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Exhibit 99.5
MEDFORD SAVINGS BANK
29 HIGH STREET
MEDFORD, MASSACHUSETTS 02155
TELEPHONE (617) 395-7700
Dear Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders
(the "Special Meeting") of Medford Savings Bank (the "Bank") to be held at Five
High Street, Suite 202, Medford, Massachusetts, at 10:00 a.m., local time, on
Tuesday, September 16, 1997.
The Special Meeting has been called for the following purposes:
1. To consider and vote upon the formation of a holding company for the
Bank by approval of a Plan of Reorganization and Acquisition, dated as
of July 29, 1997 (the "Plan of Reorganization") between the Bank and
Medford Bancorp, Inc. ("Bancorp"), a newly-formed Massachusetts
corporation organized at the direction of the Bank, and each of the
transactions contemplated thereby, pursuant to which the Bank will
become a wholly owned subsidiary of Bancorp, and each issued and
outstanding share of common stock of the Bank, par value $0.50 per
share (together with associated preferred stock purchase rights), other
than shares held by stockholders, if any, exercising dissenters'
rights, will be converted into and exchanged for one share of common
stock of Bancorp, par value $0.50 (together with associated preferred
stock purchase rights) per share (the "Reorganization"). A copy of the
Plan of Reorganization is attached as Exhibit A to the accompanying
Proxy Statement; and
2. To transact such other business as may properly come before the meeting
and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on July 31, 1997 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Special Meeting.
THE BOARD OF DIRECTORS OF THE BANK RECOMMENDS THAT AT THE SPECIAL MEETING
YOU VOTE "FOR" PROPOSAL ONE.
Very truly yours,
/s/ Arthur H. Meehan
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ARTHUR H. MEEHAN
Chairman, President and Chief
Executive Officer
August 4, 1997
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE COMPLETE
AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
SPECIAL MEETING AND DESIRE TO WITHDRAW YOUR PROXY AND VOTE IN PERSON, YOU MAY DO
SO.
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MEDFORD SAVINGS BANK
29 HIGH STREET
MEDFORD, MASSACHUSETTS 02155
TELEPHONE (617) 395-7700
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 16, 1997
Notice Is Hereby Given that the Special Meeting of Stockholders (the
"Special Meeting") of Medford Savings Bank (the "Bank") will be held at Five
High Street, Suite 202, Medford, Massachusetts, at 10:00 a.m., local time, on
Tuesday, September 16, 1997, for the following purposes:
1. To consider and vote upon the formation of a holding company for the
Bank by approval of a Plan of Reorganization and Acquisition, dated as
of July 29, 1997 (the "Plan of Reorganization") between the Bank and
Medford Bancorp, Inc. ("Bancorp"), a newly-formed Massachusetts
corporation organized at the direction of the Bank, and each of the
transactions contemplated thereby, pursuant to which the Bank will
become a wholly owned subsidiary of Bancorp, and each issued and
outstanding share of common stock of the Bank, par value $0.50 per
share ("Bank Common Stock") (together with associated preferred stock
purchase rights), other than shares held by stockholders, if any,
exercising dissenters' rights, will be converted into and exchanged for
one share of common stock of Bancorp, par value $0.50 per share
(together with associated preferred stock purchase rights) (the
"Reorganization"). A copy of the Plan of Reorganization is attached as
Exhibit A to the accompanying Proxy Statement; and
2. To transact such other business as may properly come before the meeting
and any adjournments or postponements thereof.
Pursuant to the By-laws, the Board of Directors has fixed the close of
business on July 31, 1997 as the record date for the determination of
stockholders entitled to notice of and to vote at the Special Meeting.
Any holder of Bank Common Stock (i) who files with the Bank before the
taking of the vote on the approval of the Plan of Reorganization written
objection to the Plan of Reorganization, stating that he or she intends to
demand payment for his shares if the Reorganization is consummated, and (ii)
whose shares are not voted in favor of the Plan of Reorganization has or may
have the right to demand in writing from the Bank, within 20 days after the date
of mailing to him or her of notice in writing that the Reorganization has become
effective, payment for his or her shares and an appraisal of the value thereof.
The Bank and any such stockholder shall follow the procedures set forth in
Sections 86 to 98, inclusive, of Chapter 156B of the General Laws of
Massachusetts. See "Proposal One -- Formation of Holding Company -- Rights of
Dissenting Stockholders" in the accompanying Proxy Statement for a description
of procedures to be followed to exercise such rights. A copy of certain
provisions of the General Laws of Massachusetts relating to the rights of
dissenting stockholders is attached as Exhibit B to the accompanying Proxy
Statement.
The above matters are described in detail in the accompanying Proxy
Statement.
By Order of the Board of Directors
/s/ Eugene R. Murray
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EUGENE R. MURRAY
Clerk
August 4, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE SPECIAL MEETING AND DESIRE TO WITHDRAW YOUR PROXY AND VOTE IN PERSON,
YOU MAY DO SO.
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MEDFORD SAVINGS BANK
29 HIGH STREET
MEDFORD, MASSACHUSETTS 02155
TELEPHONE (617) 395-7700
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PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 16, 1997
VOTING, REVOCATION, AND SOLICITATION OF PROXIES
SPECIAL MEETING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Medford Savings Bank (the "Bank") for use
at the Special Meeting of Stockholders of the Bank to be held at Five High
Street, Suite 202, Medford, Massachusetts, at 10:00 a.m., local time, on
Tuesday, September 16, 1997, and any adjournments or postponements thereof (the
"Special Meeting"), for the purposes set forth in this Proxy Statement.
At the Special Meeting, stockholders of the Bank will be asked to consider
and vote upon the following matters:
1. To consider and vote upon the formation of a holding company for the
Bank by approval of the Plan of Reorganization and Acquisition, dated
as of July 29, 1997 (the "Plan of Reorganization") between the Bank and
Medford Bancorp, Inc. ("Bancorp"), a newly-formed Massachusetts
corporation organized at the direction of the Bank, and each of the
transactions contemplated thereby, pursuant to which a newly formed
Massachusetts corporation will be organized at the direction of the
Bank, the Bank will become a wholly owned subsidiary of Bancorp, and
each issued and outstanding share of common stock of the Bank, par
value $0.50 per share ("Bank Common Stock")(together with associated
preferred stock purchase rights), other than shares held by
stockholders, if any, exercising dissenters' rights, will be converted
into and exchanged for one share of common stock of Bancorp, par value
$0.50 per share ("Bancorp Common Stock")(together with associated
preferred stock purchase rights) (the "Reorganization"). A copy of the
Plan of Reorganization is attached as Exhibit A to the accompanying
Proxy Statement; and
2. To transact such other business as may properly come before the meeting
and any adjournments or postponements thereof.
RECORD DATE
This Proxy Statement is first being mailed to stockholders of the Bank on
or about August 4, 1997, in connection with the solicitation of proxies for the
Special Meeting. The Board of Directors (the "Board") has fixed the close of
business on July 31, 1997 as the record date for the determination of
stockholders entitled to notice of and to vote at the Special Meeting and any
adjournments or postponements thereof (the "Record Date"). Only holders of Bank
Common Stock, at that time will be entitled to notice of and to vote at the
Special Meeting and any adjournments or postponements thereof. As of the Record
Date, there were 4,541,148 shares of Bank Common Stock outstanding and each such
share is entitled to one vote at the Special Meeting. As of the Record Date,
there were approximately 1,196 holders of record of the outstanding Bank Common
Stock.
PROXIES
Stockholders of the Bank are requested to complete, date, sign and promptly
return the accompanying form of proxy in the enclosed envelope. Bank Common
Stock represented by properly executed proxies
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received by the Bank and not revoked will be voted at the Special Meeting in
accordance with the instructions contained therein. If instructions are not
given therein, properly executed proxies will be voted FOR Proposal One. It is
not anticipated that any matters other than those set forth in this Proxy
Statement will be presented at the Special Meeting. If other matters are
presented, proxies will be voted in accordance with the best judgment of the
proxy holders.
Any properly completed proxy may be revoked at any time before it is voted
by filing a written notice of such revocation with, or by delivering a duly
executed proxy bearing a later date to, the Clerk of the Bank, or by attending
the Special Meeting and voting in person. Attendance at the Special Meeting will
not in and of itself constitute revocation of a proxy.
STOCKHOLDER VOTE REQUIRED
The presence, in person or by proxy, of at least a majority in interest of
the total number of the issued and outstanding shares of Bank Common Stock
entitled to vote is necessary to constitute a quorum for transaction of business
at the Special Meeting. A quorum being present, approval of Proposal One
(Formation of Holding Company) requires the affirmative vote of the holders of
at least 66 2/3% of the issued and outstanding shares of Bank Common Stock
entitled to vote by stockholders of record at the close of business on the
Record Date.
Abstentions and "broker non-votes" will be counted as present for
determining the presence or absence of a quorum for the transaction of business
at the Special Meeting. A "broker non-vote" is a proxy from a broker or other
nominee indicating that such person has not received instructions from the
beneficial owner or other person entitled to vote the shares on a particular
matter with respect to which the broker or other nominee does not have
discretionary voting power. Abstentions and broker non-votes will not be counted
as votes for Proposal One and, therefore, will have the effect of negative
votes.
BUSINESS OF THE BANK
The Bank was chartered as a Massachusetts savings bank in 1869. The Bank
converted from mutual to stock form on March 18, 1986 and issued 3,680,000
shares of Bank Common Stock. The Bank adopted a holding company structure on
August 14, 1987, whereby the Bank became a wholly owned subsidiary of Regional
Bancorp, Inc. ("Regional") and all Bank Common Stock was exchanged on a
one-for-one basis for 100% of Regional's common stock. On July 22, 1993, the
holding company structure was eliminated. Each share of Regional's common stock
was exchanged for one share of Bank Common Stock.
The Bank is principally engaged in the business of attracting deposits from
the general public, originating residential and commercial real estate mortgages
and consumer and commercial loans, and investing in securities. The Bank is
headquartered in Medford, Massachusetts, which is located approximately seven
miles north of downtown Boston. It has a network of sixteen banking offices
located in Medford, Malden, Arlington, Belmont, Burlington, North Reading,
Waltham, and Wilmington. The Bank's primary market area includes these
communities as well as other cities and towns in Middlesex County and the
surrounding area north of Boston.
Until January 1996, the Bank had two wholly owned subsidiaries: Medco
Realty, Inc. ("Medco") and Medford Securities Corporation ("MSC"). Medco engaged
in the ownership and maintenance of certain buildings leased to the Bank and, to
the extent excess space was available, third parties. The Bank elected to
dissolve Medco in January, 1996 and acquired all of its assets and liabilities.
MSC was established as a wholly owned subsidiary of Medford Savings Bank in
February, 1995. MSC engages exclusively in the buying, selling, dealing in, or
holding of securities, and became operational on March 1, 1995.
COPIES OF THE BANK'S 1996 ANNUAL REPORT, AND COPIES OF THE BANK'S FORM F-2
FOR THE YEAR ENDED DECEMBER 31, 1996 AND FORM F-4 FOR THE QUARTER ENDED JUNE 30,
1997 AS FILED WITH THE FEDERAL DEPOSIT INSURANCE CORPORATION (WITHOUT EXHIBITS),
ARE AVAILABLE UPON REQUEST, WITHOUT CHARGE, FROM THE BANK. SUCH REQUESTS SHOULD
BE DIRECTED TO: MEDFORD SAVINGS BANK, 29 HIGH STREET, MEDFORD, MASSACHUSETTS
02155, ATTENTION: SHAREHOLDER RELATIONS.
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PROPOSAL ONE
FORMATION OF HOLDING COMPANY
The following descriptions are qualified in their entirety by reference and
made subject to the Plan of Reorganization attached hereto as Exhibit A, certain
provisions of the General Laws of Massachusetts relating to the rights of
dissenting stockholders attached hereto as Exhibit B, and the form of Articles
of Organization of Bancorp attached hereto as Exhibit C.
DESCRIPTION OF THE PLAN OF REORGANIZATION
Bancorp has been organized as a Massachusetts corporation at the direction
of the Bank for the purpose of becoming the holding company of the Bank. Bancorp
and the Bank have entered into the Plan of Reorganization, which provides,
subject to the exercise of dissenters' rights, for the acquisition of all the
outstanding shares of Bank Common Stock by Bancorp in exchange for an equal
number of shares of Bancorp Common Stock pursuant to the provisions of Section
26B of Chapter 172 of the General Laws of Massachusetts.
After consummation of the Reorganization, the Bank, as a subsidiary of
Bancorp, will continue to serve the communities it presently serves from its
existing office locations. The assets, property, rights and powers, debts,
liabilities, obligations and duties of the Bank will not be changed by the
Reorganization, except for the proposed initial transfer, subject to applicable
law and any agreements of the Bank with regulatory agencies, of up to
approximately $7 million from the Bank to Bancorp. See "Regulation of Bancorp
and the Bank." Similarly, the Charter and By-laws of the Bank will not be
affected by consummation of the Reorganization. The Medford Savings Bank 1993
Stock Option Plan and the Medford Savings Bank 1986 Stock Option Plan
(collectively, the "Stock Option Plans") will become stock option plans of
Bancorp. All other stock related benefit plans of the Bank will be unchanged by
the Reorganization, except that any plan which refers to Bank Common Stock, such
as the Employee Stock Ownership Plan (the "ESOP"), will, following the
completion of the Reorganization, be deemed to refer instead to Bancorp Common
Stock. The Directors, officers and other employees of the Bank will be unchanged
by the Reorganization. The Directors of Bancorp will initially consist of the
ten persons currently serving as members of the Board of Directors of the Bank.
The President and Chief Executive Officer, Chief Financial Officer and the Clerk
of the Bank will initially be the persons serving as the executive officers of
Bancorp.
Under the Plan of Reorganization, Bancorp will become the owner of all the
outstanding shares of the Bank Common Stock, and each stockholder of the Bank
who does not exercise dissenters' rights with respect to the Plan of
Reorganization will become the owner of one share of Bancorp Common Stock for
each share of Bank Common Stock held immediately prior to the consummation of
the Reorganization, together with associated preferred stock purchase rights.
See "Shareholder Rights Plan." On the effective date of the Reorganization, each
share of Bank Common Stock (together with associated preferred stock purchase
rights) will be automatically converted into and exchanged for one share of
Bancorp Common Stock (together with associated preferred stock purchase rights).
The Reorganization will become effective at 12:01 a.m. on a business day
following the date on which the Bank and Bancorp advise the Massachusetts
Commissioner of Banks (the "Commissioner" or the "Commissioner of Banks") in
writing that all the conditions precedent to the Reorganization becoming
effective have been satisfied and that the Plan of Reorganization has not been
abandoned by the Bank or Bancorp (the "Effective Time"). As a condition to the
consummation of the Reorganization, Bancorp and the Bank must receive certain
regulatory approvals. See "Conditions of the Reorganization." Neither Bancorp
nor the Bank can predict with any certainty whether such approvals on terms
satisfactory to Bancorp and the Bank will be obtained, and, if so, the timing of
such approvals. Accordingly, the consummation of the Reorganization may be
subject to a delay, which may, under certain circumstances, be significant. If
the stockholders approve the Plan of Reorganization at the Special Meeting,
Bancorp and the Bank shall have the right to consummate the Reorganization at
any time thereafter.
The number of shares of Bancorp Common Stock (together with associated
preferred stock purchase rights) to be issued at the Effective Time will equal
the number of shares of Bank Common Stock (together with associated preferred
stock purchase rights) issued and outstanding immediately prior thereto, less
the
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number of shares of Bank Common Stock held by dissenting stockholders. Shares of
Bancorp Common Stock that would have been issued had dissenting stockholders not
dissented will remain as authorized but unissued shares of Bancorp Common Stock.
The shares of Bancorp Common Stock that are outstanding prior to the Effective
Time, all of which are presently held by the Bank, will be canceled as part of
the Reorganization.
The outstanding stock certificates of Bank Common Stock that, prior to the
Reorganization, represented shares of Bank Common Stock, will thereafter for all
purposes represent an equal number of shares of Bancorp Common Stock, except for
certificates held by dissenting stockholders and as further described below.
After the Effective Time, Bancorp and the Bank will notify stockholders by mail
at their addresses as shown on the Bank's records and by publication that they
may present their certificates to the transfer agent (the "Transfer Agent") for
exchange. However, stockholders need not surrender stock certificates
representing Bank Common Stock to the Transfer Agent in exchange for new
certificates representing Bancorp Common Stock. The Transfer Agent will treat
certificates for Bank Common Stock as representing, for all purposes, an equal
number of shares of Bancorp Common Stock, and the holders of those certificates
will have all the other rights of stockholders of Bancorp.
REASONS FOR THE HOLDING COMPANY FORMATION
The Board of Directors of the Bank believes that a holding company
structure will provide flexibility for meeting the future financial needs of the
Bank or other subsidiaries of Bancorp and responding to competitive conditions
in the financial services market. As a bank holding company, Bancorp will not be
subject to the same regulatory restrictions as the Bank, and will be able to
acquire and invest more freely in certain bank and bank-related activities as
well as such other activities as might be permitted by regulatory authorities.
In addition, Bancorp will not be subject to the same regulatory limitations on
the amounts which it can invest in its subsidiaries and other businesses and
will not be required to obtain regulatory approval before issuing shares of its
capital stock, except under certain circumstances. See "Regulation of Bancorp
and the Bank." Moreover, providing even further operational flexibility, the
repurchase of stock by Bancorp will not be subject to the same significant
adverse tax consequences as a repurchase of stock by the Bank, and except under
certain circumstances, no regulatory approval is required for such repurchase by
Bancorp. There are no current agreements or understandings with respect to any
investments or the issuance of any additional shares of capital stock by either
the Bank or Bancorp, except pursuant to options granted under the Stock Option
Plans.
The holding company structure will also facilitate the acquisition of other
banks as well as other companies engaged in bank-related activities if and when
opportunities arise. A holding company structure would permit an acquired entity
to operate on a more autonomous basis as a wholly owned subsidiary of Bancorp
rather than as a division of the Bank. For example, the acquired institution
could retain its own directors, officers, corporate name and local identity.
This more autonomous operation may be decisive in acquisition negotiations. In
addition, the stock of Bancorp may serve as appropriate consideration in any
such acquisition.
While the Bank is, from time to time, exploring various acquisition
possibilities, there are no current agreements or understandings for the
acquisition of any financial institution or other company and there are no
assurances that any such acquisitions will occur. It is recognized that some
increased costs, including administrative expenses, will be incurred in the
formation and operation of Bancorp. However, such increased costs are not
expected to have a material adverse effect on the consolidated financial results
of Bancorp and the Bank.
BUSINESS OF BANCORP
Bancorp is a business corporation organized under the laws of the
Commonwealth of Massachusetts in July, 1997. The only office of Bancorp, and its
principal place of business, is located at the main office of the Bank at 29
High Street, Medford, Massachusetts 02155, and its telephone number is (617)
395-7700. Bancorp was organized for the purpose of becoming the holding company
of the Bank. Upon completion of the Reorganization, the Bank will be a wholly
owned subsidiary of Bancorp, which will thereby become a bank holding company.
Each stockholder of the Bank, upon completion of the Reorganization, will,
subject to dissenters' appraisal rights, become a stockholder of Bancorp without
change in the number of shares owned
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or in respective ownership percentages. Bancorp has not yet undertaken any
business activities and there are no operating business activities currently
proposed for Bancorp. In the future, Bancorp may become an operating company or
acquire banks or companies engaged in bank-related activities and may engage in
or acquire such other business or activities as may be permitted by applicable
law. Upon consummation of the Reorganization, Bancorp will own all of the
outstanding Bank Common Stock.
FINANCIAL RESOURCES OF BANCORP
In connection with the Reorganization, the Bank currently intends, subject
to applicable law and any agreements of the Bank with regulatory agencies, to
transfer up to approximately $7.0 million to Bancorp, which amount does not
exceed the accumulated earnings and profits for tax purposes of the Bank as of
June 30, 1997. The actual amount of funds which may be transferred, however, is
subject to change and may be greater or less than this amount, depending on a
number of factors, including Bancorp's future financial requirements and
applicable regulatory restrictions. Moreover, the amount of capital which will
initially be transferred from the Bank to Bancorp may be reduced to the extent
necessary to avoid any taxable income to the Bank. See "Income Tax
Consequences."
A transfer of $7.0 million to Bancorp would reduce the Bank's stockholders'
equity as of June 30, 1997, to approximately $89.5 million. See
"Capitalization." If such a transfer to Bancorp had been made on June 30, 1997,
the leverage, Tier 1 risk-based, and total risk-based capital ratios of the Bank
would have been approximately 7.93%, 14.14% and 15.32%, respectively.
Upon consummation of the Reorganization, the currently outstanding shares
of Bancorp, all of which are owned by the Bank, will be canceled.
The Bank is contemplating contributing up to $7 million to Bancorp to
provide its holding company with flexibility in its ongoing operations. This sum
is anticipated to enable Bancorp, as market conditions warrant, to engage in
general corporate activities, such as funding of regular quarterly dividends and
stock repurchases, and also to establish nonbank subsidiaries to engage in new
activities, without having to rely solely on new dividends from the Bank to
support those activities. However, although it is contemplated that regular
quarterly dividends will occur after Bancorp is the holding company of the Bank,
no definite plans exist at this time as to any other of the corporate activities
described above. It should also be noted, however that bank holding companies,
such as Bancorp, have a much more extensive array of permissible investments
than banks, such as the Bank. Of course, any contribution to Bancorp would be
subject to receipt of all necessary federal and state bank regulatory approvals.
Additional financial resources may be available to Bancorp in the future
through borrowings, debt or equity financings, or dividends from the Bank, other
acquired entities or new businesses. In addition, the Bank may lend amounts to
Bancorp both prior to the consummation of the Reorganization and thereafter,
subject to certain restrictions on transactions with insured bank affiliates
under the Federal Reserve Act. There can be no assurance, however, as to the
amount of additional financial resources which will be available to Bancorp. In
particular, dividends from the Bank to Bancorp will be subject to tax
considerations and regulatory limitations. See "Income Tax Consequences,"
"Regulation of Bancorp and the Bank -- Certain Federal Tax Matters," "Comparison
of Stockholder Rights -- Common Stock -- Dividend Rights."
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CAPITALIZATION
The following table sets forth (i) the consolidated capitalization of the
Bank as of June 30, 1997; (ii) the pro forma consolidated capitalization of the
Bank as of June 30, 1997 after giving effect to the Reorganization (which
reflects the proposed maximum transfer of $7 million from the Bank's retained
earnings to Bancorp), and (iii) the pro forma capitalization of Bancorp on a
consolidated basis after giving effect to the Reorganization. The pro forma
consolidated capitalization of Bancorp as of June 30, 1997 will be the same as
the consolidated capitalization of the Bank as of that date. However, the pro
forma capitalization of the Bank is changed as a result of the $7 million
proposed transfer by the Bank to Bancorp.
AS OF JUNE 30, 1997
---------------------------------------------
BANK BANK BANCORP
(ACTUAL (PRO FORMA (PRO FORMA
CONSOLIDATED) CONSOLIDATED) CONSOLIDATED)
------------- ------------- -------------
(IN THOUSANDS)
Deposits................................................. $ 824,611 $ 824,611 $ 824,611
======== ======== ========
Securities sold under agreements to repurchase........... $ 47,580 $ 47,580 $ 47,580
Federal Home Loan Bank advances.......................... 97,439 97,439 97,439
Federal Reserve Bank of Boston advances.................. 1,262 1,262 1,262
-------- -------- --------
146,281 146,281 146,281
-------- -------- --------
Stockholders' equity:
Serial preferred stock -- par value $0.50 per share;
5,000,000 shares authorized, none issued(1)....... $ -- $ -- $ --
Common stock -- par value $0.50 per share;
15,000,000 shares authorized, [4,541,148]
issued(2)......................................... 2,271 2,271 2,271
Additional paid-in capital.......................... 28,924 28,924 28,924
Retained earnings................................... 65,923 58,923(3) 65,923
-------- -------- --------
97,118 90,118 97,118
-------- -------- --------
Net unrealized gain (loss) on investment securities
available for sale, after tax effects.................. (660) (660) (660)
-------- -------- --------
Total stockholders' equity..................... $ 96,458 $ 89,458 $ 96,458
======== ======== ========
- - - ---------------
(1) Represents, in the case of Bancorp, 5,000,000 shares of authorized, but
unissued, preferred stock, par value $0.50 per share.
(2) Represents, in the case of Bancorp, 15,000,000 shares of authorized common
stock, par value $0.50 per share of which 4,541,148 shares are to be issued
to stockholders of the Bank in exchange for the equivalent number of shares
of Bank Common Stock as part of the Reorganization, with the assumption that
no holders of Bank Common Stock exercised dissenter's rights. Does not
include the following shares of Bank Common Stock that were issuable as of
the Record Date: 936,000 shares of Bank Common Stock reserved for issuance
in the aggregate under the Stock Option Plans. Upon consummation of the
Reorganization, the Stock Option Plans will become stock option plans of
Bancorp and an identical number of shares will be reserved for issuance
thereunder as are reserved immediately prior to the consummation of the
Reorganization.
(3) Reduction reflects contribution of $7 million to Bancorp.
CONDITIONS OF THE REORGANIZATION
The Plan of Reorganization provides that it shall not become effective, and
thus the Reorganization will not occur, until all of the following first shall
have occurred: (i) the Plan of Reorganization shall have been approved by a vote
of the holders of two-thirds of the outstanding Common Stock of the Bank, (ii)
the Plan of Reorganization shall have been approved by the Commissioner of Banks
under Section 26B of Chapter 172 of the General Laws of Massachusetts, (iii) any
approval, consent, waiver, or confirmation of no objection required by the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board") shall
have
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been received and any waiting period imposed by applicable law shall have
expired, (iv) the Bank and Bancorp shall have received a favorable opinion from
counsel concerning the federal income tax consequences of the Reorganization,
(v) Bancorp Common Stock to be issued in exchange for Bank Common Stock shall
have been registered or qualified, if necessary, for issuance under applicable
state securities laws, and (vi) the Bank and Bancorp shall have obtained all
other necessary consents or approvals required for the holding company
formation.
The Bank intends to file an application with the Commissioner of Banks to
obtain approval of the Plan of Reorganization under Section 26B of Chapter 172
of the General Laws of Massachusetts after the date of this Proxy Statement. The
Commissioner will not grant his approval until the Plan of Reorganization has
been approved by the Bank's stockholders. In addition, the Bank intends to file,
after the date hereof, a notice of one bank holding company formation with the
Federal Reserve Board. Bancorp also currently intends to file an application to
register with the Federal Reserve Board as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). Any delays which are
encountered in seeking any of the foregoing regulatory approvals could result in
a delay in the consummation of the Reorganization. See "Regulation of Bancorp
and the Bank."
If the Plan of Reorganization is approved by the Bank's stockholders at the
Special Meeting, the formation of the holding company structure is currently
expected to become effective as soon thereafter as the required regulatory
approvals are received. Bank and Bancorp have the right under the terms of the
Plan of Reorganization to abandon the Reorganization if, among other things,
regulatory approvals cannot be obtained or if the conditions or obligations
associated with such regulatory approvals make the Reorganization inadvisable in
the opinion of the Bank or Bancorp.
In addition, the Plan of Reorganization also provides that it may be
abandoned by the Board of Directors of the Bank or Bancorp if, among other
things (i) the number of shares of Bank Common Stock owned by dissenting
stockholders will make consummation of the Reorganization inadvisable in the
opinion of the Bank or Bancorp, (ii) any action, suit, proceeding or claim has
been instituted, made or threatened relating to the Plan which will make
consummation of the Reorganization inadvisable in the opinion of the Bank or
Bancorp, or (iii) for any other reason consummation of the Reorganization is
inadvisable in the opinion of the Bank or Bancorp. Moreover, the Plan of
Reorganization may be amended by the mutual consent of the Boards of Directors
of Bancorp and the Bank (i) prior to its approval by the stockholders of the
Bank, in any respect, and (ii) subsequent to such approval, in any respect,
provided that the Commission shall approve of such amendment or modification.
If the Plan of Reorganization is not approved at the Special Meeting or all
of the necessary regulatory approvals are not obtained, the Bank will continue
to operate without a holding company structure. All expenses in connection with
the Reorganization will be paid by the Bank whether or not the Plan of
Reorganization is approved by its stockholders or the Reorganization is
consummated.
The Bank intends to seek approval for the listing of Bancorp Common Stock
in substitution for Bank Common Stock on the NASDAQ National Market System using
the symbol "MDBK" subject to completion of the holding company formation. The
Bank expects that approval for this substitution will be received prior to
consummation of the Reorganization.
RIGHTS OF DISSENTING STOCKHOLDERS
Any holder of Bank Common Stock (i) who files with the Bank before the
taking of the vote on the approval of the Plan of Reorganization written
objection to the Plan of Reorganization, stating that he or she intends to
demand payment for his or her shares if the Reorganization is consummated, and
(ii) whose shares are not voted in favor of the Plan of Reorganization, has or
may have the right to demand in writing from the Bank, within 20 days after the
date of mailing to him or her of notice in writing that the Reorganization has
become effective, payment for his or her shares and an appraisal of the value
thereof. The Bank and any such stockholder shall follow the procedures set forth
in Sections 86 to 98, inclusive, of Chapter 156B of the General Laws of
Massachusetts. A brief summary of those sections of the General Laws of
Massachusetts is set forth below. However, this summary does not purport to be a
complete statement of the procedures to be
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followed by stockholders desiring to exercise their rights to dissent from the
Reorganization and is qualified in its entirety by express reference to such
sections, which are included in this Proxy Statement as Exhibit B.
A holder of Bank Common Stock intending to exercise his or her dissenter's
right to receive payment for his or her shares must file with the Bank, before
the Special Meeting and the vote on the Plan of Reorganization, written
objection to the proposed Plan of Reorganization, stating that he or she intends
to demand payment for his or her shares if the Reorganization is consummated,
and must not vote in favor of the Reorganization at the Special Meeting. Within
ten days after the Reorganization becomes effective, the Bank will give written
notice of such effectiveness by registered or certified mail to each holder of
Bank Common Stock who filed such written objection and who did not vote in favor
of the Plan of Reorganization. Such written notice of effectiveness will be
addressed to the stockholder at his or her last known address as it appears in
the stock record books of the Bank. Within 20 days after the mailing of such
notice, any holder of Bank Common Stock to whom the Bank was required to give
such notice may make written demand for payment for his or her shares from the
Bank, and, in such event, the Bank will be required to pay to him or her the
fair value of such shares within 30 days after the expiration of the period
during which such demand may be made. If during such 30-day period the Bank and
the dissenting stockholder fail to agree as to the fair value of such shares,
the Bank or such stockholder may have the fair value of the stock of all
dissenting stockholders determined by judicial proceedings by filing a bill in
equity in the Superior Court in Suffolk County, Massachusetts, within four
months after the expiration of such 30-day period. For the purposes of any such
Superior Court determination, the value of the shares of the Bank is to be
determined as of the day preceding the date of the vote of the stockholders
approving the Plan of Reorganization and shall be exclusive of any element of
value arising from the expectation or accomplishment of the Reorganization. Upon
making such written demand for payment, the dissenting stockholder will not
thereafter be entitled to notices of meetings of stockholders, to vote, or to
dividends unless no suit is filed within four months after such 30-day period to
determine the value of the stock, any such suit is dismissed as to that
stockholder, or the stockholder withdraws his objection in writing with the
written approval of the Bank.
The enforcement by a dissenting stockholder of his or her right to receive
payment for his Bank Common Stock in the manner provided by Sections 86 through
98 of Chapter 156B of the General Laws of Massachusetts will be his or her
exclusive remedy, except that a stockholder shall not be excluded from bringing
or maintaining an appropriate proceeding to obtain relief on the ground that
consummation of the Reorganization will be or is illegal or fraudulent as to him
or her.
INCOME TAX CONSEQUENCES
The Bank will not seek a ruling from the Internal Revenue Service
concerning the federal income tax consequences of the proposed holding company
formation, but will instead rely on an opinion of its counsel, Goodwin, Procter
& Hoar LLP. Unlike a private letter ruling from the Internal Revenue Service, an
opinion of counsel has no binding effect on the Internal Revenue Service. Based
on such opinion, the material federal tax results of the Reorganization would be
as follows:
1. No gain or loss will be recognized by the stockholders of the Bank
upon the exchange of their Common Stock of the Bank solely for Bancorp
Common Stock.
2. No gain or loss will be recognized by the Bank as a result of the
proposed transaction (except to the extent that, as described below, the
Bank may have taxable income as a result of payments to stockholders who
exercise dissenters' rights and/or the transfer to Bancorp of an amount
that exceeds the current and accumulated earnings and profits of the Bank).
3. No gain or loss will be recognized by Bancorp upon the receipt of
shares of Bank Common Stock solely in exchange for Bancorp Common Stock.
4. The basis of the Bancorp Common Stock to be received by each
stockholder of the Bank will be the same as the basis of Bank Common Stock
surrendered in exchange therefor.
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5. The holding period of the Bancorp Common Stock to be received by
each stockholder of the Bank will include the holding period of Bank Common
Stock surrendered in exchange therefor, provided that such Bank Common
Stock was held as a capital asset in the hands of such stockholder.
6. Stockholders of the Bank who exercise their dissenters' appraisal
rights and receive cash in exchange for their shares of Bank Common Stock
will recognize taxable income or gain or loss for federal income tax
purposes in connection with the transaction. The amount of that income or
gain or loss and the character of that income or gain or loss (that is,
whether it constitutes ordinary income, short-term capital gain or loss or
long-term capital gain or loss) will turn upon a number of factual
considerations peculiar to the individual stockholder.
If a stockholder exercises his or her dissenter's appraisal rights with
respect to all of his or her shares of Bank Common Stock, and if no shares are
constructively owned by him under the rules of Section 318(a) (or if such
constructive ownership is waived under the rules of Section 302(c)(2)), then the
transaction should qualify as a sale or exchange of the stock under Section
302(a), rather than a dividend. If the shares of Bank Common Stock qualify as
"capital assets" in the hands of such a stockholder and if the shares have been
held for more than one year, then any gain recognized on the exchange should
qualify for long-term capital gain treatment. If, however, a stockholder fails
to exercise dissenters' appraisal rights as to all shares owned by him or her
(or is considered to constructively own shares under Section 318(a)), then the
transaction might be treated as a dividend to the stockholder, depending upon
whether or not it qualifies as "not essentially equivalent to a dividend" within
the meaning of Section 302(b)(1), or as "a substantially disproportionate
redemption" within the meaning of Section 302(b)(2). If the transaction were
treated as a dividend, then the entire payment could be taxable as ordinary
income, depending upon the circumstances.
Any stockholder of the Bank considering exercising his or her dissenter's
appraisal rights with respect to any shares of Bank Common Stock should consult
his personal income tax advisor for specific advice with respect to the federal
income tax consequences of that exercise.
Payments made by the Bank to stockholders who exercise their dissenters'
appraisal rights may result in taxable income to the Bank to the extent the
payments are deemed made out of the Bank's bad debt reserve. In addition, any
dividend distributions by the Bank (including any distribution made to provide
working capital to Bancorp and any payments to dissenting stockholders that are
treated as dividends) that exceed the current and accumulated earnings and
profits of the Bank will result in taxable income to the Bank to the extent that
they are deemed made out of the Bank's bad debt reserve.
The determination of current and accumulated earnings and profits turns
upon the application of a complicated set of legal rules to a number of factual
issues arising over an extended period of years. Because of the inherently
factual issues associated with determining accumulated earnings and profits,
Goodwin, Procter & Hoar LLP does not intend to confirm the amount of the Bank's
earnings and profits and thus its opinion will not address whether or not the
proposed transfer of funds to Bancorp will exceed the current and accumulated
earnings and profits of Bancorp.
ACCOUNTING TREATMENT
It is anticipated that the Reorganization will be accounted for as similar
to a "pooling of interests" transaction under generally accepted accounting
principles.
COMPARISON OF STOCKHOLDER RIGHTS
As a result of the holding company formation, stockholders of the Bank,
whose rights are presently governed by Massachusetts banking law, will become
stockholders of Bancorp, a Massachusetts corporation, and as such their rights
will be governed by Massachusetts corporate law. Certain differences in the
rights of stockholders arise from this change in governing law, however, the
provisions of the Bank's Restated Articles of Organization (the "Charter") and
By-laws and Bancorp's Articles of Organization (the "Articles") and By-laws are
substantively identical. Certain differences and similarities of the rights of
stockholders of the Bank and Bancorp are discussed below. The following
discussion does not purport to be a complete statement of such similarities and
differences affecting the rights of stockholders of the Bank but is intended as
a
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summary only. The form of Articles of Bancorp attached as Exhibit C to this
Proxy Statement should be reviewed carefully by each stockholder.
Capital Stock
Authorized and Issued Stock. The Bank had, as of the Record Date,
15,000,000 shares of authorized Common Stock of which 4,541,148 shares were
issued and outstanding and 936,000 shares were reserved for issuance under the
Stock Option Plans. As of such date, the Bank also had 5,000,000 shares of
authorized but unissued preferred stock.
The Articles of Bancorp will provide for 15,000,000 shares of authorized
Bancorp Common Stock and 5,000,000 shares of preferred stock, of which 100
shares of Bancorp Common Stock are currently issued and outstanding, all of
which are owned by the Bank. After the consummation of the Reorganization, and
subject to the exercise of dissenters' appraisal rights, the number of issued
and outstanding shares, shares reserved for issuance under the Stock Option
Plans and non-reserved shares of Bancorp Common Stock available for future
issuance by Bancorp will be the same as the number of such shares of Bank Common
Stock immediately prior to the Effective Time.
Issuance of Stock. Under the provisions of Massachusetts banking law, the
issuance of capital stock by the Bank requires the prior approval of the
Commissioner of Banks. In contrast, Bancorp is authorized to issue shares of
capital stock without obtaining prior approval of the Commissioner of Banks.
Although the issuance of Bancorp Common Stock in connection with the
Reorganization is exempt from registration under the Securities Act, future
issuances of Bancorp Common Stock would be subject to registration under the
Securities Act, unless another exemption were available. See "Regulation of
Bancorp and the Bank--Consequences of the Reorganization Under Federal
Securities Laws." Bank Common Stock is exempt from registration under the
Securities Act. There are no current agreements or understandings with respect
to the issuance of any additional shares of Bancorp capital stock.
Pre-emptive Rights. The stockholders of Bancorp, like the stockholders of
the Bank, will not be entitled to pre-emptive rights with respect to any shares
of capital stock which may be issued.
Common Stock
Dividend Rights. The stockholders of the Bank are entitled to dividends
when and as declared by the Bank's Board of Directors. Under Massachusetts
banking law, Massachusetts stock-form savings banks such as the Bank may pay
dividends only out of net profits without impairing their capital stock and
surplus accounts. Such dividend payments are also subject to a number of
additional statutory limitations. Bancorp may pay dividends if, as, and when
declared by its Board of Directors. The holders of Bancorp Common Stock will be
entitled to receive and share equally in such dividends as may be declared by
the Board of Directors out of funds legally available therefor. Although
Massachusetts corporate law does not have a specific statute regulating the
payment of dividends by Massachusetts corporations, the directors of a
corporation are jointly and severally liable to the corporation if a payment of
dividends (i) is made when the corporation is insolvent, (ii) renders the
corporation insolvent, or (iii) violates the corporation's articles of
organization. In any case, any issuance by the Bank or Bancorp of preferred
stock with a preference over common stock as to dividends may affect the
dividend rights of common stock holders.
Voting Rights. All voting rights in the Bank are currently vested in the
holders of the Bank's issued and outstanding Common Stock. Each share of Bank
Common Stock is entitled to one vote on all matters, without any right to
cumulative voting, without any right to cumulative voting in the election of
Directors. Following the formation of the holding company, all voting rights in
Bancorp will be vested in the holders of Bancorp Common Stock, and each share of
Bancorp Common Stock will be entitled to one vote on all matters. In both cases,
any issuance by the Bank or Bancorp of preferred stock with voting rights may
affect the voting rights of holders of common stock.
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Preferred Stock
Both under the Charter of the Bank and under the Articles of Bancorp, the
respective Boards of Directors (or a committee thereof in the case of Bancorp)
of the Bank and Bancorp are authorized to issue preferred stock in series (and
classes in the case of Bancorp) and to fix the powers, designations,
preferences, or other rights of the shares of each such series (or class in the
case of Bancorp) and the qualifications, limitations, and restrictions thereof.
The issuance of preferred stock by the Bank, unlike the issuance of preferred
stock by Bancorp, would be subject to approval by the Commissioner of Banks.
Preferred stock issued by Bancorp after the Reorganization may rank prior to the
Bancorp Common Stock as to dividend rights, liquidation preferences, or both,
may have full or limited voting rights (including multiple voting rights and
voting rights as a class), and may be convertible into shares of Bancorp Common
Stock. Bancorp has no present plans or understandings for the issuance of any
preferred stock.
Directors
Number and Staggered Terms. The By-laws of Bancorp provide that the Board
of Directors shall consist of not less than seven directors. The Board of
Directors of Bancorp will initially be composed of ten Directors. The By-laws of
the Bank provide that the Board shall consist of not less than seven nor more
than 25 Directors. The By-laws of the Bank and Bancorp provide that the Board of
Directors may fix the number and classification of Directors, unless at the time
there is an Interested Stockholder (as defined in the Bank's Charter and
Bancorp's Articles, respectively), in which case a majority vote of the
Continuing Directors (as defined in the Bank's Charter and Bancorp's Articles,
respectively) is also required.
Both the Bylaws of the Bank and the Bylaws of Bancorp provide for three
classes of Directors with one class elected each year for three-year staggered
terms, so that ordinarily no more than approximately one-third of the Directors
will stand for election in any one year, and that there will be no cumulative
voting in the election of Directors.
Removal of Directors. The Bank's Charter and Bancorp's Articles provide
that any Director (subject to the rights of any outstanding preferred stock) may
be removed from office, with or without cause, by an affirmative vote of (i) at
least 80% of the total votes eligible to be cast by stockholders at a duly
constituted meeting of stockholders called expressly for such purpose, or (ii)
at least 66 2/3% of the members of the Board of Directors then in office, unless
at the time of such removal there shall be an Interested Stockholder, in which
case the affirmative vote of not less than a majority of the Continuing
Directors then in office shall instead be required for removal by vote of the
Board of Directors.
Vacancies. The By-laws of the Bank and the By-laws of Bancorp both provide
that any vacancy occurring on the Board of Directors as a result of resignation,
removal, disqualification or death or by reason of an increase in the number of
Directors may be filled by vote of a majority of the remaining Directors, unless
at the time of such action there is an Interested Stockholder, in which case a
majority vote of the Continuing Directors then in office is required instead.
Any Director of the Bank or Bancorp so appointed would serve for the remainder
of the unexpired term of the class to which such Director was appointed and
until such Director's successor shall have been duly elected or qualified or
until his or her earlier resignation or removal. When the number of directors is
increased, the Board of Directors determines the class or classes to which such
number is apportioned.
Massachusetts Law Regarding Directors. Under Section 50A of Massachusetts
General Laws Chapter 156B, a publicly-held Massachusetts corporation which has
not opted out of that statute must have a classified board of directors. In
general, Section 50A provides that the board of directors of the corporation
must be divided into three classes, each of which would contain approximately
one-third of the total number of the members of the board of directors. Section
50A provides that each class shall serve a staggered term, with approximately
one-third of the total number of directors being elected each year. The
stockholders may remove a director from the board prior to the expiration of his
term only for cause, upon the affirmative vote of the holders of a majority of
the shares then entitled to vote in an election of directors. Section 50A
provides that the number of directors shall be fixed by the board, and that any
vacancy occurring on the board, including a vacancy created by an increase in
the number of directors or resulting from death, resignation,
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disqualification, removal from office or other cause, shall be filled for the
remainder of the unexpired term exclusively by a majority vote of the directors
then in office.
Section 50A does not apply to the Bank by its terms and Massachusetts
banking statutes under which the Bank is governed do not contain a similar
provision. The Board of Directors of Bancorp has voted to expressly opt out of
Section 50A, and the Board may at any time in the future vote to subject Bancorp
to the express provisions of Section 50A. Notwithstanding such action, Bancorp's
Articles (like the Bank's Charter) contain provisions substantially similar to
that of Section 50A regarding a classified board of directors, as described
above.
Meetings of Stockholders
The Bank's Charter and By-laws and Bancorp's Articles and By-laws provide
that special meetings of the stockholders may be called only by the Chairman of
the Board, if one is elected, the President, or by a majority of the Directors
then in office; provided, however, that if there is an Interested Stockholder,
any such call shall also require the affirmative vote of a majority of the
Continuing Directors then in office. Only those matters set forth in the call of
the special meeting may be considered or acted upon at such special meeting,
unless otherwise provided by law.
Both the Bank's By-laws and Bancorp's By-laws set forth certain advance
notice and informational requirements and time limitations on any Director
nomination or any new business that a stockholder wishes to propose for
consideration at an annual or special meeting of stockholders. Any such
nomination or new business must be stated in writing and must generally be filed
with the Clerk at least 75 days, but no more than 120 days, before the date of
the meeting prior to the anniversary date of the immediately preceding annual
meeting. The Board of Directors of the Bank or Bancorp, as the case may be, or
the officer presiding at the meeting of the stockholders of Bancorp or the Bank,
as the case may be, may reject such nomination or new business proposal not
timely made or supported by insufficient information. In addition, the By-laws
of the Bank and the By-Laws of Bancorp provide that, if at the time there is an
Interested Stockholder, any determination by the Board of Directors with respect
to such nomination or new business proposal shall also require the concurrence
of a majority of the Continuing Directors then in office.
Stockholder Vote Required to Approve Mergers and Certain Business Combinations
Stockholder Vote Required for Mergers. Massachusetts law provides that a
vote of 66 2/3% of the shares of each class of stock outstanding and entitled to
vote thereon is generally required to authorize a merger or the sale, lease or
exchange of all or substantially all of a corporation's property and assets,
except that the articles of organization of a Massachusetts corporation may
provide for a different percentage vote, but not less than a majority.
Fair Price Provision. The Bank's Charter and Bancorp's Articles contain a
so-called "fair price" provision pursuant to which any Business Combination (as
defined in the Bank's Charter and Bancorp's Articles) involving an Interested
Stockholder or an affiliate of an Interested Stockholder and the Bank or Bancorp
(or any subsidiary), as the case may be, would require approval by the
affirmative vote of the holders of at least 80% of the voting power of the then
outstanding shares of voting stock of the Bank or Bancorp, as the case may be,
entitled to vote in the election of directors voting together as a single class.
The fair price provision provides that the 80% stockholder vote is not required
if the Business Combination is approved by a majority of the Continuing
Directors or if certain procedures and price requirements are met.
Massachusetts Law. Chapter 110F of the Massachusetts General Laws,
entitled "Business Combinations with Interested Shareholders" ("Chapter 110F")
provides that a Massachusetts corporation with more than 200 stockholders
generally may not engage in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person becomes an interested stockholder, unless (i) the interested
stockholder obtains the approval of the Board of Directors prior to becoming an
interested stockholder, (ii) the interested stockholder acquires 90% of the
outstanding voting stock of the corporation (excluding shares held by certain
affiliates of the corporation) at the time it becomes an interested stockholder,
or (iii) the business combination is approved by both the Board of Directors and
the
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holders of 66 2/3% of the outstanding voting stock of the corporation (excluding
shares held by the interested stockholder) at an annual or special meeting of
stockholders. An "interested stockholder" is a person who, together with
affiliates and associates, owns (or, in certain cases, at any time within the
prior three years did own) 5% or more of the outstanding voting stock of the
corporation. A "business combination" includes a merger, certain stock or asset
sales, and certain other specified transactions resulting in a financial benefit
to the interested stockholder.
Chapter 110F is by its terms applicable to both the Bank and Bancorp. A
Massachusetts corporation is permitted to opt out of Chapter 110F, however,
neither the Bank nor Bancorp has opted out of Chapter 110F.
Provisions Relating to Exercise of Business Judgment by Board of Directors
The Charter of the Bank provides that its Board of Directors, when
evaluating any tender, exchange, merger, acquisition or similar offer of another
person, must in connection with the exercise of its judgment in determining what
is in the best interests of the Bank and its stockholders, give due
consideration to all relevant factors including, without limitation, the social
and economic effects of acceptance of such an offer on the Bank's present and
future account holders, borrowers and employees, on the communities in which the
Bank operates or is located, and on the ability of the Bank to fulfill its
objectives as a Massachusetts-chartered stock form savings bank under applicable
statutes and regulations. The Articles of Bancorp contain a substantially
similar provision that states, in addition, that such evaluation shall include
an examination of the effect of such a transaction on any subsidiary of Bancorp.
Control Share Acquisition Statute
Chapter 110D of the Massachusetts General Laws Chapter 110D, entitled
"Regulation of Control Share Acquisitions" ("Chapter 110D") provides that any
person who makes a bona fide offer to acquire, or acquires (the "acquiror")
shares of stock of a corporation in an amount equal to or greater than
one-fifth, one-third or a majority of the voting stock of the corporation (the
"thresholds") must obtain the approval of a majority of shares of all
stockholders except the acquiror and the officers and inside directors of the
corporation in order to vote the shares that the acquiror acquires in crossing
the thresholds.
Chapter 110D does not apply to the Bank by its terms and Massachusetts
banking statutes under which the Bank is governed do not contain a similar
provision. As permitted under Chapter 110D, Bancorp's By-laws contain a
provision opting out of Chapter 110D, making Chapter 110D inapplicable to
Bancorp's stockholders. The Board of Directors of Bancorp may amend the By-laws
at any time in the future to allow Bancorp to opt into this statute
prospectively.
Indemnification
The By-laws of the Bank provide that Directors and officers of the Bank
shall, and in the discretion of the Board of Directors, non-officer employees
may, be indemnified by the Bank against liabilities and expenses arising out of
service for or on behalf of the Bank. The By-laws of the Bank provide that such
indemnification shall not be provided if it is determined that the action giving
rise to the liability was not taken in good faith in the reasonable belief that
the action was in the best interests of the Bank. The By-laws of the Bank
provide that the indemnification provision in the By-laws does not limit any
other right to indemnification existing independently of the By-laws. The
By-laws of Bancorp contain a similar indemnification provision.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to Directors,
officers or persons controlling Bancorp pursuant to the foregoing provisions, it
is the position of the Securities and Exchange Commission (the "SEC") that such
indemnification is against public policy as expressed in such Act and is
therefore unenforceable.
Shareholder Rights Plan
In connection with the Reorganization, the Bank's Shareholder Rights Plan
will be amended so that it will be assumed by Bancorp following the
Reorganization. Accordingly, the outstanding Rights (as defined below) issued
pursuant to the Shareholder Rights Plan will be assumed by, and deemed to be
Rights issued
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by, Bancorp. The Shareholder Rights Plan, as amended, will be substantially
similar to the plan as currently in effect. The purpose of the Shareholder
Rights Plan is, among other things, to enable stockholders to receive fair and
equal treatment in the event of any proposed acquisition or other business
combination transaction involving Bancorp. The Shareholder Rights Plan could
make it more difficult for a third party to acquire, or could discourage a third
party from acquiring, Bancorp or a large block of Bancorp's common stock. The
following summary description of the Shareholder Rights Plan does not purport to
be complete and is qualified in its entirety by reference to the Bank's
Shareholder Rights Plan, a copy of which is available upon request.
In connection with the adoption of the Shareholder Rights Plan, the Board
of Directors of the Bank declared a dividend distribution of one preferred stock
purchase right (a "Right") for each outstanding share of the Bank's common stock
to stockholders of record as of the close of business on October 8, 1993. The
Rights currently are not exercisable and are attached to and trade with the
outstanding shares of the Bank's common stock. Under the Shareholder Rights
Plan, the Rights become exercisable (i) if a person becomes an "acquiring
person" by acquiring 15% or more of the outstanding shares of the Bank's common
stock, (ii) if a person who owns 10% or more of the Bank's common stock is
determined to be an "adverse person" by the Board of Directors, or (iii) if a
person commences a tender offer that would result in that person owning 15% or
more of the Bank's common stock. In the event that a person becomes an
"acquiring person" or is declared an "adverse person" by the Board of Directors,
each holder of a Right (other than the acquiring person or the adverse person)
would be entitled to acquire such number of shares of the Bank's preferred stock
which are convertible into such number of shares of common stock having a value
of twice the then-current exercise price of the Right. If the Bank is acquired
in a merger or other business combination transaction after any such event, each
holder of a Right would then be entitled to purchase, at the then-current
exercise price, shares of the acquiring company's common stock having a value of
twice the exercise price of the Right.
Amendment of Charter and Articles
The Bank's Charter and Bancorp's Articles both provide that any amendment
thereof must be first approved by a majority of the Board of Directors, and then
approved by at least 66 2/3% of the total votes eligible to be cast at a duly
constituted meeting (but only a majority of the stockholders in the case of
amendments to provisions in the Bank's Charter or Bancorp's Articles, as the
case may be, relating to the name, office, powers, and authorized capital stock)
except that if at any time within the 60 day period immediately preceding the
meeting at which the stockholder vote is to be taken on such amendment there is
an Interested Stockholder, such amendment shall also require the vote of at
least a majority of the Continuing Directors, prior to approval by the
stockholders. Notwithstanding the foregoing, the Bank's Charter and Bancorp's
Articles both state that to the extent any provision thereof requires approval
by a vote of more than 66 2/3% of the total votes eligible to be cast by
stockholders in the election of director, and if, at any time within the 60 day
period immediately preceding the meeting at which a stockholder vote is to be
taken there is an Interested Stockholder, such provision may only be amended
after approval of the same vote required by such provision unless such amendment
shall also have been approved by the affirmative vote of not less than a
majority of the Continuing Directors then in office, in which case only the vote
of 66 2/3% of the total votes eligible to be cast by the stockholders shall be
required.
Under Massachusetts law, certain amendments to a corporation's articles of
organization require a vote of a majority of the outstanding shares of each
class of stock entitled to vote thereon, while other amendments require a
66 2/3% vote. In either case, the articles of organization may provide for a
greater or lesser percentage vote, but not less than a majority. Massachusetts
law requires a class vote under certain circumstances when an amendment of the
articles of organization will adversely affect the special rights of a class of
stock.
Amendment of By-laws
The Charter of the Bank and the Articles of Bancorp provide that their
respective By-laws may be adopted or amended either by their respective Board of
Directors or stockholders. Such action by the Board of Directors of the Bank or
Bancorp, as the case may be, shall require the affirmative vote of at least
66 2/3% of the Directors then in office, unless, in the case of both the Bank
and Bancorp, at the time of such action there shall be an Interested
Stockholder, in which case such action shall also require the affirmative vote
of at least a
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majority of the Continuing Directors. Such action by the stockholders of the
Bank or Bancorp, as the case may be, shall require (i) approval by the majority
of the Board of Directors of the Bank (and, if there is an Interested
Stockholder at the time of such action, such action shall also require the
affirmative vote of a majority of the Continuing Directors), (ii) unless waived
by the majority of the Board of Directors (and, if applicable, the Continuing
Directors), the submission by the stockholders of written proposals for amending
the By-laws at least 60 days prior to the meeting at which the amendment is to
be considered, and (iii) the vote of at least 66 2/3% of the total votes
eligible to be cast by stockholders in the election of directors at a duly
constituted meeting of stockholders called expressly for such purpose.
EFFECT ON CURRENT MARKET VALUE OF OUTSTANDING BANK STOCK
Although the Board of Directors does not know of any reason why
implementation of the Plan of Reorganization would cause the market value of the
stock of Bancorp to be different from the market value of the stock of the Bank
immediately prior to consummation of the Reorganization, it is possible that the
public trading market could perceive that the stock of Bancorp has a different
value from the stock of the Bank. It is not known whether the public trading
market will attribute any additional or lesser value to Bancorp Common Stock
than it would attribute to Bank Common Stock. On July 28, 1997, the last trading
day prior to the day on which the Board of Directors adopted a resolution
approving the Plan of Reorganization, the high and low sale prices of Bank
Common Stock as quoted on the NASDAQ National Market were $30 3/4 and $30 3/8
per share, respectively.
ANTI-TAKEOVER PROVISIONS
A number of provisions of the Bank's Charter and By-laws and similarly of
Bancorp's Articles and By-laws deal with matters of corporate governance and
rights of stockholders. Certain of those provisions discussed above may be
deemed to have an "anti-takeover" effect, and may discourage takeover attempts
not first approved by the Directors (including takeovers which certain
stockholders might deem to be in their interests). Although the Board of
Directors of Bancorp is not aware of any effort that might be made to gain
control of Bancorp after the Reorganization, the Board of Directors believes
that those provisions are appropriate to protect the interests of Bancorp and
its stockholders from certain hostile takeovers that the Board of Directors
believes would not be in the best interests of Bancorp and all of its
stockholders. In addition, the Bank has entered into agreements with certain of
its officers which require the Bank to make certain payments to such officers
upon the termination of their employment under certain circumstances.
LEGAL INVESTMENTS
Under the laws of some jurisdictions, shares of Bank Common Stock may be
legal investments for certain institutions and fiduciaries, whereas shares of
Bancorp Common Stock may not be legal investments for such investors.
REGULATION OF BANCORP AND THE BANK
The following summaries of statutes and regulations affecting banks and
holding companies do not purport to be complete. Such summaries are qualified in
their entirety by reference to such statutes and regulations.
Holding Company Regulation. As a bank holding company, Bancorp would be
subject to regulation and supervision by the Federal Reserve Board under the BHC
Act. The regulations of the Federal Reserve Board restrict or require prior
approval for acquisitions of ownership or control of banks or other companies,
restrict transactions between bank holding companies and their affiliates,
restrict tying arrangements, limit nonbanking activities of bank holding
companies and their subsidiaries, require the filing of annual and periodic
reports and give the Federal Reserve Board supervisory authority over various
activities of bank holding companies. The Bank is not currently subject to the
regulations or authority of the Federal Reserve Board, except as certain of such
regulations are made applicable to the Bank by law or regulations of the FDIC.
Certain Federal and State Restrictions on Acquisition of Stock. Any
attempt to acquire control of the Bank, currently, or Bancorp, following
completion of the Reorganization, through the purchase of stock would
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be subject to regulation under Massachusetts law, and the BHC Act or the federal
Change in Bank Control Act of 1978, as amended (the "CBCA").
With respect to acquisitions of Common Stock of the Bank, Massachusetts law
prohibits any person from acquiring voting stock of a bank that would result in
such person having the power, directly or indirectly, to direct the management
or policies of such bank or to vote 25% or more of such stock unless such person
has provided the Commissioner with 60 days' prior notice and certain information
in connection therewith, and the acquisition has not been disapproved by the
Commissioner. An exemption from these requirements is provided for acquiring
persons who have complied with substantially similar procedures under the
federal law provisions outlined below.
The Federal Reserve Board's regulations promulgated under the CBCA
generally require persons who at any time intend to acquire control of a bank
holding company to provide 60 days' prior written notice and certain financial
and other information to the Federal Reserve Board. The 60-day notice period
does not commence until the information is deemed to be substantially complete.
Control for the purpose of the CBCA exists in situations in which the acquiring
party would have voting control of at least 25% of any class of a holding
company's voting stock. However, under Federal Reserve Board regulations,
control would be presumed to exist where the acquiring party would have voting
control of at least 10% of any class of the holding company's voting securities
if (i) the holding company has a class of voting securities which is registered
under Section 12 of the Exchange Act, or (ii) the acquiring party would be the
largest holder of a class of voting shares of the holding company. The statute
and underlying regulations authorize the Federal Reserve Board to disapprove the
proposed acquisition on certain specified grounds. The FDIC has adopted
substantially similar regulations under the CBCA which would apply to the
acquisition of control of an FDIC-insured bank such as the Bank.
Under the BHC Act, prior approval of the Federal Reserve Board is generally
required for an acquisition of control of a bank by any "company" defined under
the BHCA. Control for purposes of the BHCA would be based on a 25% voting stock
test or on the ability of the acquiror otherwise to control the election of a
majority of the Board of Directors of the Bank or Bancorp or on the ability of
the acquiror to exert controlling influence over the management or policies of
the Bank or Bancorp (as set forth in the BHCA). As part of such acquisition, the
acquiring company (unless already so registered) would be required to register
as a bank holding company under the BHCA. In addition, an existing bank holding
company would have to obtain prior approval from the Federal Reserve Board under
the BHCA if it sought to acquire in excess of 5% of any class of the voting
stock of another bank holding company, such as Bancorp.
A bank holding company's business activities are generally limited to those
activities which the Federal Reserve Board determines to be so closely related
to banking or managing or controlling banks as to be a proper incident thereto.
Registration as a bank holding company would generally require divestiture or
other termination of other business activities not approved for bank holding
companies by the Federal Reserve Board under the foregoing test.
In addition to the aforementioned state and federal laws governing the
acquisition of stock of a bank or a bank holding company, there are various
provisions of Massachusetts law which apply to the acquisition of stock of
business corporations and banks.
Bank Regulation. As a Massachusetts-chartered, FDIC-insured savings bank,
the Bank is subject to regulation and supervision by the Commissioner and the
FDIC. After the Reorganization, the Bank will continue to be subject to such
regulation and supervision.
Massachusetts Law. As a Massachusetts-chartered, stock form savings bank,
the Bank now is, and following consummation of the Reorganization will continue
to be, subject to regulation and examination by the Commissioner. The
Massachusetts statutes and regulations govern, among other things, lending and
investment powers, deposit activities, borrowings, maintenance of surplus and
reserve accounts, distribution of earnings, and payment of dividends. The Bank
is also subject to state regulatory provisions covering such matters as issuance
of capital stock, branching, and mergers and acquisitions. Bancorp has been
incorporated
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as a business corporation under Massachusetts law. Thus, Bancorp is subject to
regulation by the Secretary of State of Massachusetts and the rights of its
stockholders are governed by Massachusetts corporate law.
Proposed Legislation. From time to time, various types of federal and
state legislation have been proposed that could result in additional regulation
of, and restrictions on, the business of the Bank or Bancorp It cannot be
predicted whether any legislation currently being considered will be adopted or
how such legislation or any other legislation that might be enacted in the
future would affect the business of the Bank or Bancorp.
Certain Federal Tax Matters. If the Reorganization is consummated, Bancorp
and the Bank intend to file consolidated federal income tax returns, which would
have the effect of eliminating inter-company distributions, including dividends,
in the computation of consolidated taxable income. Bancorp and the Bank are
required to file unconsolidated state income tax returns. Although Bancorp and
the Bank plan to file consolidated federal income tax returns, distributions
from the Bank to Bancorp would have significant adverse tax consequences to the
Bank to the extent that the distributions were deemed to be out of the Bank's
bad debt reserve balance as of the close of its last taxable year beginning
before January 1, 1988 (which amount otherwise generally is not subject to
recapture notwithstanding the repeal in 1996 of the special thrift bad debt
reserve tax rules) rather than its current or accumulated earnings and profits.
The amount deemed distributed out of the bad debt reserve would increase the
Bank's federal taxable income and be subject to federal income tax. However, a
dividend distribution will be deemed to be out of the bad debt reserve only if
it exceeds the sum of the current and accumulated earnings and profits of the
Bank. Some or all of the Bank's accumulated earnings and profits for tax
purposes is expected to be transferred to Bancorp by the Bank as part of the
Reorganization. The actual amount of the distribution may be adjusted to the
extent necessary to avoid any taxable income to the Bank. See "Financial
Resources of Bancorp." Bancorp has no present intention of causing the Bank to
pay cash dividends that would result in the Bank being required to recognize
taxable income.
Consequences of the Reorganization Under Federal Securities Laws. Upon
consummation of the Reorganization, the reporting obligations of the Bank under
the Exchange Act, as administered by the FDIC, will be replaced with
substantially similar obligations of Bancorp under the Exchange Act, as
administered by the SEC. Pursuant to the Exchange Act, Bancorp will file annual,
quarterly and periodic reports with the SEC. Bancorp will also be subject to the
insider trading requirements of Sections 16(a) and 16(b) of the 1934 Act as
administered by the SEC. In connection with the Reorganization, the Bank will
deregister the Bank's Common Stock under the Exchange Act.
Upon consummation of the Reorganization, Bancorp intends to file a
Registration Statement on Form S-8 to register the issuance of shares of Bancorp
Common Stock under the Stock Option Plans.
The issuance of Bancorp Common Stock (together with associated preferred
stock purchase rights) in connection with the Reorganization is exempt from
registration under the Securities Act, as a result of Section 3(a)(12) of the
Securities Act. Section 3(a)(12) exempts securities issued in connection with
the acquisition of a bank by a newly formed holding company from the
registration requirements of the Securities Act. In order to qualify for the
exemption (i) the acquisition must occur solely as part of a reorganization in
which security holders exchange their shares of the bank for shares of a newly
formed holding company with no significant assets other than securities of the
bank and its existing subsidiaries, (ii) the security holders must receive the
same proportional share interests in the holding company as they held in the
bank (except for changes resulting from elimination of fractional interests and
the exercise of dissenters' rights), (iii) the rights and interests of security
holders in the holding company must be substantially the same as those in the
bank prior to the transaction, other than as required by law, and (iv) the
assets and liabilities of the holding company on a consolidated basis must be
substantially the same assets and liabilities as the bank prior to the
transaction.
The exemption under Section 3(a)(12) would not apply to future issuances of
Bancorp Common Stock. Such future issuances would be subject to the registration
requirements of the Securities Act, unless another exemption under the
Securities Act were available. In addition, the Section 3(a)(12) exemption does
not cover the resale of any of Bancorp Common Stock issued in connection with
the Reorganization. Bancorp
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Common Stock received by persons who are not deemed to be "affiliates" (as such
term is defined under the Securities Act) of the Bank or Bancorp may be resold
without registration. Shares of Bancorp Common Stock received by persons who are
deemed to be "affiliates" of the Bank or Bancorp in connection with the
Reorganization will be subject to the resale restrictions of Rule 145 under the
Securities Act (or Rule 144 under the Securities Act in the case of such persons
who become affiliates of Bancorp), which are substantially the same as the
restrictions of Rule 144. Persons who may be deemed to be "affiliates" of the
Bank or Bancorp generally include individuals or entities that at the time the
Plan of Reorganization is submitted for a vote of the stockholders of the Bank
control, are controlled by, or are under common control with, such party and may
include certain officers and directors of such party as well as principal
stockholders of such party.
Under the terms of the proposed Reorganization whereby the Bank will become
a subsidiary of Bancorp, the Stock Option Plans will be continued as and become
the stock option plans of Bancorp if the Reorganization is approved at the
Special Meeting and consummated. Stock options with respect to shares of Bank
Common Stock granted under the Stock Option Plans and outstanding prior to
consummation of the Reorganization will automatically become options to purchase
the same number of shares of Bancorp Common Stock following the Reorganization,
upon identical terms and conditions and for an identical price, and Bancorp will
assume all of the Bank's obligations with respect to such outstanding options.
If the Plan of Reorganization is not approved by the stockholders of the Bank,
then the Stock Option Plans will continue to be the stock option plans of the
Bank.
RELATED PARTY TRANSACTIONS
Certain Directors and officers of the Bank and members of their immediate
families are at present, as in the past, customers of the Bank and have
transactions with the Bank in the ordinary course of business. In addition,
certain of the Directors are at present, as in the past, also directors,
officers or shareholders of corporations or members of partnerships which are
customers of the Bank and which have transactions with the Bank in the ordinary
course of business. Such transactions with Directors and officers of the Bank
and with such corporations and partnership are on terms comparable to those
charged to other customers of the Bank. Included in such transactions are loans
to Directors and officers and their associates which were made in the ordinary
course of business, on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons and which did not involve more than the normal risk of
collectability or present other features unfavorable to the Bank.
EMPLOYMENT CONTRACT, SPECIAL TERMINATION AGREEMENTS
The present employment agreement between the Chairman, President and Chief
Executive Officer of the Bank, which provides for a specified minimum annual
compensation and the continuation of benefits currently received, will be
amended to include Bancorp as a party. Such employment may be terminated for
cause, as defined, without incurring any continuing obligations. Similarly,
amended special termination agreements with the President and Chief Executive
Officer and certain senior executives currently in place with the Bank will be
further amended to include Bancorp as a party. The amended special termination
agreements generally provide for certain lump-sum severance payments within a
three-year period following a "change in control," as defined therein.
RECOMMENDATION OF DIRECTORS
The Plan of Reorganization has been unanimously approved by the Board of
Directors of the Bank and Bancorp. THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT
LEAST 66 2/3% OF THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK ELIGIBLE TO
BE CAST BY STOCKHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON THE RECORD DATE
WILL BE REQUIRED TO APPROVE THE PLAN OF REORGANIZATION AND EACH OF THE
TRANSACTIONS CONTEMPLATED THEREBY. THE BOARD OF DIRECTORS OF THE BANK BELIEVES
THAT THE PLAN OF REORGANIZATION IS IN THE BEST INTERESTS OF THE BANK AND ITS
STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS OF THE BANK VOTE FOR APPROVAL OF THE PLAN OF REORGANIZATION AND
EACH OF THE TRANSACTIONS CONTEMPLATED THEREBY.
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ACCOUNTANTS
The firm of Wolf & Company, P.C. served as the Bank's independent public
accountants for the year ended December 31, 1996 and is expected to serve as the
Bank's independent public accountants for 1997. Representatives of Wolf &
Company, P.C. are expected to be present at the Special Meeting to be available
to respond to appropriate questions, and to have the opportunity to make a
statement if they so desire.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders of Bancorp (or the Bank in the event the Reorganization
does not occur) must be filed with the Clerk of Bancorp or the Bank, as the case
may be, at least 75 days, but not more than 120 days, prior to the 1998 Annual
Meeting of Stockholders, in the case of Bancorp, or the anniversary date of the
prior meeting, in the case of the Bank, and no other nominations or proposals by
stockholders shall be acted upon at the meeting; provided, however, in the case
of the Bank, that if the Annual Meeting is scheduled to be held on a date more
than 30 days before the Anniversary Date or more than 60 days after the
Anniversary Date, notice by the stockholder must be so delivered or received no
later than the close of business on the 75th day prior to the scheduled date of
the Annual Meeting or the 15th day following the day on which public disclosure
of the date of such meeting is first made by the Bank. Any such proposal should
be mailed to: Clerk, Medford Savings Bank or Clerk, Medford Bancorp, Inc., as
the case may be, 29 High Street, Medford, Massachusetts 02155.
OTHER MATTERS
At the time of the preparation of this proxy material, the Board of
Directors of the Bank does not know of any other matter to be presented for
action at the Annual Meeting. If any other matters should come before the
meeting, proxy holders have discretionary authority to vote their shares
according to their best judgment.
The cost of soliciting proxies will be borne by the Bank. In addition to
solicitation by mail, officers and regular employees of the Bank, who will
receive no compensation for their services other than their salaries, may
solicit proxies personally, by telephone or by telegraph. Brokerage houses,
nominees, fiduciaries, and other custodians are requested to forward soliciting
material to the beneficial owners of shares held of record by them and will be
reimbursed for their expenses. The Bank also intends to employ the services of
Corporate Investors Communications ("CIC") to solicit proxies. It is estimated
that CIC will receive approximately $4,300, plus reimbursement of certain
out-of-pocket expenses, for its service in connection with such solicitation of
proxies.
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EXHIBIT A
PLAN OF REORGANIZATION AND ACQUISITION
PURSUANT TO SECTION 26B OF CHAPTER 172
OF THE GENERAL LAWS OF MASSACHUSETTS
This Plan of Reorganization and Acquisition (the "Plan") is dated as of
July 29, 1997, and made between Medford Savings Bank, a Massachusetts guaranty
(stock) savings bank (the "Bank"), and Medford Bancorp, Inc., a Massachusetts
corporation ("Bancorp").
The Bank is a stock savings bank, duly organized and validly existing
under the laws of the Commonwealth of Massachusetts, with its principal office
at 29 High Street, Medford, Massachusetts 02155. As of the date hereof, the
authorized capital stock of the Bank consists of (1) 15,000,000 shares of
common stock, par value $0.05 per share (the "Bank Common Stock"), of which
4,541,148 shares are issued and outstanding, 200,000 shares are reserved for
issuance under the Bank's 1993 Stock Option Plan (as the same may be renamed
from time to time), and, 736,000 shares are reserved for issuance under the
Bank's 1986 Stock Option Plan (the 1993 Stock Option Plan and the 1986 Stock
Option Plan are collectively referred to herein as the "Stock Option Plans"),
and (2) 5,000,000 shares of preferred stock, par value $0.50 per share, none of
which shares are issued and outstanding.
Bancorp is a corporation, duly organized and validly existing under the
laws of the Commonwealth of Massachusetts, with its principal office at 29 High
Street Medford, Massachusetts 02155. The articles of organization of Bancorp at
the Effective Time (as defined herein) will provide for authorized capital
stock consisting of 15,000,000 shares of common stock, par value $0.50 per
share (the "Bancorp Common Stock"), and 5,000,000 shares of preferred stock,
par value $0.50 per share. As of the date hereof, there are 100 shares of
Bancorp Common Stock issued and outstanding, all of which are held by the Bank.
The Bank and Bancorp have agreed that Bancorp will acquire all of the
issued and outstanding shares of Bank Common Stock (together with associated
preferred stock purchase rights) in exchange for shares of Bancorp Common stock
(together with associated preferred stock purchase rights) pursuant to the
provisions of Section 26B of Chapter 172 of the General Laws of Massachusetts
and of this Plan. The Plan has been adopted and approved by a vote of a
majority of all the members of the Board of Directors of the Bank, and by a
vote of a majority of all the members of the Board of Directors of Bancorp. The
officers of the Bank and of Bancorp whose respective signatures appear below
have been duly authorized to execute and deliver this Plan.
Now, THEREFORE, in consideration of these premises, the Bank and Bancorp
agree as follows:
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SECTION 1 - APPROVAL AND FILING OF PLAN
1.1 The Plan shall be submitted for approval by the holders of Bank
Common Stock at a meeting to be called and held in accordance with the
applicable provisions of law. Notice of such meeting shall be published at
least once a week for two successive weeks in a newspaper of general
circulation in the County of Suffolk, Commonwealth of Massachusetts. Both of
said publications shall be at least fifteen days prior to the date of the
meeting.
1.2 Upon approval of the Plan by the affirmative vote of the holders of
66 2/3% of the outstanding shares of Bank Common Stock as required by law, the
Bank and Bancorp shall submit the Plan to the Commissioner of Banks of the
Commonwealth of Massachusetts (the "Bank Commissioner") for his approval and
filing in accordance with the provisions of Section 26B of Chapter 172 of the
General Laws of Massachusetts. The Plan shall be accompanied by such
certificates of the respective officers of the Bank and Bancorp as may be
required by law and a written request from the Bank that the Plan not be filed
by the Bank Commissioner until such future time as the Bank Commissioner shall
have received from the Bank and Bancorp the written notice described in
Subsection 2.1.
1.3 If the requisite approval of the Plan is obtained at the meeting of
holders of Bank Common Stock referred to in Subsection 1.1, thereafter and
until the Effective Time, as hereinafter defined, the Bank shall issue
certificates for Bank Common Stock, whether upon transfer or otherwise, only if
such certificates bear a legend indicating that the Plan has been approved and
that shares of Bank Common Stock evidenced by such certificates are subject to
acquisition by Bancorp pursuant to the Plan.
SECTION 2 - DEFINITION OF EFFECTIVE TIME
2.1 The Plan shall become effective at 12:01 A.M. on the first business
day following the date on which the Bank and Bancorp advise the Bank
Commissioner in writing (i) that all the conditions precedent to the Plan
becoming effective specified in Section 5 have been satisfied and (ii) that the
Plan has not been abandoned by the Bank or Bancorp in accordance with the
provisions of Section 6, or at such other date and time as is specified in such
written notice to the Bank Commissioner. Such time is hereafter called the
"Effective Time."
SECTION 3 - ACTIONS AT THE EFFECTIVE TIME
3.1 At the Effective Time, Bancorp shall, without any further action on
its part or on the part of the holders of Bank Common Stock, automatically and
by operation of law acquire and become the owner for all purposes of all the
then issued and outstanding shares of Bank Common Stock (together with
associated preferred stock purchase rights) and shall be entitled to have issued
to it by the Bank a certificate or certificates representing such shares.
Thereafter, Bancorp shall have full and exclusive power to vote such shares of
Bank Common Stock, to receive dividends thereon and to exercise all rights of an
owner thereof.
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3.2. At the Effective Time, the shares of Bancorp Common Stock which are
outstanding immediately prior to the Effective Time shall be canceled.
3.3. At the Effective Time, the holders of the then issued and outstanding
shares of Bank Common Stock (together with associated preferred stock purchase
rights) shall, without any further action on their part or on the part of
Bancorp, automatically and by operation of law cease to own such shares and
shall instead become owners of one share of Bancorp Common Stock (together with
associated preferred stock purchase rights) for each share of Bank Common Stock
held by them immediately prior to the Effective Time. Thereafter, such persons
shall have full and exclusive power to vote such shares of Bancorp Common Stock,
to receive dividends thereon, except as otherwise provided herein, and to
exercise all rights of an owner thereof.
3.4. At the Effective Time, all previously issued and outstanding
certificates representing shares of Bank Common Stock (the "Old Certificates")
shall automatically and by operation of law cease to represent shares of Bank
Common Stock or any interest therein and each Old Certificate shall instead
represent the ownership by the holder thereof of an equal number of shares of
Bancorp Common Stock. No holder of an Old Certificate shall be entitled to vote
the shares of Bank Common Stock formerly represented by such certificate, or to
receive dividends thereon, or to exercise any other rights of ownership in
respect thereof.
3.5. Notwithstanding any of the foregoing, any Dissenting Stockholder, as
defined in Subsection 8.1, shall have such rights as are provided by Subsection
8.2 and by the laws of the Commonwealth of Massachusetts.
SECTION 4 - ACTIONS AFTER THE EFFECTIVE TIME
As soon as practicable and in any event not more than thirty days after the
Effective Time:
4.1. Bancorp shall deliver to the transfer agent for the Bank and Bancorp
(the "Transfer Agent"), as agent for the then holders of the Old Certificates
(other than Old Certificates representing shares of Bank Common Stock as to
which dissenters' appraisal rights shall have been exercised), a certificate or
certificates for the aggregate number of shares of Bancorp Common Stock (the
"New Certificates"), to which said holders shall be entitled. Each such holder
may surrender his Old Certificate to the Transfer Agent and receive in exchange
therefor a New Certificate for an equal number of shares of Bancorp Common
Stock. However, holders of Old Certificates need not surrender Old Certificates
to the transfer Agent in exchange for a New Certificate. The Transfer Agent
shall treat Old Certificates as representing for all purposes an equal number
of shares of Bancorp Common Stock.
4.2. Bancorp may publish a notice to the holders of all Old Certificates,
specifying the Effective Time of the Plan and notifying such holders that they
may present their Old Certificates to the Transfer Agent for exchange for a
New Certificate representing an equal number of shares of Bancorp Common Stock.
Such notice may likewise be given by mail to such holders at their addresses on
the Bank's records.
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SECTION 5--CONDITIONS PRECEDENT
The Plan and the acquisition provided for herein shall not become
effective unless all of the following first shall have occurred:
5.1 The Plan shall have been approved by the affirmative vote of the
holders of two-thirds of the outstanding Bank Common Stock at a meeting of such
stockholders called for such purpose.
5.2 The Plan shall have been approved by the Bank Commissioner and a copy
of the Plan with his approval endorsed thereon shall have been filed in his
office, all as provided in Section 26B of Chapter 172 of the General Laws of
Massachusetts.
5.3 Any approval, consent, or waiver required by the Board of Governors
of the Federal Reserve System shall have been received, and any waiting period
imposed by applicable law shall have expired.
5.4 The Bank shall have received a favorable opinion from its counsel,
satisfactory in form and substance to the Bank, with respect to the federal
income tax consequences of the Plan and the acquisition contemplated thereby.
5.5 The shares of Bancorp Common Stock (together with associated
preferred stock purchase rights) to be issued to the holders of Bank Common
Stock pursuant to the Plan shall have been registered or qualified for such
issuance to the extent required under all applicable state securities laws.
5.6 The Bank and Bancorp shall have obtained all other consents,
permissions and approvals and taken all actions required by law or agreement,
or deemed necessary by the Bank or Bancorp, prior to the consummation of the
acquisition provided for by the Plan and to Bancorp's having and exercising all
rights of ownership with respect to all of the outstanding shares of Bank
Common Stock acquired by it thereunder.
SECTION 6--ABANDONMENT OF PLAN
6.1 The Plan may be abandoned by either the Bank or Bancorp at any time
before the Effective Time in the event that:
(a) Necessary regulatory approvals cannot be obtained, or the
conditions or obligations associated with such regulatory approvals make
consummation of the acquisition contemplated by the Plan inadvisable in the
opinion of Bank or Bancorp;
(b) The number of shares of Bank Common Stock owned by Dissenting
Stockholders, as defined in Subsection 8.1, shall make consummation of the
acquisition contemplated by the Plan inadvisable in the opinion of the Bank or
Bancorp;
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(c) Any action, suit, proceeding or claim has been instituted, made or
threatened relating to the Plan which shall make consummation of the
acquisition contemplated by the Plan inadvisable in the opinion of the Bank or
Bancorp; or
(d) For any other reason consummation of the acquisition contemplated
by the Plan is inadvisable in the opinion of the Bank or Bancorp.
Such abandonment shall be effected by written notice by either the Bank or
Bancorp to the other of them, and shall be authorized or approved by the Board
of Directors of the party giving such notice. Upon the giving of such notice,
the Plan shall be terminated and there shall be no liability hereunder or on
account of such on the part of the Bank or Bancorp or the Directors, officers,
employees, agents or stockholders of either of them. In the event of
abandonment of the Plan, the Bank shall pay the fees and expenses incurred by
itself and Bancorp in connection with the Plan and the proposed acquisition. If
either party hereto gives written notice of termination to the other party
pursuant to this section, the party giving such written notice shall
simultaneously furnish a copy thereof to the Bank Commissioner.
SECTION 7 -- AMENDMENT OF PLAN
7.1. The Plan may be amended or modified at any time by mutual agreement of
the Boards of Directors of Bancorp and the Bank (i) prior to its approval by
the stockholders of the Bank, in any respect, and (ii) subsequent to such
approval, in any respect, provided that the Bank Commissioner shall approve of
such amendment or modification.
SECTION 8 -- RIGHTS OF DISSENTING STOCKHOLDERS
8.1. "Dissenting Stockholders" shall mean those holders of Bank Common
Stock who file with the Bank before the taking of the vote on the Plan, written
objection to the Plan, pursuant to Section 86 of Chapter 156B of the General
Laws of Massachusetts, stating that they intend to demand payment for their
shares of Bank Common Stock if the Plan is consummated and whose shares are not
voted in favor of the Plan.
8.2. Dissenting Stockholders who comply with the provisions of Sections 86
to 98, inclusive, of Chapter 156B of the General Laws of Massachusetts and all
other applicable provisions of law shall be entitled to receive from the Bank
payment of the fair value of their shares of Bank Common Stock upon surrender
by such holders of the certificates which previously represented shares of Bank
Common Stock. Certificates so obtained by the Bank, upon payment of the fair
value of such shares as provided by law, shall be canceled. Shares of Bancorp
Common Stock, to which Dissenting Stockholders would have been entitled had
they not dissented, shall be deemed to constitute authorized but unissued
shares of Bancorp Common Stock and may be sold or otherwise disposed of by
Bancorp at the discretion of, and on such terms as may be fixed by, its Board
of Directors.
5
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SECTION 9 -- STOCK OPTIONS
By voting in favor of the Plan and by consummation of the acquisition
contemplated by the Plan, Bancorp shall have approved adoption by Bancorp of
the Stock Option Plans of the Bank as the Stock Option Plans of Bancorp and
shall have agreed to issue Bancorp Common Stock in lieu of Bank Common Stock
pursuant to stock options then outstanding under the Stock Option Plans. As of
the Effective Time, the unexercised portion of the options outstanding under
the existing Stock Option Plans shall be assumed by Bancorp and thereafter
shall be exercisable only for shares of Bancorp Common Stock, with each such
option being exercisable for a number of shares of Bancorp Common Stock equal to
the number of shares of Bank Common Stock that were available thereunder
immediately prior to the Effective Time, and with no change in the exercise
price or any other term or condition of such option. Bancorp and the Bank shall
make appropriate amendments to the Stock Option Plans to reflect the adoption of
such plans as the Stock Option Plans of Bancorp without adverse effect upon the
options outstanding under the Stock Option Plans.
SECTION 10 -- GOVERNING LAW
The Plan shall take effect as a sealed instrument and shall be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts.
SECTION 11 -- COUNTERPARTS
The Plan may be executed in several identical counterparts, each of which
when executed and delivered by the parties hereto shall be an original, but all
of which together shall constitute a single instrument. In making proof of the
Plan, it shall not be necessary to produce or account for more than one such
counterpart.
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MEDFORD SAVINGS BANK
By: /s/ Arthur H. Meehan
---------------------------------
Arthur H. Meehan
Chairman, President and Chief
Executive Officer
ATTEST:
/s/ Eugene R. Murray
- - - --------------------------------------
Eugene R. Murray
Clerk
MEDFORD BANCORP, INC.
By: /s/ Arthur H. Meehan
---------------------------------
Arthur H. Meehan
Chairman, President and Chief
Executive Officer
ATTEST:
/s/ Eugene R. Murray
- - - --------------------------------------
Eugene R. Murray
Clerk
7
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EXHIBIT B
PROVISIONS OF THE GENERAL LAW OF MASSACHUSETTS
RELATING TO RIGHTS OF DISSENTING STOCKHOLDERS
(Sections 86 to 98 of Chapter 156B of the
General Laws of Massachusetts)
SECTION 86. Sections Applicable To Appraisal; Prerequisites. If a
corporation proposes to take a corporate action as to which any section of this
chapter provides that a stockholder who objects to such action shall have the
right to demand payment for his shares and an appraisal thereof, sections
eighty-seven to ninety-eight, inclusive, shall apply except as otherwise
specifically provided in any section of this chapter. Except as provided in
sections eighty-two and eighty-three, no stockholder shall have such right
unless (1) he files with the corporation before the taking of the vote of the
shareholders on such corporate action, written objection to the proposed action
stating that he intends to demand payment for his shares if the action is taken
and (2) his shares are not voted in favor of the proposed action.
SECTION 87. Statement Of Rights Of Objecting Stockholder In Notice of
Meeting; Form. The notice of the meeting of stockholders at which the approval
of such proposed action is to be considered shall contain a statement of
the rights of objecting stockholders. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock, and the directors may authorize the inclusion in any such
notice of a statement of opinion by the management as to the existence or
non-existence of the right of the stockholders to demand payment for their
stock on account of the proposed corporate action. The notice may be in such
form as the directors or officers calling the meeting deem advisable, but the
following form of notice shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the corporation
before the taking of the vote on the approval of such action, written objection
to the proposed action stating that he intends to demand payment for his shares
if the action is taken and (2) whose shares are not voted in favor of such
action has or may have the right to demand in writing from the corporation (or,
in the case of a consolidation or merger, the name of the resulting or surviving
corporation shall be inserted), within twenty days after the date of mailing to
him of notice in writing that the corporate action has become effective, payment
for his shares and an appraisal of the value thereof. Such corporation and any
such stockholder shall in such cases have the rights and duties and shall
follow the procedure set forth in Sections 88 to 98, inclusive, of Chapter 156B
of the General Laws of Massachusetts."
SECTION 88. Notice Of Effectiveness Of Action Objected To. The
corporation taking such action, or in the case of a merger or consolidation the
surviving or resulting corporation, shall, within ten days after the date on
which such corporate action became effective, notify each stockholder who filed
a written objection meeting the requirements of section eighty-six and whose
shares were not voted in favor of the approval of such action, that the action
approved at the meeting of the corporation of which he is a stockholder has
become effective. The giving of such notice shall not be deemed to create any
rights in any stockholder receiving the same to demand payment for his stock.
The notice shall be sent by registered or certified mail, addressed to the
stockholder at his last known address as it appears in the records of the
corporation.
SECTION 89. Demand For Payment; Time For Payment. If within twenty days
after the date of mailing of a notice under subsection (e) of section
eighty-two, subsection (f) of section eighty-three, or section eighty-eight,
any stockholder to whom the corporation was required to give such notice shall
demand in writing from the corporation taking such action, or in the case of a
consolidation or merger from the resulting or surviving corporation, payment
for his stock, the corporation upon which such demand is made shall pay to him
30
the fair value of his stock within thirty days after the expiration of the
period during which such demand may be made.
SECTION 90. Demand For Determination of Value; Bill In Equity; Venue. If
during the period of thirty days provided for in section eighty-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county
where the corporation in which such objecting stockholder held stock had or has
its principal office in the commonwealth.
SECTION 91. Parties To Suit To Determine Value; Service. If the bill is
filed by the corporation, it shall name as parties respondent all stockholders
who have demanded payment for their shares and with whom the corporation has
not reached agreement as to the value thereof. If the bill is filed by a
stockholder, he shall bring the bill in his own behalf and in behalf of all
other stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof, and service of
the bill shall be made upon the corporation by subpoena with a copy of the bill
annexed. The corporation shall file with its answer a duly verified list of all
such other stockholders, and such stockholders shall thereupon be deemed to
have been added as parties to the bill. The corporation shall give notice in
such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
SECTION 92. Decree Determining Value And Ordering Payments; Valuation
Date. After hearing the court shall enter a decree determining the fair value
of the stock of those stockholders who have become entitled to the valuation of
and payment for their shares, and shall order the corporation to make payment
of such value, together with interest, if any, as hereinafter provided, to the
stockholders entitled thereto upon the transfer by them to the corporation of
the certificates representing such stock if certificated or, if uncertificated,
upon receipt of an instruction transferring such stock to the corporation. For
this purpose, the value of the shares shall be determined as of the day
preceding the date of the vote approving the proposed corporate action and
shall be exclusive of any element of value arising from the expectation or
accomplishment of the proposed corporate action.
SECTION 93. Reference to Special Master. The court in its discretion may
refer the bill or any question arising thereunder to a special master to hear
the parties, make findings and report the same to the court, all in accordance
with the usual practice in suits in equity in the superior court.
SECTION 94. Notation On Stock Certificates Of Pendency Of Bill. On motion
the court may order stockholder parties to the bill to submit their
certificates of stock to the corporation for the notation thereon of the
pendency of the bill and may order the corporation to note such pendency in its
records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
SECTION 95. Costs; Interest. The costs of the bill, including the
reasonable compensation and expenses of any master appointed by the court, but
exclusive of fees of counsel or of experts retained by any party, shall be
determined by the court and taxed upon the parties to the bill, or any of them,
in such manner as appears to be equitable, except that all costs of giving
notice to stockholders as provided in this chapter shall
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31
be paid by the corporation. Interest shall be paid upon any award from the date
of the vote approving the proposed corporate action, and the court may on
application of any interested party determine the amount of interest to be paid
in the case of any stockholder.
SECTION 96. Dividends And Voting Rights After Demand For Payment. Any
stockholder who has demanded payment for his stock as provided in this chapter
shall not thereafter be entitled to notice of any meeting of stockholders or to
vote such stock for any purpose and shall not be entitled to the payment of
dividends or other distribution on the stock (except dividends or other
distributions payable to stockholders of record at a date which is prior to the
date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section
ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the
corporation, or in the case of a consolidation or merger, the
resulting or surviving corporation, deliver to it a written
withdrawal of his objections to and an acceptance of such
corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
SECTION 97. Status Of Shares Paid For. The shares of the corporation paid
for by the corporation pursuant to the provisions of this chapter shall have the
status of treasury stock, or in the case of a consolidation or merger the shares
or the securities of the resulting or surviving corporation into which the
shares of such objecting stockholder would have been converted had he not
objected to such consolidation or merger shall have the status of treasury stock
or securities.
SECTION 98. Exclusive Remedy; Exception. The enforcement by a stockholder
of his right to receive payment for his shares in the manner provided in this
chapter shall be an exclusive remedy except that this chapter shall not exclude
the right of such stockholder to bring or maintain an appropriate proceeding to
obtain relief on the ground that such corporate action will be or is illegal or
fraudulent as to him.
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EXHIBIT C
THE COMMONWEALTH OF MASSACHUSETTS
- - - ---------
Examiner William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B)
- - - ---------
Name
Approved
ARTICLE I
The exact name of the corporation is:
Medford Bancorp, Inc.
ARTICLE II
The purpose of the corporation is to engage
in the following business activities:
See attached Addendum A to the Articles of Organization.
C / / Note: If the space provided under any article or item on this form is
P / / insufficient, additions shall be set forth on one side only of
M / / separate 8 1/2 x 11 sheets of paper with a left margin of at least 1
R.A. / / inch. Additions to more than one article may be made on a single sheet
so long as each article requiring each addition is clearly indicated.
- - - ----------
P.C.
33
ARTICLE III
State the total number of shares and par value, if any, of each class of stock
which the corporation is authorized to issue.
WITHOUT PAR VALUE WITH PAR VALUE
- - - ------------------------------- --------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- - - ---- ---------------- ---- ---------------- ---------
Common: 0 Common: 15,000,000 $.50
- - - -------------------------------------------------------------------------------
Preferred: 0 Preferred: 5,000,000 $.50
- - - -------------------------------------------------------------------------------
ARTICLE IV
If more than one class of stock is authorized, state a distinguishing
designation for each class. Prior to the issuance of any shares of a class, if
shares of another class are outstanding, the corporation must provide a
description of the preferences, voting powers, qualifications, and special or
relative rights or privileges of that class and of each other class of which
shares are outstanding and of each series then established within any class.
See attached Addendum B to the Articles of Organization.
ARTICLE V
The restrictions, if any, imposed by the Articles of Organization upon the
transfer of shares of stock of any class are:
None.
ARTICLE VI
**Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary dissolution, or for
limiting, defining, or regulating the powers of the corporation, or of its
directors or stockholders, or of any class of stockholders:
See attached Addendum C to the Articles of Organization.
**If there are no provisions state "None".
Note: The preceding six (6) articles are considered to be permanent and may
ONLY be changed by filing appropriate Articles of Amendment.
34
ADDENDUM A
TO THE
ARTICLES OF ORGANIZATION
OF
MEDFORD BANCORP, INC.
ARTICLE II
A. To acquire, invest in or hold stock in any subsidiary permitted under (i)
the Bank Holding Company Act of 1956, and (ii) Massachusetts General Laws,
Chapter 167A, as such statutes may be amended from time to time, and to
engage in any other activity or enterprise permitted to a bank holding
company under said statutes or other applicable law.
B. To buy, sell, invest in, hold and deal in property of every nature and
description, real and personal, tangible and intangible permissible for
such a corporation.
C. To carry on any business or other activity which may be lawfully carried
on by a corporation organized under the Business Corporation Law of the
Commonwealth of Massachusetts, whether or not related to those referred
to in the foregoing paragraphs.
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ADDENDUM B
TO THE
ARTICLES OF ORGANIZATION
OF
MEDFORD BANCORP, INC.
ARTICLE IV. Capital Stock.
The total number of shares of all classes of capital stock which Medford
Bancorp, Inc. ("Bancorp") is authorized to issue is 20,000,000 shares, of which
15,000,000 shares shall be common stock, $.50 par value per share, and
5,000,000 shares shall be preferred stock, $.50 par value per share. The shares
may be issued by Bancorp from time to time by a vote of its Board of Directors
without the approval of its stockholders. Upon payment of lawful 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 Bancorp which is transferred to
stated capital upon the issuance of shares as a stock dividend shall be deemed
to be the consideration for their issuance.
A description of the different classes and series of Bancorp's capital
stock and a statement of the designations and the relative rights, preferences
and limitation of the shares of each class and series of capital stock are as
follows:
A. Common Stock. Except as provided by law or in this Article IV (or in
any supplemental sections hereto or in any certificate of establishment of any
series of preferred stock), 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. There shall be no
cumulative voting rights in the election of Directors.
If 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 a sinking fund or a 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; but only when and
as declared by the Board of Directors.
In the event of any liquidation, dissolution or winding up of Bancorp,
after there shall have been paid to or set aside for the holders of any class
having preference over the common stock in the event of liquidation,
dissolution or winding up of Bancorp the full preferential amounts to which
they are respectively entitled, the holders of the common stock, and of any
class or series of stock entitled to participate in whole or in part therewith
as to distribution of
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assets, shall be entitled, after payment or provision for payment of all debts
and liabilities of Bancorp, to receive the remaining assets of Bancorp
available for distribution, in cash or in kind, in proportion to their holdings.
B. Preferred Stock. The Board of Directors of Bancorp is authorized by
vote or votes, from time to time adopted, to provide for the issuance of
preferred stock in one or more series and to fix and state the voting powers,
designations, preferences and relative participating, optional or other special
rights of the shares of each series and the qualifications, limitations, and
restrictions thereof, including, but not limited to, determination of one or
more of the following:
(1) The distinctive serial designation and the number of shares
constituting such series;
(2) The dividend rates 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 or dates, the payment date or dates for dividends and the
participating or other special rights, if any, with respect to dividends;
(3) The voting powers, if any, of shares of such series;
(4) Whether the shares of such series shall be redeemable and, if so,
the price or prices at which, and the terms and conditions on which, such
shares may be redeemed;
(5) The amount or amounts payable upon the shares of such series in
the event of voluntary or involuntary liquidation, dissolution or winding
up of Bancorp;
(6) 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 or prices at which such
shares may be redeemable or purchased through the application of such fund;
(7) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or of any other
series of the same or any other class or classes of stock of Bancorp, and
if so convertible or exchangeable, the conversion price or prices, or the
rate or rates 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;
(8) The price or other consideration for which the shares of such
series shall be issued; and
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(9) Whether the shares of such series which are redeemed or
converted shall have the status of authorized but unissued shares of
preferred stock and whether such shares may be reissued as shares of the
same or any other series of stock.
Unless otherwise provided by law, any such vote shall become effective
when Bancorp files with the Secretary of State of the Commonwealth of
Massachusetts a certificate of establishment of one or more series of preferred
stock signed by the President or any Vice President and by the Clerk, Assistant
Clerk, Secretary or Assistant Secretary of Bancorp, setting forth a copy of the
vote of the Board of Directors establishing and designating the series and
fixing and determining the relative rights and preferences thereof, the date of
adoption of such vote and a certification that such vote was duly adopted by
the Board of Directors.
B-3
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ADDENDUM C
TO THE
ARTICLES OF ORGANIZATION
OF
MEDFORD BANCORP, INC.
ARTICLE VI(A). Certain Business Combinations.
SECTION 1. Vote Required for Certain Business Combinations.
A. Required Vote for Certain Business Combinations. In addition to any
affirmative vote required by the Massachusetts General Laws or by these
Articles of Organization, and except as otherwise expressly provided in Section
2 of this Article VI(A):
(1) any merger or consolidation of Bancorp or any Subsidiary (as
hereinafter defined) with (a) any Interested Stockholder (as hereinafter
defined) or (b) any other corporation or entity (whether or not itself
an Interested Stockholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an Interested
Stockholder;
(2) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Stockholder or any Affiliate of any Interested Stockholder of
any assets of Bancorp or any Subsidiary having an aggregate Fair Market
Value (as hereinafter defined) of $1,000,000 or more;
(3) the issuance or transfer by Bancorp or any Subsidiary (in one
transaction or a series of transactions) or any securities of Bancorp
or any Subsidiary to any Interested Stockholder or any Affiliate of any
Interested Stockholder in exchange for cash, securities, or other
property (or a combination thereof) having an aggregate Fair Market
Value of $1,000,000 or more;
(4) the adoption of any plan or proposal for the liquidation or
dissolution of Bancorp proposed by or on behalf of any Interested
Stockholder of any Affiliate of any Interested Stockholder; or
(5) any reclassification of securities (including any reverse stock
split), any recapitalization of Bancorp, any merger or consolidation of
Bancorp with any of its Subsidiaries or any other transaction (whether or
not with or into or otherwise involving any Interested Stockholder)
which has the effect, directly or indirectly, of increasing the proportion
of the outstanding shares of any class of equity or convertible securities
of Bancorp or any Subsidiary which is directly or indirectly owned by any
Interested Stockholder or any Affiliate of any Interested Stockholder;
C-1
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shall require (subject to Section 2 or this Article VI(A)) the affirmative vote
of the holders of at least eighty percent of the voting power of the then
outstanding shares of capital stock of Bancorp entitled to vote generally in
the election of directors (the "Voting Stock"), voting together as a single
class. Such affirmative vote shall be required notwithstanding the fact that no
vote may be required or that a lesser percentage may be specified by law.
B. Definition of "Business Combination." The term "Business
Combination" as used in this Article VI(A) shall mean any transaction which is
referred to in any one or more of clauses (1) through (5) of Paragraph A of
this Section 1.
SECTION 2. When Higher Vote is Not Required.
The provisions of Section 1 of this Article VI(A) shall not be applicable
to any particular Business Combination, and such Business Combination shall
require only such affirmative vote as is required by law and any other provision
of these Articles of Organization, if all of the conditions specified in either
of the following Paragraphs A or B are met:
A. Approval by Continuing Directors. The Business Combination shall have
been approved by a majority of the Continuing Directors then in office (as
hereinafter defined); or
B. Price and Procedure Requirements. All of the following conditions
shall have been met:
(1) The aggregate amount of cash and the Fair Market Value as of the
date of the consummation of the Business Combination (the "Consummation
Date") of any consideration other than cash to be received per share by holders
of common stock in such Business Combination shall be at least equal to the
highest of the following:
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder for any shares of common
stock acquired by it (i) within the two-year period immediately
prior to and including the first public announcement of the
proposed Business Combination (the "Announcement Date") or (ii)
in the transaction in which it became an Interested Stockholder,
whichever is higher;
(b) the highest Fair Market Value per share of common stock
on any date during the one-year period prior to and including the
Announcement Date; and
(c) (if applicable) the price per share equal to the product
of (i) the Fair Market Value per share of common stock on the
Announcement Date or on the date on which the Interested
Stockholder
C-2
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became an Interested Stockholder (such later date is referred to
in this Article VI(A) as the "Determination Date"), whichever
is higher, multiplied by (ii) the ratio of (x) the highest per
share price (including any brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by the Interest Stockholder
for any shares of common stock acquired by it within the two-year
period immediately prior to and including the Announcement Date
to (y) the Fair Market Value per share of common stock on the
first day in such two-year period upon which the Interested
Stockholder acquired any shares of common stock.
(2) The aggregate amount of the cash and the Fair Market Value as of
the Consummation Date of the Business Combination of consideration other than
cash to be received per share by holders of any other class of outstanding
Voting Stock shall be at least equal to the highest of the following (it being
intended that the requirements of this Paragraph B(2) shall be required to be
met with respect to every other class of outstanding Voting Stock, whether or
not the Interested Stockholder has previously acquired any shares of a
particular class of Voting Stock):
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder for any shares of such
class of Voting Stock acquired by it (i) within the two-year
period immediately prior to and including the Announcement Date
or (ii) in the transaction in which it became an Interested
Stockholder, whichever is higher;
(b) (if applicable) the highest preferential amount per share
which the holders of shares of such class of Voting Stock are
entitled to receive from Bancorp in the event of any voluntary or
involuntary liquidation, dissolution or winding up of Bancorp;
(c) the highest Fair Market Value per share of such class of
Voting Stock on any date during the one-year period prior to and
including the Announcement Date; and
(d) (if applicable) the price per share equal to the product of
(i) the Fair Market Value per share of such class of Voting Stock
on the Announcement Date or on the Determination Date, whichever
is higher, multiplied by (ii) the ratio of (x) the highest per
share price (including any brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by the Interested Stockholder
for any shares of such class of Voting Stock acquired by it
within the two-year period immediately prior to and including the
Announcement Date to (y) the Fair Market Value per share of such
class of Voting Stock on the first day in such two-year period
C-3
41
upon which the Interested Stockholder acquired any shares of
such class of Voting Stock.
(3) The consideration to be received by holders of a particular class of
outstanding Voting Stock (including common stock) shall be in cash or in the
same form as the Interested Stockholder has previously paid for shares of such
class of Voting Stock. If the Interested Stockholder has paid for shares of any
class of Voting Stock with varying forms of consideration, the form of
consideration for such class of Voting Stock shall be either cash or the form
used to acquire the largest number of shares of such class of Voting Stock
previously acquired by it.
(4) After such Interested Stockholder has become an Interested Stockholder
and prior to the consummation of any such Business Combination:
(a) there shall have been (i) no failure to declare and pay at
regular dates therefor the full amount of any dividends (whether or
not cumulative) payable on any class or series having a preference
over the common stock of Bancorp as to dividends or upon liquidation,
except as approved by a majority of the Continuing Directors; (ii) no
reduction in the annual rate of dividends paid on the common stock
(except as necessary to reflect any subdivision of the common stock),
except as approved by a majority of the Continuing Directors; and
(iii) an increase in such annual rate of dividends as necessary to
reflect any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which has
the effect of reducing the number of outstanding shares of the common
stock, unless the failure to so increase such annual rate is approved
by a majority of the Continuing Directors; and
(b) such Interested Stockholder shall have not become the
beneficial owner of any additional shares of Voting Stock except as
part of the transaction which results in such Interested Stockholder's
becoming an Interested Stockholder.
(5) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the benefit,
directly or indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax credits
or other tax advantages provided by Bancorp, whether in anticipation of or in
connection with such Business Combination or otherwise, unless such transaction
shall have been approved or ratified by a majority of the Continuing Directors
after such person shall have become an Interested Stockholder.
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(6) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange
Act of 1934 and the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall be mailed to
public stockholders of Bancorp at least twenty days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such Act or
subsequent provisions).
SECTION 3. Certain Definitions.
For the purpose of these Articles of Organization:
A. A "person" shall mean an individual, a group acting in concert, a
corporation, a partnership, a limited liability company, an association, a
joint stock company, a trust, a business trust, a government or political
subdivision, any unincorporated organization and any similar association or
entity.
B. "Interested Stockholder" shall mean any person (other than Bancorp or
any Subsidiary) who or which:
(1) is the beneficial owner, directly or indirectly, of more than ten
percent of the voting power of the then outstanding shares of Voting Stock;
(2) is an Affiliate of Bancorp and at any time within the two-year
period immediately prior to and including the date in question was the
beneficial owner, directly or indirectly, of ten percent of more of the
voting power of the then outstanding shares of Voting Stock; or
(3) is an assignee of or has otherwise succeeded to the beneficial
ownership of any shares of Voting Stock which were at any time within the
two-year period immediately prior to and including the date in question
beneficially owned by any Interested Stockholder, if such assignment or
succession shall have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning of the
Securities Act of 1933 and such assignment or succession was not approved
by a majority of the Continuing Directors.
C. A person shall be a "beneficial owner" of any shares of Voting Stock:
(1) which such person or any of its Affiliates or Associates, directly
or indirectly, has or shares with respect to the Voting Stock (a) the right
to acquire or direct the acquisition of (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction of
any conditions or both), pursuant to any agreement, arrangement or
understanding or upon the exercise of any conversion rights, warrants, or
options or otherwise; (b) the right to vote, or direct the voting of,
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pursuant to any agreement, arrangement or understanding or otherwise; or
(c) the right to dispose of or transfer or direct the disposition or
transfer of, pursuant to any agreement, arrangement, understanding or
otherwise; or
(2) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement, or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of Voting
Stock.
D. For the purpose of determining whether a person is an Interested
Stockholder pursuant to Paragraph B of this Section 3, the number of shares of
Voting Stock deemed to be outstanding shall include shares deemed owned by such
person through application of Paragraph C of this Section 3 but shall not
include any other shares of Voting Stock which may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion rights,
warrants or options or otherwise.
E. "Affiliate" or "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended.
F. "Subsidiary" means any corporation of which a majority of any class of
equity security is owned, directly or indirectly, by Bancorp; provided,
however, that for the purposes of the definition of Interested Stockholder set
forth in Paragraph B of this Section 3, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity security is owned,
directly or indirectly, by Bancorp.
G. "Continuing Director" means any member of the Board of Directors of
Bancorp (the "Board") who is not an Affiliate or Associate of the Interested
Stockholder and was a member of the Board prior to the time that the Interested
Stockholder became an Interested Stockholder, and any successor of a Continuing
Director who is not an Affiliate or Associate of the Interested Stockholder and
is recommended to succeed a Continuing Director by a majority of Continuing
Directors then on the Board.
H. "Fair Market Value" means:
(1) in the case of stock, the highest closing sale price during the
thirty-day period immediately preceding the date in question of a share of
such stock on the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such stock is listed,
or, if such stock is not listed on any such exchange, the highest closing
bid quotation with respect to a share of such stock during the thirty-day
period preceding the date in question on the National Association of
Securities Dealers Automated Quotation System or any comparable system
then in use, or if no such quotations are available, the fair market value
on the date in question of a
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share of such stock as determined by at least a majority of the Continuing
Directors of the Board in good faith; and
(2) in the case of property other than cash or stock, the fair market
value of such property on the date in question as determined by at least a
majority of the Continuing Directors of the Board in good faith.
I. "Group Acting in Concert" shall mean persons seeking to combine or pool
their voting or other interests in the securities of Bancorp for a common
purpose, pursuant to any contract, understanding, relationship, agreement or
other arrangement, whether written, oral or otherwise, or any "group of
persons" as defined under Section 13(d) of the Securities Exchange Act of 1934.
When persons act together for any such purpose, their group is deemed to have
acquired their stock.
J. In the event of any Business Combination in which Bancorp survives, the
phrase "other consideration to be received" as used in Paragraphs B(1) and (2)
of Section 2 of this Article VI(A) shall include the shares of common stock
and/or the shares of any other class of outstanding Voting Stock retained by
the holders of such shares.
SECTION 4. Powers of the Board of Directors.
A majority of the Directors of Bancorp (or, if there is an Interested
Stockholder, a majority of the Continuing Directors then in office) shall have
the power to determine for the purposes of this Article VI(A), on the basis of
information known to them after reasonable inquiry, (A) whether a person is an
Interested Stockholder, (B) the number or percentage of any class of securities
beneficially owned by any person, (C) whether a person is an Affiliate or
Associate of or is affiliated or associated with another, (D) whether the
requirements of Section 2 of this Article VI(A) have been met with respect to
any Business Combination, (E) whether the assets which are the subject of any
Business Combination have, or the consideration to be received for the issuance
or transfer of securities by Bancorp or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $1,000,000 or more and (F)
any other matters of interpretation arising under this Article VI(A). The good
faith determination of a majority of the Directors (or, if there is an
Interested Stockholder, a majority of the Continuing Directors then in office)
on such matters shall be conclusive and binding for all purposes of this Article
VI(A).
SECTION 5. No Effect on Fiduciary Obligations of Interested Stockholders.
Nothing contained in this Article VI(A) shall be construed to relieve any
Interested Stockholder from any fiduciary obligation imposed by law.
ARTICLE VI(B). Standards for Board of Directors' Evaluation of Offers.
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The Board of Directors of Bancorp, when evaluating any offer of another
person (as defined in Article VI(A) hereof) to (A) make a tender or exchange
offer for any equity security of Bancorp or any Subsidiary (as defined in
Article VI(A) hereof), (B) merge or consolidate Bancorp or any Subsidiary with
another institution or (C) purchase or otherwise acquire all or substantially
all of the properties and assets of Bancorp or any Subsidiary, shall, in
connection with the exercise of its judgment in determining what is in the best
interests of Bancorp and its stockholders, give due consideration to all
relevant factors including, without limitation, the social and economic effects
of acceptance of such offer on Bancorp's and/or any Subsidiaries' present and
future account holders, borrowers and employees; on the communities in which
Bancorp or any Subsidiary operates or is located; and on the ability of
Bancorp and its Subsidiaries to fulfill their objectives under applicable
statutes and regulations.
ARTICLE VI(C). Pre-emptive Rights.
Holders of the capital stock of Bancorp shall not be entitled to
preemptive rights with respect to any shares of the capital stock of Bancorp
which may be issued.
ARTICLE VI(D). Directors.
Bancorp shall be under the direction of a Board of Directors. The number
of Directors shall not be fewer nor more than permitted by law. The Board of
Directors shall be divided into three classes as nearly equal in number as
possible, with one class to be elected annually.
Any Director (including persons elected by Directors to fill vacancies in
the Board of Directors) may be removed from office, with or without cause, by
an affirmative vote of not less than (i) 80% of the total votes eligible to be
cast by stockholders in the election of directors at a duly constituted meeting
of stockholders called expressly for such purpose, or (ii) 66 2/3% of the
members of the Board of Directors then in office, unless at the time of such
removal there shall be an Interested Stockholder, in which case the affirmative
vote of not less than a majority of the Continuing Directors then in office
shall instead be required for removal by vote of the Board of Directors. At
least thirty days prior to such meeting of stockholders, written notice shall
be sent to the Director whose removal will be considered at the meeting.
ARTICLE VI(E). Transactions with Interested Persons.
SECTION 1. Unless entered into in bad faith or in violation of any provision of
these Articles of Organization, no contract or transaction by Bancorp shall be
void, voidable or in any way affected by reason of the fact that it is with an
Interested Person.
SECTION 2. For the purposes of this Article VI(E), "Interested Person" means
any person or organization in any way interested in Bancorp whether as a
director, officer, stockholder, employee or otherwise, and any other entity in
which any such person or organization of Bancorp is in any way interested.
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SECTION 3. Unless such contract or transaction was entered into in bad faith or
in violation of any provision of these Articles of Organization, no Interested
Person, because of such interest, shall be liable to Bancorp or to any other
person or organization for any loss or expense incurred by reason of such
contract or transaction or shall be accountable for any gain or profit realized
from such contract or transaction.
SECTION 4. The provisions of this Article VI(E) shall be operative
notwithstanding the fact that the presence of an Interested Person was
necessary to constitute a quorum at a meeting of Directors or stockholders of
Bancorp at which such contract or transaction was authorized or that the vote
of an Interested Person was necessary for the authorization of such contract or
transaction.
ARTICLE VI(F). Acting as a Partner.
Bancorp may be a partner in any business enterprise which it would have
power to conduct by itself.
ARTICLE VI(G). Stockholders' Meetings.
Meetings of stockholders may be held at such place in the Commonwealth of
Massachusetts or, if permitted by applicable law, elsewhere in the United
States as the Board of Directors may determine.
ARTICLE VI(H). Call of Special Meetings.
Special meetings of the stockholders for any purpose or purposes may be
called at any time only by the Chairman of the Board, if one is elected, the
President or by the affirmative vote of a majority of the Directors then in
office; provided, however, that if there is an Interested Stockholder, any such
call shall also require the affirmative vote of a majority of the Continuing
Directors then in office. Only those matters set forth in the call of the
special meeting may be considered or acted upon at such special meeting, unless
otherwise provided by law.
ARTICLE VI(I). Amendment of By-Laws.
The By-Laws of Bancorp may be adopted, altered, amended, changed or
repealed by the Board of Directors or the stockholders of Bancorp. Such action
by the Board of Directors shall require the affirmative vote of at least
66-2/3% of the Directors then in office at a duly constituted meeting of the
Board of Directors, unless at the time of such action there shall be an
Interested Stockholder, in which case such action shall in addition require the
affirmative vote of at least a majority of the Continuing Directors then in
office, at such a meeting. Such action by the stockholders shall require (i)
approval by the affirmative vote of a majority of the Board of Directors of
Bancorp then in office at a duly constituted meeting of the Board of Directors,
unless at the time of such action there shall be an Interested Stockholder, in
which
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case such action shall in addition require the affirmative vote of at least a
majority of the Continuing Directors then in office, at such meeting, (ii)
unless waived by the affirmative vote of the Board of Directors (and, if
applicable, Continuing Directors) specified in the preceding sentence, the
submission by the stockholders of written proposals for adopting, altering,
amending, changing or repealing the By-Laws at least sixty days prior to the
meeting at which they are to be considered and (iii) the affirmative vote of at
least 66 2/3% of the total votes eligible to be cast by stockholders in the
election of directors at a duly constituted meeting of stockholders called
expressly for such purpose.
ARTICLE VI(J). Amendment of Articles of Organization. No amendment,
addition, alteration, change or repeal of these Articles of Organization shall
be made, unless the same is first approved by the affirmative vote of a majority
of the Board of Directors of Bancorp then in office, and thereafter approved by
the stockholders by not less than 66 2/3% of the total votes eligible to be cast
at a duly constituted meeting, or, in the case of Articles I, II and VIII and
the first sentence of Article IV as set forth in Addendum B to these Articles of
Organization, by not less than a majority of the total votes eligible to be cast
at a duly constituted meeting; provided, however, that if, at any time within
the sixty day period immediately preceding the meeting at which the stockholder
vote is to be taken, there is an Interested Stockholder, such amendment,
addition, alteration, change or repeal shall also require the affirmative vote
of not less than a majority of the Continuing Directors then in office, prior to
approval by the stockholders. Notwithstanding the foregoing, to the extent that
any provision of these Articles of Organization stipulates stockholder approval
by a vote of more than 66 2/3% of the total votes eligible to be cast by
stockholders in the election of directors, and if, at any time within the sixty
day period immediately preceding the meeting at which the stockholder vote is to
be taken there is an Interested Stockholder, such provision may only be amended,
altered, changed or repealed after approval by the same vote required by such
provision, unless such amendment, alteration or repeal shall also have been
approved by the affirmative vote of not less than a majority of the Continuing
Directors then in office, in which case only the vote of 66 2/3% of the total
votes eligible to be cast by the stockholders shall be required. Unless
otherwise provided by law, any amendment, addition, alteration, change or repeal
so acted upon shall be effective on the date it is filed with the Secretary of
State of the Commonwealth of Massachusetts or on such other date as specified in
such amendment, addition, alteration, change or repeal or as the Secretary of
State may specify.
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ADDENDUM D
TO THE
ARTICLES OF ORGANIZATION
OF
MEDFORD BANCORP, INC.
ARTICLE VIII(B)
The name, residential address and post office address of each director and
officer of the corporation is as follows:
NAME RESIDENTIAL ADDRESS POST OFFICE ADDRESS
President: Arthur H. Meehan 5 Fox Run Road 29 High Street
Dover, MA 02030 Medford, MA 02155
Treasurer: Phillip W. Wong 8 Kelly Street 29 High Street
Medway, MA 02053 Medford, MA 02155
Clerk: Eugene R. Murray 14 Milton Street 29 High Street
E. Falmouth, MA 02536 Medford, MA 02155
Directors: Paul J. Crowley 15 Old Weston Road 29 High Street
Wayland, MA 01778 Medford, MA 02155
Edward J. Gaffey 43 High Street 29 High Street
Medford, MA 02155 Medford, MA 02155
Andrew D. Guthrie Jr., 30 Cambridge Street 29 High Street
M.D. Winchester, MA 01890 Medford, MA 02155
Edward D. Brickley 79 Mystic Valley Pkwy. 29 High Street
Winchester, MA 01890 Medford, MA 02155
Robert A. Havern III 35 Bartlett Avenue 29 High Street
Arlington, MA 02174 Medford, MA 02155
Francis D. Pizzella 13 Browning Road 29 High Street
Somerville, MA 02145 Medford, MA 02155
David L. Burke 9 Wedgemere Ave. 29 High Street
Winchester, MA 01890 Medford, MA 02155
Mary L. Doherty 87 Yale Street 29 High Street
Medford, MA 02155 Medford, MA 02155
Arthur H. Meehan 5 Fox Run Road 29 High Street
Dover, MA 02030 Medford, MA 02155
Eugene R. Murray 14 Milton Street 29 High Street
E. Falmouth, MA 02536 Medford, MA 02155
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ARTICLE VII
The effective date of organization of the corporation shall be the date
approved and filed by the Secretary of the Commonwealth. If a later effective
date is desired, specify such date which shall not be more than thirty days
after the date of filing.
ARTICLE VIII
The information contained in Article VIII is not a permanent part of the
Articles of Organization.
a. The street address (post office boxes are not acceptable) of the principal
office of the corporation in Massachusetts is:
29 High Street, Medford Massachusetts 02155
b. The name, residential address and post office address of each director and
officer of the corporation is as follows:
NAME RESIDENTIAL ADDRESS POST OFFICE ADDRESS
President:
Treasurer: See attached Addendum D to the Articles of Organization
Clerk:
Directors:
c. The fiscal year (i.e., tax year) of the corporation shall end on the last
day of the month of: December
d. The name and business address of the resident agent, if any, of the
corporation is: Eugene R. Murray, Clerk 29 High Street, Medford, MA 02155
ARTICLE IX
By-laws of the corporation have been duly adopted and the president, treasurer,
clerk and directors whose names are set forth above, have been duly elected.
IN WITNESS WHEREOF AND UNDER THE PAINS AND PENALTIES OF PERJURY, I/we, whose
signature(s) appear below as incorporator(s) and whose name(s) and business or
residential address(es) are clearly typed or printed beneath each signature do
hereby associate with the intention of forming this corporation under the
provisions of General Laws, Chapter 156B and do hereby sign these Articles of
Organization as incorporator(s) this 23rd day of July, 1997.
/s/ Arthur H. Meehan
- - - ------------------------------------------------------------------------------
Arthur H. Meehan
- - - ------------------------------------------------------------------------------
29 High Street
- - - ------------------------------------------------------------------------------
Medford, MA 02155
- - - ------------------------------------------------------------------------------
Note: If an existing corporation is acting as incorporator, type in the exact
name of the corporation, the state or other jurisdiction where it was
incorporated, the name of the person signing on behalf of said corporation and
the title he/she holds or other authority by which such action is taken.
50
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF ORGANIZATION
(GENERAL LAWS, CHAPTER 156B)
================================================================================
I hereby certify that, upon examination of these Articles of Organization, duly
submitted to me, it appears that the provisions of the General Laws relative to
the organization of corporations have been complied with, and I hereby approve
said articles; and the filing fee in the amount of $ having been paid,
said articles are deemed to have been filed with me this day of July 1997.
Effective date: July 1997
- - - -----------------------------------------------------------------------------
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
FILING FEE: One tenth of one percent of the total authorized capital stock, but
not less than $200.00. For the purpose of filing, shares of stock with a par
value less than $1.00, or no par stock, shall be deemed to have a par value of
$1.00 per share.
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF DOCUMENT TO BE SENT TO:
Paul W. Lee, P.C.
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Goodwin, Procter & Hoar LLP
- - - --------------------------------------------------------------------------------
Exchange Place, Boston, MA 02109
- - - --------------------------------------------------------------------------------
Telephone: (617) 570-1000
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