CERTIFICATE OF DESIGNATION
OF
$0.005 GOODWILL CONVERTIBLE PREFERRED STOCK,
OF
ARGO BANCORP, INC.
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Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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Argo Bancorp, Inc., a Delaware corporation DOES HEREBY CERTIFY that
pursuant to the authority contained in Article Five, Paragraph B of its Amended
and Restated Certificate of Incorporation, and in accordance with the provision
of Section 151 of the General Corporation Law of the State of Delaware, its
Board of Directors adopted the following resolution creating a series of its
Preferred Stock designated as $0.005 Goodwill Convertible Preferred Stock
RESOLVED: that, pursuant to authority conferred upon the Board of Directors
of Argo Bancorp, Inc., (the "Company") by the Amended and Restated Certificate
of Incorporation of the Company (the "Certificate of Incorporation"), the Board
of Directors hereby creates and hereby authorizes the issuance of 592,681 shares
of Preferred Stock of the Company, and hereby fixes the designations, powers,
preferences and relative, participating optional or other special rights and the
qualifications, limitations or restrictions thereof, of such shares, in addition
to those set forth in the Certificate of Incorporation, as follows:
1. Designation and Amount. The shares of the Goodwill Convertible
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Preferred Stock shall be designated as "$0.005 Goodwill Convertible Preferred
Stock, and the number of shares shall be 592,681.
2. Preference on Liquidation. In the event of any dissolution,
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liquidation or winding up of the affairs of the Company, after payment or
provision for payment of any remaining conversion or liquidation accounts
together with the debts and other liabilities of the Company, the holders of
Goodwill Convertible Preferred Stock shall be entitled to receive the applicable
redemption price on each outstanding share of Goodwill Convertible Preferred
Stock, out of the net assets of the Company and before any distribution shall be
made to the holders of the Common Stock or to the holders of any other class of
stock or series thereof ranking junior to the Goodwill Convertible Preferred
Stock in the distribution of assets.
If upon such voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company the net assets of the Company shall be
insufficient to permit payment in full of the amounts required to be paid to the
holders of the Goodwill Convertible Preferred Stock and
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to the holders of any class of stock or series thereof ranking on a parity with
the Goodwill Convertible Preferred Stock in respect of the distribution of
assets, then the holders of Goodwill Convertible Preferred Stock and the holders
of any class of stock or series thereof ranking on a parity with the Goodwill
Convertible Preferred Stock in respect of the distribution of assets shall share
ratably, in any distribution of assets other than by way of dividends in the
proportion that the sum payable on each share bears to the aggregate of the
amounts so payable on all shares of Preferred Stock.
After such amount is paid in full, no further distributions or payments
shall be made in respect of the Goodwill Convertible Preferred Stock, such
Preferred Stock shall no longer be deemed to be outstanding or be entitled to
any privilege of exchange or conversion or to any other preferences, rights or
privileges, and such Preferred Stock shall be surrendered for cancellation to
any transfer agent for such Preferred Stock or to the Company. Once any portion
(less than all) of such distribution or payment is made to any holder of the
Goodwill Convertible Preferred Shares, there shall not be any conversion rights
in respect of such Preferred Shares pursuant to Paragraph 5, below, unless the
full amount of such distributions and payments in respect of such Preferred
Shares being converted is remitted to the Company, without interest, prior to or
contemporaneously with the conversion of such Preferred Shares.
Nothing herein contained shall be deemed to prevent redemption of Goodwill
Convertible Preferred Stock by the Company in the manner provided in Paragraph
3, below. Neither the merger nor consolidation of the Company into or with any
other corporation, nor the merger or consolidation of any other corporation into
or with the Company, nor a sale, transfer or lease of all or any part of the
assets of the Company, shall be deemed to be a dissolution, liquidation or
winding up of the Company within the meaning of this Paragraph 2.
Written notice of any voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, stating a payment date and the place
where the distribution amounts shall be payable and containing a statement of or
reference to the conversion right set forth in Paragraph 5 below, shall be given
by mail, postage prepaid, at least thirty (30) days but not more than sixty (60)
days prior to the payment date stated therein, to the holders of record of the
Goodwill Convertible Preferred Stock at their respective addresses as the same
shall appear on the books of the Company.
3. Redemption. The Company shall have the right, at its option and by
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resolution of its Board of Directors, to redeem any of the outstanding shares of
Goodwill Convertible Preferred Stock, for a period of ninety (90) days following
the receipt of the announcement date (the "Announcement Date") of a final
resolution of the pending civil action and associated damage awards, if any,
including any and all appeals or petitions for certiorari (the "Goodwill
Settlement") in the Company's goodwill litigation (the "Litigation"), upon
notice given as hereinafter specified and upon payment in cash in respect of
each share redeemed at a redemption price determined as follows: The redemption
price per share shall be determined by multiplying the Goodwill Settlement minus
expenses related to the Goodwill Litigation and expenses related to the issuance
of the Goodwill Convertible Preferred Stock by 75% and dividing the product
determined thereby by the number of shares of Goodwill Convertible
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Preferred Stock, hereinafter the "Valuation Amount." To the extent that the
Company receives all or a portion of the Goodwill Settlement in the form of non-
cash proceeds, the Company shall obtain an independent third party appraisal as
to the fair market value of the non-cash proceeds which shall be used to
calculate the value of the Goodwill Settlement. The Company shall provide to
each holder of Goodwill Convertible Preferred Stock financial and other
documentation reasonably sufficient to support the valuation of such non-cash
proceeds. To the extent that any portion of the Goodwill Settlement is received
by the Company prior to final resolution of the Goodwill Settlement, the Company
shall place 75% of such portion of the Goodwill Settlement in an escrow account
pending final resolution of the Goodwill Settlement. In the event of dismissal,
adverse judgment or an award of damages consisting exclusively of non-cash
proceeds with a fair market value of less than $250,000 after the conclusion of
the Litigation, each share of Goodwill Convertible Preferred Stock shall be
redeemed at par value.
Notice of any redemption specifying the date fixed for said redemption and
the place where the amount to be paid upon redemption is payable shall be
mailed, postage prepaid, at least thirty (30) days but not more than sixty (60)
days prior to said redemption date to the holders of record of the Goodwill
Convertible Preferred Stock to be redeemed at their respective addresses as the
same shall appear on the books of the Company. If such notice of redemption
shall have been so mailed, and if on or before the redemption date specified in
such notice all funds necessary for such redemption shall have been set aside by
the Company separate and apart from its other funds, in trust for the benefit of
the holders of the shares so to be redeemed, so as to be and continue
notwithstanding that any certificate for shares of the Goodwill Convertible
Preferred Stock so called for redemption shall not have been surrendered for
cancellation, the shares represented thereby so called for redemption shall be
deemed to be no longer outstanding, or if such notice of redemption shall have
been so mailed, and if prior to the date of redemption specified in such notice
said fund shall be deposited in trust, for the benefit of the holders of the
shares of Goodwill Convertible Preferred Stock to be redeemed (and so as to be
and continue to be available therefor), with a bank or trust company organized
in good standing under the laws of the United States of America or any state
thereof, named in such notice having capital, surplus and undivided profits of
at least $5,000,000 according to its last published Statement of Condition
thereupon and without awaiting the redemption date all shares of Goodwill
Convertible Preferred Stock with respect to which such notice shall have been so
mailed and such deposit shall have been so made shall be deemed to be no longer
outstanding, and all rights with respect to such shares of Goodwill Convertible
Preferred Stock shall forthwith upon such separation or deposit in trust cease
and terminate, except only the right of the holders thereof on or after the
redemption date to receive from such deposit the amount payable on the
redemption thereof, but without interest. In the event the holders of shares of
Goodwill Convertible Preferred Stock which shall have been redeemed shall not
within six years after the redemption date claim any amount so deposited in
trust for the redemption of such shares, such bank or trust company shall upon
demand pay over to the Company any such unclaimed amount so deposited with it,
and shall thereupon be relieved of all responsibility in respect thereof, Any
interest accrued on such funds shall be paid to the Company from time to time.
To the extent that the Goodwill Settlement is paid to the Company in
installments, and the Company exercises its option to redeem such shares
pursuant to this paragraph 3, the amount
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of the Goodwill Settlement for purposes of determining the Valuation Amount
shall be determined by calculating the present value of the installment payment
obligations to be made to the Company. Once the Goodwill Convertible Preferred
Stock is redeemed based upon such present value calculation, the holders of the
Goodwill Convertible Preferred Stock shall not be entitled to any further rights
with respect to the future installment payments.
Any provision of this Paragraph 3 to the contrary notwithstanding, the
Company shall not redeem any shares of Goodwill Convertible Preferred Stock
unless all outstanding shares of Goodwill Convertible Preferred Stock are
simultaneously redeemed in accordance with the provision of this Paragraph 3 and
the Company shall not purchase or otherwise acquire any shares of Goodwill
Convertible Preferred Stock except in accordance with a purchase offer made by
the Company on the same terms to all holders of record of Goodwill Convertible
Preferred Stock.
4. Voting Rights. The holders of the Goodwill Convertible Preferred Stock
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shall have no voting power except as set forth in Paragraph 4 and Paragraph
8(b)(2) herein.
(A) So long as the shares of any Goodwill Convertible Preferred Stock are
outstanding, the Company shall not:
(i) without the consent of the holders of at least two-thirds (2/3) of the
number of shares of Goodwill Convertible Preferred Stock at the time
outstanding:
(a) create or authorize an additional class of stock ranking prior to the
Goodwill Convertible Preferred Stock in respect to distribution of assets
on liquidation; or
(b) increase the authorized amount of any additional class of stock
ranking prior to the Goodwill Convertible Preferred Stock in respect to
distribution of assets on liquidation; or
(c) create or authorize any obligation or security convertible into or
evidencing the right to purchase shares of stock of any additional class
ranking prior to the Goodwill Convertible Preferred Stock in respect to
distribution of assets on liquidation; or
(ii) without the consent of the holders of at least two-thirds (2/3) of the
number of shares of Goodwill Convertible Preferred Stock at the time
outstanding:
(a) amend, alter or repeal any of the provisions of Article 5 of the
Certificate of Incorporation or of this Certificate so as to affect
adversely the rights, powers or preferences of the Goodwill Convertible
Preferred Stock; or
(b) authorize any merger or consolidation of the Company if the Company is
not the surviving corporation, unless the terms of the merger or
consolidation
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require that the holders of the Goodwill Convertible Preferred Stock
receive securities of the surviving corporation having the same terms and
preferences as the Goodwill Convertible Preferred Stock.
(c) authorize the sale, lease or conveyance (other than by mortgage or
pledge) of all or substantially all of the Company's properties or
business in exchange for securities of another corporation unless the terms
of the sale, lease or conveyance require that the holders of the Goodwill
Convertible Preferred Stock receive securities of the surviving corporation
having the same terms and preferences as the Goodwill Convertible Preferred
Stock.
Any vote or consent required or permitted by this Subparagraph (A) may be given
in person or by proxy, either in writing or by vote at an annual or special
meeting called therefor.
(B) Any action specified in this Paragraph 4 as requiring the consent of
the specified proportion of the votes of the shares of the preferred stock at
the time outstanding or represented at a meeting may be taken with such consent
and with such additional vote or consent, if any, of stockholders as may be from
time to time required by law.
(C) For purposes of the voting rights set forth in this Paragraph 4, the
holders of the Goodwill Convertible Preferred Stock shall be entitled to one
vote for each share of Goodwill Convertible Preferred Stock held.
5. Convertibility. In the event that the Company determines not to redeem
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the shares of Goodwill Convertible Preferred Stock in accordance with the terms
of Paragraph 3, the Company shall so notify each holder of record of the
Goodwill Convertible Preferred Stock at their respective offices as the same
shall appear on the books of the Company. In such case, shares of the Goodwill
Convertible Preferred Stock (hereinafter in this Paragraph 5 called the
"Shares") shall be convertible into Common Stock for a period commencing on the
first day of the next succeeding fiscal quarter of the Company and for a period
of ninety (90) (days thereafter on the following terms and conditions):
(A) Subject to and upon compliance with the provisions of this Paragraph 5,
holders of Shares may at such holder's option convert any such Shares into such
number of fully paid and non-assessable shares of Common Stock as are issuable
pursuant to the formula set forth in subparagraphs (C) and (D) of this Paragraph
5.
(B) The surrender of any Shares for conversion shall be made by the holder
thereof to the Company at the office of the Conversion Agent for the Goodwill
Convertible Preferred Stock, and such holder shall give written notice to the
Company at said office that such holder elects to convert such Shares in
accordance with the provisions thereof and this Paragraph 5. Such notice also
shall state the name or names (with addresses) in which the certificate or
certificates for Common Stock which shall be issuable on such conversion shall
be issued. Subject to the provisions of subparagraph (A) of this Paragraph 5,
every such notice of election to convert shall constitute a contract between the
holder of such Shares and the Company,
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whereby such holder shall be deemed to subscribe for the number of shares of
Common Stock which such holder will be entitled to receive upon such conversion
and, in payment and satisfaction of such subscription, to surrender such Shares
and to release the Company from all obligations thereon, and whereby the Company
shall be deemed to agree that the surrender of such Shares and the
extinguishment of its obligations thereon shall constitute full payment for the
Common Stock so subscribed for and to be issued upon such conversion.
In the event that any Shares that are eligible for conversion shall not
have been surrendered for conversion prior to the date on which Common Stock
issuable pursuant to such conversion would otherwise escheat to or become the
property of any governmental unit or agency, the unclaimed Common Stock shall,
to the extent permitted by abandoned property and any other applicable law,
become the property of the Company (and to the extent not in its possession
shall be paid over to it), free and clear of all claims or interest of any
person previously entitled to such claims, and at such time the outstanding
Shares shall be deemed to be canceled and all rights thereunder forfeited.
Notwithstanding the foregoing, neither the Company, the Conversion Agent or any
other person shall be liable to any former holder of Shares for any amount
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
As soon as practicable after the receipt of such notice and Shares, the
Company shall issue and shall deliver at said office of the Conversion Agent to
the person for whose account such Shares were so surrendered, or on such
holder's written order, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Shares and a check
or cash for the payment (if any) to which such person is entitled pursuant to
subparagraph (E) of the Paragraph 5. Such conversion shall be deemed to have
been effected on the date on which the Company shall have received such notice
and such Shares, and the person or persons in whose name or names any
certificate or certificates for Common Stock shall be issuable upon such
conversion shall be deemed to have become on said date the holder or holders of
record of the shares represented thereby.
(C) Each share of Goodwill Convertible Preferred Stock shall be convertible
into that number of shares of common stock determined by dividing the Valuation
Amount by the current market value of the Company's Common Stock, as defined in
subsection (D)(5) of this Paragraph 5, on the Announcement Date plus accrued and
unpaid dividends as of such date. For purposes of this Section, if the Goodwill
Settlement is to be payable to the Company in installment payments, the amount
of the Goodwill Settlement for purposes of determining the Valuation Amount
shall be determined by calculating the present value of the installment payment
obligations to be made to the Company. Once the Goodwill Convertible Preferred
Stock becomes convertible based upon such present value calculations, the
holders of the Goodwill Convertible Preferred Stock shall not be entitled to any
further rights with respect to the future installment payments.
(D) The Conversion Rate shall be subject to adjustment from time to time as
follows:
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(1) If the Company shall (i) pay a dividend on its Common Stock in shares
of the Company or distribute shares of the Company, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of
shares, or (iv) issue by reclassification of its shares of Common Stock
(whether pursuant to a merger or consolidation or otherwise) any shares of
its capital stock, then the Conversion Rate in effect immediately prior
thereto shall be adjusted so that the holder of a Share surrendered for
conversion after the record date fixing stockholders to be affected by such
event shall be entitled to receive upon conversion the number of such
shares of the Company which such holder would have been entitled to receive
after the happening of such event had such Shares been converted
immediately prior to such record date. Such adjustment shall be made
whenever any of such events shall happen, and shall also be effective
retroactively as to Shares converted between such record date and the date
of the happening of any such event.
(2) If the Company shall issue rights or warrants to the holders of its
Common Stock entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the then Current Market Price per
share of Common Stock (as defined in subsection (D)(5) of this Paragraph 5)
on the record date for determination of shareholders entitled to receive
such rights or warrants, the number of shares of Common Stock into which
each Share shall thereafter be convertible shall be determined by
multiplying the number of shares of Common Stock into which such Shares
were theretofore convertible by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common
Stock offered for subscription or purchase, and the denominator of which
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of shares of Common
Stock which the aggregate offering price of the total number of Shares so
offered would purchase at such Current Market Price (as defined in
subsection (D)(5) of this Paragraph 5). For the purposes of this
subdivision (2), the issuance of rights or warrants to subscribe for or
purchase shares or securities convertible into Common Stock shall be deemed
to be the issuance of rights or warrants to purchase the Common Stock into
which such Shares or securities are convertible at an aggregate offering
price equal to the aggregate offering price of such shares or securities
plus the minimum aggregate amount (if any) payable upon conversion of such
Shares or securities into Common Stock. Such adjustment shall be made
whenever such rights or warrants are issued and shall also be effective
retroactively as to Shares converted between the record date for the
determination of stockholders entitled to receive such rights or warrants
and the date such rights or warrants are issued.
(3) If the Company shall distribute to the holders of its Common Stock
(whether pursuant to a merger or consolidation or otherwise) evidence of
its
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indebtedness or assets (excluding cash dividends or distributions made out
of current or retained earnings), capital stock other than Common Stock or
rights or warrants to subscribe other than as referred to in subsection
(D)(2) of this Paragraph 5, then in each such case the number of shares of
Common Stock into which each Share shall thereafter be convertible shall be
determined by multiplying the number of shares of Common Stock into which
such Share was theretofore convertible by a fraction, the numerator of
which shall be the Current Market Price per share of Common Stock (as
defined in subsection (D)(5) of this Paragraph 5) on the date of such
distribution, and the denominator of which shall be such Current Market
Price per share of the Common Stock, less the then fair market value (as
determined by the Board of Directors of the Company, whose determination
shall be conclusive and described in a statement filed with the Conversion
Agent maintained by the Company pursuant to subparagraph (B) of this
paragraph 5) of the portion of the assets, or capital stock or cash or
evidence of indebtedness, subscription rights or warrants so distributed
applicable to one share of the Common Stock. Such adjustment shall be made
whenever any such distribution is made, and shall also be effective
retroactively as to the Shares converted between the record date for the
determination of stockholders entitled to receive such distribution and the
date such distribution is made.
(4) Notwithstanding the foregoing, in the event of any consolidation or
merger of the Company (including, without limitation, a merger in which the
Company is the surviving corporation), or in the event of any sale,
conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Company to another corporation, or in the case of
any reorganization of the Company, or reclassifications or changes of the
shares of Common Stock, the holder of each Share then outstanding upon
exercise of the conversion privilege thereof shall have the right
thereafter to convert such Share into the kind and amount of shares of
stock and other securities and property, including cash, which would have
been deliverable to such holder upon such consolidation, merger, sale,
conveyance, exchange, transfer or reorganization if such holder had
converted such holder's Shares into Common Stock immediately prior to such
consolidation, merger, sale, conveyance, exchange, transfer or
reorganization. In any such event, effective provision shall be made in
the instrument effecting or providing for such consolidation, merger, sale,
conveyance, exchange, transfer or reorganization so that the provisions set
forth herein for the protection of the conversion rights of the Shares
shall thereafter be applicable- as nearly as may be practicable, in
relation to any shares of stock or other securities or property including
cash, deliverable after such consolidation, merger, sale, conveyance,
exchange, transfer or reorganization upon the conversion of the Goodwill
Convertible Preferred Stock, or such other securities as shall have been
issued to the holders thereof in lieu thereof or in exchange therefor. The
provisions of this subsection (D)(4) shall similarly apply to successive
consolidations, mergers, sales, leases, conveyances, exchanges, transfers
and reorganizations.
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(5) For the purpose of any computation under Section C above and subsection
(D)(2) and (D)(3) of this paragraph 5, (i) the "Current Market Price" per
share of Common Stock at any date shall be deemed to be, when used in
connection with the Common Stock on a certain date, the average of the high
and low sales prices of the Common Stock as reported by the American Stock
Exchange ("AMEX") or the New York Stock Exchange ("NYSE") or other national
securities exchange which is the primary trading market for such Common
Stock or the average of the high and low bid prices of the Common Stock as
reported by Nasdaq Stock Market ("NASDAQ") if the NASDAQ serves as the
primary trading market for the Common Stock, each as published in the Wall
Street Journal, if published, on such date or, if the Common Stock was not
traded on such date, on the next preceding day on which the Common Stock
was traded thereon or the last previous date on which a sale was reported.
If the Common Stock is not traded on a national securities exchange or the
NASDAQ, the Fair Market Value of the Common Stock is the value so
determined by the Board in good faith.
(6) No adjustment in the Conversion Rate shall be required unless such
adjustment would require an increase or decrease of at least one percent
(1%) in such Rate, subject to an adjustment in the event the Company issues
a stock dividend in Common Stock or subdivides or combines the outstanding
shares of Common Stock; provided, however, that any adjustments which by
reason of this subsection (D)(6) are not required to be, and are not, made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this subsection (D)(6) shall be made to
the nearest cent or one-hundredth of a share, as the case may be.
(E) No fractional shares or scrip representing fractional shares shall be
issued upon the conversion of any Shares. If more than one Share shall be
surrendered for conversion at one time by the same holder, the number of full
shares issuable upon conversion thereof shall be computed on the basis of the
aggregate number of such shares so surrendered. If the conversion of any Shares
results in a fraction, an amount equal to such fraction multiplied by the
Current Market Price (determined as provided in subsection (D)(5) of this
Paragraph 5) of the Common Stock shall be paid to such holder in cash by the
Company.
(F) If any Share shall be called for redemption, any right to convert such
Share shall immediately terminate.
(G) The Shares shall be deemed to have been converted and the person
converting the same to have become the holder of record of Common Stock, for the
purpose of receiving dividends and for all other purposes whatever, as of the
date when a certificate or certificates for such Shares are surrendered to the
Company as aforesaid.
(H) The Company shall pay any and all taxes which may be imposed upon it
with respect to the issuance and delivery of Common Stock upon the conversion of
the Shares as
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herein provided. The Company shall not, however, be required to
pay any transfer or other taxes which may be payable in respect of any transfer
involved in the issue and delivery of stock in a name other than that of the
holder of the Shares converted, and the Company shall not be required to issue
or deliver any such stock certificate unless and until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of any
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
(I) If in any case a state of facts occurs wherein in the opinion of the
Board of Directors the other provisions of this Paragraph 5 are not strictly
applicable, or if strictly applicable, would not fairly protect the conversion
rights of the Shares in accordance with the essential intent and principles of
such provisions, then the Board of Directors shall make an adjustment in the
application of such provisions in accordance with such essential intent and
principles so as to protect such conversion rights as aforesaid.
(J) The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Goodwill Convertible Preferred
Stock, such number of its shares of Common stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Goodwill
Convertible Preferred Stock, and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Goodwill Convertible Preferred Stock, the
Company shall take such action as may be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose, including without limitation, engaging in best
efforts to obtain the requisite stockholder approval of any necessary amendment
to the Certificate of Incorporation.
(K) Shares converted shall not be reissued as Shares but: shall assume the
status of authorized but unissued shares of preferred stock of the Company.
(L) For the purposes of this Paragraph 5:
(1) "Conversion Rate" at any time shall mean the amount of Common Stock of
the Company into which at such time one Share shall be convertible in
accordance with the provisions of this Paragraph 5.
(2) "Common Stock" shall mean stock of the Company of any class, whether
now or hereafter authorized, which has the right to participate in the
distribution of either earnings or assets of the Company without limit or
preference as to the amount or percentage. If by reason of the operation
of subsection (D)(4) of this Paragraph 5 the Shares shall be convertible
into any other shares of stock or other securities or property of the
Company or of any other corporation, any reference herein to the conversion
of Shares will be a reference to a conversion into such other shares of
stock or other securities or property.
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(3) "Conversion Agent" shall mean Harris Bank & Trust Co. So long as
shares of Goodwill Convertible Preferred Stock remain outstanding, the
Company shall maintain such an agency for the purposes contemplated by this
Paragraph 5.
6. Certain Shareholder Rights. The parties agree the Company is obligated
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to either redeem the Goodwill Convertible Preferred Stock or convert the
Goodwill Convertible Preferred Stock into common stock. However, applicable
laws, rules, regulations, directives to the terms of any judgment or settlement
may limit or prevent the Company from redeeming the Preferred Shares or
converting the preferred Shares into common shares. In any such event, the
Company shall distribute or convert such portion of the Goodwill Settlement (on
a pro rata basis), in each case to the extent not otherwise restricted under
applicable laws, rules, regulations, directives or the terms of any judgment or
settlement. The Company has a continuing obligation pursuant hereto to redeem or
convert the balance of the Preferred Stock and distribute the balance of any
Goodwill Settlement which it has been precluded from paying as soon as
permissible under applicable laws, rules, regulations, directives or the terms
of any judgment or settlement.
7. Litigation. The Litigation will be supervised by a committee (the
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Litigation Committee) appointed by the Board of Directors of the Company. The
Litigation Committee will supervise the litigation, and have the power to
replace counsel, if necessary.
8. Successors.
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(a) The Company's claims against the Government that are the basis for the
litigation are, and shall remain, an asset of the Company. In the event of any
acquisition, merger, or consolidation of the Company in which the Company will
not be the surviving entity, the Company shall require its respective successors
to assume, and such respective successors shall assume, the rights and
obligations of the Company under this Certificate.
(b) (1) To the extent that the Company enters into a definitive agreement
providing for the acquisition, merger, or consolidation of the Company in which
the Company is not the surviving entity (the "Acquisition Agreement"), such
Acquisition Agreement shall be required to specifically incorporate and provide
for the terms set forth in this section 8(b).
(2) Effective upon consummation of the transaction contemplated by the
Acquisition Agreement, the Company (or any successors thereto) shall create a
Litigation Trust (the "Litigation Trust"). The Litigation Trust shall be a
statutory business trust treated under Delaware Law pursuant to a Declaration of
Trust and the filing of a Certificate of Trust with the Delaware Secretary of
State. The Litigation Trust shall have three trustees designated by the
shareholders as follows: by a vote of the holders of a majority of the number of
Goodwill Convertible Preferred Stock at the time outstanding.
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(3) Effective upon consummation of the transaction contemplated by the
Acquisition Agreement, the Company (or any successor thereto) shall be
contractually obligated to assume all duties and obligations of the Company with
respect to the Goodwill Settlement and the redemption or conversion of the
Preferred Stock.
(4) Effective upon consummation of the transaction contemplated by the
Acquisition Agreement, the Litigation Trustees shall assume authority, identical
to and succeeding to the Litigation Committee, to make all decisions on behalf
of the Company (and its successors) with respect to the prosecution of the
Litigation and in any ancillary litigation, including the selection and
supervision of existing, and any new, counsel or other persons retained to
assist in the prosecution of the Litigation or in any ancillary litigation, and
deciding whether or not to accept any settlement offer. Without prejudice to
any rights of the holders of the Goodwill Convertible Preferred Stock, the
Litigation Trustee shall have the authority to bring suit on behalf of the
holders of the Goodwill Convertible Preferred Stock to enforce any provision of
this Certificate for the benefit of the holders of the Goodwill Convertible
Preferred Stock, including the redemption or conversion of the Preferred Stock.
The Company, or its successors as the case may be, will pay the expenses, costs
or fees incurred by the Litigation Trustee for the administration and management
of the litigation. The Litigation Trustee shall seek reimbursement by the
Company, or its successors as the case may be, for expenses, costs, or fees
reasonably incurred for their own administration and management of the
Litigation and any ancillary litigation. Any such reimbursement by the Company,
or its successors as the case may be, shall be deducted from the Goodwill
Settlement.
(5) Nothing in this agreement is intended to create rights in the Preferred
Shareholders against the United States, except as such parties may have had
prior to the date of this agreement or may have by operation of law.
9. Sinking Fund. No sinking funds shall be established for the retirement
------------
or redemption of the Goodwill Convertible Preferred Stock.
10. Restrictions and Transferability. Each certificate representing the
--------------------------------
Goodwill Convertible Preferred Stock, and, if appropriate, securities issued
upon conversion thereof, shall be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required by
applicable state securities or "blue sky" laws):
THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS, OFFERED OR SOLD PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENT OF THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS, AND ARGO BANCORP, INC. SHALL HAVE RECEIVED
AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH
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SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
The restrictions on transfer contained in Paragraph 10 shall be in addition to,
and not by way of limitation of, any other restrictions on transfer contained in
any other section of this Certificate. In general, subject to the restrictions
on transfer contained in this Certificate, each share of Goodwill Convertible
Preferred Stock may be offered for resale, resold and otherwise transferred by
any holder of such Goodwill Convertible Preferred Stock (other than any such
holder which is an "affiliate" of the Registrant within the meaning of Rule 405
under the Security Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Goodwill
Convertible Preferred Stock are acquired in the ordinary course of such holder's
business, such holder has no arrangement or understanding with any person to
participate in the distribution of such Goodwill Convertible Preferred Stock and
neither the holder nor any other person is engaging in or intends to engage in a
distribution of the Goodwill Convertible Preferred Stock.
-13-
IN WITNESS WHEREOF, ARGO BANCORP, INC. has caused its corporate seal to be
affixed and this Supplemental Charter Section to be signed by its Chairman and
its Secretary, this 31st day of August, 1998.
ARGO BANCORP, INC.
By /s/ John G. Yedinak
---------------------------
John G. Yedinak, Chairman
By /s/ Frances M. Pitts
---------------------------
Frances M. Pitts
Secretary
(SEAL)
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