser of 100
shares or the number of shares subscribed for by such persons. Thereafter,
unallocated shares will be allocated among the Preferred Subscribers whose
subscriptions remain unsatisfied on a 100 shares per order basis until all such
orders have been filled or the remaining shares have been allocated. To the
extent that there are shares remaining
25
after all subscriptions by Preferred Subscribers, any remaining shares will be
allocated among members of the general public using the foregoing allocation as
applied to Preferred Subscribers. The Savings Bank, or the Stock Holding
Company, as the case may be, shall make distribution of the Common Stock to be
sold in the Community Offering in such a manner as to promote a wide
distribution of Common Stock. The Savings Bank, or the Stock Holding Company, as
the case may be, reserves the right to reject any or all orders in whole or in
part, which are received in the Community Offering.
The Savings Bank, or the Stock Holding Company, as the case may be,
may establish all other terms and conditions of such offer. It is expected that
the Community Offering will commence concurrently with the Subscription
Offering. The Community Offering must be completed within 45 days after the
completion of the Subscription Offering unless otherwise extended by the OTS.
6. SYNDICATED COMMUNITY OFFERING
If feasible, all shares of Common Stock not subscribed for in the
Subscription and Community Offerings may be sold in a Syndicated Community
Offering, subject to such terms, conditions and procedures as may be determined
by the Savings Bank, or the Stock Holding Company, as the case may be, in a
manner that will achieve the widest distribution of the Common Stock subject to
the right of the Savings Bank, or the Stock Holding Company, as the case may be,
to accept or reject in whole or in part all 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
$350,000 of the shares of Common Stock offered subject to the maximum purchase
limitation specified in Section F.2 and the minimum purchase limitation
specified in Section F.3 or as such purchase limitations may be increased or
decreased by F.12, and exclusive of an increase in the total number of shares
issued due to an increase in the Estimated Price Range of up to 15%; provided,
however, that this amount may be increased to 5% or decreased to less than
$350,000 without the resolicitation of subscribers. The shares purchased by any
Person together with any Associate or group of persons Acting in Concert
pursuant to Section F shall be counted toward meeting the maximum percentage of
shares permitted to be purchased pursuant to this Section. Provided that the
Subscription Offering has commenced, the Savings Bank, or the Stock Holding
Company, as the case may be, may commence 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 Common Stock shall be conditioned upon the approval of
the Reorganization Plan by the Voting Members. If the Syndicated Community
Offering is not sooner commenced, the Syndicated Community Offering will be
commenced as soon as practicable following the date upon which the Subscription
and Community Offerings terminate.
Alternatively, if a Syndicated Community Offering is not held, the
Savings Bank, or the Stock Holding Company, as the case may be, shall have the
right to sell any shares of Common Stock remaining following the Subscription
and Community Offerings in an underwritten firm
26
commitment public offering. The provisions of Section F hereof shall not be
applicable to sales to underwriters for purposes of such an offering but shall
be applicable to sales by the underwriters to the public. The price to be paid
by the underwriters in such an offering shall be equal to the Actual Purchase
Price less an underwriting discount to be negotiated among such underwriters and
the Savings Bank, or the Stock Holding Company, as the case may be, 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 Common Stock not sold in the
Subscription and Community Offerings cannot be effected, or in the event that
any insignificant residue of shares of Common Stock is not sold in the
Subscription and Community Offerings or in the Syndicated Community Offering or
an underwritten firm commitment public offering, other purchase arrangements
will be made for the sale of unsubscribed shares by the Savings Bank, or the
Stock Holding Company, as the case may be, if possible. Such other purchase
arrangements will be subject to the approval of the OTS.
F. LIMITATIONS UPON PURCHASES IN THE OFFERING
In addition to the maximum amount of Common Stock that may be subscribed
for as set forth in Sections E.1 through E.6, the following limitations shall
apply to all purchases of shares of the Common Stock:
1. The aggregate amount of outstanding Common Stock of the Savings Bank,
or the Stock Holding Company, as the case may be, owned or controlled by persons
other than the Mutual Holding Company at the close of the Offering shall be less
than fifty percent (50%) of the Savings Bank's or the Stock Holding Company's
total outstanding Common Stock, respectively.
2. The maximum number of shares of Common Stock which may be subscribed
for or purchased in all categories in the Offering by any Person or Participant
together with any Associate or group or persons Acting in Concert shall not
exceed $700,000 of the Common Stock offered, except for the Employee Plans which
may subscribe for up to 10% of the Common Stock issued and except for certain
Eligible Account Holders and Supplemental Eligible Account Holders which may
subscribe for or purchase shares in accordance with Sections E.1 and E.3 herein;
provided, however, in the event that the maximum purchase limitation is
increased to more than 2.0% of the shares of Common Stock offered, orders for
Common Stock in the Community Offering and in the Syndicated Community Offering
(or, alternatively an underwritten firm commitment public offering), if any,
shall, as determined by the Savings Bank, first be filled to a maximum of 2.0%
of the total number of shares of Common Stock offered and thereafter remaining
shares shall be allocated on an equal number of shares basis per order until all
orders have been filled.
3. A minimum of 25 shares of 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
Common Stock purchased times the price per share
27
exceeds $500, then such minimum purchase requirement shall be reduced to such
number of shares of Common Stock which when multiplied by the price per share
shall not exceed $500, as determined by the Board.
4. The aggregate amount of Common Stock acquired in the Offering, plus
all prior issuances of the Savings Bank, or the Stock Holding Company, as the
case may be, by any Non Tax-Qualified Employee Stock Benefit Plan of the Savings
Bank, or the Stock Holding Company, respectively, or any Insider and Associates
of Insiders, exclusive of any stock acquired by said plan, Insider or Associate
in the secondary market, shall not exceed ten percent (10%) of the outstanding
shares of Common Stock of the Savings Bank, or the Stock Holding Company,
respectively, held by persons other than the Mutual Holding Company at the close
of the Offering. In calculating the number of shares held by any Insider or
Associate under this provision, shares held by any Tax-Qualified or Non Tax-
Qualified Employee Stock Benefit Plan of the Savings Bank or Stock Holding
Company that are attributable to such person shall not be counted.
5. The aggregate amount of Stock, whether common or preferred, acquired
in the Offering, plus all prior issuances of the Savings Bank, or the Stock
Holding Company, as the case may be, by any Non Tax-Qualified Employee Stock
Benefit Plan of the Savings Bank, or the Stock Holding Company, respectively, or
any Insider or Associates of Insiders, exclusive of any stock acquired by said
plan or Insider or Associate in the secondary market, shall not exceed ten
percent (10%) of the stockholders' equity of the Savings Bank, or the Stock
Holding Company, respectively, held by any person other than the Mutual Holding
Company at the close of the Offering.
6. The aggregate amount of Common Stock acquired in the Offering, plus
all prior issuances of the Savings Bank, or the Stock Holding Company, as the
case may be, by all Tax-Qualified Employee Stock Benefit Plans of the Savings
Bank, or the Stock Holding Company, respectively, exclusive of any stock
acquired by such plans in the secondary market, shall not exceed ten percent
(10%) of the outstanding shares of Common Stock of the Savings Bank, or the
Stock Holding Company, respectively, held by persons other than Mutual Holding
Company at the close of the Offering.
7. The aggregate amount of Stock, whether common or preferred, acquired
in the Offering, by any one or more Tax-Qualified Employee Stock Benefit Plans
of the Savings Bank, or the Stock Holding Company, as the case may be, exclusive
of any stock acquired by such plans in the secondary market, shall not exceed
ten percent (10%) of the stockholders' equity of the Savings Bank, or the Stock
Holding Company, respectively, held by persons other than the Mutual Holding
Company at the close of the Offering.
8. The aggregate amount of Common Stock acquired in the Offering, plus
all prior issuances of the Savings Bank, or the Stock Holding Company, as the
case may be, by all Non Tax-Qualified Employee Stock Benefit Plans, Insiders and
Associates of Insiders, exclusive of any stock acquired by said plans, Insiders,
and Associates in the secondary market, shall not exceed thirty percent (30%) of
the outstanding shares of Common Stock of the Savings Bank, or the Stock
28
Holding Company, respectively, held by persons other than the Mutual Holding
Company at the close of the Offering. In calculating the number of shares held
by Insiders and their Associates under this provision or the provision in
paragraph 9 of this section, shares held by any Tax-Qualified or Non Tax-
Qualified Employee Stock Benefit Plan of the Savings Bank, or the Stock Holding
Company, respectively, that are attributable to such persons shall not be
counted.
9. The aggregate amount of Stock, whether common or preferred, acquired
in the Offering, plus all prior issuances of the Savings Bank, or the Stock
Holding Company, as the case may be, by all Non Tax-Qualified Employee Stock
Benefit Plans of the Savings Bank, or the Stock Holding Company, respectively,
Insiders, and Associates of Insiders, exclusive of any stock acquired by said
plans, Insiders, and Associates in the secondary market, shall not exceed
thirty-two percent (32%) of the stockholders' equity of the Savings Bank, or the
Stock Holding Company, respectively, held by persons other than the Mutual
Holding Company at the close of the Offering.
If the number of shares of Common Stock otherwise allocable pursuant to
Sections E.1 through E.6, inclusive, to any Person or that Person's Associates
would be in excess of the maximum number of shares permitted as set forth above,
the number of shares of Common Stock allocated to each such person shall be
reduced to the lowest limitation applicable to that Person, and then the number
of shares allocated to each group consisting of a Person and that Person's
Associates shall be reduced so that the aggregate allocation to that Person and
his or her Associates complies with the above maximums, 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 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 Savings Bank, or the Stock Holding Company, if utilized, without further
approval of the Members, may decrease or increase the maximum purchase
limitation in this Stock Issuance Plan, provided that the maximum purchase
limitation may not be decreased below 1% or increased to a percentage in excess
of 5%. Notwithstanding the foregoing, the maximum purchase limitation may be
increased up to 9.99% provided that orders for Common Stock exceeding 5% of the
shares being offered shall not exceed, in the aggregate, 10% of the total
offering. If the Savings Bank or the Stock Holding Company increases the
maximum purchase limitations, the Savings Bank or the Stock Holding Company is
only required to resolicit Persons who subscribed for the maximum purchase
amount and may, in the sole discretion of the Savings Bank resolicit certain
other large subscribers.
In the event of an increase in the total number of shares offered in the
Offering due to an increase in the Estimated Price Range of up to 15% (the
"Adjusted Maximum") the additional shares will be allocated 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 level, to fill unfulfilled subscriptions of Eligible Account
Holders exclusive of the Adjusted Maximum according to Section E.1.; (iii) in
the event there is an oversubscription at the Supplemental Eligible Account
Holder level, to fill unfulfilled subscriptions of Supplemental Eligible Account
Holders exclusive of the Adjusted Maximum according to Section E.3.; (iv) in the
29
event that there is an oversubscription at the Other Member level, to fill
unfulfilled subscriptions of Other Members exclusive of the Adjusted Maximum in
accordance with Section E.4.; and (v) to fill unfulfilled Subscriptions in the
Community Offering exclusive of the Adjusted Maximum in accordance with
Section E.5.
For purposes of this Section F, the Directors of the Savings Bank, the
Mutual Holding Company and the Stock Holding Company, if utilized, 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 Savings
Bank, the Mutual Holding Company or the Stock Holding Company.
Each Person purchasing Common Stock in the Offering shall be deemed to
confirm that such purchase does not conflict with the above purchase limitations
contained in this Plan.
For a period of three years following the Offering, no Officer, Director or
their Associates shall purchase, without the prior written approval of the OTS,
any outstanding shares of common stock of the Savings Bank, or the Stock Holding
Company, if utilized, except from a broker-dealer registered with the SEC. This
provision shall not apply to negotiated transactions involving more than one
percent of the outstanding shares of common stock of the Savings Bank, or the
Stock Holding Company, as the case may be, the exercise of any options pursuant
to stock option plan or purchases of common stock of the Savings Bank, or the
Stock Holding Company, as the case may be, made by or held by any Tax-Qualified
Employee Stock Benefit Plan or Non-Tax-Qualified Employee Stock Benefit Plan of
the Savings Bank, or the Stock Holding Company, as the case may be, (including
the Employee Plans) which may be attributable to any Officer or Director. As
used herein, the term "negotiated transaction" means a transaction in which the
securities are offered and the terms and arrangements relating to any sale are
arrived at through direct communications between the seller or any person acting
on its behalf and the purchaser or his investment representative. The term
"investment representative" shall mean a professional investment advisor acting
as agent for the purchaser and independent of the seller and not acting on
behalf of the seller in connection with the transaction.
G. PAYMENT FOR COMMON STOCK
All payments for Common Stock subscribed for in the Subscription, Community
and Syndicated Community Offerings must be delivered in full to the Savings Bank
or the Stock Holding Company, if utilized, together with a properly completed
and executed Order Form, or purchase order in the case of the Syndicated
Community Offering, on or prior to the expiration date specified on the Order
Form or purchase order, as the case may be, unless such date is extended by the
Savings Bank or Stock Holding Company; 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 Common Stock subscribed for by such plans at the Actual
Purchase Price upon consummation of the Offering, provided that, in the case of
the employee stock ownership plan ("ESOP") there is in force from the time of
its subscription until the consummation of the Offering, a loan commitment from
the Mutual Holding Company, the
30
Stock Holding Company or an unrelated financial institution to lend to the ESOP,
at such time, the aggregated Subscription Price of the shares for which it
subscribed. The Savings Bank may make scheduled discretionary contributions to
an Employee Plan provided such contributions do not cause the Savings Bank to
fail to meet its regulatory capital requirement.
Notwithstanding the foregoing, the Savings Bank, or the Stock Holding
Company, as the case may be, shall have the right, in its sole discretion, to
permit institutional investors to submit contractually irrevocable orders in the
Community Offering and to thereafter submit payment for the Common Stock for
which they are subscribing in the Community Offering at any time prior to 48
hours before the completion of the Offering, unless such 48 hour period is
waived by the Savings Bank, or the Stock Holding Company, as the case may be, in
its sole discretion.
Payment for Common Stock subscribed for shall be made either in cash (if
delivered in person), check or money order. Alternatively, subscribers in the
Subscription and Community Offerings may pay for the shares subscribed for by
authorizing the Savings Bank on the Order Form to make a withdrawal from the
subscriber's Account at the Savings Bank in an amount equal to the purchase
price of such shares. Such authorized withdrawal, whether from a savings
passbook or certificate account, shall be without penalty as to premature
withdrawal. If the authorized withdrawal is from a certificate account, and the
remaining balance does not meet the applicable minimum balance requirement, the
certificate shall be canceled at the time of withdrawal, without penalty, and
the remaining balance will earn interest at the passbook rate. Funds for which
a withdrawal is authorized will remain in the subscriber's Account but may not
be used by the subscriber until the Common Stock has been sold or the 45-day
period (or such longer period as may be approved by the OTS) following the
Subscription and Community Offering has expired, whichever occurs first.
Thereafter, the withdrawal will be given effect only to the extent necessary to
satisfy the subscription (to the extent it can be filled) at the purchase price
per share. Interest will continue to be earned on any amounts authorized for
withdrawal until such withdrawal is given effect. Interest will be paid by the
Savings Bank at not less than the passbook annual rate on payments for Common
Stock received in cash or by check or money order. Such interest will be paid
from the date payment is received by the Savings Bank until consummation or
termination of the Offering. If for any reason the Offering 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 Accounts, refunds will be made by canceling the
authorization for withdrawal. The Savings Bank is prohibited by regulation from
knowingly making any loans or granting any lines of credit for the purchase of
stock in the Offering, and therefore, will not do so.
31
H. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the Offering Circular or Prospectus prepared
by the Savings Bank, or the Stock Holding Company, as the case may be, has been
declared effective by the OTS or the SEC, Order Forms will be distributed to all
Eligible Account Holders, the Employee Plans, the Supplemental Eligible Account
Holders and Other Members at their last known addresses appearing on the records
of the Savings Bank for the purpose of subscribing to shares of 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 Savings Bank or the Stock Holding Company may elect to send Order Forms only
to those Persons who request them after such notice as is approved by the OTS
and is adequate to apprise all Eligible Account Holders, the Employee Plans,
Supplemental Eligible Account Holders and Other Members of the pendency of the
Subscription Offering has been given. Such notice may be included with the
proxy statement for the Special Meeting of Members and may also be included in a
notice of the pendency of the Offering and the Special Meeting of Members sent
to all Eligible Account Holders and Supplemental Eligible Account Holders in
accordance with regulations of the OTS.
Each Order Form will be preceded or accompanied by the Offering Circular or
Prospectus describing the Savings Bank, the Stock Holding Company, if
applicable, the Common Stock and the Subscription and Community Offerings. Each
Order Form will contain, among other things, the following:
1. A specified date by which all Order Forms must be received by the
Savings Bank or Stock Holding Company, which date shall be not less than twenty
(20), nor more than forty-five (45) days, following the date on which the Order
Forms are mailed by the Savings Bank or Stock Holding Company, and which date
will constitute the termination of the Subscription Offering;
2. The Subscription Price per share for shares of Common Stock to be sold
in the Subscription and Community Offerings;
3. A description of the minimum and maximum number of shares of Common
Stock which may be subscribed for pursuant to the exercise of subscription
rights or otherwise purchased in the Community Offering;
4. Instructions as to how the recipient of the Order Form is to indicate
thereon the number of shares of Common Stock for which such person elects to
subscribe and the available alternative methods of payment therefor;
5. An acknowledgment that the recipient of the Order Form has received a
final copy of the Offering Circular, prior to execution of the Order Form;
32
6. A statement to the effect that all subscription rights are
nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering within the subscription period such properly
completed and executed Order Form, together with cash (if delivered in person),
check or money order in the full amount of the purchase price as specified in
the Order Form for the shares of Common Stock for which the recipient elects to
subscribe in the Subscription Offering (or by authorizing on the Order Form that
the Savings Bank withdraw said amount from the subscriber's Account at the
Savings Bank) to the Savings Bank;
7. A statement to the effect that the executed Order Form, once received
by the Savings Bank, may not be modified or amended by the subscriber without
the consent of the Savings Bank, and
8. A statement with respect to the residence of the subscriber.
Notwithstanding the above, the Savings Bank, or the Stock Holding Company,
as the case may be, will not accept orders received on photocopied or
facsimilied order forms.
I. UNDELIVERED, DEFECTIVE OR LATE ORDER FORMS: INSUFFICIENT PAYMENT
In the event Order Forms (a) are not delivered and are returned to the
Savings Bank, or the Stock Holding Company, if utilized, by the United States
Postal Service or the Savings Bank, or the Stock Holding Company, as the case
may be, is unable to locate the addressee, (b) are not received back by the
Savings Bank, or the Stock Holding Company, or are received by the Savings Bank
or Stock 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 purchase
price prior to 48 hours before the completion of the Offering for the shares of
Common Stock subscribed for (including cases in which savings accounts from
which withdrawals are authorized are insufficient to cover the amount of the
required payment), or (e) are not mailed pursuant to a "no mail" order placed in
effect by the account holder, the subscription rights of the person to whom such
rights have been granted will lapse as though such person failed to return the
contemplated Order Form within the time period specified thereon; provided,
however, that the Savings Bank, or the Stock Holding Company, as the case may
be, 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 Savings Bank or Stock
Holding Company may specify. The interpretation of the Savings Bank, or the
Stock Holding Company, as the case may be, of terms and conditions of the Plan
and of the Order Forms will be final, subject to the authority of the OTS.
33
J. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
1. All shares of Common Stock purchased by Directors or Officers of the
Savings Bank in the Offering shall be subject to the restriction that, except as
provided in Section J.2., below, 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 (l) year following the date of purchase.
2. The restriction on disposition of shares of Common Stock set forth in
Section J.1. above shall not apply to the following:
(i) Any exchange of such shares in connection with a merger or
acquisition involving the Savings Bank or the Stock Holding Company, as the case
may be, which has been approved by the OTS; and
(ii) Any disposition of such shares following the death of the
person to whom such shares were initially sold under the terms of the Plan.
3. With respect to all shares of Common Stock subject to restrictions on
resale or subsequent disposition, each of the following provisions shall apply:
(i) Each certificate representing shares restricted within the
meaning of Section J.1., above, shall bear a legend prominently stamped on its
face giving notice of the restriction;
(ii) Instructions shall be issued to the stock transfer agent for
the Savings Bank, or the Stock Holding Company, if utilized, 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 Savings Bank, or the Stock
Holding Company, if utilized, issued with respect to a stock dividend, stock
split, or otherwise with respect to ownership of outstanding shares of Common
Stock subject to the restriction on transfer hereunder shall be subject to the
same restriction as is applicable to such Common Stock.
K. VOTING RIGHTS OF STOCKHOLDERS
Following consummation of the Reorganization, the holders of the capital
stock of the Savings Bank shall have the exclusive voting rights with respect to
the Savings Bank as specified in its charter. The holders of the common stock
of the Stock Holding Company, if utilized, shall have the exclusive voting
rights with respect to the Stock Holding Company.
34
L. TRANSFER OF SAVINGS ACCOUNTS AND CONTINUITY OF THE SAVINGS BANK
Upon the Reorganization, each Savings Account Holder having a Savings
Account at the Savings Bank prior to the Reorganization will continue to have a
Savings Account, without payment therefor, in the same amount and subject to the
same terms and conditions (except for voting and liquidation rights) as in
effect prior to the Reorganization.
After the Reorganization, the Savings Bank will succeed to all the rights,
interests, duties and obligations of the Savings Bank before the Reorganization,
including but not limited to, all rights and interests of the Savings Bank in
and to its assets and properties, whether real, personal or mixed. The Savings
Bank 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.
M. RESTRICTIONS ON ACQUISITION OF THE SAVINGS BANK AND STOCK HOLDING COMPANY
1. In accordance with OTS regulations, for a period of three years from
the date of consummation of the Reorganization, no Person, other than the Mutual
Holding Company, or the Stock Holding Company, if utilized 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 Savings Bank without the prior written
consent of the OTS.
2. The charter of the Savings Bank contains a provision stipulating that
no person, except the Mutual Holding Company, or the Stock Holding Company, if
utilized, for a period of five years following the date of the Reorganization,
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 Savings
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 Reorganization,
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.
3. The Charter of the Stock Holding Company, if utilized, will contain a
provision stipulating that in no event shall any record owner, except the Mutual
Holding Company, of any outstanding shares of the Stock Holding Company's 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 Charter and Bylaws of the Stock Holding Company will
provide for staggered terms of the directors, noncumulative voting for
directors, limitations on the calling of special meetings and certain notice
requirements.
35
4. For the purposes of this Section M:
(i) The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, 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 of an insured institution;
(ii) The term "offer" includes every offer to buy or acquire,
solicitation of an offer to sell, tender offer for, or request or invitation for
tenders of, a security or interest in a security for value;
(iii) The term "acquire" includes every type of acquisition,
whether effected by purchase, exchange, operation of law or otherwise; and
(iv) The term "security" includes non-transferable subscription
rights issued pursuant to a plan of stock issuance as well as a "security" as
defined in 15 U.S.C. Section 78c(a)(10).
N. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
The Savings 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 the federal regulatory capital requirement set forth
in Section 567.2 of the Rules and Regulations of the OTS. Otherwise, the Savings
Bank may declare dividends, make capital distributions or repurchase its capital
stock in accordance with applicable law and regulations.
O. AMENDMENT OF PLAN
If deemed necessary or desirable, this Stock Issuance Plan may be
substantively amended by the Savings Bank's and the Stock Holding Company's
Board of Directors at any time prior to approval of the Stock Issuance Plan by
the OTS, and at any time thereafter with the concurrence of the OTS. Any
amendment to the Plan made after approval by the Members with the approval of
the OTS shall not necessitate further approval by the Members unless otherwise
required by the OTS. This Stock Issuance Plan may be terminated by the Boards of
Directors at any time prior to approval of the Stock Issuance Plan by the OTS
and at any time thereafter with the concurrence of the OTS.
P. CONSUMMATION OF REORGANIZATION
The Reorganization of the Savings Bank shall be deemed to take place and be
effective upon the completion of all requisite organizational procedures for
obtaining a Federal Stock Savings Bank Charter for the Savings Bank and sale of
all Common Stock.
36
Q. REGISTRATION AND MARKETING
Within the time period required by applicable laws and regulations, the
Savings Bank, or the Stock Holding Company, if utilized, will register the
securities issued in connection with the Offering pursuant to the Securities
Exchange Act of 1934 and will not deregister such securities for a period of at
least three years thereafter, except that the maintenance of registration for
three years requirement may be fulfilled by any successor to the Savings Bank,
or the Stock Holding Company, as the case may be. In addition, the Savings
Bank, or the Stock Holding Company, if utilized, will use its best efforts to
encourage and assist a market-maker to establish and maintain a market for the
Common Stock and to list those securities on a national or regional securities
exchange or the Nasdaq Stock Market.
R. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
The Savings Bank, or the Stock Holding Company, if utilized, 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 Common Stock
pursuant to the Stock Issuance Plan reside. However, no such Person will be
issued subscription rights or be permitted to purchase shares of 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 both of the following apply:
(1) a small number of Persons otherwise eligible to subscribe for shares under
the Plan reside in such state; and (2) the issuance of subscription rights or
the offer or sale of shares of Common Stock to such Persons would require the
Savings Bank, or the Stock Holding Company, as the case may be, under the
securities laws of such state, to register as a broker, dealer, salesman or
agent or to register or otherwise qualify its securities for sale in such state
and such registration or qualification would be impracticable for reasons of
cost or otherwise.
S. EXPENSES OF OFFERING
The Savings Bank shall use its best efforts to assure that expenses
incurred by it in connection with the Offering shall be reasonable.
T. INTERPRETATION
All interpretations of this Stock Issuance Plan and application of its
provisions to particular circumstances by a majority of the Board of Directors
of the Savings Bank shall be final, subject to the authority of the OTS.
Attachments
A-1 and A-2: Charter and Bylaws of Mutual Holding Company
B-1 and B-2: Charter and Bylaws of Stock Holding Company
C-1 and C-2: Charter and Bylaws of Stock Savings Bank
37
ATTACHMENT A-1
FEDERAL MUTUAL HOLDING COMPANY CHARTER
Section 1. Corporate title. The name of the mutual holding company
---------------
hereby chartered is West Essex Bancorp, M.H.C. (the "Holding Company").
Section 2. Duration. The duration of the Holding Company is perpetual.
--------
Section 3. Purpose and powers. The purpose of the Holding Company is to
------------------
pursue any or all of the lawful objectives of a federal mutual savings and loan
holding company chartered under section 10(o) of the Home Owners' Loan Act, 12
U.S.C. 1467a(o), and to exercise all of the express, implied, and incidental
powers conferred thereby and all acts amendatory thereof and supplemental
thereto, subject to the Constitution and laws of the United States as they are
now in effect, or as they may hereafter be amended, and subject to all lawful
and applicable rules, regulations, and orders of the Office of Thrift
Supervision ("OTS").
Section 4. Capital. The Holding Company shall have no capital stock.
-------
Section 5. Members. All holders of the savings, demand, or other
-------
authorized accounts of West Essex Bank (the "Bank") are members of the Holding
Company. In the consideration of all questions requiring action by the members
of the Holding Company, each holder of an account shall be permitted to cast one
vote for each $100, or fraction thereof, of the withdrawal value of the member's
account. Borrowers as of November 16, 1995 shall continue to have one vote for
the period of time such borrowings are in existence. No member, however, shall
cast more than 1,000 votes. Voting may be by proxy, which is subject to the
rules and regulations of the OTS. Any number of members present and voting
represented in person or by proxy, at a regular or special meeting of the
members shall constitute a quorum. A majority of all votes cast at any meeting
of the members shall determine any question. All accounts shall be
nonassessable.
Section 6. Directors. The Holding Company shall be under the direction
---------
of a board of directors. The authorized number of directors shall not be fewer
than five nor more than fifteen, as fixed in the Holding Company's bylaws,
except that the number of directors may be decreased to a number less than
five or increased to a number greater than fifteen with the prior approval of
the OTS. Each director of the Holding Company shall be a member of the Holding
Company. Members of the Holding Company shall elect the directors, provided
that, in the event of a vacancy on the board, the board of directors may fill
such vacancy, if the members of the Holding Company fail to do so, by electing a
director to serve until the next annual meeting of members. Directors shall be
elected for periods of three years and until their successors are elected and
qualified, except that provision shall be made for the election of approximately
one-third of the board each year.
Section 7. Capital, surplus, and distribution of earnings.
----------------------------------------------
a. The Holding Company shall maintain for the purpose of meeting losses
the amount of capital required by Section 5 of the Home Owners' Loan Act and by
regulations of the OTS. The Holding Company shall distribute net earnings to
account holders of the Bank on such basis and in accordance with such terms and
conditions as may from time to time be authorized by the Director of the OTS;
provided, that the Holding Company may establish minimum-balance requirements
- --------
for accounts to be eligible for distribution of earnings and provided, further,
that the Holding Company shall not distribute net earnings or any other item of
value to members in connection with any Business Combination as defined in this
Section 7, corporate reorganization or similar transactions except with the
approval of at least three-fourths of the Board.
Any voluntary liquidation, dissolution, or winding up of the Holding
Company must be approved by an affirmative vote of three-fourths of the Board.
All holders of accounts of the Bank shall be entitled to equal distribution of
assets of the Holding Company pro rata to the value of their accounts in the
--- ----
Bank, in the event of voluntary or involuntary liquidation, dissolution, or
winding up of the Holding Company.
b. For purposes of this Section 7, "Business Combination" shall mean:
1) any merger or consolidation of the Holding Company or any of its
subsidiaries with any entity which was not formed on behalf of the
Holding Company pursuant to two-thirds majority vote of
Disinterested Directors; or
2) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or series of transactions) of 25%
or more of the consolidated assets of the Holding Company and its
subsidiaries to or with any entity which was not formed on behalf
of the Holding Company pursuant to a two-thirds majority vote of
Disinterested Directors; or
3) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or series of transactions) of
assets of the Holding Company or its subsidiaries which would
result in a 10% or more reduction in the capital of the Holding
Company.
c. For purposes of this Section 7, "Business Combination" shall not
include:
1) any merger or consolidation of the Holding Company or any of its
subsidiaries or any sale, lease or exchange of the assets of the
Holding Company or any subsidiary which has been initiated,
ordered or directed by the Office or any other appropriate federal
banking agency pursuant to any applicable law or regulation.
2
d. "Disinterested Director" shall mean any member of the board of
directors of the Holding Company or its subsidiaries who, during the period
commencing one year prior to the proposal of the Business Combination and
ending on the vote by the board of directors upon the proposed Business
Combination, was not an agent of or otherwise associated with any party to the
Business Combination other than: (i) the Holding Company, (ii) any subsidiary
of the Holding Company or (iii) any other entity formed on behalf of the
Holding Company, and any director who is thereafter chosen to fill any vacancy
of the board of directors or who is elected to the board of directors and who,
in either event, is not a agent of or associated with any party to the Business
Combination other than: (i) the Holding Company, (ii) any subsidiary of the
Holding Company or (iii) any other entity formed on behalf of the Holding
Company.
e. "Interested Member" shall mean any member of the Holding Company who
is an agent of or otherwise associated with any party to Business Combination
other than: (i) the Holding Company, (ii) any subsidiary of the Holding Company
or (iii) any other entity formed on behalf of the Holding Company.
f. For the purposes of this Charter, a person shall be considered to be
an "agent of" or "otherwise associated with" a party, if: (i) such person was
employed by, received financial support from or had any equity or other interest
in the party, (ii) such person had a contractual relationship with the party,
(iii) such person controls, is controlled by or is under common control with the
party, (iv) such person is an immediate family member of the party, as defined
by 12 C.F.R. 574.2(j), (v) such person is acting in concert with the party, as
defined by 12 C.F.R. 574.2(c), (vi) such person is an associate of the party, as
defined by 12 C.F.R.563b.2(a)(5), or (vii) such person is an officer, director
or employee of the party.
Section 8. Amendment of Charter. Adoption of any preapproved charter
--------------------
amendment shall be effective after such preapproved amendment has been
submitted to and approved by the members at a legal meeting. Any other
amendment, addition, change or repeal of this charter must be approved by the
OTS prior to approval by the members at a legal meeting and shall be effective
upon filing with the OTS in accordance with regulatory procedures.
3
Attest:
- ------------------------------------- ---------------------------------------
Corporate Secretary President and Chief Executive
Officer
Attest: Office of Thrift Supervision
By:
- ------------------------------------- ------------------------------------
Secretary
Office of Thrift Supervision
EFFECTIVE DATE:
------------------------
4
ATTACHMENT A-2
BYLAWS
OF
WEST ESSEX BANCORP, M.H.C.
1. Annual meeting of members. The annual meeting of the members of the
-------------------------
Holding Company for the election of directors and for the transaction of any
other business of the Holding Company shall be held, as designated by the board
of directors, at a location within the state that constitutes the principal
place of business of the Holding Company at 4:00 p.m. on a day that is within
150 days after the end of the Holding Company's fiscal year, which shall be,
unless otherwise specified by the Board, the third Wednesday in April each year,
if not a legal holiday, or if a legal holiday then on the next succeeding day
not a legal holiday. The annual meeting may be held at such other times on such
day or at such other place in the same state as the board of directors may
determine. At each annual meeting, the officers shall make a full report of the
financial condition of the Holding Company and of its progress for the preceding
year and shall outline a program for the succeeding year. Annual meetings shall
be conducted by the Chairman of the annual meeting in accordance with the
written procedures agreed to by the board of directors.
2. Special meetings of members. Special meetings of the members of the
----------------------------
Holding Company may be called at any time by the president or the majority of
the board of directors and shall be called by the president or the secretary
upon the written request of members of record, holding in the aggregate at least
10% or more of the voting capital of the Holding Company. Voting capital shall
mean the maximum number of votes eligible to be cast at a legal meeting of
members as determined at the most recent practicable date. Such written request
shall state the purpose of the meeting and shall be delivered at the principal
place of business of the Holding Company addressed to the president. The
business which may be brought before and acted upon at any special meeting shall
be limited to those matters specified by the Board of Directors or, in the case
of a special meeting called by the members pursuant to this Section 2, those
matters specified by such members in the written request delivered to the
president or the secretary. Special meetings shall be conducted by the
Chairman of the special meeting in accordance with written procedures agreed to
by the board of directors.
3. Notice of meeting of members. Notice of each meeting shall be either
----------------------------
published once a week for the two successive calendar weeks (in each instance on
any day of the week) immediately prior to the week in which such meeting shall
convene, in a newspaper printed in the English language and of general
circulation in the city or county in which the principal place of business of
the Holding Company is located, or mailed postage prepaid at least 15 days and
not more than 45 days prior to the date on which such meeting shall convene, to
each of its members of record at the last address appearing on the books of the
Holding Company. Such notice shall state the name of the Holding Company, the
place of the meeting, the date and time when it shall convene, and the matters
to be considered. A similar notice shall be posted in a conspicuous place in
each of the
1
offices of West Essex Bank (the "Bank") during the 14 days immediately preceding
the date on which such meeting shall convene. If any member, in person or by
authorized attorney, shall waive in writing notice of any meeting of members,
notice thereof need not be given to such member. When any meeting is adjourned
for 30 days or more, notice of the adjournment and reconvening of the meeting
shall be given as in the case of the original meeting.
4. Fixing of record date. For the purpose of determining members
---------------------
entitled to notice of or to vote at any meeting of members or any adjournment
thereof, or in order to make a determination of members for any other proper
purpose, the board of directors shall fix in advance a record date for any
such determination of members. Such date shall be not more than 60 days nor
fewer than 10 days prior to the date on which the action, requiring such
determination of members, is to be taken. The member entitled to participate
in any such action shall be the member of record on the books of the Holding
Company on such record date. The number of votes which each member shall be
entitled to cast at any meeting of the members shall be determined from the
books of the Holding Company as of such record date. Any member of such
record date who ceases to be a member prior to such meeting shall not be
entitled to vote at that meeting.
5. Member quorum. Any number of members present and voting, represented
-------------
in person or by proxy, at a regular or special meeting of the members shall
constitute a quorum. A majority of all votes cast at any meeting of the members
shall determine any question, unless otherwise required by regulation.
Directors, however, are elected by a plurality of the votes cast at an election
of directors. At any adjourned meeting any business may be transacted which
might have been transacted at the meeting as originally called. Members present
at a duly constituted meeting may continue to transact business until
adjournment.
6. Voting by proxy. Voting at any annual or special meeting of the
---------------
members may be by proxy pursuant to the rules and regulations of the Office of
Thrift Supervision ("Office"), provided, that no proxies shall be voted at any
meeting unless such proxies shall have been placed on file with the secretary of
the Holding Company, for verification, prior to the convening of such meeting.
All proxies with a term greater than eleven months or solicited at the expense
of the Holding Company must run to the board of directors as a whole, or to a
committee appointed by a majority of such board.
7. Communication between members. Communication between members shall be
-----------------------------
subject to any applicable rules or regulations of the Office, including Section
545.131 of the Office's regulations. The Board of Directors shall have sole
discretion to determine the propriety of communications between members.
8. Number of directors. The number of directors of the Holding Company
-------------------
shall be six (6). Each director shall be a member of West Essex Bank.
Directors shall be elected for periods of one to three years and until their
successors are elected and qualified, but if a staggered board is chosen,
provision shall be made for the election of approximately one-third or one-half
of the board each year, as appropriate. No person 75 years of age shall be
eligible for election, reelection,
2
appointment or reappointment to the board of the Holding Company. No director
shall serve as such beyond the annual meeting of the Holding Company immediately
following the director becoming 75. This age limitation does not apply to an
advisory director. It is specifically understood that the age limitation set
forth herein for any Director of the Board in office as of April 19, 1995 shall
not apply.
9. Meetings of the board. The board of directors shall meet regularly
---------------------
without notice at the principal place of business of the Holding Company at
least once each month at an hour and date fixed by resolution of the board,
provided that the place of meeting may be changed by the directors. Special
meetings of the board may be held at any place specified in a notice of such
meeting and shall be called by the secretary upon the written request of the
chairman of the board or of the majority of the board of directors. All special
meetings shall be held upon at least 24 hours written notice to each director
unless notice is waived in writing before or after such meeting. Such notice
shall state the place, date, time, and purposes of such meeting. A majority of
the authorized directors shall constitute a quorum for the transaction of
business. The act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board. Action may be taken
without a meeting if unanimous written consent is obtained for such action.
Members of the board of directors may participate in meetings by means of
conference telephone or in similar communications equipment by which all persons
participating in the meeting can hear and speak to each other.
The meetings shall be under the direction of a Chairman, appointed annually
by the board, or in the absence of the Chairman, the Vice Chairman, or in the
absence of the Vice Chairman, the meetings shall be under the direction of the
president. Regular and special meetings of the Board shall be conducted in
accordance with the rules determined by the Chairman.
10. Officers, employees and agents. Annually at the meeting of the board
------------------------------
of directors of the Holding Company next following the annual meeting of the
members of the Holding Company, the board of directors may elect one of its
members to preside at its meetings as Chairman of the Board, and may elect one
of its members as Vice Chairman to preside in the absence of the Chairman. At
such meeting, the board shall elect a president, one or more vice presidents, a
secretary, and a treasurer: Provided, that the offices of president and
--------
secretary may not be held by the same person and a vice president may also be
the treasurer. The board may appoint such additional officers, employees, and
agents as it may from time to time determine. The term of office of all
officers shall be one year or until their respective successors are elected and
qualified; but any officer may be removed at any time by a three-fourths vote of
the board. In the absence of designation from time to time of powers and duties
by the board, the officers shall have such powers and duties as generally
pertain to their respective offices.
11A. Vacancies, resignation or removal of directors. Members of the Holding
----------------------------------------------
Company shall elect directors by ballot; provided, that in the event of a
vacancy on the board between meetings of members, the board of directors may, by
their affirmative vote, fill such vacancy, even if the
3
remaining directors constitute less than a quorum. A director elected to fill a
vacancy shall be elected to serve only until the next election of directors by
the members. Any director may resign at any time by sending a written notice of
such resignation to the office of the Holding Company delivered to the
secretary. Unless otherwise specified therein such resignation shall take
effect upon receipt by the secretary. More than three consecutive absences
from regular meetings of the board, unless excused by resolution of the board,
shall automatically constitute a resignation, effective when such resignation is
accepted by the board.
At a meeting of members called expressly for that purpose, directors or the
entire board may be removed, only with cause, by a vote of the holders of a
majority of the shares then entitled to vote at an election of directors.
11B. Emergency appointment of directors. In the event the number of
----------------------------------
directors falls below five, the minimum number required by law, the number of
directors shall be restored to five, automatically and simultaneously, by the
appointment of new directors, from the ranks of the Holding Company's directors
emeritus, in the reverse order (last to retire, first to be appointed) of their
retirement, provided any such director emeritus so appointed is able to serve in
such capacity.
Directors so appointed shall remain as directors until their successor is
appointed or elected, but in no event shall the appointment of said director
continue for more than one year. Any provisions in these Bylaws pertaining to
the age of a director shall be waived for directors emeritus so appointed.
12. Powers of the board. The board of directors shall have the power:
-------------------
(a) By resolution, to appoint from among its members and remove an
executive committee, which committee shall be comprised of at
least the majority of the Board and shall have and may exercise
the powers of the board between the meetings of the board, but no
such committee shall have the authority of the board to amend the
charter or bylaws, adopt a plan of merger, consolidation,
dissolution, or provide for the disposition of all or
substantially all of the property and assets of the Holding
Company. Such committee shall not operate to relieve the board,
or any member thereof, of any responsibility imposed by law;
(b) To appoint and remove by resolution the members of such other
committees as may be deemed necessary and prescribe the
duties thereof;
(c) To fix the compensation of directors, officers, and employees;
and to remove any officer or employee at any time with or
without cause;
(d) To limit payments on capital which may be accepted; and
4
(e) To exercise any and all of the powers of the Holding Company not
expressly reserved by the charter to the members.
13. Execution of instruments, generally. All documents and instruments
-----------------------------------
or writings of any nature shall be signed, executed, verified, acknowledged, and
delivered by such officers, agents, or employees of the Holding Company or any
one of them and in such manner as from time to time may be determined by
resolution of the board. All notes, drafts, acceptances, checks, endorsements,
and all evidences of indebtedness of the Holding Company whatsoever shall be
signed by such officer or officers or such agent or agents of the Holding
Company and in such manner as the board may from time to time determine.
Endorsements for deposit to the credit of the Holding Company in any of its duly
authorized depositaries shall be made in such manner as the board may from time
to time determine. Proxies to vote with respect to shares or accounts of other
associations or stock of other corporations owned by, or standing in the name
of, the Holding Company may be executed and delivered from time to time on
behalf of the Holding Company by the president or a vice president and the
secretary or an assistant secretary of the Holding Company or by any other
persons so authorized by the board.
14. Nominating committee. The chairman, at least 30 days prior to the
---------------------
date of each annual meeting, shall appoint a nominating committee of three
persons who are members of the Holding Company. Such committee shall make
nominations for directors in writing and deliver to the secretary such written
nominations at least 15 days prior to the date of the annual meeting, which
nominations shall then be posted in a prominent place in the principal place of
business for the 15-day period prior to the date of the annual meeting, except
in the case of a nominee substituted as a result of death or other incapacity.
Provided such committee is appointed and makes such nominations, no nominations
for directors except those made by the nominating committee shall be voted upon
at the annual meeting unless other nominations by members are made in writing
and delivered to the secretary of the Holding Company at least 10 days prior to
the date of the annual meeting, which nominations shall then be posted in a
prominent place in the principal place of business for the 10-day period prior
to the date of the annual meeting, except in the case of a nominee substituted
as a result of death or other incapacity. Ballots bearing the names of all
persons nominated by the nominating committee and by other members prior to the
annual meeting shall be provided for use by the members at the annual meeting.
If at any time the chairman shall fail to appoint such nominating committee, or
the nominating committee shall fail or refuse to act at least 15 days prior to
the annual meeting, nominations for directors may be made at the annual meeting
by any member and shall be voted upon.
15. New business. Any new business to be taken up at the annual meeting,
------------
including any proposal to increase or decrease the number of directors of the
Holding Company, shall be stated in writing and filed with the secretary of the
Holding Company at least 30 days before the date of the annual meeting, and all
business so stated, proposed, and filed shall be considered at the annual
meeting; but no other proposal shall be acted upon at the annual meeting. This
provision shall not prevent the consideration and approval or disapproval at the
annual meeting of the reports of officers
5
and committees, but in connection with such reports no new business shall be
acted upon at such annual meeting unless stated and filed as herein provided.
16. Seal. The seal shall be two concentric circles between which shall be
----
the name of the Holding Company. The year of incorporation, the word
"incorporated," or an emblem, may appear in the center.
17. Indemnification. The Holding Company shall indemnify all officers,
---------------
directors and employees of the Holding Company, and their heirs, executors and
administrators, to the fullest extent permitted under federal law against all
expenses and liabilities reasonably incurred by them in connection with or
arising out of any action, suit or proceeding in which they may be involved by
reason of their having been a director or officer of the Holding Company,
whether or not they continue to be a director or officer at the time of
incurring such expenses or liabilities, such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements. Any payments made to any officer or
director pursuant to this Section are subject to and conditioned upon compliance
with the rules or regulations of the Office and 12 C.F.R. Section 359.5.
18. Amendment. Adoption of any bylaw amendment pursuant to Section 544.5
---------
of the Office's regulations, as long as consistent with applicable law, rules
and regulations, and which adequately addresses the subject and purpose of the
stated bylaw section, shall be effective after: (i) approval of the amendment by
a majority vote of the authorized board, or by a vote of the members of the
Holding Company at a legal meeting, and (ii) receipt of any applicable
regulatory approval. When the Holding Company fails to meet its quorum
requirements, solely due to vacancies on the board, the bylaws may be amended by
an affirmative vote of a majority of the sitting board.
6
ATTACHMENT B-1
FEDERAL MHC SUBSIDIARY HOLDING COMPANY CHARTER
FOR
WEST ESSEX BANCORP, INC.
SECTION 1. CORPORATE TITLE.
The full corporate title of the MHC subsidiary holding company is West
Essex Bancorp, Inc. (the "Holding Company").
SECTION 2. DOMICILE
The domicile of the Holding Company is in the city of Caldwell, in the
State of New Jersey.
SECTION 3. DURATION.
The duration of the Holding Company is perpetual.
SECTION 4. PURPOSE AND POWERS.
The purpose of the Holding Company is to pursue any or all of the lawful
objectives of a federal mutual holding company chartered under Section 10(o) of
the Home Owners' Loan Act, 12 U.S.C. 1467a(o), and to exercise all the express,
implied, and incidental powers conferred thereby and by all acts amendatory
thereof and supplemental thereto, subject to the Constitution and laws of the
United States as they are now in effect, or as they may hereafter be amended,
and subject to all lawful and applicable rules, regulations, and orders of the
Office of Thrift Supervision ("Office").
SECTION 5. CAPITAL STOCK.
The total number of shares of all classes of the capital stock which the
Holding Company has authority to issue is ten million shares (10,000,000), of
which nine million shares (9,000,000) shall be common stock, par value $.01 per
share and of which one million shares (1,000,000) shall be preferred stock, par
value $.01 per share. The shares may be issued from time to time as authorized
by the Board of Directors without further approval of shareholders except as
otherwise provided in this Section 5 or to the extent that such approval is
required by governing law, rule, or regulation. The consideration for the
issuance of the shares shall be paid in full before their issuance and shall not
be less than the par value. Neither promissory notes nor future services shall
constitute payment or part payment for the issuance of shares of the Holding
Company. The consideration for the shares shall be cash, tangible or intangible
property (to the extent direct investment in such property would be permitted),
labor, or services actually performed for the Holding Company, or any
combination of the foregoing. In the absence of actual fraud in the
transaction, the value of such property, labor, or services, as determined by
the Board of Directors of the Holding Company, shall be conclusive.
Upon payment of such consideration, such shares shall be deemed to be fully paid
and nonassessable. In the case of a stock dividend, that part of the surplus of
the Holding Company which is transferred to common stock or paid-in capital
accounts upon the issuance of shares as a stock dividend shall be deemed to be
the consideration for their issuance.
Except for shares issued in the initial organization of the Holding
Company, no shares of capital stock (including shares issuable upon conversion,
exchange, or exercise of other securities) shall be issued, directly or
indirectly, to officers, directors, or controlling persons of the Holding
Company other than as part of a general public offering or as qualifying shares
to a director, unless their issuance or the plan under which they would be
issued has been approved by a majority of the total votes eligible to be cast at
a legal meeting.
Nothing contained in this Section 5 (or in any supplementary sections
hereto) shall entitle the holders of any class or series of capital stock to
vote as a separate class or series or to more than one vote per share:
provided, that this restriction on voting separately by class or series shall
- --------
not apply:
(i) To any provision which would authorize the holders of preferred stock,
voting as a class or series, to elect some members of the Board of
Directors, less than a majority thereof, in the event of default in
the payment of dividends on any class or series of preferred stock;
(ii) To any provision which would require the holders of preferred stock,
voting as a class or series, to approve the merger or consolidation of
the Holding Company with another corporation or the sale, lease, or
conveyance (other than by mortgage or pledge) of properties or
business in exchange for securities of a corporation other than the
Holding Company if the preferred stock is exchanged for securities of
such other corporation: Provided, that no provision may require such
approval for transactions undertaken with the assistance or pursuant
to the direction of the Office or the Federal Deposit Insurance
Corporation;
(iii)To any amendment which would adversely change the specific terms of
any class or series of capital stock as set forth in this Section 5
(or in any supplementary sections hereto), including any amendment
which would create or enlarge any class or series ranking prior
thereto in rights and preferences. An amendment which increases the
number of authorized shares of any class or series of capital stock,
or substitutes the surviving Holding Company in a merger or
consolidation for the Holding Company, shall not be considered to be
such an adverse change.
A description of the different classes and series (if any) of the Holding
Company's capital stock and a statement of the designations, and the relative
rights, preferences, and limitations of the shares of each class of and series
(if any) of capital stock are as follows:
2
A. Common Stock. Except as provided in this Section 5 (or in any
------------
supplementary sections thereto) the holders of the common stock shall
exclusively possess all voting power. Each holder of shares of common
stock shall be entitled to one vote for each share held by such holder
and there shall be no right to cumulate votes in an election of
directors.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of
stock having preference over the common stock as to the payment of
dividends, the full amount of dividends and of sinking fund, or
retirement fund, or other retirement payments, if any, to which such
holders are respectively entitled in preference to the common stock,
then dividends may be paid on the common stock and on any class or
series of stock entitled to participate therewith as to dividends out
of any assets legally available for the payment of dividends.
In the event of any liquidation, dissolution, or winding up of the
Holding Company, the holders of the common stock (and the holders of
any class or series of stock entitled to participate with the common
stock in the distribution of assets) shall be entitled to receive, in
cash or in kind, the assets of the Holding Company available for
distribution remaining after: (i) payment or provision for payment of
the Holding Company's debts and liabilities; (ii) distributions or
provision for distributions in settlement of a liquidation account;
and (iii) distributions or provision for distributions to holders of
any class or series of stock having preference over the common stock
in the liquidation, dissolution, or winding up of the Holding Company.
Each share of common stock shall have the same relative rights as and
be identical in all respects with all the other shares of common
stock.
B. Preferred Stock. The Holding Company may provide in supplementary
---------------
sections to its charter for one or more classes of preferred stock,
which shall be separately identified. The shares of any class may be
divided into and issued in series, with each series separately
designated so as to distinguish the shares thereof from the shares of
all other series and classes. The terms of each series shall be set
forth in a supplementary section to the charter. All shares of the
same class shall be identical except as to the following relative
rights and preferences, as to which there may be variations between
different series:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and,
if so, from which date(s) the payment date(s) for dividends, and
the participating or other special rights, if any, with respect
to dividends;
3
(c) The voting powers, full or limited, if any, of the shares of such
series;
(d) Whether the shares of such series shall be redeemable and, if so,
the price(s) at which, and the terms and conditions on which,
such shares may be redeemed;
(e) The amount(s) payable upon the shares of such series in the event
of voluntary or involuntary liquidation, dissolution, or winding
up of the Holding Company;
(f) Whether the shares of such series shall be entitled to the
benefit of a sinking or retirement fund to be applied to the
purchase or redemption of such shares, and if so entitled, the
amount of such fund and the manner of its application, including
the price(s) at which such shares may be redeemed or purchased
through the application of such fund;
(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock
of the Holding Company and, if so, the conversion price(s) or the
rate(s) of exchange, and the adjustments thereof, if any, at
which such conversion or exchange may be made, and any other
terms and conditions of such conversion or exchange;
(h) The price or other consideration for which the shares of such
series shall be issued; and
(i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial
preferred stock and whether such shares may be reissued as shares
of the same or any other series of serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative rights as and be identical in all respects with all the other shares of
the same series.
The Board of Directors shall have authority to divide, by the adoption of
supplementary charter sections, any authorized class of preferred stock into
series, and, within the limitations set forth in this section and the remainder
of this charter, fix and determine the relative rights and preferences of the
shares of any series so established.
Prior to the issuance of any preferred shares of a series established by a
supplementary charter section adopted by the Board of Directors, the Holding
Company shall file with the Secretary to the Office a dated copy of that
supplementary section of this charter establishing and designating the series
and fixing and determining the relative rights and preferences thereof.
4
SECTION 6. LIMITATIONS ON VOTING.
Notwithstanding any other provision of this Charter, in no event may any
record owner of any outstanding Common Stock that is beneficially owned,
directly or indirectly, by a person (other than West Essex Bancorp, M.H.C., the
parent holding company of the Holding Company) who, as of any record date for
the determination of shareholders 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 that may be cast by any record owner
by virtue of the provisions hereof in respect of Common Stock beneficially owned
by such person beneficially owning shares in excess of the Limit is a number
equal to the total number of votes that a single record owner of all Common
Stock beneficially owned by such person would be entitled to cast, (subject to
the provisions of this Section 6) multiplied by a fraction, the numerator of
which is the number of shares of such class or series that 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.
The following definitions apply to this Section 6:
a. "Affiliate" has the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as amended, as in effect on the date of filing of this Charter.
b. "Beneficial ownership" is determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as amended, (or any successor rule or statutory provision), or,
if said Rule 13d-3 is rescinded and there is no successor rule or
provision thereto, pursuant to said Rule 13d-3 as in effect on the
date of filing of this Charter; provided, however, that a person is,
in any event, also deemed the "beneficial owner" of any Common Stock:
(1) that such person or any of its affiliates beneficially owns,
directly or indirectly; or
(2) that 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, 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 is not deemed to be the beneficial owner of
any voting shares solely by reason of a revocable proxy
granted for a particular meeting of shareholders, 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
5
(3) that are 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 Holding Company; and provided further,
however, that: (1) no Director or Officer of this Holding
Company (or any Affiliate of any such Director or Officer),
solely by reason of any or all of such Directors or Officers
acting in their capacities as such, will be deemed, for any
purposes hereof, to beneficially own any Common Stock
beneficially owned by any other such Director or Officer (or
any Affiliate thereof); and (2) neither any employee stock
ownership or similar plan of the Holding Company or any
subsidiary of this Holding Company, nor any trustee with
respect thereto or any Affiliate of such trustee (solely by
reason of such capacity of such trustee), will be deemed,
for any purposes hereof, to beneficially own any Common
Stock held under any such plan. For purposes only of
computing the percentage of beneficial ownership of Common
Stock of a person, the outstanding Common Stock includes
shares deemed owned by such person through application of
this Section, but does not include any other Common Stock
that may be issuable by the Holding Company pursuant to any
agreement, or upon exercise of conversion rights, warrants
or options, or otherwise. For all other purposes, the
outstanding Common Stock includes only Common Stock then
outstanding and does not include any Common Stock that may
be issuable by the Holding Company pursuant to any
agreement, or upon the exercise of conversion rights,
warrants or options, or otherwise.
c. The "Limit" means 10% of the then-outstanding shares of Common Stock.
d. A "person" includes an individual, a firm, 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 or any other entity.
The Board of Directors has 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) the number of shares of Common Stock beneficially owned by any person; (ii)
whether a person is an affiliate of another; (iii) whether a person has an
agreement, arrangement, or understanding with another as to the matters referred
to in the definition of beneficial ownership; (iv) 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.
6
The Board of Directors has 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 Holding Company 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; and (ii) any other
factual matter relating to the applicability or effect of this section as may
reasonably be requested of such person.
Except as otherwise provided by law or expressly provided in this Section
6, the presence, in person or by proxy, of the holders of record of shares of
capital stock of the Holding Company entitling the holders thereof to cast a
majority of the votes (after giving effect, if required, to the provisions of
this Section 6) entitled to be cast by the holders of shares of capital stock of
the Holding Company entitled to vote constitutes a quorum at all meetings of the
shareholders, and every reference in this Charter 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 is
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.
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 is
conclusive and binding upon the Holding Company and its shareholders.
In the event any provision (or portion thereof) of this Section 6 is found
to be invalid, prohibited or unenforceable for any reason, the remaining
provisions (or portions thereof) of this Section will remain in full force and
effect, and be construed as if such invalid, prohibited or unenforceable
provision had been stricken from this Section 6 or otherwise rendered
inapplicable, it being the intent of the Holding Company and its shareholders
that each such remaining provision (or portion thereof) of this Section 6
remain, to the extent permitted by law, applicable and enforceable as to all
shareholders, including shareholders owning an amount of stock over the Limit,
notwithstanding any such finding.
SECTION 7. PREEMPTIVE RIGHTS.
Holders of the capital stock of the Holding Company are not entitled to
preemptive rights with respect to any shares of the Holding Company that may be
issued.
SECTION 8. DIRECTORS.
The Holding Company shall be under the direction of a Board of Directors.
The authorized number of directors, as stated in the Holding Company's bylaws,
shall be not be less than five nor more than 15 except when a greater or lesser
number is approved by the Director of the Office, or his or her delegate.
7
SECTION 9. CONDUCT OF BUSINESS.
The following provisions are inserted for the management of the business
and the conduct of the affairs of the Holding Company, and for further
definition, limitation and regulation of the powers of the Holding Company and
of its directors and shareholders:
A. Any action required or permitted to be taken by the shareholders of
the Holding Company must be effected at a duly called annual or special
meeting of shareholders of the Holding Company and may not be effected by
any consent in writing by such shareholders.
B. Special meetings of shareholders of the Holding Company may be
called only by the Board of Directors pursuant to a resolution adopted by a
majority of the Whole Board or as otherwise provided in the Bylaws. The
term "Whole Board" means 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).
SECTION 10. BYLAWS.
The Board of Directors is expressly empowered to adopt, amend or repeal
Bylaws of the Holding Company. Any adoption, amendment or repeal of the Bylaws
of the Holding Company by the Board of Directors requires the approval of a
majority of the Whole Board. The shareholders also have power to adopt, amend
or repeal the Bylaws of the Holding Company by at least a majority of the voting
power of all of the then-outstanding shares of the capital stock of the Holding
Company entitled to vote generally in the election of directors (after giving
effect to the provisions of Section 6), voting together as a single class.
SECTION 11. TENDER AND EXCHANGE OFFERS.
A. The Board of Directors of the Holding Company, when evaluating any
offer of another Person (as hereinafter defined in this Section 11) to: (1)
make a tender or exchange offer for any equity security of the Holding Company;
(2) merge or consolidate the Holding Company with another corporation or entity;
or (3) purchase or otherwise acquire all or substantially all of the properties
and assets of the Holding Company, may, in connection with the exercise of its
judgment in determining what is in the best interest of the Holding Company and
its shareholders, give due consideration to all relevant factors, including,
without limitation, those factors that directors of any subsidiary of the
Holding Company may consider in evaluating any action that may result in a
change or potential change in the control of the subsidiary, and the social and
economic effect of acceptance of such offer: on the Holding Company's present
and future customers and employees and those of its Subsidiaries (as hereinafter
defined ); on the communities in which the Holding Company and its Subsidiaries
operate or are located; on the ability of the Holding Company to fulfill its
corporate objective as a savings and loan holding company under applicable laws
and regulations; and on the ability of its subsidiary savings bank to fulfill
the objectives of a federally-chartered stock form savings bank under applicable
statutes and regulations.
8
B. For the purposes of this Section 11:
1. A "Person" includes an individual, a firm, 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 or any other entity.
2. "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or
indirectly, by the Holding Company.
SECTION 12. AMENDMENT OF CHARTER.
Except as provided in Section 5, no amendment, addition, alteration,
change, or repeal of this charter shall be made, unless such is proposed by the
Board of Directors of the Holding Company, approved by the shareholders by a
majority of the votes eligible to be cast at a legal meeting, unless a higher
vote is otherwise required, and approved or preapproved by the Office.
WEST ESSEX BANCORP, INC.
Attest:________________________ By:_____________________________________
Leopold W. Montanaro
Corporate Secretary President and Chief Executive Officer
OFFICE OF THRIFT SUPERVISION
Attest:________________________ By:_____________________________________
Secretary to the OTS
Declared effective on
the _____ day of __________, 1998
9
ATTACHMENT B-2
BYLAWS OF
WEST ESSEX BANCORP, INC.
ARTICLE I. DOMICILE
The domicile of West Essex Bancorp, Inc. (the "Holding Company") is 417
Bloomfield Avenue, Caldwell, in the County of Essex, in the State of New Jersey.
ARTICLE II. SHAREHOLDERS
Section l. Place of Meetings. All annual and special meetings of
-----------------------------
shareholders shall be held at the home office of the Holding Company or at such
other convenient place as the board of directors may determine.
Section 2. Annual Meeting. A meeting of the shareholders of the Holding
--------------------------
Company for the election of directors and for the transaction of any other
business of the Holding Company shall be held annually within 150 days after the
end of the Holding Company's fiscal year which shall be, unless otherwise
specified by the Board, the third Wednesday of April if not a legal holiday, and
if a legal holiday, then on the next day following which is not a legal holiday,
at 4:00 p.m., or at such other date and time within such 150-day period as the
board of directors may determine.
Section 3. Special Meetings. Special meetings of the shareholders for any
----------------------------
purpose or purposes, unless otherwise prescribed by the regulations of the
Office of Thrift Supervision ("OTS") or the Federal Stock Charter of the Holding
Company, may be called only by the board of directors pursuant to a resolution
adopted by a majority of the total number of directors that the Holding Company
would have if there were no vacancies on the Board of Directors (hereinafter the
"Whole Board").
Section 4. Conduct of Meetings. Annual and special meetings shall be
-------------------------------
conducted by the chairman of the annual or special meeting in accordance with
the written procedures agreed to by the board of directors . The board of
directors shall designate, when present, either the chairman of the board or
president to preside at such meetings.
Section 5. Notice of Meetings. Written notice stating the place, day and
------------------------------
hour of the meeting and the purpose(s) for which the meeting is called shall be
delivered not fewer than 20 nor more than 50 days before the date of the
meeting, either personally or by mail, by or at the direction of the chairman of
the board, the president, the secretary, or the directors calling the meeting,
to each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the mail, addressed to
the shareholder at the address as it appears on the stock transfer books or
records of the Holding Company as of the record date prescribed in Section 6 of
this Article II, with postage prepaid. When any shareholders' meeting, either
annual or special, is adjourned for 30 days or more, notice of the adjourned
meeting shall be given as in the case of an
original meeting. It shall not be necessary to give any notice of the time and
place of any meeting adjourned for less than 30 days or of the business to be
transacted at the meeting, other than an announcement at the meeting at which
such adjournment is taken.
Section 6. Fixing of Record Date. For the purpose of determining
---------------------------------
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment, or shareholders entitled to receive payment of any dividend, or
in order to make a determination of shareholders for any other proper purpose,
the board of directors shall fix in advance a date as the record date for any
such determination of shareholders. Such date in any case shall be not more
than 60 days and, in case of a meeting of shareholders, not fewer than 10 days
prior to the date on which the particular action, requiring such determination
of shareholders, is to be taken; provided, however, that if no record date is
fixed by the Board of Directors, the record date for determining shareholders
entitled to notice of or to vote at a meeting of shareholders 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 next day preceding the day
on which the meeting is held, and, for determining shareholders entitled to
receive payment of any dividend or other distribution or allotment or 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. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this section, such determination shall apply to any
adjournment.
Section 7. Voting Lists. At least 20 days before each meeting of the
------------------------
shareholders, the officer or agent having charge of the stock transfer books for
shares of the Holding Company shall make a complete list of the shareholders
entitled to vote at such meeting, or any adjournment, arranged in alphabetical
order, with the address and the number of shares held by each. This list of
shareholders shall be kept on file at the home office of the Holding Company and
shall be subject to inspection by any shareholder at any time during usual
business hours, for a period of 20 days prior to such meeting. Such list shall
also be produced and kept open at the time and place of the meeting and shall be
subject to the inspection by any shareholder during the entire time of the
meeting. The original stock transfer book shall constitute prima facie evidence
of the shareholders entitled to examine such list or transfer books or to vote
at any meeting of shareholders.
In lieu of making the shareholder list available for inspection by
shareholders as provided in the preceding paragraph, the board of directors may
elect to follow the procedures prescribed in the OTS's Regulations as now or
hereafter in effect.
Section 8. Quorum. A majority of the outstanding shares of the Holding
------------------
Company entitled to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders. If less than a majority of the outstanding
shares is represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the
2
withdrawal of enough shareholders to constitute less than a quorum. If a quorum
is present, the affirmative vote of the majority of the shares represented at
the meeting and entitled to vote on the subject matter shall be the act of the
shareholders, unless the vote of a greater number of shareholders voting
together or voting by classes is required by law or the Holding Company's
charter. Directors, however, are elected by a plurality of the votes cast at an
election of directors.
Section 9. Proxies. At all meetings of shareholders, a shareholder may
-------------------
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney in fact. Proxies may be given telephonically or electronically as long
as the holder uses a procedure for verifying the identity of the shareholder.
Proxies solicited on behalf of the management shall be voted as directed by the
shareholder or, in the absence of such direction, as determined by a majority of
the board of directors. No proxy shall be valid more than eleven months from the
date of its execution except for a proxy coupled with an interest.
Section 10. Voting of Shares in the Name of Two or More Persons. When
----------------------------------------------------------------
ownership stands in the name of two or more persons, in the absence of written
directions to the Holding Company to the contrary, at any meeting of the
shareholders of the Holding Company any one or more of such shareholders may
cast, in person or by proxy, all votes to which such ownership is entitled. In
the event an attempt is made to cast conflicting votes, in person or by proxy,
by the several persons in whose names shares of stock stand, the vote or votes
to which those persons are entitled shall be cast as directed by a majority of
those holding such and present in person or by proxy at such meeting, but no
votes shall be cast for such stock if a majority cannot agree.
Section 11. Voting of Shares by Certain Holders. Shares standing in the
------------------------------------------------
name of another corporation may be voted by any officer, agent or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by him, either in
person or by proxy, without a transfer of such shares into his name. Shares
standing in the name of a trustee may be voted by him, either in person or by
proxy, but no trustee shall be entitled to vote shares held by him without a
transfer of such shares into his name. Shares held in trust in an IRA or Keogh
Account, however, may be voted by the holding company if no other instructions
are received. Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority to do so
is contained in an appropriate order of the court or other public authority by
which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee and
thereafter the pledgee, shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the Holding Company, nor
shares held by another corporation, if a majority of the shares entitled to vote
for the election of directors of such
3
other corporation are held by the Holding Company, shall be voted at any meeting
or counted in determining the total number of outstanding shares at any given
time for purposes of any meeting.
Section 12. No Cumulative Voting. Each holder of shares of common stock
---------------------------------
shall be entitled to one vote for each share held by such holder. No holder of
such shares shall be entitled to cumulative voting for any purpose.
Section 13. Inspectors of Election. In advance of any meeting of
-----------------------------------
shareholders, the board of directors may appoint any persons other than nominees
for office as inspectors of election to act at such meeting or any adjournment.
The number of inspectors shall be either one or three. Any such appointment
shall not be altered at the meeting. If inspectors of election are not so
appointed, the chairman of the board or the president may, or on the request of
not fewer than 10 percent of the votes represented at the meeting shall, make
such appointment at the meeting. If appointed at the meeting, the majority of
the votes present shall determine whether one or three inspectors are to be
appointed. In case any person appointed as inspector fails to appear or fails
or refuses to act, the vacancy may be filled by appointment by the board of
directors in advance of the meeting, or at the meeting by the chairman of the
board or the president.
Unless otherwise prescribed by regulations of the OTS, the duties of such
inspectors shall include: determining the number of shares of stock and the
voting power of each share, the shares represented at the meeting, the existence
of a quorum, and the authenticity, validity and effect of proxies; receiving
votes, ballots, or consents; hearing and determining all challenges and
questions in any way arising in connection with the rights to vote; counting and
tabulating all votes or consents; determining the result; and such acts as may
be proper to conduct the election or vote with fairness to all shareholders.
Section 14. Nominating Committee. The board of directors shall act as a
---------------------------------
nominating committee for selecting the management nominees for election as
directors. Except in the case of a nominee substituted as a result of the death
or other incapacity of a management nominee, the nominating committee shall
deliver written nominations to the secretary at least 30 days prior to the date
of the annual meeting. Upon delivery, such nominations shall be posted in a
conspicuous place in each office of the Holding Company. No nominations for
directors except those made by the nominating committee shall be voted upon at
the annual meeting unless other nominations by shareholders are made in writing
and delivered to the secretary of the Holding Company at least 30 days prior to
the date of the annual meeting. Upon delivery, such nominations shall be posted
in a conspicuous place in each office of the Holding Company. Ballots bearing
the names of all persons nominated by the nominating committee and by
shareholders shall be provided for use at the annual meeting. However, if the
nominating committee shall fail or refuse to act at least 30 days prior to the
annual meeting, nominations for directors may be made at the annual meeting by
any shareholder entitled to vote and shall be voted upon.
Section 15. New Business. At any annual meeting of the shareholders, only
-------------------------
such business shall be conducted as shall have been brought before the meeting
(i) by or at the direction of the
4
Board of Directors or (ii) by any stockholder of the Holding Company who is
entitled to vote with respect thereto and who complies with the notice
procedures set forth in this Section 15. 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 Holding Company. To be timely,
a stockholder's notice must be delivered or mailed to and received at the
principal executive offices of the Holding Company 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 shareholders, 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
Holding Company's books, of the stockholder proposing such business, (iii) the
class and number of shares of the Holding Company'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 15. The Officer of the
Holding Company 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 15 and, if he should so determine, he 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 shareholders, only such business shall be
conducted as shall have been brought before the meeting by or at the direction
of the Board of Directors.
Section 16. Informal Action by Shareholders. Subject to the rights of the
--------------------------------------------
holders of any class or series of preferred stock of the Holding Company, any
action required or permitted to be taken by the shareholders of the Holding
Company must be effected at an annual or special meeting of shareholders of the
Holding Company and may not be effected by any consent in writing by such
shareholders.
ARTICLE III. BOARD OF DIRECTORS
Section l. General Powers. The business and affairs of the Holding
--------------------------
Company shall be under the direction of its board of directors. The board of
directors shall annually elect a chairman of the board and a president from
among its members and shall designate, when present, either the chairman of the
board or the president to preside at its meetings.
Section 2. Number and Term. The board of directors shall consist of six
---------------------------
(6) members and shall be divided into three classes as nearly equal in number as
possible. The members of each class
5
shall be elected for a term of three years and until their successors are
elected and qualified. One class shall be elected by ballot annually.
Section 3. Regular Meetings. A regular meeting of the board of directors
----------------------------
shall be held without other notice than this bylaw immediately after, and at the
same place as, the annual meeting of shareholders. The board of directors may
provide, by resolution, the time and place, for the holding of additional
regular meetings without other notice than such resolution. Directors may
participate in a meeting by means of a conference telephone or similar
communications device through which all persons participating can hear each
other at the same time. Participation by such means shall constitute presence
in person for all purposes.
Section 4. Qualification. Each director shall at all times be the
-------------------------
beneficial owner of not less than 100 shares of capital stock of the Holding
Company unless the Holding Company is a wholly owned subsidiary of a holding
company.
Section 5. Special Meetings. Special meetings of the board of directors
----------------------------
may be called by or at the request of the chairman of the board, the president
or by three of the directors. The persons authorized to call special meetings
of the board of directors may fix any place, as the place for holding any
special meeting of the board of directors called by such persons.
Members of the board of directors may participate in regular and special
meetings by means of conference telephone, or by means of similar communications
equipment by which all persons participating in the meeting can hear and speak
to each other. Such participation shall constitute presence in person for all
purposes.
Section 6. Notice. Written notice of any special meeting shall be given
------------------
to each director at least 24 hours prior thereto when delivered personally or by
telegram, or at least 48 hours prior thereto when delivered by mail at the
address at which the director is most likely to be reached. Such notice shall
be deemed to be delivered when deposited in the mail so addressed, with postage
prepaid if mailed, or when delivered to the telegraph company if sent by
telegram. Any director may waive notice of any meeting by a writing filed with
the secretary. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
Section 7. Quorum. A majority of the number of directors fixed by Section
------------------
2 of this Article III shall constitute a quorum for the transaction of business
at any meeting of the board of directors, but if less than such majority is
present at a meeting, a majority of the directors present may adjourn the
meeting from time to time. Notice of any adjourned meeting shall be given in
the same manner as prescribed by Section 6 of this Article III.
6
Section 8. Manner of Acting. The act of the majority of the directors
----------------------------
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by regulation of the OTS or
by these bylaws.
Section 9. Action Without a Meeting. Any action required or permitted to
------------------------------------
be taken by the board of directors at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the directors.
Section 10. Resignation. Any director may resign at any time by sending a
------------------------
written notice of such resignation to the home office of the Holding Company
addressed to the chairman of the board or secretary. Unless otherwise specified
such resignation shall take effect upon receipt by the chairman of the board or
president. More than three consecutive absences from regular meetings of the
board of directors, unless excused by resolution of the board of directors,
shall automatically constitute a resignation, effective when such resignation is
accepted by the board of directors.
Section 11. Vacancies. Any vacancy occurring in the board of directors
----------------------
may be filled by the affirmative vote of a majority of the remaining directors,
although less than a quorum of the board of directors. A director elected to
fill a vacancy shall be elected to serve until the next election of directors by
the shareholders. Any directorship to be filled by reason of an increase in the
number of directors may be filled by election by the board of directors for a
term of office continuing only until the next election of directors by the
shareholders.
Section 12. Compensation. Directors, as such, may receive a stated fee
-------------------------
for their services. By resolution of the board of directors, a reasonable fixed
sum, and reasonable expenses of attendance, if any, may be allowed for actual
attendance at each regular or special meeting of the board of directors.
Members of either standing or special committees may be allowed such
compensation for actual attendance at committee meetings as the board of
directors may determine.
Section 13. Presumption of Assent. A director of the Holding Company who
----------------------------------
is present at a meeting of the board of directors at which action on any Holding
Company matter is taken shall be presumed to have assented to the action taken
unless his dissent or abstention shall be entered in the minutes of the meeting
or unless he shall file a written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the secretary of the Holding Company within
five days after the date a copy of the minutes of the meeting is received. Such
right to dissent shall not apply to a director who voted in favor of such
action.
Section 14. Removal of Directors. At a meeting of shareholders called
---------------------------------
expressly for that purpose, any director may be removed only for cause by a vote
of the holders of a majority of the shares then entitled to vote at an election
of directors. Whenever the holders of the shares of any class are entitled to
elect one or more directors by the provisions of the Charter or supplemental
sections thereto, the provisions of this section shall apply, in respect to the
removal of a director or
7
directors so elected, to the vote of the holders of the outstanding shares of
that class and not to the vote of the outstanding shares as a whole.
Section 15. Age Limitation for Directors. No person 75 years of age shall
-----------------------------------------
be eligible for election, reelection, appointment or reappointment to the Board
of the Holding Company nor shall any director serve as such beyond the annual
meeting of the Holding Company immediately following the director becoming 75.
This provision does not apply to any director who was serving as a director of
West Essex Bank as of April 19, 1995. This age limitation does not apply to an
advisory director.
ARTICLE IV. EXECUTIVE AND OTHER COMMITTEES
Section l. Appointment. The board of directors, by resolution adopted by
-----------------------
a majority of the full board, may designate the chief executive officer and two
or more of the other directors to constitute an executive committee. The
designation of any committee pursuant to this Article IV and the delegation of
authority shall not operate to relieve the board of directors, or any director,
of any responsibility imposed by law or regulation.
Section 2. Authority. The executive committee, when the board of
---------------------
directors is not in session, shall have and may exercise all of the authority of
the board of directors except to the extent, if any, that such authority shall
be limited by the resolution appointing the executive committee; and except also
that the executive committee shall not have the authority of the board of
directors with reference to: the declaration of dividends; the amendment of the
Charter or bylaws of the Holding Company, or recommending to the shareholders a
plan of merger, consolidation, or conversion; the sale, lease or other
disposition of all or substantially all of the property and assets of the
Holding Company otherwise than in the usual and regular course of its business;
a voluntary dissolution of the Holding Company; a revocation of any of the
foregoing; or the approval of a transaction in which any member of the executive
committee, directly or indirectly, has any material beneficial interest.
Section 3. Tenure. Subject to the provisions of Section 8 of this Article
------------------
IV, the terms of the members of the executive committee shall be set by the
board of directors.
Section 4. Meetings. Regular meetings of the executive committee may be
--------------------
held without notice at such times and places as the executive committee may fix
from time to time by resolution. Special meetings of the executive committee may
be called by any member thereof upon not less than one day's notice stating the
place, date and hour of the meeting, which notice may be written or oral. Any
member of the executive committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the executive committee need not state the business
proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the executive committee
------------------
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the executive
8
committee must be authorized by the affirmative vote of a majority of the
members present at a meeting at which a quorum is present.
Section 6. Action Without a Meeting. Any action required or permitted to
------------------------------------
be taken by the executive committee at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the members of the executive committee.
Section 7. Vacancies. Any vacancy in the executive committee may be
---------------------
filled by a resolution adopted by a majority of the full board of directors.
Section 8. Resignations and Removal. Any member of the executive
------------------------------------
committee may be removed at any time with or without cause by resolution adopted
by a majority of the full board of directors. Any member of the executive
committee may resign from the executive committee at any time by giving written
notice to the president or secretary of the Holding Company. Unless otherwise
specified, such resignation shall take effect upon its receipt; the acceptance
of such resignation shall not be necessary to make it effective.
Section 9. Procedure. The executive committee shall elect a presiding
---------------------
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these bylaws. It shall keep regular minutes of its
proceedings and report the same to the board of directors for its information at
the meeting held next after the proceedings shall have occurred.
Section 10. Other Committees. The board of directors may by resolution
-----------------------------
establish an audit, loan, or other committees composed of directors as they may
determine to be necessary or appropriate for the conduct of the business of the
Holding Company and may prescribe the duties, constitution and procedures
thereof.
ARTICLE V. OFFICERS
Section l. Positions. The officers of the Holding Company shall be a
---------------------
president, one or more vice presidents, a secretary and a treasurer or
comptroller, each of whom shall be elected by the board of directors. The board
of directors may also designate the chairman of the board as an officer. The
president shall be a director of the Holding Company. The offices of the
secretary and treasurer or comptroller may be held by the same person and a vice
president may also be either the secretary or the treasurer or comptroller. The
board of directors may designate one or more vice presidents as executive vice
president or senior vice president. The board of directors may also elect or
authorize the appointment of such other officers as the business of the Holding
Company may require. The officers shall have such authority and perform such
duties as the board of directors may from time to time authorize or determine.
In the absence of action by the board of directors, the officers shall have such
powers and duties as generally pertain to their respective offices.
Section 2. Election and Term of Office. The officers of the Holding
---------------------------------------
Company shall be elected annually at the first meeting of the board of directors
held after each annual meeting of the
9
shareholders. If the election of officers is not held at such meeting, such
election shall be held as soon thereafter as possible. Each officer shall hold
office until a successor has been duly elected and qualified or until the
officer's death, resignation or removal in the manner hereinafter provided.
Election or appointment of an officer, employee or agent shall not of itself
create contractual rights. The board of directors may authorize the Holding
Company to enter into an employment contract with any officer in accordance with
regulations of the OTS; but no such contract shall impair the right of the board
of directors to remove any officer at any time in accordance with Section 3 of
this Article V.
Section 3. Removal. Any officer may be removed by the board of directors
-------------------
whenever in its judgment the best interests of the Holding Company will be
served thereby, but such removal, other than for cause, shall be without
prejudice to the contractual rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
---------------------
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
Section 5. Remuneration. The remuneration of the officers shall be fixed
------------------------
from time to time by the board of directors.
ARTICLE VI. CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section l. Contracts. To the extent permitted by regulations of the OTS,
---------------------
and except as otherwise prescribed by these bylaws with respect to certificates
for shares, the board of directors may authorize any officer, employee, or agent
of the Holding Company to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Holding Company. Such authority
may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the Holding
-----------------
Company and no evidence of indebtedness shall be issued in its name unless
authorized by the board of directors. Such authority may be general or confined
to specific instances.
Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for
--------------------------------
the payment of money, notes or other evidences of indebtedness issued in the
name of the Holding Company shall be signed by one or more officers, employees
or agents of the Holding Company in such manner as shall from time to time be
determined by the board of directors.
Section 4. Deposits. All funds of the Holding Company not otherwise
--------------------
employed shall be deposited from time to time to the credit of the Holding
Company in any duly authorized depositories as the board of directors may
select.
10
ARTICLE VII. CERTIFICATES FOR SHARES
AND THEIR TRANSFER
Section l. Certificates for Shares. Certificates representing shares of
-----------------------------------
capital stock of the Holding Company shall be in such form as shall be
determined by the board of directors and approved by the OTS. Such certificates
shall be signed by the chief executive officer or by any other officer of the
Holding Company authorized by the board of directors, attested by the secretary
or an assistant secretary, and sealed with the corporate seal or a facsimile
thereof. The signatures of such officers upon a certificate may be facsimiles
if the certificate is manually signed on behalf of a transfer agent or a
registrar, other than the Holding Company itself or one of its employees. Each
certificate for shares of capital stock shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares are
issued, with the number of shares and date of issue, shall be entered on the
stock transfer books of the Holding Company. All certificates surrendered to
the Holding Company for transfer shall be cancelled and no new certificate shall
be issued until the former certificate for a like number of shares has been
surrendered and cancelled, except that in case of a lost or destroyed
certificate, a new certificate may be issued upon such terms and indemnity to
the Holding Company as the board of directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of capital stock of the
------------------------------
Holding Company shall be made only on its stock transfer books. Authority for
such transfer shall be given only by the holder of record or by his legal
representative, who shall furnish proper evidence of such authority, or by his
attorney authorized by a duly executed power of attorney and filed with the
Holding Company. Such transfer shall be made only on surrender for cancellation
of the certificate for such shares. The person in whose name shares of capital
stock stand on the books of the Holding Company shall be deemed by the Holding
Company to be the owner for all purposes.
ARTICLE VIII. RELIANCE UPON BOOKS, REPORTS AND RECORDS
Each director, each member of any committee designated by the Board of
Directors, and each officer of the Holding Company 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 Holding Company and upon such information,
opinions, reports or statements presented to the Holding Company 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
Holding Company.
ARTICLE IX. FISCAL YEAR
The fiscal year of the Holding Company shall end on December 31 of each
year. The appointment of accountants shall be subject to annual ratification by
the shareholders.
11
ARTICLE X. DIVIDENDS
Subject to the terms of the Holding Company's Charter and the regulations
and orders of the OTS, the board of directors may, from time to time, declare,
and the Holding Company may pay, dividends on its outstanding shares of capital
stock.
ARTICLE XI. CORPORATE SEAL
The board of directors shall provide a Holding Company seal, which shall be
two concentric circles between which shall be the name of the Holding Company.
The year of incorporation or an emblem may appear in the center.
ARTICLE XII. INDEMNIFICATION
The Holding Company shall indemnify all officers, directors and employees
of the Holding Company, and their heirs, executors and administrators, to the
fullest extent permitted under federal law against all expenses and liabilities
reasonably incurred by them in connection with or arising out of any action,
suit or proceeding in which they may be involved by reason of their having been
a director or officer of the Holding Company, whether or not they continue to be
a director or officer at the time of incurring such expenses or liabilities,
such expenses and liabilities to include, but not be limited to, judgments,
court costs and attorneys' fees and the cost of reasonable settlements.
ARTICLE XIII. AMENDMENTS
These bylaws may be amended in a manner consistent with regulations of the
Office and shall be effective after: (i) approval of the amendment by a
majority vote of the authorized board of directors, or by the affirmative vote
of at least a majority of the voting power of all of the then-outstanding shares
of the capital stock of the Holding Company entitled to vote generally in the
election of directors (after giving effect to the provisions of Section 6 of the
Charter), voting together as a single class. When the Holding Company fails to
meet its quorum requirements, solely due to vacancies on the board, then the
affirmative vote of a majority of the sitting board will be required to amend
the bylaws.
12
ATTACHMENT C-1
FEDERAL STOCK CHARTER
FOR
WEST ESSEX BANK
SECTION 1. CORPORATE TITLE.
The full corporate title of the institution is West Essex Bank.
SECTION 2. OFFICE.
The home office shall be located in Caldwell in the State of New Jersey.
SECTION 3. DURATION.
The duration of the BANK is perpetual.
SECTION 4. PURPOSE AND POWERS.
The purpose of the BANK is to pursue any or all of the lawful objectives of
a Federal savings association chartered under Section 5 of the Home Owners' Loan
Act and to exercise all the express, implied, and incidental powers conferred
thereby and by all acts amendatory thereof and supplemental thereto, subject to
the Constitution and laws of the United States as they are now in effect, or as
they may hereafter be amended, and subject to all lawful and applicable rules,
regulations, and orders of the Office of Thrift Supervision ("Office").
SECTION 5. CAPITAL STOCK.
The total number of shares of all classes of the capital stock which the
BANK has authority to issue is ten million shares (10,000,000), of which nine
million shares (9,000,000) shall be common stock, par value $1.00 per share and
of which one million shares (1,000,000) shall be preferred stock, par value
$1.00 per share. The shares may be issued from time to time as authorized by
the Board of Directors without further approval of shareholders except as
otherwise provided in this Section 5 or to the extent that such approval is
required by governing law, rule, or regulation. The consideration for the
issuance of the shares shall be paid in full before their issuance and shall not
be less than the par value. Neither promissory notes nor future services shall
constitute payment or part payment for the issuance of shares of the BANK. The
consideration for the shares shall be cash, tangible or intangible property (to
the extent direct investment in such property would be permitted), labor or
services actually performed for the BANK, or any combination of the foregoing.
In the absence of actual fraud in the transaction, the value of such property,
labor, or services, as determined by the Board of Directors of the BANK, shall
be conclusive. Upon payment of such consideration, such shares shall be deemed
to be fully paid and nonassessable. In the case of a stock dividend, that part
of the surplus of the BANK which is transferred to stated capital upon the
issuance of shares as a share dividend shall be deemed to be the consideration
for their issuance.
Except for the initial offering of shares of the BANK, no shares of capital
stock (including shares issuable upon conversion, exchange, or exercise of other
securities) shall be issued, directly or indirectly, to officers, directors, or
controlling persons of the BANK other than as part of a general public offering
or as qualifying shares to a director, unless their issuance or the plan under
which they would be issued has been approved by a majority of the total votes
eligible to be cast at a legal meeting.
Nothing contained in this Section 5 (or in any supplementary sections
hereto) shall entitle the holders of any class or series of capital stock to
vote as a separate class or series or to more than one vote per share:
provided, that this restriction on voting separately by class or series shall
- --------
not apply:
(i) To any provision which would authorize the holders of preferred stock,
voting as a class or series, to elect some members of the Board of
Directors, less than a majority thereof, in the event of default in
the payment of dividends on any class or series of preferred stock;
(ii) To any provision which would require the holders of preferred stock,
voting as a class or series, to approve the merger or consolidation of
the BANK with another corporation or the sale, lease, or conveyance
(other than by mortgage or pledge) of properties or business in
exchange for securities of a corporation other than the BANK if the
preferred stock is exchanged for securities of such other corporation:
Provided, that no provision may require such approval for transactions
undertaken with the assistance or pursuant to the direction of the
Office, the Federal Deposit Insurance Corporation;
(iii)To any amendment which would adversely change the specific terms of
any class or series of capital stock as set forth in this Section 5
(or in any supplementary sections hereto), including any amendment
which would create or enlarge any class or series ranking prior
thereto in rights and preferences. An amendment which increases the
number of authorized shares of any class or series of capital stock,
or substitutes the surviving BANK in a merger or consolidation for the
BANK, shall not be considered to be such an adverse change.
A description of the different classes and series (if any) of the BANK's
capital stock and a statement of the designations, and the relative rights,
preferences, and limitations of the shares of each class of and series (if any)
of capital stock are as follows:
I-2
A. Common Stock. Except as provided in this Section 5 (or in any
------------
supplementary sections hereto) the holders of the common stock shall
exclusively possess all voting power. Each holder of shares of common
stock shall be entitled to one vote for each share held by such
holder.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of
stock having preference over the common stock as to the payment of
dividends, the full amount of dividends and of sinking fund, or
retirement fund, or other retirement payments, if any, to which such
holders are respectively entitled in preference to the common stock,
then dividends may be paid on the common stock and on any class or
series of stock entitled to participate therewith as to dividends out
of any assets legally available for the payment of dividends.
In the event of any liquidation, dissolution, or winding up of the
BANK, the holders of the common stock (and the holders of any class or
series of stock entitled to participate with the common stock in the
distribution of assets) shall be entitled to receive, in cash or in
kind, the assets of the BANK available for distribution remaining
after: (i) payment or provision for payment of the BANK's debts and
liabilities; (ii) distributions or provision for distributions in
settlement of its liquidation account; and (iii) distributions or
provision for distributions to holders of any class or series of stock
having preference over the common stock in the liquidation,
dissolution, or winding up of the BANK. Each share of common stock
shall have the same relative rights as and be identical in all
respects with all the other shares of common stock.
B. Preferred Stock. The BANK may provide in supplementary sections to
---------------
its charter for one or more classes of preferred stock, which shall be
separately identified. The shares of any class may be divided into
and issued in series, with each series separately designated so as to
distinguish the shares thereof from the shares of all other series and
classes. The terms of each series shall be set forth in a
supplementary section to the charter. All shares of the same class
shall be identical except as to the following relative rights and
preferences, as to which there may be variations between different
series:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and,
if so, from which date(s), the payment date(s) for dividends, and
the participating or other special rights, if any, with respect
to dividends;
I-3
(c) The voting powers, full or limited, if any, of the shares of such
series;
(d) Whether the shares of such series shall be redeemable and, if so,
the price(s) at which, and the terms and conditions on which,
such shares may be redeemed;
(e) The amount(s) payable upon the shares of such series in the event
of voluntary or involuntary liquidation, dissolution, or winding
up of the BANK;
(f) Whether the shares of such series shall be entitled to the
benefit of a sinking or retirement fund to be applied to the
purchase or redemption of such shares, and if so entitled, the
amount of such fund and the manner of its application, including
the price(s) at which such shares may be redeemed or purchased
through the application of such fund;
(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock
of the BANK and, if so, the conversion price(s) or the rate(s) of
exchange, and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
(h) The price or other consideration for which the shares of such
series shall be issued; and
(i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial
preferred stock and whether such shares may be reissued as shares
of the same or any other series of serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative rights as and be identical in all respects with all the other shares of
the same series.
The Board of Directors shall have authority to divide, by the adoption of
supplementary charter sections, any authorized class of preferred stock into
series, and, within the limitations set forth in this section and the remainder
of this charter, fix and determine the relative rights and preferences of the
shares of any series so established.
Prior to the issuance of any preferred shares of a series established by a
supplementary charter section adopted by the Board of Directors, the BANK shall
file with the Secretary of the Office a dated copy of that supplementary section
of this charter establishing and designating the series and fixing and
determining the relative rights and preferences thereof.
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SECTION 6. PREEMPTIVE RIGHTS.
Holders of the capital stock of the BANK shall not be entitled to
preemptive rights with respect to any shares of the BANK which may be issued.
SECTION 7. BENEFICIAL OWNERSHIP PROVISION
Notwithstanding anything contained in the BANK's charter or bylaws to the
contrary, for a period of five years from the date of this charter, no person
other than West Essex Bancorp, M.H.C. or West Essex Bancorp, Inc., the parent
holding company of the BANK, shall directly or indirectly offer to acquire or
acquire the beneficial ownership of more than 10 percent of any class of any
equity security of the BANK. This limitation shall not apply to a transaction
in which the BANK forms a holding company without change in the respective
beneficial ownership interests of the BANK's shareholders other than pursuant to
the exercise of any dissenter and appraisal rights, the purchase of shares by
underwriters in connection with a public offering, or the purchase of shares by
a tax-qualified employee stock benefit plan which is exempt from the approval
requirements under Section 574.3(c)(1)(vi) of the Office's Regulations.
In the event shares are acquired in violation of this Section 7, all shares
beneficially owned by any person in excess of 10% shall be considered "excess
shares" and shall not be counted as shares entitled to vote and shall not be
voted by any person or counted as voting shares in connection with any matters
submitted to the shareholders for a vote.
For the purposes of this Section 7, the following definitions apply:
(i) The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint
stock company, a trust, any unincorporated organization or
similar company, a syndicate or any other group formed for the
purpose of acquiring, holding or disposing of the equity
securities of the BANK.
(ii) The term "offer" includes every offer to buy or otherwise
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.
(iv) The term "acting in concert" means (a) knowing participation in a
joint activity or conscious parallel action towards a common goal
whether or not pursuant to an express agreement, or (b) a
combination or pooling of voting or other interests in the
securities of an issuer for a common purpose pursuant
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to any contract, understanding, relationship, agreement or other
arrangement, whether written or otherwise.
SECTION 8. CUMULATIVE VOTING LIMITATION
Shareholders shall not be permitted to cumulate their votes for the
election of directors.
SECTION 9. CALL FOR SPECIAL MEETINGS
Special meetings of shareholders relating to changes in control of the BANK
or amendments to its charter shall be called only at the direction of the Board
of Directors.
SECTION 10. DIRECTORS.
The BANK shall be under the direction of a Board of Directors. The
authorized number of directors, as stated in the BANK's bylaws, shall be not be
less than five nor more than 15 except when a greater number is approved by the
Director of the Office.
SECTION 11. AMENDMENT OF CHARTER.
Except as provided in Section 5 hereof, no amendment, addition, alteration,
change, or repeal of this charter shall be made, unless such is first proposed
by the Board of Directors of the BANK, approved by the shareholders by a
majority of the total votes eligible to be cast at a legal meeting, unless a
higher vote us otherwise required, and approved or preapproved by the Office.
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As adopted by the BANK's members on _______________, 199_, to be effective
on the date of the reorganization of the BANK.
WEST ESSEX BANK
Attest:______________________ By:_____________________________________
Leopold W. Montanaro
Corporate Secretary President and Chief Executive Officer
OFFICE OF THRIFT SUPERVISION
Attest:______________________ By:_____________________________________
Secretary to the Office
Declared effective on
the _____ day of __________, 1998
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ATTACHMENT C-2
BYLAWS OF
WEST ESSEX BANK
ARTICLE I. HOME OFFICE
The home office of West Essex Bank ("BANK") is 417 Bloomfield Avenue,
Caldwell, in the County of Essex, in the State of New Jersey.
ARTICLE II. SHAREHOLDERS
Section l. Place of Meetings. All annual and special meetings of
-----------------------------
shareholders shall be held at the home office of the BANK or at such other place
in the State in which the principal place of business of the BANK is located as
the board of directors may determine.
Section 2. Annual Meeting. A meeting of the shareholders of the BANK for
--------------------------
the election of directors and for the transaction of any other business of the
BANK shall be held annually within 150 days after the end of the BANK's fiscal
year which shall be, unless otherwise specified by the Board, the third
Wednesday of April if not a legal holiday, and if a legal holiday, then on the
next day following which is not a legal holiday, at 4:00 p.m., or at such other
date and time within such 150-day period as the board of directors may
determine.
Section 3. Special Meetings. Special meetings of the shareholders for any
----------------------------
purpose or purposes, unless otherwise prescribed by the regulations of the
Office of Thrift Supervision ("OTS") or the Federal Stock Charter of the BANK,
may be called at any time by the chairman of the board, the president, or a
majority of the board of directors, and shall be called by the chairman of the
board, the president or the secretary upon the written request of the holders of
not less than one-tenth of all the outstanding capital stock of the BANK
entitled to vote at the meeting. Such written request shall state the purpose
or purposes of the meeting and shall be delivered at the home office of the BANK
addressed to the chairman of the board, the president or the secretary.
Section 4. Conduct of Meetings. Annual and special meetings shall be
-------------------------------
conducted by the chairman of the annual or special meeting in accordance with
the written procedures agreed to by the board of directors. The board of
directors shall designate, when present, either the chairman of the board or
president to preside at such meetings.
Section 5. Notice of Meetings. Written notice stating the place, day and
------------------------------
hour of the meeting and the purpose(s) for which the meeting is called shall be
delivered not fewer than 20 nor more than 50 days before the date of the
meeting, either personally or by mail, by or at the direction of the chairman of
the board, the president, the secretary, or the directors calling the meeting,
to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the mail, addressed to the
shareholder at the address as it appears on the stock transfer books or records
of the BANK as of the record date prescribed in Section 6 of this Article II,
with postage prepaid. When any shareholders' meeting, either annual or special,
is adjourned for 30 days or more, notice of the adjourned meeting shall be given
as in the case of an original meeting. It shall not be necessary to give any
notice of the time and place of any meeting adjourned for less than 30 days or
of the business to be transacted at the meeting, other than an announcement at
the meeting at which such adjournment is taken.
Section 6. Fixing of Record Date. For the purpose of determining
---------------------------------
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment, or shareholders entitled to receive payment of any dividend, or
in order to make a determination of shareholders for any other proper purpose,
the board of directors shall fix in advance a date as the record date for any
such determination of shareholders. Such date in any case shall be not more
than 60 days and, in case of a meeting of shareholders, not fewer than 10 days
prior to the date on which the particular action, requiring such determination
of shareholders, is to be taken. When a determination of shareholders entitled
to vote at any meeting of shareholders has been made as provided in this
section, such determination shall apply to any adjournment.
Section 7. Voting Lists. At least 20 days before each meeting of the
------------------------
shareholders, the officer or agent having charge of the stock transfer books for
shares of the BANK shall make a complete list of the shareholders entitled to
vote at such meeting, or any adjournment, arranged in alphabetical order, with
the address and the number of shares held by each. This list of shareholders
shall be kept on file at the home office of the BANK and shall be subject to
inspection by any shareholder at any time during usual business hours, for a
period of 20 days prior to such meeting. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection by any shareholder during the entire time of the meeting. The
original stock transfer book shall constitute prima facie evidence of the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
In lieu of making the shareholder list available for inspection by
shareholders as provided in the preceding paragraph, the board of directors may
elect to follow the procedures prescribed in the OTS's Regulations as now or
hereafter in effect.
Section 8. Quorum. A majority of the outstanding shares of the BANK
------------------
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
is represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to constitute less than a quorum. If a quorum is present, the
affirmative vote of the majority of the shares represented at the meeting and
entitled to vote on the
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subject matter shall be the act of the shareholders, unless the vote of a
greater number of shareholders voting together or voting by classes is required
by law or the charter. Directors, however, are elected by a plurality of the
votes cast at an election of directors.
Section 9. Proxies. At all meetings of shareholders, a shareholder may
-------------------
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney in fact. Proxies may be given telephonically or electronically as long
as the holder uses a procedure for verifying the identity of the shareholder.
Proxies solicited on behalf of the management shall be voted as directed by the
shareholder or, in the absence of such direction, as determined by a majority of
the board of directors. No proxy shall be valid more than eleven months from the
date of its execution except for a proxy coupled with an interest.
Section 10. Voting of Shares in the Name of Two or More Persons. When
----------------------------------------------------------------
ownership stands in the name of two or more persons, in the absence of written
directions to the BANK to the contrary, at any meeting of the shareholders of
the BANK any one or more of such shareholders may cast, in person or by proxy,
all votes to which such ownership is entitled. In the event an attempt is made
to cast conflicting votes, in person or by proxy, by the several persons in
whose names shares of stock stand, the vote or votes to which those persons are
entitled shall be cast as directed by a majority of those holding such and
present in person or by proxy at such meeting, but no votes shall be cast for
such stock if a majority cannot agree.
Section 11. Voting of Shares by Certain Holders. Shares standing in the
------------------------------------------------
name of another corporation may be voted by any officer, agent or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by him, either in
person or by proxy, without a transfer of such shares into his name. Shares
held in trust in an IRA or Keogh Account, however, may be voted by the
association if no other instructions are received. Shares standing in the name
of a trustee may be voted by him, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him without a transfer of such shares
into his name. Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority to do so
is contained in an appropriate order of the court or other public authority by
which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee and
thereafter the pledgee, shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the BANK, nor shares held
by another corporation, if a majority of the shares entitled to vote for the
election of directors of such other corporation are held by the BANK, shall be
voted at any meeting or counted in determining the total number of outstanding
shares at any given time for purposes of any meeting.
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Section 12. No Cumulative Voting. Each holder of shares of common stock
---------------------------------
shall be entitled to one vote for each share held by such holder. No holder of
such shares shall be entitled to cumulative voting for any purpose.
Section 13. Inspectors of Election. In advance of any meeting of
-----------------------------------
shareholders, the board of directors may appoint any persons other than nominees
for office as inspectors of election to act at such meeting or any adjournment.
The number of inspectors shall be either one or three. Any such appointment
shall not be altered at the meeting. If inspectors of election are not so
appointed, the chairman of the board or the president may, or on the request of
not fewer than 10 percent of the votes represented at the meeting shall, make
such appointment at the meeting. If appointed at the meeting, the majority of
the votes present shall determine whether one or three inspectors are to be
appointed. In case any person appointed as inspector fails to appear or fails
or refuses to act, the vacancy may be filled by appointment by the board of
directors in advance of the meeting, or at the meeting by the chairman of the
board or the president.
Unless otherwise prescribed by regulations of the OTS, the duties of such
inspectors shall include: determining the number of shares of stock and the
voting power of each share, the shares represented at the meeting, the existence
of a quorum, and the authenticity, validity and effect of proxies; receiving
votes, ballots, or consents; hearing and determining all challenges and
questions in any way arising in connection with the rights to vote; counting and
tabulating all votes or consents; determining the result; and such acts as may
be proper to conduct the election or vote with fairness to all shareholders.
Section 14. Nominating Committee. The board of directors shall act as a
---------------------------------
nominating committee for selecting the management nominees for election as
directors. Except in the case of a nominee substituted as a result of the death
or other incapacity of a management nominee, the nominating committee shall
deliver written nominations to the secretary at least 30 days prior to the date
of the annual meeting. Upon delivery, such nominations shall be posted in a
conspicuous place in each office of the BANK. No nominations for directors
except those made by the nominating committee shall be voted upon at the annual
meeting unless other nominations by shareholders are made in writing and
delivered to the secretary of the BANK at least thirty days prior to the date of
the annual meeting. Upon delivery, such nominations shall be posted in a
conspicuous place in each office of the BANK. Ballots bearing the names of all
persons nominated by the nominating committee and by shareholders shall be
provided for use at the annual meeting. However, if the nominating committee
shall fail or refuse to act at least 30 days prior to the annual meeting,
nominations for directors may be made at the annual meeting by any shareholder
entitled to vote and shall be voted upon.
Section 15. New Business. At an annual meeting of shareholders, only such
-------------------------
business shall be conducted, and only such proposals shall be acted upon, as
shall have been properly brought before the meeting. For any business proposed
by management to be properly brought before the annual meeting, such business
shall be approved by the board of directors, either directly or through its
approval of proxy solicitation materials related thereto, and shall be stated in
writing and filed with the secretary at least 30 days before the date of the
annual meeting, and all business so stated, proposed and filed shall be
considered at the annual meeting. Any shareholder may make any other proposal
at the annual meeting and the same may be discussed and considered but unless
stated in writing and filed
II-4
with the secretary at least ten days before the meeting, such proposal shall be
laid over for action at an adjourned, special or annual meeting of the
shareholders taking place 30 days or more thereafter. A shareholder's notice to
the secretary shall set forth as to each matter the shareholder proposed to
bring before the annual meeting (a) a brief description of the proposal desired
to be brought before the annual meeting, (b) the business, as well as the name
and address of such shareholder and the class and number of shares of the BANK
which are owned of record by such shareholder.
Section 16. Informal Action by Shareholders. Any action required to be
--------------------------------------------
taken at a meeting of shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if consent in
writing, setting forth the action so taken, shall be given by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III. BOARD OF DIRECTORS
Section l. General Powers. The business and affairs of the BANK shall be
--------------------------
under the direction of its board of directors. The board of directors shall
annually elect a chairman of the board and a president from among its members
and shall designate, when present, either the chairman of the board or the
president to preside at its meetings.
Section 2. Number and Term. The board of directors shall consist of six
---------------------------
(6) members and shall be divided into three classes as nearly equal in number as
possible. The members of each class shall be elected for a term of three years
and until their successors are elected and qualified. One class shall be
elected by ballot annually.
Section 3. Regular Meetings. A regular meeting of the board of directors
----------------------------
shall be held without other notice than this bylaw immediately after, and at the
same place as, the annual meeting of shareholders. The board of directors may
provide, by resolution, the time and place, for the holding of additional
regular meetings without other notice than such resolution. Directors may
participate in a meeting by means of a conference telephone or similar
communications device through which all persons participating can hear each
other at the same time. Participation by such means shall constitute presence
in person for all purposes.
Section 4. Qualification. Each director shall at all times be the
-------------------------
beneficial owner of not less than 100 shares of capital stock of the BANK unless
the BANK is a wholly owned subsidiary of a holding company.
Section 5. Special Meetings. Special meetings of the board of directors
----------------------------
may be called by or at the request of the chairman of the board, the president
or a majority of the directors. The
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persons authorized to call special meetings of the board of directors may fix
any place, as the place for holding any special meeting of the board of
directors called by such persons.
Members of the board of directors may participate in special meetings by
means of conference telephone, or by means of similar communications equipment
by which all persons participating in the meeting can hear and speak to each
other. Such participation shall constitute presence in person for all purposes.
Section 6. Notice. Written notice of any special meeting shall be given
------------------
to each director at least two days prior thereto when delivered personally or by
telegram, or at least five days prior thereto when delivered by mail at the
address at which the director is most likely to be reached. Such notice shall
be deemed to be delivered when deposited in the mail so addressed, with postage
prepaid if mailed, or when delivered to the telegraph company if sent by
telegram. Any director may waive notice of any meeting by a writing filed with
the secretary. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
Section 7. Quorum. A majority of the number of directors fixed by Section
------------------
2 of this Article III shall constitute a quorum for the transaction of business
at any meeting of the board of directors, but if less than such majority is
present at a meeting, a majority of the directors present may adjourn the
meeting from time to time. Notice of any adjourned meeting shall be given in
the same manner as prescribed by Section 6 of this Article III.
Section 8. Manner of Acting. The act of the majority of the directors
----------------------------
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by regulation of the OTS or
by these bylaws.
Section 9. Action Without a Meeting. Any action required or permitted to
------------------------------------
be taken by the board of directors at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the directors.
Section 10. Resignation. Any director may resign at any time by sending a
------------------------
written notice of such resignation to the home office of the BANK addressed to
the chairman of the board or president. Unless otherwise specified such
resignation shall take effect upon receipt by the chairman of the board or
president. More than three consecutive absences from regular meetings of the
board of directors, unless excused by resolution of the board of directors,
shall automatically constitute a resignation, effective when such resignation is
accepted by the board of directors.
Section 11. Vacancies. Any vacancy occurring in the board of directors
----------------------
may be filled by the affirmative vote of a majority of the remaining directors,
although less than a quorum of the board
II-6
of directors. A director elected to fill a vacancy shall be elected to serve
until the next election of directors by the shareholders. Any directorship to be
filled by reason of an increase in the number of directors may be filled by
election by the board of directors for a term of office continuing only until
the next election of directors by the shareholders.
Section 12. Compensation. Directors, as such, may receive a stated fee
-------------------------
for their services. By resolution of the board of directors, a reasonable fixed
sum, and reasonable expenses of attendance, if any, may be allowed for actual
attendance at each regular or special meeting of the board of directors.
Members of either standing or special committees may be allowed such
compensation for actual attendance at committee meetings as the board of
directors may determine.
Section 13. Presumption of Assent. A director of the BANK who is present
----------------------------------
at a meeting of the board of directors at which action on any BANK matter is
taken shall be presumed to have assented to the action taken unless his dissent
or abstention shall be entered in the minutes of the meeting or unless he shall
file a written dissent to such action with the person acting as the secretary of
the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the BANK within five days after the date a
copy of the minutes of the meeting is received. Such right to dissent shall not
apply to a director who voted in favor of such action.
Section 14. Removal of Directors. At a meeting of shareholders called
---------------------------------
expressly for that purpose, any director may be removed for cause by a vote of
the holders of a majority of the shares then entitled to vote at an election of
directors. Whenever the holders of the shares of any class are entitled to
elect one or more directors by the provisions of the Charter or supplemental
sections thereto, the provisions of this section shall apply, in respect to the
removal of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class and not to the vote of the outstanding shares
as a whole.
Section 15. Age Limitation for Directors. No person 75 years of age shall
-----------------------------------------
be eligible for election, reelection, appointment or reappointment to the Board
of the BANK nor shall any director serve as such beyond the annual meeting of
the BANK immediately following the director becoming 75. This age limitation
does not apply to an advisory director. This age limitation does not apply to
an advisory director. It is specifically understood that the age limitation set
forth herein for any Director of the Board in office as of April 19, 1995 shall
not apply.
ARTICLE IV. EXECUTIVE AND OTHER COMMITTEES
Section l. Appointment. The board of directors, by resolution adopted by
-----------------------
a majority of the full board, may designate the chief executive officer and two
or more of the other directors to constitute an executive committee. The
designation of any committee pursuant to this Article IV and the delegation of
authority shall not operate to relieve the board of directors, or any director,
of any responsibility imposed by law or regulation.
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Section 2. Authority. The executive committee, when the board of
---------------------
directors is not in session, shall have and may exercise all of the authority of
the board of directors except to the extent, if any, that such authority shall
be limited by the resolution appointing the executive committee; and except also
that the executive committee shall not have the authority of the board of
directors with reference to: the declaration of dividends; the amendment of the
Charter or bylaws of the BANK, or recommending to the shareholders a plan of
merger, consolidation, or conversion; the sale, lease or other disposition of
all or substantially all of the property and assets of the BANK otherwise than
in the usual and regular course of its business; a voluntary dissolution of the
BANK; a revocation of any of the foregoing; or the approval of a transaction in
which any member of the executive committee, directly or indirectly, has any
material beneficial interest.
Section 3. Tenure. Subject to the provisions of Section 8 of this Article
------------------
IV, the terms of the members of the executive committee shall be set by the
board of directors.
Section 4. Meetings. Regular meetings of the executive committee may be
--------------------
held without notice at such times and places as the executive committee may fix
from time to time by resolution. Special meetings of the executive committee may
be called by any member thereof upon not less than one day's notice stating the
place, date and hour of the meeting, which notice may be written or oral. Any
member of the executive committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the executive committee need not state the business
proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the executive committee
------------------
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the executive committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
Section 6. Action Without a Meeting. Any action required or permitted to
------------------------------------
be taken by the executive committee at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the members of the executive committee.
Section 7. Vacancies. Any vacancy in the executive committee may be
---------------------
filled by a resolution adopted by a majority of the full board of directors.
Section 8. Resignations and Removal. Any member of the executive
------------------------------------
committee may be removed at any time with or without cause by resolution adopted
by a majority of the full board of directors. Any member of the executive
committee may resign from the executive committee at any time by giving written
notice to the president or secretary of the BANK. Unless otherwise specified,
such resignation shall take effect upon its receipt; the acceptance of such
resignation shall not be necessary to make it effective.
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Section 9. Procedure. The executive committee shall elect a presiding
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officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these bylaws. It shall keep regular minutes of its
proceedings and report the same to the board of directors for its information at
the meeting held next after the proceedings shall have occurred.
Section 10. Other Committees. The board of directors may by resolution
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establish an audit, loan, or other committees composed of directors as they may
determine to be necessary or appropriate for the conduct of the business of the
BANK and may prescribe the duties, constitution and procedures thereof.
ARTICLE V. OFFICERS
Section l. Positions. The officers of the BANK shall be a president, one
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or more vice presidents, a secretary and a treasurer or chief financial officer,
each of whom shall be elected by the board of directors. The board of directors
may also designate the chairman of the board as an officer. The president shall
be the chief executive officer, unless the board of directors designates the
chairman of the board as chief executive officer. The president shall be a
director of the BANK. The offices of the secretary and treasurer or chief
financial officer may be held by the same person and a vice president may also
be either the secretary or the treasurer or chief financial officer. The board
of directors may designate one or more vice presidents as executive vice
president or senior vice president. The board of directors may also elect or
authorize the appointment of such other officers as the business of the BANK may
require. The officers shall have such authority and perform such duties as the
board of directors may from time to time authorize or determine. In the absence
of action by the board of directors, the officers shall have such powers and
duties as generally pertain to their respective offices.
Section 2. Election and Term of Office. The officers of the BANK shall be
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elected annually at the first meeting of the board of directors held after each
annual meeting of the shareholders. If the election of officers is not held at
such meeting, such election shall be held as soon thereafter as possible. Each
officer shall hold office until a successor has been duly elected and qualified
or until the officer's death, resignation or removal in the manner hereinafter
provided. Election or appointment of an officer, employee or agent shall not of
itself create contractual rights. The board of directors may authorize the BANK
to enter into an employment contract with any officer in accordance with
regulations of the OTS; but no such contract shall impair the right of the board
of directors to remove any officer at any time in accordance with Section 3 of
this Article V.
Section 3. Removal. Any officer may be removed by the board of directors
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whenever in its judgment the best interests of the BANK will be served thereby,
but such removal, other than for cause, shall be without prejudice to the
contractual rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
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resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
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Section 5. Remuneration. The remuneration of the officers shall be fixed
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from time to time by the board of directors.
ARTICLE VI. CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section l. Contracts. To the extent permitted by regulations of the OTS,
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and except as otherwise prescribed by these bylaws with respect to certificates
for shares, the board of directors may authorize any officer, employee, or agent
of the BANK to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the BANK. Such authority may be general or
confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the BANK and
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no evidence of indebtedness shall be issued in its name unless authorized by the
board of directors. Such authority may be general or confined to specific
instances.
Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for
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the payment of money, notes or other evidences of indebtedness issued in the
name of the BANK shall be signed by one or more officers, employees or agents of
the BANK in such manner as shall from time to time be determined by the board of
directors.
Section 4. Deposits. All funds of the BANK not otherwise employed shall
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be deposited from time to time to the credit of the BANK in any duly authorized
depositories as the board of directors may select.
ARTICLE VII. CERTIFICATES FOR SHARES
AND THEIR TRANSFER
Section l. Certificates for Shares. Certificates representing shares of
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capital stock of the BANK shall be in such form as shall be determined by the
board of directors and approved by the OTS. Such certificates shall be signed
by the chief executive officer or by any other officer of the BANK authorized by
the board of directors, attested by the secretary or an assistant secretary, and
sealed with the corporate seal or a facsimile thereof. The signatures of such
officers upon a certificate may be facsimiles if the certificate is manually
signed on behalf of a transfer agent or a registrar, other than the BANK itself
or one of its employees. Each certificate for shares of capital stock shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the BANK. All
certificates surrendered to the BANK for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares has been surrendered and cancelled, except that in case of a lost or
destroyed certificate, a new certificate may be issued upon such terms and
indemnity to the BANK as the board of directors may prescribe.
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Section 2. Transfer of Shares. Transfer of shares of capital stock of the
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BANK shall be made only on its stock transfer books. Authority for such
transfer shall be given only by the holder of record or by his legal
representative, who shall furnish proper evidence of such authority, or by his
attorney authorized by a duly executed power of attorney and filed with the
BANK. Such transfer shall be made only on surrender for cancellation of the
certificate for such shares. The person in whose name shares of capital stock
stand on the books of the BANK shall be deemed by the BANK to be the owner for
all purposes.
ARTICLE VIII. FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the BANK shall end on December 31 of each year. The
appointment of accountants shall be subject to annual ratification by the
shareholders.
ARTICLE IX. DIVIDENDS
Subject to the terms of the BANK's Charter and the regulations and orders
of the OTS, the board of directors may, from time to time, declare, and the BANK
may pay, dividends on its outstanding shares of capital stock.
ARTICLE X. CORPORATE SEAL
The board of directors shall provide a BANK seal, which shall be two
concentric circles between which shall be the name of the BANK. The year of
incorporation or an emblem may appear in the center.
ARTICLE XI. INDEMNIFICATION
The BANK shall indemnify all officers, directors and employees of the BANK,
and their heirs, executors and administrators, to the fullest extent permitted
under federal law against all expenses and liabilities reasonably incurred by
them in connection with or arising out of any action, suit or proceeding in
which they may be involved by reason of their having been a director or officer
of the BANK, whether or not they continue to be a director or officer at the
time of incurring such expenses or liabilities, such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements. Any payments made to any officer or
director pursuant to this Section are subject to and conditioned upon compliance
with the rules or regulations of the OTS.
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ARTICLE XII. AMENDMENTS
These bylaws may be amended in a manner consistent with regulations of the
OTS and shall be effective after: (i) approval of the amendment by a majority
vote of the full board of directors, or by a majority vote of the votes cast by
the shareholders of the BANK at any legal meeting, and (ii) receipt of any
applicable regulatory approval. When the BANK fails to meet its quorum
requirement, solely due to vacancies on the board, then the affirmative vote of
a majority of the sitting board will be required to amend the bylaws.
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