PLAN OF CONVERSION AND REORGANIZATION
OF
SOUND FEDERAL, MHC
TABLE OF CONTENTS
1. INTRODUCTION.......................................................................1
2. DEFINITIONS........................................................................1
3. PROCEDURES FOR CONVERSION..........................................................7
4. HOLDING COMPANY APPLICATIONS AND APPROVALS.........................................9
5. SALE OF SUBSCRIPTION SHARES........................................................9
6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES..................................10
7. RETENTION OF CONVERSION PROCEEDS BY THE HOLDING COMPANY...........................11
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS
(FIRST PRIORITY)................................................................11
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)...........................12
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY).....12
11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)............................13
12. COMMUNITY OFFERING................................................................13
13. SYNDICATED COMMUNITY OFFERING.....................................................14
14. LIMITATIONS ON PURCHASES..........................................................14
15. PAYMENT FOR HOLDING COMPANY COMMON STOCK..........................................16
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS
THROUGH ORDER FORMS.............................................................17
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM;
INSUFFICIENT PAYMENT............................................................18
18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES.................................18
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT..............................................19
20. VOTING RIGHTS OF STOCKHOLDERS.....................................................20
21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION..................................20
22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS
AND OFFICERS FOLLOWING THE CONVERSION...........................................21
23. TRANSFER OF DEPOSIT ACCOUNTS......................................................21
24. REGISTRATION AND MARKETING........................................................21
25. TAX RULINGS OR OPINIONS...........................................................21
26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS.....................................22
27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY...........................23
28. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK......................................24
29. CHARTER AND BYLAWS................................................................24
30. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE.....................................24
31. EXPENSES OF CONVERSION............................................................24
32. AMENDMENT OR TERMINATION OF PLAN..................................................24
33. CONDITIONS TO CONVERSION..........................................................25
34. INTERPRETATION....................................................................25
EXHIBIT A AGREEMENT OF MERGER BETWEEN SOUND FEDERAL BANCORP, SOUND FEDERAL
INTERIM SAVINGS BANK I AND SOUND FEDERAL SAVINGS AND LOAN
ASSOCIATION
EXHIBIT B AGREEMENT OF MERGER BETWEEN, SOUND FEDERAL MHC, SOUND FEDERAL
INTERIM SAVINGS BANK II AND SOUND FEDERAL SAVINGS AND LOAN
ASSOCIATION
EXHIBIT C AGREEMENT OF MERGER BETWEEN SOUND FEDERAL SAVINGS AND SOUND FEDERAL
INTERIM SAVINGS BANK
EXHIBIT D CERTIFICATE OF INCORPORATION OF THE HOLDING COMPANY
EXHIBIT E BYLAWS OF THE HOLDING COMPANY
PLAN OF CONVERSION AND REORGANIZATION OF
SOUND FEDERAL, MHC
1. INTRODUCTION
This Plan of Conversion and Reorganization (the "Plan") provides for the
conversion of Sound Federal, MHC, a federal mutual holding company (the "Mutual
Holding Company"), into the capital stock form of organization. The Mutual
Holding Company currently owns a majority of the common stock of Sound Federal
Bancorp, a federal stock holding company (the "Mid-Tier Holding Company"), which
owns 100% of the common stock of Sound Federal Savings and Loan Association (the
"Bank"), a federal stock savings bank which is headquartered in Mamaroneck, New
York. The purpose of the Conversion is to provide the Bank and its stock holding
company resulting from the conversion (the "Holding Company") with greater
operating flexibility and capital resources to respond to changing regulatory
and market conditions, and to effect corporate transactions, including mergers,
acquisitions and branch expansions. The Holding Company will offer for sale
Holding Company Common Stock upon the terms and conditions set forth herein to
Eligible Account Holders, the Employee Plans established by the Bank or the
Holding Company, Supplemental Eligible Account Holders and Other Members
according to the respective priorities set forth in this Plan. Any shares not
subscribed for by the foregoing classes of Persons will be offered for sale to
certain members of the public directly by the Holding Company through a
Community Offering or a Syndicated Community Offering, or through a combination
thereof. As part of the Conversion, each Minority Stockholder will receive
Holding Company Common Stock in exchange for Minority Shares. The Conversion
will result in the voting interests of the Mutual Holding Company's Members
being transferred to Persons who purchase Holding Company Common Stock in the
Offering. The Conversion will have no impact on depositors, borrowers or other
customers of the Bank. After the Conversion, the Bank will continue to be
regulated by the OTS as its chartering authority. The Bank also will continue to
be a member of the Federal Home Loan Bank System and all insured savings
deposits in the Bank will continue to be insured by the FDIC to the extent
provided by applicable law.
This Plan has been adopted by the Boards of Directors of the Mutual
Holding Company, the Mid-Tier Holding Company and the Bank and must also be
approved by (i) a majority of the total number of votes entitled to be cast by
Voting Members of the Mutual Holding Company at a Special Meeting of Members to
be called for that purpose, and (ii) at least two-thirds of the outstanding
common stock of the Mid-Tier Holding Company at the Special Meeting of
Stockholders, including at least a majority of the votes cast, in person or by
proxy, by Minority Stockholders. Prior to presenting this Plan to the Voting
Members and stockholders of the Mid-Tier Holding Company for consideration, the
Plan must be approved by the OTS.
2. DEFINITIONS
For the purposes of this Plan, the following terms have the following
meanings:
ACCOUNT HOLDER - Any Person holding a Deposit Account in the Bank.
ACTING IN CONCERT - The term Acting in Concert means (i) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement; or (ii) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise. A
Person or company which acts in concert with another Person or company ("other
party") shall also be deemed to be acting in concert with any Person or company
who is also acting in concert with that other party, except that any
Tax-Qualified Employee Stock Benefit Plan will not be deemed to be acting in
concert with its trustee or a Person who serves in a similar capacity solely for
the purpose of determining whether stock held by the trustee and stock held by
the plan will be aggregated.
AFFILIATE - Any Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with
another Person.
APPRAISED VALUE RANGE - The range of the estimated consolidated pro forma
market value of the Holding Company, which shall also be equal to the estimated
pro forma market value of the total number of shares of Holding Company Common
Stock to be issued in the Conversion, as determined by the Independent Appraiser
prior to the Subscription Offering and as it may be amended from time to time
thereafter. The maximum and minimum of the Appraised Value Range will vary
within 15% above and 15% below, respectively, of the midpoint of the Appraised
Value Range.
ASSOCIATE - The term Associate when used to indicate a relationship
with any Person, means (i) any corporation or organization (other than the
Mid-Tier Holding Company, the Bank or a majority owned subsidiary of the Bank)
of which such Person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10% or more of any class of equity securities, (ii) any
trust or other estate in which such Person has a substantial beneficial interest
or as to which such Person serves as trustee or in a similar fiduciary capacity,
except that for the purposes of this Plan relating to subscriptions in the
Offering the term "Associate" does not include any non-Tax-Qualified Employee
Stock Benefit Plan or any Tax-Qualified Employee Stock Benefit Plan in which a
Person has a substantial beneficial interest or serves as a trustee or in a
similar fiduciary capacity, and except that for purposes of aggregating total
shares that may be held by Officers and Directors the term "Associate" does not
include any shares held for the benefit of such Persons through any
Tax-Qualified Employee Stock Benefit Plan, and (iii) any relative or spouse of
such Person, or any relative of such spouse, who has the same home as such
Person or who is a Director or Officer of the Mid-Tier Holding Company, the Bank
or the Holding Company, or any of their parents or subsidiaries.
BANK - Sound Federal Savings and Loan Association.
BANK MERGER - The merger of Interim with the Bank as set forth in this
Plan.
CODE - The Internal Revenue Code of 1986, as amended.
COMMUNITY - The New York counties of Westchester, Rockland and Putnam and
the Connecticut county of Fairfield.
2
COMMUNITY OFFERING - The offering for sale to certain members of the
general public directly by the Holding Company of shares not subscribed for in
the Subscription Offering.
CONTROL - (including the terms "controlled by", "controlling" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
CONVERSION - The conversion and reorganization of the Mutual Holding
Company to stock form pursuant to this Plan, and all steps incident or necessary
thereto, include the Exchange Offer and the Offering.
DEPOSIT ACCOUNT - Any withdrawable account as defined in Section 561.42 of
the Rules and Regulations of the OTS, and shall include all demand deposit
accounts and certificates of deposit.
DIRECTOR - A member of the Board of Directors of the Bank, the Mid-Tier
Holding Company, the Holding Company or the Mutual Holding Company, as
appropriate in the context.
ELIGIBLE ACCOUNT HOLDER - Any Person holding a Qualifying Deposit on the
Eligibility Record Date for purposes of determining subscription rights and
establishing subaccount balances in the Liquidation Account.
ELIGIBILITY RECORD DATE - The date for determining Eligible Account
Holders, which is May 31, 2001.
EMPLOYEES - All Persons who are employed by the Bank, the Mid-Tier Holding
Company or the Mutual Holding Company.
EMPLOYEE PLANS - Any Tax-Qualified Employee Stock Benefit Plan of the Bank
or the Holding Company, including any ESOP and 401(k) Plan.
ESOP - An Employee Stock Ownership Plan and related trust established by
the Bank or the Holding Company.
EXCHANGE OFFER - The offer of Holding Company Common Stock to Minority
Stockholders in exchange for Minority Shares.
EXCHANGE RATIO - The rate at which shares of Holding Company Common Stock
are exchanged for Minority Shares upon consummation of the Conversion. The
Exchange Ratio shall be determined as of the closing of the Conversion and shall
be the rate that will result in the Minority Stockholders owning in the
aggregate the same percentage of the outstanding shares of Holding Company
Common Stock immediately upon completion of the Conversion (without giving
effect to any shares purchased in the Offering and any cash issued in lieu of
fractional shares), as the percentage of the Mid-Tier Holding Company common
stock owned by them in the aggregate immediately prior to the consummation of
the Conversion.
3
EXCHANGE SHARES - Shares of Holding Company Common Stock issued to
Minority Stockholders in exchange for Minority Shares.
FDIC - The Federal Deposit Insurance Corporation.
HOLDING COMPANY - The Delaware corporation formed for the purpose of
acquiring all of the shares of capital stock of the Bank in connection with the
Conversion. The Holding Company will be the successor to the Mid-Tier Holding
Company. Shares of Holding Company Common Stock will be issued in the Conversion
to Participants and others in the Conversion.
HOLDING COMPANY COMMON STOCK - The common stock, par value $.01 per share,
of the Holding Company.
INDEPENDENT APPRAISER - The appraiser retained by the Mutual Holding
Company and the Bank to prepare an appraisal of the pro forma market value of
the Holding Company Common Stock issued in the Conversion.
INTERIM - The interim federal savings bank subsidiary of the Holding
Company established to effect the Conversion.
LIQUIDATION ACCOUNT - One or more accounts established in accordance with
12 C.F.R. 563b.3(f) and OTS policy.
MAJORITY OWNERSHIP INTEREST - The percentage of common stock of the
Mid-Tier Holding Company owned by the Mutual Holding Company immediately prior
to the completion of the Conversion.
MEMBER - Any Person or entity who qualifies as a member of the Mutual
Holding Company pursuant to its charter and bylaws.
MHC MERGER - The conversion of the Mutual Holding Company into an interim
federal stock savings bank and subsequent merger with and into the Bank as set
forth in this Plan.
MID-TIER HOLDING COMPANY - Sound Federal Bancorp, the Federal holding
company that owns 100% of the Bank's common stock, and any successor thereto.
MID-TIER MERGER - The conversion of Mid-Tier Holding Company into an
interim federal stock savings bank and subsequent merger with and into the Bank
as set forth in this Plan.
MINORITY SHARE(S) - Any outstanding common stock of the Mid-Tier Holding
Company, or shares of common stock of the Mid-Tier Holding Company issuable upon
the exercise of options or grant of stock awards, in each case held by persons
other than the Mutual Holding Company.
MINORITY STOCKHOLDER - Any owner of Minority Shares.
MUTUAL HOLDING COMPANY - Sound Federal, MHC, the mutual holding company of
the Bank.
4
OTS - The Office of Thrift Supervision of the Department of the Treasury
or any successor thereto.
OFFERING - The offering for sale, pursuant to this Plan, of Holding
Company Common Stock in a Subscription Offering, Community Offering, and
Syndicated Community Offering, as the case may be. The term "Offering" does not
include the Holding Company Common Stock issued in exchange for Minority Shares
pursuant to this Plan.
OFFERING RANGE - The number of shares of Holding Company Stock offered for
sale in the Offering multiplied by the Subscription Price. The Offering Range
shall be equal to the Appraised Value Range multiplied by the Majority Ownership
Interest.
OFFICER - An executive officer of the Bank, the Mid-Tier Holding Company,
the Holding Company or the Mutual Holding Company as appropriate in the context,
which includes the Chief Executive Officer, President, Senior Vice Presidents,
Executive Vice President in charge of principal business functions, Secretary
and Controller and any Person performing functions similar to those performed by
the foregoing persons.
ORDER FORM - Any form (together with any cover letter and/or
certifications or acknowledgments), sent by the Bank to any Participant or
Person containing among other things a description of the alternatives available
to such Person under the Plan and by which any such Person may make elections
regarding purchases of Holding Company Common Stock in the Subscription and
Community Offerings.
OTHER MEMBER - Any Member on the Voting Record Date who is not an Eligible
Account Holder or Supplemental Eligible Account Holder.
PARTICIPANT - Any Eligible Account Holder, Employee Plan, Supplemental
Eligible Account Holder, or Other Member.
PERSON - An individual, a corporation, a partnership, an association, a
joint stock company, a trust (including Individual Retirement Accounts and KEOGH
Accounts), any unincorporated organization, a government or political
subdivision thereof or any other entity.
PLAN - This Plan of Conversion and Reorganization of the Mutual Holding
Company as it exists on the date hereof and as it may hereafter be amended in
accordance with its terms.
PROSPECTUS - The one or more documents used in offering the Holding
Company Common Stock in the Offering and the Exchange Offer.
QUALIFYING DEPOSIT - The aggregate balance of all Deposit Accounts in the
Bank of (i) an Eligible Account Holder at the close of business on the
Eligibility Record Date, provided such aggregate balance is not less than $50,
and (ii) a Supplemental Eligible Account Holder at the close of business on the
Supplemental Eligibility Record Date, provided such aggregate balance is not
less than $50.
5
RESIDENT - Any Person who occupies a dwelling within the Community, has a
present intent to remain within the Community for a period of time, and
manifests the genuineness of that intent by establishing an ongoing physical
presence within the Community together with an indication that such presence
within the Community is something other than merely transitory in nature. To the
extent the Person is a corporation or other business entity, the principal place
of business or headquarters shall be in the Community. To the extent a Person is
a personal benefit plan, the circumstances of the beneficiary shall apply with
respect to this definition. In the case of all other benefit plans,
circumstances of the trustee shall be examined for purposes of this definition.
The Bank may utilize deposit or loan records or such other evidence provided to
it to make a determination as to whether a Person is a resident. In all cases,
however, such a determination shall be in the sole discretion of the Mutual
Holding Company and the Bank. A Participant or Person must be a "Resident" for
purposes of determining whether such Person "resides" or is "residing" in the
Community as such term is used in this Plan.
SEC - The Securities and Exchange Commission.
SPECIAL MEETING OF MEMBERS - The special meeting of Members of the Mutual
Holding Company and any adjournments thereof held to consider and vote upon this
Plan.
SPECIAL MEETING OF STOCKHOLDERS - The special meeting of stockholders of
the Mid-Tier Holding Company and any adjournments thereof held to consider and
vote upon the Plan.
SUBSCRIPTION OFFERING - The offering of Subscription Shares to
Participants.
SUBSCRIPTION PRICE - The price per Subscription Share to be paid by
Participants in the Subscription Offering and by Persons in the Community
Offering and any Syndicated Community Offering. The Subscription Price will be
determined by the Board of Directors of the Mutual Holding Company and fixed
prior to the commencement of the Subscription Offering.
SUBSCRIPTION SHARES - Shares of Holding Company Common Stock issued in the
Subscription Offering. Subscription Shares do not include Exchange Shares.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER - Any Person, other than Directors
and Officers of the Bank, the Mid-Tier Holding Company or the Mutual Holding
Company and their Associates, holding a Qualifying Deposit on the Supplemental
Eligibility Record Date, who is not an Eligible Account Holder.
SUPPLEMENTAL ELIGIBILITY RECORD DATE - The date for determining
Supplemental Eligible Account Holders, which shall be the last day of the
calendar quarter preceding OTS approval of the application for conversion.
SYNDICATED COMMUNITY OFFERING - The offering of Holding Company Common
Stock following the Subscription and Community Offerings through a syndicate of
broker-dealers.
TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN - Any defined benefit plan or
defined contribution plan, such as an employee stock ownership plan, stock bonus
plan, profit-sharing plan or other plan, which, with its related trust, meets
the requirements to be "qualified" under
6
Section 401 of the Internal Revenue Code. The Bank may make scheduled
discretionary contributions to a tax-qualified employee stock benefit plan,
PROVIDED such contributions do not cause the Bank to fail to meet its regulatory
capital requirement. A "non-Tax-Qualified Employee Stock Benefit Plan" is any
defined benefit plan or defined contribution plan which is not so qualified.
VOTING MEMBER - Any Person who at the close of business on the Voting
Record Date is entitled to vote as a Member of the Mutual Holding Company
pursuant to its charter and bylaws.
VOTING RECORD DATE - The date fixed by the Directors in accordance with
OTS regulations for determining eligibility to vote at the Special Meeting of
Members and/or the Special Meeting of Stockholders.
3. PROCEDURES FOR CONVERSION
A. After approval of the Plan by the Boards of Directors of the Bank,
the Mid-Tier Holding Company and the Mutual Holding Company, the Plan together
with all other requisite material shall be submitted to the OTS for its
approval. Notice of the adoption of the Plan by the Boards of Directors of the
Bank and the Mutual Holding Company and the submission of the Plan to the OTS
for its approval will be published in a newspaper having general circulation in
each community in which an office of the Bank is located, and copies of the Plan
will be made available at each office of the Bank for inspection by the Members.
Upon receipt of notice from the OTS to do so, the Mutual Holding Company also
will publish a notice of the filing with the OTS of an application to convert in
accordance with the provisions of this Plan.
B. Promptly following approval by the OTS, the Plan will be submitted
to a vote of (i) the Voting Members at the Special Meeting of Members, and (ii)
the Stockholders of the Mid-Tier Holding Company at the Special Meeting of
Stockholders. The Mutual Holding Company will mail to all Members as of the
Voting Record Date, at their last known address appearing on the records of the
Bank at that date, a proxy statement in either long or summary form describing
the Plan which will be presented to a vote of the Members at the Special Meeting
of Members. The Mid-Tier Holding Company also will mail to all stockholders as
of the Voting Record Date, a proxy statement describing the Plan and the
Conversion, which will be presented to a vote of stockholders at the Special
Meeting of Stockholders. The Holding Company also will mail to all Participants
either a Prospectus and Order Form for the purchase of Subscription Shares or a
letter informing them of their right to receive a Prospectus and Order Form and
a postage prepaid card to request such materials, subject to other provisions of
this Plan. In addition, all Participants will receive, or be given the
opportunity to request by either returning a postage prepaid card which may be
distributed with the proxy statement or by letter addressed to the Bank's
Secretary, a copy of the Plan as well as the certificate of incorporation or
bylaws of the Holding Company. Upon approval of the Plan by (i) a majority of
the total number of votes entitled to be cast by the Voting Members, (ii) at
least two-thirds of the outstanding common stock of the Mid-Tier Holding
Company, and (iii) a majority vote of Minority Stockholders present in person or
by proxy, the Mutual Holding Company, the Holding Company and the Bank will take
all other necessary steps pursuant to applicable laws and regulations to
consummate the Conversion and Offering. The Conversion must be completed within
24 months of the approval of the Plan by the Voting Members, unless a longer
time period is permitted by governing laws and regulations.
7
C. The Conversion will be effected as follows or in any other manner
selected by the Board of Directors of the Mutual Holding Company which is
consistent with the purposes of this Plan and applicable laws and regulations.
The choice of which method to use to effect the Conversion will be made by the
Board of Directors of the Mutual Holding Company immediately prior to the
closing of the Conversion. Each of the steps shall be deemed to occur in the
order set forth below or in such order as is necessary to consummate the
Conversion pursuant to the Plan, the intent of the Boards of Directors of the
Mutual Holding Company, the Mid-Tier Holding Company and the Bank, and OTS
regulations. Approval of the Plan by the Members and by the stockholders of the
Mid-Tier Holding Company shall also constitute approval of each of the
transactions below that are necessary to implement the Plan.
(1) The Mid-Tier Holding Company will convert into or exchange its
charter for an interim federal stock savings bank (which shall
continue to be referred to as the "Mid-Tier Holding Company") and
will merge with and into the Bank (the "Mid-Tier Merger") with the
Bank as the resulting entity, pursuant to the Agreement of Merger
attached hereto as Exhibit A, whereby the Mid-Tier Holding Company
stockholders will constructively receive shares of Bank common stock
in exchange for their Mid-Tier Holding Company common stock.
(2) The Mutual Holding Company will exchange its charter for an interim
federal stock savings bank charter and simultaneously merge with and
into the Bank (the "MHC Merger") pursuant to the Agreement of Merger
attached hereto as Exhibit B between the Mutual Holding Company and
the Bank, whereby the shares of common stock of the Bank
constructively held by the Mutual Holding Company will be canceled
and each Eligible Account Holder and Supplemental Eligible Account
Holder will receive an interest in a Liquidation Account of the Bank
in exchange for such person's interest in the Mutual Holding
Company.
(3) The Bank will establish the Holding Company as a first-tier stock
holding company subsidiary.
(4) Immediately after the MHC Merger, the Holding Company will charter
Interim as a wholly-owned subsidiary.
(5) Immediately after the formation of Interim, Interim will merge with
and into the Bank with the Bank as the surviving entity (the "Bank
Merger") pursuant to the Agreement of Merger attached hereto as
Exhibit C between the Bank and Interim, whereby the Holding Company
will become the sole stockholder of the Bank. Constructive
shareholders of the Bank (i.e., Minority Stockholders) will exchange
the shares of Bank common stock that they constructively received in
the Mid-Tier Merger for Holding Company Common Stock.
(6) Contemporaneously with the Bank Merger, the Holding Company will
offer for sale its Common Stock in the Offering.
8
D. As part of the Conversion, each Minority Share shall automatically,
without further action of the holder thereof, be converted into and become the
right to receive Holding Company Common Stock based upon the Exchange Ratio. The
basis for exchange of Minority Shares for Holding Company Common Stock shall be
fair and reasonable. Options to purchase shares of Mid-Tier Holding Company
common stock which are outstanding immediately prior to the consummation of the
Conversion shall be converted into options to purchase shares of Holding Company
Common Stock, with the number of shares subject to the option and the exercise
price per share to be adjusted based upon the Exchange Ratio so that the
aggregate exercise price remains unchanged, and with the duration of the option
remaining unchanged.
E. Concurrent with the filing of the Conversion application with the
OTS, the Holding Company shall also seek to register the Holding Company Common
Stock with the SEC and any appropriate state securities authorities. In
addition, the Mid-Tier Holding Company shall prepare preliminary proxy materials
as well as other applications and information for review by the SEC and the OTS
in connection with the solicitation of stockholder approval of the Plan.
F. The Certificate of Incorporation of the Holding Company (the
"Certificate") shall read substantially in the form of Exhibit D.
G. The home office and branch offices of the Bank shall be unaffected
by the Conversion. The executive offices of the Holding Company shall be located
at the current offices of the Mutual Holding Company.
4. HOLDING COMPANY APPLICATIONS AND APPROVALS
The Board of Directors of the Mid-Tier Holding Company, the Bank and the
Mutual Holding Company will take all necessary steps to convert the Mutual
Holding Company to stock form, form the Holding Company and complete the
Offering. The Holding Company shall make timely applications for any requisite
regulatory approvals, including an Application on Form AC and a Holding Company
Application on Form H-(e)1 or Form H-(e)1-S, to be filed with the OTS and a
Registration Statement to be filed with the SEC.
5. SALE OF SUBSCRIPTION SHARES
The Subscription Shares will be offered simultaneously in the Subscription
Offering to the Participants in the respective priorities set forth in this
Plan. Subscription Shares will be available for purchase only in the priorities
set forth in this Plan. The Subscription Offering may begin as early as the
mailing of the proxy statement for the Special Meeting of Members. The Holding
Company Common Stock will not be insured by the FDIC. The Bank will not
knowingly lend funds or otherwise extend credit to any Person to purchase shares
of Holding Company Common Stock.
Any Subscription Shares not subscribed for in the Subscription Offering
may be offered for sale in the Community Offering. The Subscription Offering may
begin prior to the Special Meeting of Members and, in that event, the Community
Offering may also begin prior to the Special Meeting of Members. The offer and
sale of Holding Company Common Stock prior to the Special Meeting
9
of Members will, however, be conditioned upon approval of the Plan by the Voting
Members and stockholders of the Mid-Tier Holding Company.
If feasible, any shares of Holding Company Common Stock remaining after
the Subscription and Community Offerings, will be offered for sale in a
Syndicated Community Offering or underwritten public offering in a manner that
will achieve the widest distribution of the Holding Company Common Stock. The
sale of all Holding Company Common Stock purchased in the Subscription and
Community Offerings will be consummated simultaneously with the sale of any
Holding Company Common Stock in the Syndicated Community Offering or
underwritten public offering.
6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES
The total number of shares (or a range thereof) of Holding Company Common
Stock to be offered for sale in the Offering will be determined jointly by the
Boards of Directors of the Mid-Tier Holding Company and the Holding Company
immediately prior to the commencement of the Subscription and Community
Offerings, and will be equal to the Offering Range divided by the Subscription
Price. The Offering Range will be equal to the Appraised Value Range multiplied
by the Majority Ownership Interest. The estimated pro forma consolidated market
value of the Holding Company will be subject to adjustment within the Appraised
Value Range if necessitated by market or financial conditions, with the approval
of the OTS, if necessary, and the maximum of the Appraised Value Range may be
increased by up to 15% subsequent to the commencement of the Subscription and
Community Offerings to reflect changes in market and financial conditions. The
number of shares of Holding Company Common Stock issued in the Conversion will
be equal to the estimated pro forma consolidated market value of the Holding
Company, as may be amended, divided by the Subscription Price, and the number of
shares of Holding Company Common Stock sold in the Offering will be equal to the
product of (i) the estimated pro forma consolidated market value of the Holding
Company, as may be amended, divided by the Subscription Price, and (ii) the
Majority Ownership Interest.
In the event that the Subscription Price multiplied by the number of
shares of Holding Company Common Stock to be issued in the Conversion is below
the minimum of the Appraised Value Range, or materially above the maximum of the
Appraised Value Range, a resolicitation of purchasers may be required, PROVIDED
that up to a 15% increase above the maximum of the Appraised Value Range will
not be deemed material so as to require a resolicitation. Any such
resolicitation shall be effected in such manner and within such time as the Bank
and the Mutual Holding Company shall establish, with the approval of the OTS if
required.
Notwithstanding the foregoing, shares of Holding Company Common Stock will
not be issued unless, prior to the consummation of the Conversion, the
Independent Appraiser confirms to the Bank, the Mutual Holding Company, the
Holding Company and to the OTS that, to the best knowledge of the Independent
Appraiser, nothing of a material nature has occurred which, taking into account
all relevant factors, would cause the Independent Appraiser to conclude that the
number of shares of Holding Company Common Stock issued in the Conversion
multiplied by the Subscription Price is incompatible with its estimate of the
aggregate pro forma consolidated market value of the Holding Company. An
increase in the aggregate value of the Holding Company
10
Common Stock by up to 15% above the maximum of the Appraised Value Range, would
not be deemed to be material. If such confirmation is not received, the Holding
Company may cancel the Offering, extend the Conversion, establish a new
Subscription Price and/or Appraised Value Range and reopen or hold a new
Offering, or take such other action as the OTS may permit.
The Holding Company Common Stock to be issued in the Conversion shall
be fully paid and nonassessable.
7. RETENTION OF CONVERSION PROCEEDS BY THE HOLDING COMPANY
The Holding Company will apply to the OTS to retain up to 50% of the
proceeds of the Offering. The Holding Company believes that the Offering
proceeds will provide economic strength to the Holding Company and the Bank in a
highly competitive financial services industry, and would facilitate the
possible expansion through acquisitions of other financial institutions, branch
acquisitions, possible diversification into other related businesses and for
other business and investment purposes, including the possible payment of
dividends and future repurchases of the Holding Company Common Stock.
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)
A. Each Eligible Account Holder shall receive, without payment,
nontransferable subscription rights to subscribe in the Subscription Offering
for a number of shares equal to up to the greater of 50,000 shares, .10% of the
total number of shares of Holding Company Common Stock issued in the Offering,
or fifteen times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares of Holding Company Common Stock issued in
the Offering by a fraction, the numerator of which is the amount of the Eligible
Account Holder's Qualifying Deposit and the denominator is the total amount of
Qualifying Deposits of all Eligible Account Holders, in each case on the
Eligibility Record Date, subject to the provisions of Section 14.
B. In the event that Eligible Account Holders exercise subscription
rights for a number of Subscription Shares in excess of the total number of such
shares eligible for subscription, the Subscription Shares shall be allocated
among the subscribing Eligible Account Holders so as to permit each subscribing
Eligible Account Holder to purchase a number of shares sufficient to make his or
her total allocation of Subscription Shares equal to the lesser of 100 shares or
the number of shares for which such Eligible Account Holder has subscribed. Any
remaining shares will be allocated among the subscribing Eligible Account
Holders whose subscriptions remain unsatisfied in the proportion that the amount
of the Qualifying Deposit of each Eligible Account Holder whose subscription
remains unsatisfied bears to the total amount of the Qualifying Deposits of all
Eligible Account Holders whose subscriptions remain unsatisfied. If the amount
so allocated exceeds the amount subscribed for by any one or more Eligible
Account Holders, the excess shall be reallocated (one or more times as
necessary) among those Eligible Account Holders whose subscriptions are still
not fully satisfied on the same basis until all available shares have been
allocated.
11
C. Subscription rights of Directors, Officers and their Associates as
Eligible Account Holders which are based on deposits made by such Persons during
the twelve (12) months preceding the Eligibility Record Date shall be
subordinated to the subscription rights of all other Eligible Account Holders.
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)
If Subscription Shares remain available after all subscriptions of
Eligible Account Holders have been satisfied, the Employee Plans of the Holding
Company and the Bank shall receive, without payment, subscription rights to
purchase in the aggregate up to 10% of the total number of shares of Holding
Company Common Stock issued in the Offering. The Employee Plans may purchase any
shares of Holding Company Common Stock to be issued in the Offering as a result
of an increase in the maximum of the Appraised Value Range after commencement of
the Subscription Offering and prior to completion of the Conversion,
notwithstanding the subscription rights of Eligible Account Holders. Consistent
with applicable laws and regulations and practices and policies of the OTS, the
Employee Plans may use funds contributed by the Holding Company or the Bank
and/or borrowed from an independent financial institution to exercise such
subscription rights, and the Holding Company and the Bank may make scheduled
discretionary contributions thereto, provided that such contributions do not
cause the Holding Company or the Bank to fail to meet any applicable regulatory
capital requirements. The Employee Plans shall not be deemed to be Associates or
Affiliates of or Persons Acting in Concert with any Director or Officer of the
Holding Company or the Bank.
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD
PRIORITY)
A. Each Supplemental Eligible Account Holder shall receive, without
payment, nontransferable subscription rights to subscribe in the Subscription
Offering for a number of shares equal to up to the greater of 50,000 shares,
..10% of the total number of shares of Holding Company Common Stock issued in the
Offering, or fifteen times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Holding Company Common
Stock issued in the Offering by a fraction, the numerator of which is the amount
of the Supplemental Eligible Account Holder's Qualifying Deposit and the
denominator is the total amount of Qualifying Deposits of all Supplemental
Eligible Account Holders, in each case on the Supplemental Eligibility Record
Date, subject to the availability of sufficient shares after filling in full all
subscription orders of the Eligible Account Holders and Employee Plans and to
the purchase limitations specified in Section 14.
B. In the event that Supplemental Eligible Account Holders exercise
subscription rights for a number of Subscription Shares in excess of the total
number of such shares eligible for subscription, the Subscription Shares shall
be allocated among the subscribing Supplemental Eligible Account Holders so as
to permit each such subscribing Supplemental Eligible Account Holder, to the
extent possible, to purchase a number of shares sufficient to make his or her
total allocation of Subscription Shares equal to the lesser of 100 shares or the
number of shares for which each such Supplemental Eligible Account Holder has
subscribed. Any remaining shares will be allocated among the subscribing
Supplemental Eligible Account Holders whose subscriptions remain
12
unsatisfied in the proportion that the amount of the Qualifying Deposit of each
such Supplemental Eligible Account Holder bears to the total amount of the
Qualifying Deposits of all Supplemental Eligible Account Holders whose
subscriptions remain unsatisfied. If the amount so allocated exceeds the amount
subscribed for by any one or more Supplemental Eligible Account Holders, the
excess shall be reallocated (one or more times as necessary) among those
Supplemental Eligible Account Holders whose subscriptions are still not fully
satisfied on the same basis until all available shares have been allocated or
all subscriptions satisfied.
11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)
A. Each Other Member shall receive, without payment, nontransferable
subscription rights to subscribe in the Subscription Offering for a number of
Subscription Shares equal to up to the greater of 50,000 shares, or .10% of the
total number of shares of Holding Company Common Stock issued in the Offering,
subject to the availability of sufficient shares after filling in full all
subscription orders of Eligible Account Holders, Employee Plans and Supplemental
Eligible Account Holders and to the purchase limitations specified in Section
14.
B. In the event that such Other Members subscribe for a number of
Subscription Shares which, when added to the Subscription Shares subscribed for
by the Eligible Account Holders, Employee Plans and Supplemental Eligible
Account Holders, is in excess of the total number of Subscription Shares to be
issued, the subscriptions of such Other Members will be allocated to Other
Members in proportion to the amounts of their relative subscriptions.
12. COMMUNITY OFFERING
If less than the total number of shares of Holding Company Common Stock to
be sold in the Offering are subscribed for in the Subscription Offering, shares
remaining unsubscribed for may be made available for purchase in the Community
Offering to members of the general public. In the Community Offering, any Person
may purchase up to 50,000 shares, subject to the overall purchase limitations
specified in Section 14. The shares may be made available in the Community
Offering through a direct community marketing program which may provide for a
broker, dealer, consultant or investment banking firm experienced and expert in
the sale of savings institutions securities. Such entities may be compensated on
a fixed fee basis or on a commission basis, or a combination thereof. In the
event orders for Holding Company Common Stock in the Community Offering exceed
the number of shares available for sale, shares may be allocated (to the extent
shares remain available) first to cover orders of Minority Stockholders as of
the Voting Record Date, next to cover orders of natural persons residing in the
Community, and thereafter to cover orders of other members of the general
public. In the event orders for Holding Company Common Stock in any of these
categories exceed the number of shares available for sale, shares any be
allocated on a pro rata basis within a category based on the amount of the
respective orders. The Holding Company shall make the distribution of the
Holding Company Common Stock to be sold in the Community Offering in such a
manner as to promote a wide distribution of the Holding Company Common Stock.
The Holding Company reserves the right to reject any or all orders, in whole or
in part, which are received in the Community Offering.
13
13. SYNDICATED COMMUNITY OFFERING
If feasible, the Board of Directors may determine to offer for sale in a
Syndicated Community Offering shares of Holding Company Common Stock not
purchased in the Subscription and Community Offerings, subject to such terms,
conditions and procedures as may be determined by the Holding Company, in a
manner that will achieve the widest distribution of the Holding Company Common
Stock, subject to the right of the Bank to accept or reject in whole or in part
any subscriptions in the Syndicated Community Offering. In the Syndicated
Community Offering, any Person may purchase up to 50,000 shares, subject to the
maximum purchase limitations specified in Section 14. Provided the Subscription
Offering has begun, the Bank may begin the Syndicated Community Offering at any
time after the mailing to the Members of the proxy statement to be used in
connection with the Special Meeting of Members, PROVIDED that the completion of
the offer and sale of Holding Company Common Stock in the Conversion shall be
conditioned upon the approval of this Plan by the Voting Members. If the
Syndicated Community Offering does not begin pursuant to the provisions of the
preceding sentence, the Syndicated Community Offering will begin as soon as
practicable following the date upon which the Subscription and Community
Offerings terminate.
Alternatively, if a Syndicated Community Offering is not held, the Bank
shall have the right to sell any shares of Holding Company Common Stock
remaining following the Subscription and Community Offerings in an underwritten
firm commitment public offering. The provisions of Section 14 shall not be
applicable to sales to underwriters for purposes of such an offering but shall
be applicable to the sales by the underwriters to the public. The price to be
paid by the underwriters in such an offering shall be equal to the Subscription
Price less an underwriting discount to be negotiated among such underwriters and
the Bank, which will in no event exceed an amount deemed to be acceptable by the
OTS.
If for any reason a Syndicated Community Offering or an underwritten firm
commitment public offering of shares of Holding Company Common Stock not sold in
the Subscription and Community Offerings cannot be effected, or in the event
that any insignificant residue of shares of Holding Company Common Stock is not
sold in the Subscription and Community Offerings or in the Syndicated Community,
offering other arrangements will be made for the disposition of unsubscribed
shares by the Bank, if possible. Such other purchase arrangements will be
subject to the approval of the OTS.
14. LIMITATIONS ON PURCHASES
The following limitations shall apply to all purchases of shares of
Holding Company Common Stock in the Conversion:
A. The maximum number of shares of Holding Company Common Stock which
may be subscribed for or purchased in all categories in the Offering by any
Person or Participant together with any Associate or group of Persons Acting in
Concert shall not exceed 50,000 shares of Holding Company Common Stock, except
for the Employee Plans which may subscribe for up to 10% of the Holding Company
Common Stock issued in the Offering (including shares issued in the event of an
increase in the maximum of the Offering Range of up to 15%).
14
B. The maximum number of shares of Holding Company Common Stock which
may be purchased in all categories of the Offering by Officers and Directors and
their Associates in the aggregate, when combined with Exchange Shares received
by such persons, shall not exceed 25% of the shares of Holding Company Common
Stock issued in the Conversion.
C. A minimum of 25 shares of Holding Company Common Stock must be
purchased by each Person purchasing shares in the Offering to the extent those
shares are available; PROVIDED, HOWEVER, that in the event the minimum number of
shares of Holding Company Common Stock purchased times the price per share
exceeds $500, then such minimum purchase requirement shall be reduced to such
number of shares which when multiplied by the price per share shall not exceed
$500, as determined by the Board.
D. The maximum number of shares of Holding Company Common Stock which
may be subscribed for or purchased in all categories of the Offering by any
Person or Participant together with any Associate or group of Persons Acting in
Concert, combined with Exchange Shares received by any such Person or
Participant together with any Associate or group of Persons Acting in Concert,
shall not exceed 2% of the shares of Holding Company Common Stock issued in the
Conversion, except for the Employee Plans which may subscribe for up to 10% of
the shares of Holding Company Common Stock issued in the Offering (including
shares issued in the event of an increase in the maximum of the Offering Range
of 15%).
If the number of shares of Holding Company Common Stock otherwise
allocable pursuant to Sections 8 through 13, inclusive, to any Person or that
Person's Associates would be in excess of the maximum number of shares permitted
as set forth above, the number of shares of Holding Company Common Stock
allocated to each group consisting of a Person and that Person's Associates
shall be reduced so that the aggregate allocation to that Person and his or her
Associates complies with the above limits.
Depending upon market or financial conditions, the Board of Directors of
the Holding Company, with the approval of the OTS and without further approval
of the Members, may decrease or further increase the purchase limitations in
this Plan, PROVIDED that the maximum purchase limitations may not be increased
to a percentage in excess of 5% of the shares issued in the Conversion except as
provided below. If the Holding Company increases the maximum purchase
limitations, the Holding Company is only required to resolicit Persons who
subscribed in the Subscription Offering for the maximum purchase amount and may,
in the sole discretion of the Holding Company resolicit certain other large
subscribers. In the event that the maximum purchase limitation is increased to
5% of the shares issued in the Conversion, such limitation may be further
increased to 9.99%, PROVIDED that orders for Holding Company Common Stock
exceeding 5% of the shares of Holding Company Common Stock issued in the
Conversion shall not exceed in the aggregate 10% of the total shares of Holding
Company Common Stock issued in the Conversion. Requests to purchase additional
shares of the Holding Company Common Stock in the event that the purchase
limitation is so increased will be determined by the Board of Directors of the
Holding Company in its sole discretion. In the event of an increase in the total
number of shares offered in the Offering due to an increase in the maximum of
the Offering Range of up to 15% (the "Adjusted Maximum"), the additional shares
will be used in the following order of priority: (i) to fill the Employee Plans'
subscription to the Adjusted Maximum; (ii) in the event that there is an
15
oversubscription at the Eligible Account Holder, Supplemental Eligible Account
Holder or Other Member levels, to fill unfulfilled subscriptions of such
subscribers according to such respective priorities; and (iii) to fill
unfulfilled subscriptions in the Community Offering with preference given first
to Minority Stockholders as of the Voting Record Date and then to natural
persons residing in the Community.
For purposes of this Section 14, the Directors of the Bank, the Mid-Tier
Holding Company and the Holding Company shall not be deemed to be Associates or
a group affiliated with each other or otherwise Acting in Concert solely as a
result of their being Directors of the Bank, the Mid-Tier Holding Company, the
Mutual Holding Company or the Holding Company.
Each Person purchasing Holding Company Common Stock in the Conversion
shall be deemed to confirm that such purchase does not conflict with the above
purchase limitations contained in this Plan.
15. PAYMENT FOR HOLDING COMPANY COMMON STOCK
All payments for Holding Company Common Stock purchased in the
Subscription and Community Offerings must be delivered in full to the Holding
Company, together with a properly completed and executed Order Form, on or prior
to the expiration date of the Offering; PROVIDED, HOWEVER, that if the Employee
Plans subscribe for shares during the Subscription Offering, such plans will not
be required to pay for the shares at the time they subscribe but rather may pay
for such shares of Holding Company Common Stock subscribed for by such plans at
the Subscription Price upon consummation of the Conversion. Notwithstanding the
foregoing, the Holding Company shall have the right, in its sole discretion, to
permit institutional investors to submit contractually irrevocable orders in the
Offering and to thereafter submit payment by wire transfer for the Holding
Company Common Stock for which they are subscribing in the Offering at any time
prior to 48 hours before the completion of the Conversion, unless such 48 hour
period is waived by the Holding Company in its sole discretion.
Payment for Holding Company Common Stock subscribed for shall be made
either by check, money order or bank draft. Alternatively, subscribers in the
Subscription and Community Offerings may pay for the shares for which they have
subscribed by authorizing the Bank on the Order Form to make a withdrawal from
the types of Deposit Accounts at the Bank indicated on the Order Form in an
amount equal to the aggregate Subscription Price of such shares. Such authorized
withdrawal, whether from a savings passbook or certificate account, shall be
without penalty as to premature withdrawal. If the authorized withdrawal is from
a certificate account, and the remaining balance does not meet the applicable
minimum balance requirement, the certificate shall be canceled at the time of
withdrawal, without penalty, and the remaining balance will earn interest at the
Bank's passbook rate. Funds for which a withdrawal is authorized will remain in
the subscriber's Deposit Account but may not be used by the subscriber during
the Offering. Thereafter, the withdrawal will be given effect only to the extent
necessary to satisfy the subscription (to the extent it can be filled) at the
Subscription Price per share. Interest will continue to be earned on any amounts
authorized for withdrawal until such withdrawal is given effect. Interest will
be paid by the Bank at the passbook rate on payments for Holding Company Common
Stock received by check. Such interest will be paid from the date payment is
received by the Bank until consummation or termination of
16
the Conversion. If for any reason the Conversion is not consummated, all
payments made by subscribers in the Subscription and Community Offerings will be
refunded to them with interest. In case of amounts authorized for withdrawal
from Deposit Accounts, refunds will be made by canceling the authorization for
withdrawal. The Bank is prohibited by regulation from knowingly making any loans
or granting any lines of credit for the purchase of stock in the Conversion, and
therefore, will not do so.
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the Prospectus prepared by the Holding
Company and Bank has been declared effective by the SEC, Order Forms will be
distributed to the Eligible Account Holders, Employee Plans, Supplemental
Eligible Account Holders and Other Members at their last known addresses as of
the most recent eligibility date that appears on the records of the Bank for the
purpose of subscribing for shares of Holding Company Common Stock in the
Subscription Offering and will be made available for use by Persons in the
Community Offering. Notwithstanding the foregoing, the Bank may elect to send
Order Forms only to those Persons who request them after receipt of such notice
in a form approved by the OTS and which is adequate to apprise the Eligible
Account Holders, Employee Plans, Supplemental Eligible Account Holders and Other
Members of the pendency of the Subscription Offering. Such notice may be
included with the proxy statement for the Special Meeting of Members and the
proxy statement for the Special Meeting of Stockholders, and may also be
included in the notice of the pendency of the Conversion and the Special Meeting
of Members sent to all Eligible Account Holders in accordance with regulations
of the OTS.
Each Order Form will be preceded or accompanied by a Prospectus describing
the Holding Company, the Bank, the Holding Company Common Stock and the
Offering. Each Order Form will contain, among other things, the following:
A. A specified date by which all Order Forms must be received by the
Holding Company, which date shall be not less than twenty (20), nor more than
forty-five (45) days, following the date on which the Order Forms are mailed by
the Holding Company, and which date will constitute the termination of the
Subscription Offering;
B. The Subscription Price per share for shares of Holding Company
Common Stock to be sold in the Offering;
C. A description of the minimum and maximum number of Subscription
Shares which may be subscribed for pursuant to the exercise of subscription
rights or otherwise purchased in the Community Offering;
D. Instructions as to how the recipient of the Order Form is to
indicate thereon the number of Subscription Shares for which such person elects
to subscribe and the available alternative methods of payment therefor;
E. An acknowledgment that the recipient of the Order Form has received
a final copy of the Prospectus prior to execution of the Order Form;
17
F. A statement to the effect that all subscription rights are
nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering to the Holding Company within the subscription
period such properly completed and executed Order Form, together with payment in
the full amount of the aggregate purchase price as specified in the Order Form
for the shares of Holding Company Common Stock for which the recipient elects to
subscribe (or by authorizing on the Order Form that the Bank withdraw said
amount from the subscriber's Deposit Account at the Bank); and
G. A statement to the effect that the executed Order Form, once
received by the Holding Company, may not be modified or amended by the
subscriber without the consent of the Holding Company.
Notwithstanding the above, the Holding Company reserves the right in its
sole discretion to accept or reject orders received on photocopied or facsimiled
Order Forms.
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT
In the event Order Forms (a) are not delivered and are returned to the
Holding Company or the Bank by the United States Postal Service, (b) are not
received by the Holding Company or are received by the Holding Company after the
expiration date specified thereon, (c) are completed or executed defectively,
(d) are not accompanied by the full required payment, or, in the case of
institutional investors in the Community Offering, by delivering irrevocable
orders together with a legally binding commitment to pay by wire transfer the
full amount of the Subscription Price prior to 48 hours before the completion of
the Conversion, unless waived by the Holding Company, for the shares of Holding
Company Common Stock subscribed or ordered (including cases in which Deposit
Accounts from which withdrawals are authorized are insufficient to cover the
amount of the required payment), or (e) are not mailed pursuant to a "no mail"
order placed in effect by the Account Holder, the subscription rights of the
Person to whom such rights have been granted will lapse as though such Person
failed to return the completed Order Form within the time period specified
thereon; PROVIDED, HOWEVER, that the Holding Company may, but will not be
required to, waive any immaterial irregularity on any Order Form or require the
submission of corrected Order Forms or the remittance of full payment for
subscribed or ordered shares by such date as the Holding Company may specify.
The interpretation of the Holding Company of terms and conditions of this Plan
and of the Order Forms will be final, subject to the authority of the OTS.
18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
The Holding Company will make reasonable efforts to comply with the
securities laws of all States in the United States in which Persons entitled to
subscribe for shares of Holding Company Common Stock pursuant to this Plan
reside. However, no such Person will be issued subscription rights or be
permitted to purchase shares of Holding Company Common Stock in the Subscription
Offering if such Person resides in a foreign country; or in a State of the
United States with respect to which any of the following apply: (A) a small
number of Persons otherwise eligible to subscribe for shares under the Plan
reside in such state; (B) the issuance of subscription rights or the offer or
sale of shares of Holding Company Common Stock to such Persons would require the
Holding
18
Company under the securities laws of such state, to register as a broker,
dealer, salesman or agent or to register or otherwise qualify its securities for
sale in such state; and (C) such registration or qualification would be
impracticable for reasons of cost or otherwise.
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT
The Bank shall establish at the time of the MHC Merger a Liquidation
Account in an amount equal to the greater of: (a) the percentage of the
outstanding shares of the common stock of the Mid-Tier Holding Company owned by
the Mutual Holding Company prior to the Mid-Tier Merger multiplied by the
Mid-Tier Holding Company's total stockholders' equity as reflected in the latest
statement of financial condition contained in the final Prospectus utilized in
the Conversion; or (b) the retained earnings of the Bank as of the latest
financial statements set forth in the prospectus used in connection with the
Bank's initial mutual holding company reorganization and minority stock
offering. Following the Conversion, the Liquidation Account will be maintained
by the Bank for the benefit of the Eligible Account Holders and Supplemental
Eligible Account Holders who continue to maintain their Deposit Accounts at the
Bank. Each Eligible Account Holder and Supplemental Eligible Account Holder
shall, with respect to his Deposit Account, hold a related inchoate interest in
a portion of the Liquidation Account balance, in relation to his Deposit Account
balance at the Eligibility Record Date or Supplemental Eligibility Record Date,
respectively, or to such balance as it may be subsequently reduced, as
hereinafter provided.
In the unlikely event of a complete liquidation of the Bank (and only in
such event), following all liquidation payments to creditors (including those to
Account Holders to the extent of their Deposit Accounts), each Eligible Account
Holder and Supplemental Eligible Account Holder shall be entitled to receive a
liquidating distribution from the Liquidation Account in the amount of the then
adjusted subaccount balance of his Deposit Account then held, before any
liquidation distribution may be made to any holders of the Bank's capital stock.
No merger, consolidation, purchase of bulk assets with assumption of Deposit
Accounts and other liabilities, or similar transactions with an FDIC insured
institution, in which the Bank is not the surviving institution, shall be deemed
to be a complete liquidation for this purpose. In such transactions, the
Liquidation Account shall be assumed by the surviving institution.
The initial subaccount balance for a Deposit Account held by an Eligible
Account Holder and Supplemental Eligible Account Holder shall be determined by
multiplying the opening balance in the Liquidation Account by a fraction, the
numerator of which is the amount of the Qualifying Deposits of such Account
Holder and the denominator of which is the total amount of all Qualifying
Deposits of all Eligible Account Holders and Supplemental Eligible Account
Holders. Such initial subaccount balance shall not be increased, but shall be
subject to downward adjustment as described below. If, at the close of business
on any December 31 annual closing date, commencing on or after the effective
date of the Conversion, the deposit balance in the Deposit Account of an
Eligible Account Holder or Supplemental Eligible Account Holder is less than the
lesser of (i) the balance in the Deposit Account at the close of business on any
other annual closing date subsequent to the Eligibility Record Date or
Supplemental Eligibility Record Date, or (ii) the amount of the Qualifying
Deposit in such Deposit Account as of the Eligibility Record Date or
Supplemental Eligibility Record Date, the subaccount balance for such Deposit
Account shall be adjusted by reducing such subaccount balance in an amount
proportionate to the reduction in such deposit balance. In the event
19
of such downward adjustment, the subaccount balance shall not be subsequently
increased, notwithstanding any subsequent increase in the deposit balance of the
related Deposit Account. If any such Deposit Account is closed, the related
subaccount shall be reduced to zero.
The creation and maintenance of the Liquidation Account shall not operate
to restrict the use or application of any of the net worth accounts of the Bank,
except that the Bank shall not declare or pay a cash dividend on, or repurchase
any of, its capital stock if the effect thereof would cause its net worth to be
reduced below (i) the amount required for the Liquidation Account; or (ii) the
minimum regulatory capital requirements of the Bank contained in Part 567 of the
Rules and Regulations of the OTS.
20. VOTING RIGHTS OF STOCKHOLDERS
Following consummation of the Conversion, voting rights with respect to
the Bank shall be held and exercised exclusively by the holders of its capital
stock. The holders of the voting capital stock of the Holding Company shall have
the exclusive voting rights with respect to the Holding Company.
21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
A. All shares of Holding Company Common Stock purchased by Directors or
Officers in the Offering shall be subject to the restriction that, except as
provided in this Section or as may be approved by the OTS, no interest in such
shares may be sold or otherwise disposed of for value for a period of one year
following the date of purchase in the Offering.
B. The restriction on disposition of Holding Company Common Stock set
forth above in this Section shall not apply to the following:
(1) Any exchange of such shares in connection with a merger or
acquisition involving the Bank or the Holding Company, as the case
may be, which has been approved by the OTS; and
(2) Any disposition of such shares following the death of the person to
whom such shares were initially sold under the terms of this Plan.
C. With respect to all shares of Holding Company Common Stock subject
to the restrictions on resale or subsequent disposition described in paragraph A
above, each of the following provisions shall apply:
(1) Each certificate representing shares restricted by this section
shall bear a legend prominently stamped on its face giving notice of
the restriction;
(2) Instructions shall be issued to the stock transfer agent for the
Holding Company not to recognize or effect any transfer of any
certificate or record of ownership of any such shares in violation
of the restriction on transfer; and
20
(3) Any shares of capital stock of the Holding Company issued with
respect to a stock dividend, stock split, or otherwise with respect
to ownership of outstanding shares of Holding Company Common Stock
subject to the restriction on transfer hereunder shall be subject to
the same restriction as is applicable to such Holding Company Common
Stock.
22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE
CONVERSION
For a period of three years following the Conversion, no Officer, Director
or their Associates shall purchase, without the prior written approval of the
OTS, any outstanding shares of Holding Company Common Stock except from a
broker-dealer registered with the SEC. This provision shall not apply to
negotiated transactions involving more than 1% of the outstanding shares of
Holding Company Common Stock, the exercise of any options pursuant to a stock
option plan or purchases of Holding Company Common Stock made by or held by any
Tax-Qualified Employee Stock Benefit Plan or non-Tax-Qualified Employee Stock
Benefit Plan of the Bank or the Holding Company (including the Employee Plans)
which may be attributable to any Officer or Director. As used herein, the term
"negotiated transaction" means a transaction in which the securities are offered
and the terms and arrangements relating to any sale are arrived at through
direct communications between the seller or any Person acting on its behalf and
the purchaser or his investment representative. The term "investment
representative" shall mean a professional investment advisor acting as agent for
the purchaser and independent of the seller and not acting on behalf of the
seller in connection with the transaction.
23. TRANSFER OF DEPOSIT ACCOUNTS
Each Person holding a Deposit Account at the Bank at the time of
Conversion shall retain an identical Deposit Account at the Bank following the
Conversion in the same amount and subject to the same terms and conditions
(except as to voting and liquidation rights).
24. REGISTRATION AND MARKETING
Within the time period required by applicable laws and regulations, the
Holding Company will register the securities issued in connection with the
Conversion pursuant to the Securities Exchange Act of 1934 (or will be a
successor issuer that succeeds to the registration of the Mid-Tier Holding
Company) and will not deregister such securities for a period of at least three
years thereafter, except that the maintenance of registration for three years
requirement may be fulfilled by any successor to the Bank or any holding company
of the Bank. In addition, the Bank or Holding Company will use its best efforts
to encourage and assist a market-maker to establish and maintain a market for
the Holding Company Common Stock and to list those securities on a national or
regional securities exchange or the Nasdaq Stock Market.
25. TAX RULINGS OR OPINIONS
Consummation of the Conversion is expressly conditioned upon prior receipt
by the Mutual Holding Company, the Mid-Tier Holding Company and the Bank of
either a ruling or an opinion of
21
counsel with respect to federal tax laws, and either a ruling, an opinion of
counsel, or a letter of advice from their tax advisor with respect to New York
tax laws, to the effect that consummation of the transactions contemplated by
the Conversion and this Plan will not result in a taxable reorganization under
the provisions of the applicable codes or otherwise result in any adverse tax
consequences to the Mutual Holding Company, the Mid-Tier Holding Company, the
Holding Company or the Bank, or the Account Holders receiving subscription
rights before or after the Conversion, except in each case to the extent, if
any, that subscription rights are deemed to have value on the date such rights
are issued.
26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS
A. The Holding Company and the Bank are authorized to adopt
Tax-Qualified Employee Stock Benefit Plans in connection with the Conversion,
including without limitation, an ESOP. Existing, as well as any newly created,
Tax-Qualified Employee Stock Benefit Plans may purchase shares of Holding
Company Common Stock in the Conversion, to the extent permitted by the terms of
such benefit plans and this Plan.
B. As a result of the Conversion, the Holding Company shall be deemed
to have ratified and approved the stock benefit plans maintained by the Bank and
the Mid-Tier Holding Company and shall have agreed to issue (and reserve for
issuance) Holding Company Common Stock in lieu of common stock of the Mid-Tier
Holding Company pursuant to the terms of such benefit plans. Upon consummation
of the Conversion, the Mid-Tier Holding Company common stock held by such
benefit plans shall be converted into Holding Company Common Stock based upon
the Exchange Ratio. Also upon consummation of the Conversion, (i) all rights to
purchase, sell or receive Mid-Tier Holding Company common stock and all rights
to elect to make payment in Mid-Tier Holding Company common stock under any
agreement between the Bank or the Mid-Tier Holding Company and any Director,
Officer or Employee thereof or under any plan or program of the Bank or the
Mid-Tier Holding Company shall automatically, by operation of law, be converted
into and shall become an identical right to purchase, sell or receive Holding
Company Common Stock and an identical right to make payment in Holding Company
Common Stock under any such agreement between the Bank or the Mid-Tier Holding
Company and any Director, Officer or Employee thereof or under such plan or
program of the Bank, and (ii) rights outstanding under any stock option plan of
the Bank or the Mid-Tier Holding Company shall be assumed by the Holding Company
and thereafter shall be rights only for shares of Holding Company Common Stock,
with each such right being for a number of shares of Holding Company Common
Stock based upon the Exchange Ratio and the number of shares of Mid-Tier Holding
Company common stock that were available thereunder immediately prior to
consummation of the Conversion, with the price adjusted to reflect the Exchange
Ratio but with no change in any other term or condition of such right.
C. The Holding Company and the Bank are authorized to enter into
employment agreements with their executive officers.
D. The Holding Company and the Bank are authorized to adopt stock
option plans, restricted stock grant plans and other non-Tax-Qualified Employee
Stock Benefit Plans, provided that such plans conform to any applicable
requirements of OTS regulations.
22
27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY
A. In accordance with OTS regulations, for a period of three years from
the date of consummation of the Conversion, no Person, other than the Holding
Company, shall directly or indirectly acquire or offer to acquire the beneficial
ownership of more than 10% of any class of an equity security of the Bank
without the prior written consent of the OTS.
(1) The charter of the Bank may contain a provision stipulating that no
Person, except the Holding Company, for a period of five years
following the closing date of the Conversion, may directly or
indirectly acquire or offer to acquire the beneficial ownership of
more than 10% of any class of an equity security of the Bank,
without the prior written approval of the OTS. In addition, such
charter may also provide that for a period of five years following
the closing date of the Conversion, shares beneficially owned in
violation of the above-described charter provision shall not be
entitled to vote and shall not be voted by any Person or counted as
voting stock in connection with any matter submitted to stockholders
for a vote. In addition, special meetings of the stockholders
relating to changes in control or amendment of the charter may only
be called by the Board of Directors, and shareholders shall not be
permitted to cumulate their votes for the election of Directors.
(2) The Certificate of Incorporation of the Holding Company will contain
a provision stipulating that in no event shall any record owner of
any outstanding shares of Holding Company Common Stock who
beneficially owns in excess of 10% of such outstanding shares be
entitled or permitted to any vote in respect to any shares held in
excess of 10%. In addition, the Certificate of Incorporation and
Bylaws of the Holding Company will contain provisions which provide
for staggered terms of the Directors, noncumulative voting for
Directors, limitations on the calling of special meetings and
certain notice requirements.
B. For the purposes of this section:
(1) The term "Person" includes an individual, a firm, a corporation or
other entity;
(2) The term "offer" includes every offer to buy or acquire,
solicitation of an offer to sell, tender offer for, or request or
invitation for tenders of, a security or interest in a security for
value;
(3) The term "acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise; and
(4) The term "security" includes nontransferable subscription rights
issued pursuant to a plan of conversion as well as a "security" as
defined in Section 2(a)(l) of the Securities Act of 1933.
23
28. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
A. The Holding Company shall comply with any applicable OTS regulation
in the repurchase of any shares of its capital stock during the first year
following consummation of the Conversion.
B. The Bank shall not declare or pay a cash dividend on, or repurchase
any of, its capital stock if the effect thereof would cause its regulatory
capital to be reduced below (i) the amount required for the Liquidation Account
or (ii) the minimum regulatory capital requirement in Section 567.2 of the Rules
and Regulations of the OTS. Otherwise, the Bank may declare dividends or make
capital distributions in accordance with applicable law and regulations,
including 12 C.F.R. Section 563.141 or its successor.
29. CHARTER AND BYLAWS
By voting to adopt this Plan, Members of the Mutual Holding Company will
be voting to adopt a Certificate of Incorporation and Bylaws for the Holding
Company attached as Exhibits D and E to this Plan.
30. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE
The Effective Date of the Conversion shall be the date upon which the
Articles of Combination shall be filed with the OTS with respect to the MHC
Merger, the Mid-Tier Merger and the Bank Merger. The Articles of Combination
shall be filed with the OTS after all requisite regulatory, member and
stockholder approvals have been obtained, all applicable waiting periods have
expired, and sufficient subscriptions and orders for Subscription Shares have
been received. The Closing of the sale of all shares of Holding Company Common
Stock sold in the Subscription Offering, Community Offering and/or Syndicated
Community Offering shall occur simultaneously on the effective date of the
Closing.
31. EXPENSES OF CONVERSION
The Mutual Holding Company, the Mid-Tier Holding Company, the Bank and the
Holding Company may retain and pay for the services of legal, financial and
other advisors to assist in connection with any or all aspects of the
Conversion, including the Offering, and such parties shall use their best
efforts to assure that such expenses shall be reasonable.
32. AMENDMENT OR TERMINATION OF PLAN
This Plan may be substantively amended by the Board of Directors of the
Mutual Holding Company at the discretion of the Board of Directors or as a
result of comments from regulatory authorities at any time prior to the
solicitation of proxies from Members and Mid-Tier Holding Company stockholders
to vote on this Plan, and at any time thereafter by the Board of Directors of
the Mutual Holding Company with the concurrence of the OTS. Any amendment to
this Plan made after approval by the Members and Mid-Tier Holding Company
stockholders with the approval of the OTS shall not necessitate further approval
by the Members or Mid-Tier Holding Company stockholders unless otherwise
required by the OTS. This Plan may be terminated by the Board of
24
Directors of the Mutual Holding Company at any time prior to the Special Meeting
of Members and the Special Meeting of Stockholders to vote on this Plan, and at
any time thereafter with the concurrence of the OTS.
By adoption of the Plan, the Members of the Mutual Holding Company
authorize the Board of Directors of the Mutual Holding Company to amend or
terminate the Plan under the circumstances set forth in this Section.
33. CONDITIONS TO CONVERSION
Consummation of the Conversion pursuant to this Plan is expressly
conditioned upon the following:
A. Prior receipt by the Mutual Holding Company, the Mid-Tier Holding
Company, and the Bank of rulings of the United States Internal Revenue Service
and the State of New York taxing authorities, or opinions of counsel or tax
advisers as described in Section 25 hereof;
B. The sale of the shares of Holding Company Common Stock offered in
the Conversion; and
C. The completion of the Conversion within the time period specified in
Section 3 of this Plan.
34. INTERPRETATION
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Mutual
Holding Company shall be final, subject to the authority of the OTS.
Dated: June 13, 2002.
25
EXHIBIT A
AGREEMENT OF MERGER
BETWEEN
SOUND FEDERAL BANCORP
SOUND FEDERAL INTERIM SAVINGS BANK I,
AND SOUND FEDERAL SAVINGS AND LOAN ASSOCIATION
FORM OF AGREEMENT OF MERGER BETWEEN
SOUND FEDERAL BANCORP,
SOUND FEDERAL INTERIM SAVINGS BANK I
AND SOUND FEDERAL SAVINGS AND LOAN ASSOCIATION
THIS AGREEMENT OF MERGER (this "Merger Agreement"), dated as of
_____________, 2002, is made by and between Sound Federal Bancorp, a federal
corporation ("Mid-Tier Holding Company"), Sound Federal Savings and Loan
Association (the "Bank"), a federal stock savings and loan association, and
Sound Federal Interim Savings Bank I, an interim federal savings bank ("Interim
I").
R E C I T A L S :
1. Mid-Tier Holding Company is a federal corporation which owns 100% of
the common stock of the Bank.
2. Pursuant to the Merger Agreement, Mid-Tier Holding Company will
convert to or exchange its charter for a federal interim savings bank charter
and shall merge with and into the Bank with the Bank as the surviving entity
(the "Mid-Tier Merger"). The Mid-Tier Holding Company stockholders shall
constructively receive shares of Bank common stock in exchange for Mid-Tier
Holding Company common stock that they actually or constructively hold.
3. At least two-thirds of the members of the boards of directors of the
Bank, Interim I and Mid-Tier Holding Company have approved this Merger Agreement
under which Mid-Tier Holding Company shall be merged with and into the Bank with
the Bank as the surviving or resulting institution (the "Resulting
Institution"), and authorized the execution and delivery thereof.
4. This Merger Agreement (and the transactions contemplated hereby) is
being entered into to facilitate the conversion of Sound Federal, MHC to stock
form pursuant to that certain Plan of Conversion and Reorganization of Sound
Federal, MHC (the "Plan").
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
1. MERGER. At and on the Effective Date (as defined below), (i)
Mid-Tier Holding Company shall exchange its charter for the charter of Interim I
and will merge with and into the Bank with the Bank as the Resulting
Institution, and (ii) Mid-Tier Holding Company/Interim I stockholders shall
constructively receive shares of Bank common stock in exchange for their
Mid-Tier Holding Company/Interim I common stock.
2. EFFECTIVE DATE. The Mid-Tier Merger shall not be effective until and
unless it is approved by the Director of the Office of Thrift Supervision (the
"OTS") after approval by at least two-thirds of the outstanding common stock of
Mid-Tier Holding Company and the Articles of Combination shall have been filed
with the OTS with respect to the Mid-Tier Merger. Approval of the Plan by the
stockholders of Mid-Tier Holding Company shall also constitute approval of this
Merger Agreement.
A-1
3. NAME. The name of the Resulting Institution shall be Sound Federal
Savings and Loan Association.
4. OFFICES. The main office of the Resulting Institution shall be 300
Mamaroneck Avenue, Mamaroneck, New York. The offices of the Bank that were in
lawful operation prior to the Mid-Tier Merger shall be operated as offices of
the Resulting Institution after the Mid-Tier Merger.
5. DIRECTORS AND OFFICERS. The directors and officers of the Bank
immediately prior to the Effective Date shall be the directors and officers of
the Resulting Institution after the Effective Date.
6. RIGHTS AND DUTIES OF THE RESULTING INSTITUTION. At the Effective
Date, the Mid-Tier Holding Company shall convert to Interim I, which shall be
merged with and into the Bank with the Bank as the Resulting Institution. The
business of the Resulting Institution shall be that of a federal savings bank as
provided in its charter. All assets, rights, interests, privileges, powers,
franchises and property (real, personal and mixed) of Mid-Tier Holding Company,
Interim I and the Bank shall be automatically transferred to and vested in the
Resulting Institution by virtue of the Mid-Tier Merger without any deed or other
document of transfer. The Resulting Institution, without any order or action on
the part of any court or otherwise and without any documents of assumption or
assignment, shall hold and enjoy all of the properties, franchises and
interests, including appointments, powers, designations, nominations and all
other rights and interests as the agent or other fiduciary in the same manner
and to the same extent as such rights, franchises, and interests and powers were
held or enjoyed by Mid-Tier Holding Company, Interim I and the Bank. The
Resulting Institution shall be responsible for all of the liabilities,
restrictions and duties of every kind and description of Mid-Tier Holding
Company, Interim I and the Bank immediately prior to the Mid-Tier Merger,
including liabilities for all debts, obligations and contracts of Mid-Tier
Holding Company, Interim I and the Bank, matured or unmatured, whether accrued,
absolute, contingent or otherwise and whether or not reflected or reserved
against on balance sheets, books of accounts or records of the Mid-Tier Holding
Company and the Bank. The stockholders of the Bank shall possess all voting
rights with respect to the shares of stock of the Bank. All rights of creditors
and other obligees and all liens on property of Mid-Tier Holding Company,
Interim I and the Bank shall be preserved and shall not be released or impaired.
7. OTHER TERMS. All terms used in this Merger Agreement shall, unless
defined herein, have the meanings set forth in the Plan. The Plan is
incorporated herein by this reference and made a part hereof to the extent
necessary or appropriate to effect and consummate the terms of this Merger
Agreement and the Conversion.
A-2
IN WITNESS WHEREOF, Mid-Tier Holding Company, Interim I and the Bank have
caused this Merger Agreement to be executed as of the date first above written.
SOUND FEDERAL BANCORP
ATTEST:
By: By:
--------------------------------- ------------------------------------
Anthony J. Fabiano, Secretary Richard P. McStravick, President
and Chief Executive Officer
SOUND FEDERAL SAVINGS AND LOAN
ASSOCIATION
ATTEST:
By: By:
--------------------------------- ------------------------------------
Anthony J. Fabiano, Secretary Richard P. McStravick, President
and Chief Executive Officer
SOUND FEDERAL INTERIM SAVINGS BANK I
ATTEST:
By: By:
--------------------------------- ------------------------------------
Anthony J. Fabiano, Secretary Richard P. McStravick, President
and Chief Executive Officer
A-3
EXHIBIT B
AGREEMENT OF MERGER
BETWEEN
SOUND FEDERAL, MHC
SOUND FEDERAL INTERIM SAVINGS BANK II
AND SOUND FEDERAL SAVINGS AND LOAN ASSOCIATION
FORM OF AGREEMENT OF MERGER
BETWEEN
SOUND FEDERAL, MHC
SOUND FEDERAL INTERIM SAVINGS BANK II
AND SOUND FEDERAL SAVINGS AND LOAN ASSOCIATION
THIS AGREEMENT OF MERGER (this "Merger Agreement"), dated as of
___________, 2002, is made by and between Sound Federal, MHC, a federal mutual
holding company (the "Mutual Holding Company"), Sound Federal Savings and Loan
Association (the "Bank"), and Sound Federal Interim Savings Bank II, an interim
federal savings bank ("Interim II").
R E C I T A L S:
1. The Mutual Holding Company is a federal mutual holding company with
no authorized shares of capital stock.
2. After the merger of Sound Federal Bancorp and Sound Federal Interim
Savings Bank I into the Bank, the majority of the shares of common stock of the
Bank will be owned by the Mutual Holding Company, and the remainder of the
shares of common stock of the Bank will be constructively owned by the Bank's
employees, directors and the public (the "Minority Stockholders").
3. Pursuant to this Merger Agreement, the Mutual Holding Company will
convert to or exchange its charter for the federal interim savings bank charter
of Interim II, and Interim II shall merge with and into the Bank with the Bank
as the surviving entity (the "MHC Merger"). Each Eligible Account Holder and
Supplemental Eligible Account Holder, as defined in the Plan of Conversion and
Reorganization of Sound Federal, MHC (the "Plan"), will receive an interest in a
liquidation account ("Liquidation Account") of the Bank in exchange for such
person's interest in the Mutual Holding Company.
4. At least two-thirds of the members of the boards of directors of the
Bank and the Mutual Holding Company have approved this Merger Agreement and the
MHC Merger (as described below) and authorized the execution and delivery
thereof.
5. This Merger Agreement (and the transactions contemplated hereby) is
being entered into to facilitate the conversion of the Mutual Holding Company to
stock form pursuant to the Plan.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
1. MERGER. At and on the Effective Date (as defined below), (i) the
Mutual Holding Company shall convert to or exchange its charter for the charter
of Interim II, and Interim II will merge with and into the Bank (the "MHC
Merger") with the Bank as the surviving or resulting institution (the "Resulting
Institution"), (ii) each share of Bank common stock owned by the Mutual Holding
Company shall be canceled, and (iii) each Eligible Account Holder and
Supplemental Eligible Account Holder shall automatically receive an interest in
the Liquidation Account which
B-1
shall be established in the Bank, in exchange for such person's interest in the
Mutual Holding Company as set forth in the Plan.
2. EFFECTIVE DATE. The MHC Merger shall not be effective until and
unless it is approved by the Director of the Office of Thrift Supervision (the
"OTS") after approval by (i) two-thirds of the outstanding common stock of the
Bank, and (ii) a majority of the members of the Mutual Holding Company, and the
Articles of Combination shall have been filed with the OTS with respect to the
MHC Merger. Approval of the Plan by the members of the Mutual Holding Company
shall also constitute approval of this Merger Agreement.
3. NAME. The name of the Resulting Institution shall be Sound Federal
Savings and Loan Association.
4. OFFICES. The main offices of the Resulting Institution shall be 300
Mamaroneck Avenue, New York. The offices of the Bank that were in lawful
operation prior to the MHC Merger shall continue to be operated as the offices
of the Resulting Institution after the MHC Merger.
5. DIRECTORS AND OFFICERS. The directors and officers of the Bank
immediately prior to the Effective Date shall be the directors and officers of
the Resulting Institution after the Effective Date.
6 RIGHTS AND DUTIES OF THE RESULTING INSTITUTION. At the Effective
Date, the Mutual Holding Company shall convert to Interim II, which shall merge
with and into the Bank with the Bank as the Resulting Institution. The business
of the Resulting Institution shall be that of a federal savings bank as provided
in its charter. All assets, rights, interests, privileges, powers, franchises
and property (real, personal and mixed) of the Mutual Holding Company, Interim
II and the Bank shall be automatically transferred to and vested in the
Resulting Institution by virtue of such merger without any deed or other
document of transfer. The Resulting Institution, without any order or action on
the part of any court or otherwise and without any documents of assumption or
assignment, shall hold and enjoy all of the properties, franchises and
interests, including appointments, powers, designations, nominations and all
other rights and interests as the agent or other fiduciary in the same manner
and to the same extent as such rights, franchises, and interests and powers were
held or enjoyed by the Mutual Holding Company, Interim II and the Bank. The
Resulting Institution shall be responsible for all of the liabilities,
restrictions and duties of every kind and description of both the Mutual Holding
Company, Interim II and the Bank immediately prior to the MHC Merger, including
liabilities, debts, obligations and contracts of the Mutual Holding Company,
Interim II and the Bank, matured or unmatured, whether accrued, absolute,
contingent or otherwise and whether or not reflected or reserved against on
balance sheets, books of accounts or records of the Mutual Holding Company,
Interim II and the Bank. The stockholders of the Bank shall possess all voting
rights with respect to the shares of stock of the Bank. All rights of creditors
and other obligees and all liens on property of either the Mutual Holding
Company, Interim II or the Bank shall be preserved and shall not be released or
impaired.
7. OTHER TERMS. All terms used in this Merger Agreement shall, unless
defined herein, have the meanings set forth in the Plan. The Plan is
incorporated herein by this reference and made
B-2
a part hereof to the extent necessary or appropriate to effect and consummate
the terms of this Merger Agreement and the Conversion.
IN WITNESS WHEREOF, the Mutual Holding Company, Interim II and the Bank
have caused this Merger Agreement to be executed as of the date first above
written.
SOUND FEDERAL BANCORP
ATTEST:
By: By:
--------------------------------- ------------------------------------
Anthony J. Fabiano, Secretary Richard P. McStravick, President
and Chief Executive Officer
SOUND FEDERAL SAVINGS AND LOAN
ASSOCIATION
ATTEST:
By: By:
--------------------------------- ------------------------------------
Anthony J. Fabiano, Secretary Richard P. McStravick, President
and Chief Executive Officer
SOUND FEDERAL INTERIM SAVINGS BANK II
ATTEST:
By: By:
--------------------------------- ------------------------------------
Anthony J. Fabiano, Secretary Richard P. McStravick, President
and Chief Executive Officer
B-3
EXHIBIT C
AGREEMENT OF MERGER
BETWEEN
SOUND FEDERAL SAVINGS AND LOAN ASSOCIATION
AND SOUND FEDERAL INTERIM SAVINGS BANK
FORM OF AGREEMENT OF MERGER
BETWEEN
SOUND FEDERAL SAVINGS AND LOAN ASSOCIATION
AND SOUND FEDERAL INTERIM SAVINGS BANK
THIS AGREEMENT OF MERGER (this "Merger Agreement"), dated as of
__________________, 2002, is made by and between Sound Federal Savings and Loan
Association, a federal savings bank (the "Bank"), and Sound Federal Interim
Savings Bank, an interim federal savings bank ("Interim").
R E C I T A L S :
1. The Bank is a federal savings bank that immediately prior to the
transactions contemplated by this Merger Agreement and the Plan of Conversion
and Reorganization of Sound Federal, MHC (the "Plan") was a wholly-owned
subsidiary of Sound Federal Bancorp (the "Mid-Tier Holding Company"), a Federal
corporation. Mid-Tier Holding Company was a majority-owned subsidiary of Sound
Federal, MHC (the "Mutual Holding Company").
2. Pursuant to the Plan and its related merger agreements, (i) Mid-Tier
Holding Company has converted to Sound Federal Interim Savings Bank I, an
interim federal savings bank ("Interim I") and Interim I has merged with and
into the Bank (the "Mid-Tier Merger") with the Bank as the resulting entity,
(ii) Mid-Tier Holding Company stockholders have constructively received shares
of Bank common stock in exchange for their Mid-Tier Holding Company common
stock, (iii) the Mutual Holding Company has converted to, or exchanged its
charter for, a federal interim savings bank ("Interim II") which has merged with
and into the Bank with the Bank as the resulting entity, and (iv) each Eligible
Account Holder and Supplemental Eligible Account Holder (as defined in the Plan)
has received an interest in a Liquidation Account of the Bank in exchange for
such person's interest in the Mutual Holding Company.
3. Pursuant to the Plan, following the completion of each of the steps
outlined in paragraph 2 above, the Bank has organized Sound Federal Bancorp, a
Delaware corporation (the "Holding Company"), to become the holding company of
the Bank, and the Holding Company has organized Interim for the purpose of
facilitating the conversion of the Mutual Holding Company to stock form (the
"Conversion") pursuant to the Plan.
4. At least two-thirds of the members of the boards of directors of the
Bank and Interim have approved this Merger Agreement under which Interim shall
be merged with and into the Bank with the Bank as the surviving or resulting
institution, and authorized the execution and delivery thereof.
5. This Merger Agreement (and the transactions contemplated hereby) is
being entered into to facilitate the conversion of the Mutual Holding Company to
stock form pursuant to the Plan.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
C-1
1. MERGER. At and on the Effective Date (as defined below) and
immediately following the Mid-Tier Merger and the MHC Merger (i) Interim will
merge with and into the Bank (the "Bank Merger") with the Bank as the surviving
or resulting institution ("Resulting Institution"), whereby (ii) all
constructive shareholders of the Bank (I.E., Minority Stockholders immediately
prior to the Conversion) will exchange the shares of Bank common stock that they
constructively received in the Mid-Tier Merger for Holding Company Common Stock.
2. STOCK OFFERING. Immediately after the Bank Merger, the Holdings
Company shall sell shares of its common stock in a subscription and community
offering as described in the Plan.
3. EFFECTIVE DATE. The Bank Merger shall not be effective until and
unless it is approved by the Director of the Office of Thrift Supervision (the
"OTS") after approval by at least two-thirds of the outstanding common stock of
the Bank and Interim, and the Articles of Combination shall have been filed with
the OTS with respect to the Bank Merger.
4. NAME. The name of the Resulting Institution shall be Sound Federal
Savings and Loan Association.
5. OFFICES. The main offices of the Resulting Institution shall be 300
Mamaroneck Avenue, Mamaroneck, New York. The offices of the Bank that were in
lawful operation prior to the Bank Merger shall be operated as offices of the
Resulting Institution after the Bank Merger.
6. DIRECTORS AND OFFICERS. The directors and officers of the Bank
immediately prior to the Effective Date shall be the directors and officers of
the Resulting Institution after the Effective Date.
7. RIGHTS AND DUTIES OF THE RESULTING INSTITUTION. At the Effective
Date, Interim shall be merged with and into the Bank with the Bank as the
Resulting Institution. The business of the Resulting Institution shall be that
of a federal savings bank as provided in its charter. All assets, rights,
interests, privileges, powers, franchises and property (real, personal and
mixed) of Interim and the Bank shall be automatically transferred to and vested
in the Resulting Institution by virtue of the Bank Merger without any deed or
other document of transfer. The Resulting Institution, without any order or
action on the part of any court or otherwise and without any documents of
assumption or assignment, shall hold and enjoy all of the properties, franchises
and interests, including appointments, powers, designations, nominations and all
other rights and interests as the agent or other fiduciary in the same manner
and to the same extent as such rights, franchises, and interests and powers were
held or enjoyed by Interim and the Bank. The Resulting Institution shall be
responsible for all of the liabilities, restrictions and duties of every kind
and description of Interim and the Bank immediately prior to the Bank Merger,
including liabilities for all debts, obligations and contracts of Bank and
Interim, matured or unmatured, whether accrued, absolute, contingent or
otherwise and whether or not reflected or reserved against on balance sheets,
books of accounts or records of Interim and the Bank. The stockholders of the
Resulting Institution shall possess all voting rights with respect to the shares
of stock of the Bank. All rights of creditors and other obligees and all liens
on property of Interim and the Bank shall be preserved and shall not be released
or impaired.
C-2
8. OTHER TERMS. All terms used in this Merger Agreement shall, unless
defined herein, have the meanings set forth in the Plan. The Plan is
incorporated herein by this reference and made a part hereof to the extent
necessary or appropriate to effect and consummate the terms of the Merger
Agreement and the Conversion.
IN WITNESS WHEREOF, the Bank and Interim have caused this Merger Agreement
to be executed as of the date first above written.
SOUND FEDERAL SAVINGS AND LOAN
ASSOCIATION
ATTEST:
By: By:
----------------------------------- ------------------------------------
Anthony J. Fabiano, Secretary Richard P. McStravick, President
and Chief Executive Officer
SOUND FEDERAL INTERIM SAVINGS BANK
ATTEST:
By: By:
----------------------------------- ------------------------------------
Anthony J. Fabiano, Secretary Richard P. McStravick, President
and Chief Executive Officer
C-3
EXHIBIT D
CERTIFICATE OF INCORPORATION OF THE HOLDING COMPANY
CERTIFICATE OF INCORPORATION
OF
SOUND FEDERAL BANCORP, INC.
FIRST: The name of the Corporation is Sound Federal Bancorp, Inc.
(hereinafter referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of the registered agent at that
address is The Corporation Trust Company. THIRD: The purpose of the Corporation
is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
FOURTH:
A. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is twenty-five million (25,000,000)
consisting of:
1. one million (1,000,000) shares of Preferred Stock, par value
one cent ($.01) per share (the "Preferred Stock"); and
2. twenty-four million (24,000,000) shares of Common Stock, par
value one cent ($.01) per share (the "Common Stock").
B. The Board of Directors is authorized, subject to any limitations
prescribed by law, to provide for the issuance of the shares of Preferred Stock
in series, and by filing a certificate pursuant to the applicable law of the
State of Delaware (such certificate being hereinafter referred to as a
"Preferred Stock Designation"), to establish from time to time the number of
shares to be included in each such series, and to fix the designation, powers,
preferences, and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof. The number of authorized
shares of Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the terms of any Preferred Stock Designation.
C. 1. Notwithstanding any other provision of this Certificate of
Incorporation or the bylaws of the Corporation, in no event shall any record
owner of any outstanding Common Stock which is beneficially owned, directly or
indirectly, by a person who, as of any record date for the determination of
stockholders entitled to vote on any matter, beneficially owns in excess of ten
percent (10%) of the then-outstanding shares of Common Stock (the "Limit"), be
entitled, or permitted to any vote in respect of the shares held in excess of
the Limit. The number of votes which may be cast by any record owner by virtue
of the provisions hereof in respect of Common Stock beneficially owned by such
person owning shares in excess of the Limit shall be a number equal to the total
number of votes which a single record owner of all Common Stock owned by such
person would be entitled to cast subject to this Section C of this Article
FOURTH, multiplied by a fraction,
D-1
the numerator of which is the number of shares of such class or series which are
both beneficially owned by such person and owned of record by such record owner
and the denominator of which is the total number of shares of Common Stock
beneficially owned by such person owning shares in excess of the Limit.
2. The following definitions shall apply to this Section C of
this Article FOURTH:
(a) "Affiliate" shall have the meaning ascribed to it in
Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on the
date of filing of this Certificate of Incorporation.
(b) "Beneficial ownership" shall be determined pursuant to
Rule 13d-3 of the General Rules and Regulations under
the Securities Exchange Act of 1934 (or any successor
rule or statutory provision), or, if said Rule 13d-3
shall be rescinded and there shall be no successor rule
or statutory provision thereto, pursuant to said Rule
13d-3 as in effect on the date of filing of this
Certificate of Incorporation; provided, however, that a
person shall, in any event, also be deemed the
"beneficial owner" of any Common Stock:
(1) which such person or any of its Affiliates
beneficially owns, directly or indirectly; or
(2) which such person or any of its Affiliates has (i)
the right to acquire (whether such right is
exercisable immediately or only after the passage
of time), pursuant to any agreement, arrangement
or understanding (but shall not be deemed to be
the beneficial owner of any voting shares solely
by reason of an agreement, contract, or other
arrangement with this Corporation to effect any
transaction which is described in any one or more
clauses of Section A of Article EIGHTH) or upon
the exercise of conversion rights, exchange
rights, warrants, or options or otherwise, or (ii)
sole or shared voting or investment power with
respect thereto pursuant to any agreement,
arrangement, understanding, relationship or
otherwise (but shall not be deemed to be the
beneficial owner of any voting shares solely by
reason of a revocable proxy granted for a
particular meeting of stockholders, pursuant to a
public solicitation of proxies for such meeting,
with respect to shares of which neither such
person nor any such Affiliate is otherwise deemed
the beneficial owner); or
(3) which are beneficially owned, directly or
indirectly, by any other person with which such
first mentioned person or any of its Affiliates
acts as a partnership, limited partnership,
syndicate or other group pursuant to any
agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing
of any shares of capital stock of this
Corporation;
D-2
and provided further, however, that (1) no
Director or Officer of this Corporation (or any
Affiliate of any such Director or Officer) shall,
solely by reason of any or all of such Directors
or Officers acting in their capacities as such, be
deemed, for any purposes hereof, to beneficially
own any Common Stock beneficially owned by another
such Director or Officer (or any Affiliate
thereof), and (2) neither any employee stock
ownership plan or similar plan of this Corporation
or any subsidiary of this Corporation, nor any
trustee with respect thereto or any Affiliate of
such trustee (solely by reason of such capacity of
such trustee), shall be deemed, for any purposes
hereof, to beneficially own any Common Stock held
under any such plan. For purposes of computing the
percentage of beneficial ownership of Common Stock
of a person the outstanding Common Stock shall
include shares deemed owned by such person through
application of this subsection but shall not
include any other Common Stock which may be
issuable by this Corporation pursuant to any
agreement, or upon exercise of conversion rights,
warrants or options, or otherwise. For all other
purposes, the outstanding Common Stock shall
include only Common Stock then outstanding and
shall not include any Common Stock which may be
issuable by this Corporation pursuant to any
agreement, or upon the exercise of conversion
rights, warrants or options, or otherwise.
(c) A "person" shall mean any individual, firm,
corporation, or other entity.
3. The Board of Directors shall have the power to construe
and apply the provisions of this Section C of Article FOURTH and to make all
determinations necessary or desirable to implement such provisions, including
but not limited to matters with respect to (i) the number of shares of Common
Stock beneficially owned by any person, (ii) whether a person is an Affiliate of
another, (iii) whether a person has an agreement, arrangement, or understanding
with another as to the matters referred to in the definition of beneficial
ownership, (iv) the application of any other definition or operative provision
of this section to the given facts, or (v) any other matter relating to the
applicability or effect of this Section C of Article FOURTH.
4. The Board of Directors shall have the right to demand
that any person who is reasonably believed to beneficially own Common Stock in
excess of the Limit (or holds of record Common Stock beneficially owned by any
person in excess of the Limit) supply the Corporation with complete information
as to (i) the record owner(s) of all shares beneficially owned by such person
who is reasonably believed to own shares in excess of the Limit, and (ii) any
other factual matter relating to the applicability or effect of this Section C
of Article FOURTH as may reasonably be requested of such person.
5. Except as otherwise provided by law or expressly
provided in this Section C of Article FOURTH, the presence, in person or by
proxy, of holders of a majority of the shares of capital stock of the
Corporation entitled to vote at the meeting (after giving effect, if required,
to the provisions of this Section C of Article FOURTH) shall constitute a quorum
at all meetings of the stockholders (unless or except to the extent that the
presence of a larger number may be required by law), and every reference in this
Certificate of Incorporation to a majority or other proportion of
D-3
capital stock (or the holders thereof) for purposes of determining any quorum
requirement or any requirement for stockholder consent or approval shall be
deemed to refer to such majority or other proportion of the votes (or the
holders thereof) then entitled to be cast in respect of such capital stock
(after giving effect, if required, to the provisions of this Section C of
Article FOURTH).
6. Any constructions, applications, or determinations made
by the Board of Directors pursuant to this Section C of Article FOURTH in good
faith and on the basis of such information and assistance as was then reasonably
available for such purpose shall be conclusive and binding upon the Corporation
and its stockholders.
7. In the event any provision (or portion thereof) of this
Section C of Article FOURTH shall be found to be invalid, prohibited or
unenforceable for any reason, the remaining provisions (or portions thereof) of
this Section C of Article FOURTH shall remain in full force and effect, and
shall be construed as if such invalid, prohibited or unenforceable provision had
been stricken herefrom or otherwise rendered inapplicable, it being the intent
of this Corporation and its stockholders that such remaining provision (or
portion thereof) of this section remain, to the fullest extent permitted by law,
applicable and enforceable as to all stockholders, including stockholders owning
an amount of stock over the Limit, notwithstanding any such finding.
FIFTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its Directors and stockholders:
A. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors. In
addition to the powers and authority expressly conferred upon them
by statute or by this Certificate of Incorporation or the Bylaws of
the Corporation, the Directors are hereby empowered to exercise all
such powers and do all such acts and things as may be exercised or
done by the Corporation.
B. The Directors of the Corporation need not be elected by
written ballot unless the Bylaws so provide. Stockholders shall not
be permitted to cumulate their votes for the election of Directors.
C. Subject to the rights of any class or series of
Preferred Stock of the Corporation, any action required or permitted
to be taken by the stockholders of the Corporation must be effected
at a duly called annual or special meeting of stockholders of the
Corporation and may not be effected by any consent in writing by
such stockholders.
D. Special meetings of stockholders of the Corporation may
be called (i) by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized
directorships (whether or not there exist any vacancies in
previously authorized directorships at the time any such resolution
is presented to the Board for adoption) (the "Whole Board") or (ii)
as otherwise provided in the Bylaws.
D-4
SIXTH:
A. The number of Directors shall be fixed from time to time exclusively
by the Board of Directors pursuant to a resolution adopted by a majority of the
Whole Board. The Directors shall be divided into three classes, with the term of
office of the first class to expire at the first annual meeting of stockholders,
the term of office of the second class to expire at the annual meeting of
stockholders one year thereafter and the term of office of the third class to
expire at the annual meeting of stockholders two years thereafter. At each
annual meeting of stockholders following such initial classification and
election, Directors elected to succeed those Directors whose terms expire shall
be elected for a term of office to expire at the third succeeding annual meeting
of stockholders after their election.
B. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting from any increase
in the authorized number of Directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the Directors
then in office, though less than a quorum, and Directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of office of the class to which they have been chosen expires. No decrease
in the number of Directors constituting the Board of Directors shall shorten the
term of any incumbent Director.
C. Advance notice of stockholder nominations for the election of
Directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.
D. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any Director, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the affirmative
vote of the holders of at least eighty percent (80%) of the voting power of all
of the then-outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of Directors (after giving effect to the
provisions of Article FOURTH of this Certificate of Incorporation ("Article
FOURTH")), voting together as a single class.
SEVENTH: The Board of Directors is expressly empowered to adopt, amend or
repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the
Bylaws of the Corporation by the Board of Directors shall require the approval
of the majority of the Whole Board. The stockholders shall also have power to
adopt, amend or repeal the Bylaws of the Corporation; provided, however, that,
in addition to any vote of the holders of any class or series of stock of the
Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least eighty percent (80%) of the voting
power of all of the then-outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of Directors (after
giving effect to the provisions of Article FOURTH), voting together as a single
class, shall be required to adopt, amend or repeal any provisions of the Bylaws
of the Corporation.
D-5
EIGHTH:
A. In addition to any affirmative vote required by law or this
Certificate of Incorporation, and except as otherwise expressly provided in this
section:
1. any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate (as hereinafter defined) of an
Interested Stockholder; or
2. any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with
any Interested Stockholder, or any Affiliate of any Interested
Stockholder, of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value (as hereinafter defined) equaling or exceeding
twenty-five percent (25%) or more of the combined assets of the
Corporation and its Subsidiaries; or
3. the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Stockholder or any
Affiliate of any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an aggregate Fair
Market Value (as hereinafter defined) equaling or exceeding twenty-five
percent (25%) of the combined Fair Market Value of the then-outstanding
common stock of the Corporation and its Subsidiaries, except pursuant to
an employee benefit plan of the Corporation or any Subsidiary thereof; or
4. the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of an Interested Stockholder; or
5. any reclassification or combination of securities, or
recapitalization of the Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other transaction (whether
or not with or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing the
proportional share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary which is
directly or indirectly owned by an Interested Stockholder or any Affiliate
of an Interested Stockholder;
shall require the affirmative vote of the holders of at least eighty percent
(80%) of the voting power of the then-outstanding shares of stock of the
Corporation entitled to vote in the election of Directors (the "Voting Stock")
(after giving effect to the provision of Article FOURTH), voting together as a
single class. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage may be specified, by
law or by any other provisions of this Certificate of Incorporation or any
Preferred Stock Designation or in any agreement with any national securities
exchange or otherwise.
D-6
The term "Business Combination" as used in this Article EIGHTH shall mean
any transaction which is referred to in any one or more of paragraphs 1 through
5 of Section A of this Article EIGHTH.
B. The provisions of Section A of this Article EIGHTH shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only the affirmative vote of the majority of the outstanding
shares of capital stock entitled to vote (after giving effect, if required, to
the provisions of Section C of Article FOURTH), or such vote as is required by
law or by this Certificate of Incorporation, if, in the case of any Business
Combination that does not involve any cash or other consideration being received
by the stockholders of the Corporation solely in their capacity as stockholders
of the Corporation, the condition specified in the following paragraph 1 is met
or, in the case of any other Business Combination, all of the conditions
specified in either of the following paragraphs 1 or 2 are met:
1. The Business Combination shall have been approved by
two-thirds of the Disinterested Directors (as hereinafter defined).
2. All of the following conditions shall have been met:
(a) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business
Combination of consideration other than cash to be
received per share by the holders of Common Stock in
such Business Combination shall at least be equal to the
higher of the following:
(1) (if applicable) the Highest Per Share Price (as
hereinafter defined), including any brokerage
commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Stockholder
or any of its Affiliates for any shares of Common
Stock acquired by it (i) within the two-year
period immediately prior to the first public
announcement of the proposal of the Business
Combination (the "Announcement Date"), or (ii) in
the transaction in which it became an Interested
Stockholder, whichever is higher.
(2) the Fair Market Value per share of Common Stock on
the Announcement Date or on the date on which the
Interested Stockholder became an Interested
Stockholder (such latter date is referred to in
this Article EIGHTH as the "Determination Date"),
whichever is higher.
(b) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business
Combination of consideration other than cash to be
received per share by holders of shares of any class of
outstanding Voting Stock other than Common Stock shall
be at least equal to the highest of the following (it
being intended that the requirements of this
subparagraph (b) shall be required to be met with
respect to every such class of outstanding Voting Stock,
whether or not the Interested Stockholder has previously
acquired any shares of a particular class of Voting
Stock):
D-7
(1) (if applicable) the Highest Per Share Price (as
hereinafter defined), including any brokerage
commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Stockholder
for any shares of such class of Voting Stock
acquired by it (i) within the two-year period
immediately prior to the Announcement Date, or
(ii) in the transaction in which it became an
Interested Stockholder, whichever is higher;
(2) (if applicable) the highest preferential amount
per share to which the holders of shares of such
class of Voting Stock are entitled in the event of
any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; and
(3) the Fair Market Value per share of such class of
Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher.
(c) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including
Common Stock) shall be in cash or in the same form as
the Interested Stockholder has paid for shares of such
class of Voting Stock. If the Interested Stockholder has
previously paid for shares of any class of Voting Stock
with varying forms of consideration, the form of
consideration to be received per share by holders of
shares of such class of Voting Stock shall be either
cash or the form used to acquire the largest number of
shares of such class of Voting Stock previously acquired
by the Interested Stockholder. The price determined in
accordance with subparagraph B.2 of this Article EIGHTH
shall be subject to appropriate adjustment in the event
of any stock dividend, stock split, combination of
shares or similar event.
(d) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of
such Business Combination: (1) except as approved by a
majority of the Disinterested Directors, there shall
have been no failure to declare and pay at the regular
date therefor any full quarterly dividends (whether or
not cumulative) on any outstanding stock having
preference over the Common Stock as to dividends or
liquidation; (2) there shall have been (i) no reduction
in the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any subdivision of the
Common Stock), except as approved by a majority of the
Disinterested Directors, and (ii) an increase in such
annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar
transaction which has the effect of reducing the number
of outstanding shares of the Common Stock, unless the
failure to so increase such annual rate is approved by a
majority of the Disinterested Directors; and (3) neither
such Interested Stockholder or any of its Affiliates
shall have become the beneficial owner of any additional
shares of Voting Stock except as part of the transaction
which results in such Interested Stockholder becoming an
Interested Stockholder.
D-8
(e) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder
shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder), of
any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax
advantages provided by the Corporation, whether in
anticipation of or in connection with such Business
Combination or otherwise.
(f) A proxy or information statement describing the proposed
Business Combination and complying with the requirements
of the Securities Exchange Act of 1934 and the rules and
regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be
mailed to stockholders of the Corporation at least
thirty (30) days prior to the consummation of such
Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant
to such Act or subsequent provisions).
C. For the purposes of this Article EIGHTH:
1. A "Person" shall include an individual, a group acting in
concert, a corporation, a partnership, an association, a joint venture, a
pool, a joint stock company, a trust, an unincorporated organization or
similar company, a syndicate or any other group formed for the purpose of
acquiring, holding or disposing of securities.
2. "Interested Stockholder" shall mean any person (other than the
Corporation or any holding company or Subsidiary thereof) who or which:
(a) is the beneficial owner, directly or indirectly, of more
than ten percent (10%) of the voting power of the outstanding Voting
Stock; or
(b) is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date in question
was the beneficial owner, directly or indirectly, of ten percent
(10%) or more of the voting power of the then-outstanding Voting
Stock; or
(c) is an assignee of or has otherwise succeeded to any
shares of Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially owned
by an Interested Stockholder, if such assignment or succession shall
have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning of
the Securities Act of 1933.
3. For purposes of this Article EIGHTH, "beneficial ownership"
shall be determined in the manner provided in Section C of Article FOURTH
hereof.
4. "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on the date of
filing of this Certificate of Incorporation.
D-9
5. "Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in paragraph 2 of this section, the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
6. "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Stockholder and was a
member of the Board of Directors prior to the time that the Interested
Stockholder became an Interested Stockholder, and any Director who is
thereafter chosen to fill any vacancy of the Board of Directors or who is
elected and who, in either event, is unaffiliated with the Interested
Stockholder and in connection with his or her initial assumption of office
is recommended for appointment or election by a majority of Disinterested
Directors then on the Board of Directors.
7. "Fair Market Value" means: (a) in the case of stock, the
highest closing sales price of the stock during the 30-day period
immediately preceding the date in question of a share of such stock on the
National Association of Securities Dealers Automated Quotation System or
any system then in use, or, if such stock is admitted to trading on a
principal United States securities exchange registered under the
Securities Exchange Act of 1934, Fair Market Value shall be the highest
sales price reported during the 30-day period preceding the date in
question, or, if no such quotations are available, the Fair Market Value
on the date in question of a share of such stock as determined by the
Board of Directors in good faith, in each case with respect to any class
of stock, appropriately adjusted for any dividend or distribution in
shares of such stock or any stock split or reclassification of outstanding
shares of such stock into a greater number of shares of such stock or any
combination or reclassification of outstanding shares of such stock into a
smaller number of shares of such stock, and (b) in the case of property
other than cash or stock, the Fair Market Value of such property on the
date in question as determined by the Board of Directors in good faith.
8. Reference to "Highest Per Share Price" shall in each case with
respect to any class of stock reflect an appropriate adjustment for any
dividend or distribution in shares of such stock or any stock split or
reclassification of outstanding shares of such stock into a greater number
of shares of such stock or any combination or reclassification of
outstanding shares of such stock into a smaller number of shares of such
stock.
9. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be
received" as used in subparagraphs (a) and (b) of paragraph 2 of Section B
of this Article EIGHTH shall include the shares of Common Stock and/or the
shares of any other class of outstanding Voting Stock retained by the
holders of such shares.
D. A majority of the Directors of the Corporation shall have the power
and duty to determine for the purposes of this Article EIGHTH, on the basis of
information known to them after reasonable inquiry: (a) whether a person is an
Interested Stockholder; (b) the number of shares of Voting Stock beneficially
owned by any person; (c) whether a person is an Affiliate or Associate of
another; and (d) whether the assets which are the subject of any Business
Combination have, or the
D-10
consideration to be received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value equaling or exceeding twenty-five percent (25%) of the combined
Fair Market Value of the common stock of the Corporation and its Subsidiaries. A
majority of the Directors shall have the further power to interpret all of the
terms and provisions of this Article EIGHTH.
E. Nothing contained in this Article EIGHTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
F. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least eighty percent (80%) of the voting power of all of the
then-outstanding shares of the Voting Stock, voting together as a single class,
shall be required to alter, amend or repeal this Article EIGHTH.
NINTH: The Board of Directors of the Corporation, when evaluating any
offer of another Person (as defined in Article EIGHTH hereof) to (A) make a
tender or exchange offer for any equity security of the Corporation, (B) merge
or consolidate the Corporation with another corporation or entity or (C)
purchase or otherwise acquire all or substantially all of the properties and
assets of the Corporation, may, in connection with the exercise of its judgment
in determining what is in the best interest of the Corporation and its
stockholders, give due consideration to all relevant factors, including, without
limitation, the social and economic effect of acceptance of such offer on: the
Corporation's present and future customers and employees and those of its
Subsidiaries (as defined in Article EIGHTH hereof); the communities in which the
Corporation and its Subsidiaries operate or are located; the ability of the
Corporation to fulfill its corporate objectives as a savings or bank holding
company; and the ability of its subsidiary bank to fulfill its corporate
objectives under applicable statutes and regulations.
TENTH:
A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent or in any other capacity while serving as a Director, Officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by
D-11
such indemnitee in connection therewith; provided, however, that, except as
provided in Section C hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
B. The right to indemnification conferred in Section A of this Article
TENTH shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a Director of Officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section or otherwise. The rights to indemnification and to the advancement
of expenses conferred in Sections A and B of this Article TENTH shall be
contract rights and such rights shall continue as to an indemnitee who has
ceased to be a Director, Officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article TENTH is not paid in
full by the Corporation within sixty (60) days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty (20) days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking the Corporation shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by the
indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not
D-12
entitled to be indemnified, or to such advancement of expenses, under this
Article TENTH or otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article TENTH shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any Director, Officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification and to the advancement
of expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article TENTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
ELEVENTH: A Director of this Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (i) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the Director derived an improper
personal benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the personal
liability of Directors, then the liability of a Director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
Director of the Corporation existing at the time of such repeal or modification.
TWELFTH: The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights conferred upon
stockholders are granted subject to this reservation; provided, however, that,
notwithstanding any other provision of this Certificate of Incorporation or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any vote of the holders of any class or series of the stock of the
Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least eighty percent (80%) of the voting
power of all of the then-outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of Directors (after
giving effect to the provisions of Article FOURTH), voting together as a single
class, shall be required to amend or repeal this Article TWELFTH, Section C of
Article FOURTH, Sections C or D of Article FIFTH, Article SIXTH, Article
SEVENTH, Article EIGHTH or Article TENTH.
D-13
THIRTEENTH: The name and mailing address of the sole incorporator are as
follows:
NAME MAILING ADDRESS
Edward A. Quint 5335 Wisconsin Avenue, N.W.
Suite 400
Washington, D.C. 20015
I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a
corporation under the laws of the State of Delaware, do make, file and record
this Certificate of Incorporation, do certify that the facts herein stated are
true, and accordingly, have hereto set my hand this 16th day of September, 2002.
/s/ Edward A. Quint
--------------------------------
Edward A. Quint
Incorporator
D-14
EXHIBIT E
BYLAWS OF THE HOLDING COMPANY
BYLAWS
OF
SOUND FEDERAL BANCORP, INC.
ARTICLE I - STOCKHOLDERS
SECTION 1. ANNUAL MEETING.
A. An annual meeting of the stockholders, for the election of Directors
to succeed those whose terms expire and for the transaction of such other
business as may properly come before the meeting, shall be held at such place,
on such date, and at such time as the Board of Directors shall each year fix,
which date shall be within thirteen (13) months subsequent to the later of the
date of incorporation or the last annual meeting of stockholders.
B. Nominations of persons for election to the Board of Directors and
the proposal of business to be transacted by the stockholders may be made at an
annual meeting of stockholders (a) pursuant to the Corporation's notice with
respect to such meeting, (b) by or at the direction of the Board of Directors or
(c) by any stockholder of record of the Corporation who was a stockholder of
record at the time of the giving of the notice provided for in the following
paragraph, who is entitled to vote at the meeting and who has complied with the
notice procedures set for the in this section.
C. For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of the foregoing
paragraph, (1) the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation, (2) such business must be proper matter for
stockholder action under the General Corporation Law of the State of Delaware,
(3) if the stockholder, or the beneficial owner on whose behalf any such
proposal or nomination is made, has provided the Corporation with a Solicitation
Notice, as that term is defined in subclause (c)(iii) of this paragraph, such
stockholder or beneficial owner must, in the case of a proposal, have delivered
a proxy statement and form of proxy to holders of at least the percentage of the
Corporation's voting shares required under applicable law to carry any such
proposal, or, in the case of a nomination or nominations, have delivered a proxy
statement and form of proxy to holders of a percentage of the Corporation's
voting shares reasonably believed by such stockholder or beneficial holder to be
sufficient to elect the nominee or nominees proposed to be nominated by such
stockholder, and must, in either case, have included in such materials the
Solicitation Notice and (4) if no Solicitation Notice relating thereto has been
timely provided pursuant to this section, the stockholder or beneficial owner
proposing such business or nomination must not have solicited a number of
proxies sufficient to have required the delivery of such a Solicitation Notice
under this section. To be timely, a stockholder's notice shall be delivered to
the Secretary at the principal executive offices of the Corporation not less
than 90 days prior to the date of the Corporation's proxy materials for the
preceding year's annual meeting of stockholders ("Proxy Statement Date");
provided, however, that if the date of the annual meeting is advanced more than
30 days prior to or delayed by more than 30 days after the anniversary of the
preceding year's annual meeting, notice by the stockholder to be timely must be
so delivered not later than the close of business on the 10th day following the
day on which public announcement of the date of such meeting is first made. Such
E-1
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director all information
relating to such person as would be required to be disclosed in solicitations of
proxies for the elections such nominees as directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
such person's written consent to serve as a director if elected; (b) as to any
other business that the stockholder proposes to bring before the meeting, a
brief description of such business, the reasons for conducting such business at
the meeting and any material interest in such business of such stockholder and
the beneficial owner, if any, on whose behalf the proposal is made; (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner, (ii) the class and number of shares of the Corporation that are owned
beneficially and of record by such stockholder and such beneficial owner and
(iii) whether either such stockholder or beneficial owner intends to deliver a
proxy statement and form of proxy to holders if, in the case of a proposal, at
least percentage of the Corporation's voting shares required under applicable
law to carry the proposal or, in the case of a nomination or nominations, a
sufficient number of holders of the Corporation's voting shares to elect such
nominee or nominees (an affirmative statement of such intent, a "Solicitation
Notice").
D. Notwithstanding anything in the second sentence of the third
paragraph of this Section 1 to the contrary, in the event that the number of
directors to be elected to the Board of Directors is increased and there is no
public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the Corporation at least 85
days prior to the Proxy Statement Date, a stockholder's notice required by this
Bylaw shall also be considered timely, but only with respect to nominees for any
new positions created by such increase, if it shall be delivered to the
Secretary at the principal executive offices of the Corporation not later than
the close of business on the 10th day following the day on which such public
announcement is first made by the Corporation.
E. Only persons nominated in accordance with the procedures set forth
in this Section 1 shall be eligible to serve as directors and only such business
shall be conducted at an annual meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
section. The chairman of the meeting shall have the power and the duty to
determine whether a nomination or any business proposed to be brought before the
meeting has been made in accordance with the procedures set forth in these
Bylaws and, if any proposed nomination or business is not in compliance with
these Bylaws, to declare that such defectively proposed business or nomination
shall not be presented for stockholder action at the meeting and shall be
disregarded.
F. For purposes of these Bylaws, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones New Service, Associated
Press or a comparable national news service or in a document publicly filed by
the Corporation with the Securities and Exchange Commission pursuant to Section
13 or 14 of the Exchange Act.
G. Notwithstanding the foregoing provisions of this Section 1, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to matters set forth
in this Section 1. Nothing in this Section 1 shall be
E-2
deemed to affect any rights of stockholders to request inclusion of proposals in
the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 2. SPECIAL MEETINGS.
A. Special meetings of the stockholders, other than those required by
statute, may be called at any time by the Board of Directors acting pursuant to
a resolution adopted by a majority of the Whole Board. For purposes of these
Bylaws, the term "Whole Board" shall mean the total number of authorized
directors whether or not there exist any vacancies in previously authorized
directorships. The Board of Directors may postpone or reschedule any previously
scheduled special meeting.
B. Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (a)
by or at the direction of the Board of Directors or (b) by any stockholder of
record of the Corporation who is a stockholder of record at the time of giving
of notice provided for in this paragraph, who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in Section 1 of
this Article I. Nominations by stockholders of persons for election to the Board
of Directors may be made at such a special meeting of stockholders if the
stockholder's notice required by the third paragraph of Section 1 of this
Article I shall be delivered to the Secretary at the principal executive offices
of the Corporation not later than the close of business on the later of the 90th
day prior to such special meeting or the 10th day following the day on which
public announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected as such meeting.
C. Notwithstanding the foregoing provisions of this Section 2, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to matters set forth
in this Section 2. Nothing in this Section 2 shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 3. NOTICE OF MEETINGS.
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the Delaware General Corporation Law or the Certificate of Incorporation of the
Corporation).
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty (30) days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned
E-3
meeting shall be given in conformity herewith. At any adjourned meeting, any
business may be transacted which might have been transacted at the original
meeting.
SECTION 4. QUORUM.
At any meeting of the stockholders, the holders of a majority of all of
the shares of the stock entitled to vote at the meeting, present in person or by
proxy (after giving effect to the provisions of Article FOURTH of the
Corporation's Certificate of Incorporation), shall constitute a quorum for all
purposes, unless or except to the extent that the presence of a larger number
may be required by law. Where a separate vote by a class or classes is required,
a majority of those represented in person or by proxy (after giving effect to
the provisions of Article FOURTH of the Corporation's Certificate of
Incorporation) shall constitute a quorum entitled to take action with respect to
that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date,
or time.
If a notice of any adjourned special meeting of stockholders is sent to
all stockholders entitled to vote thereat, stating that it will be held with
those present in person or by proxy constituting a quorum, then except as
otherwise required by law, those present in person or by proxy at such adjourned
meeting shall constitute a quorum, and all matters shall be determined by a
majority of the votes cast at such meeting.
SECTION 5. ORGANIZATION.
Such person as the Board of Directors may have designated or, in the
absence of such a person, the Chairman of the Board of the Corporation or, in
his or her absence, such person as may be chosen by the holders of a majority of
the shares entitled to vote who are present, in person or by proxy, shall call
to order any meeting of the stockholders and act as chairman of the meeting. In
the absence of the Secretary of the Corporation, the secretary of the meeting
shall be such person as the chairman appoints.
SECTION 6. CONDUCT OF BUSINESS.
The chairman of any meeting of stockholders shall determine the order of
business and the procedures at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him or her in order.
The date and time of the opening and closing of the polls for each matter upon
which the stockholders will vote at the meeting shall be announced at the
meeting.
SECTION 7. PROXIES AND VOTING.
At any meeting of the stockholders, every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing filed in
accordance with the procedure established for the meeting. Any facsimile
telecommunication or other reliable reproduction of the writing or transmission
created pursuant to this paragraph, may be substituted or used in lieu of the
original
E-4
writing or transmission for any and all purposes for which the original writing
or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission.
All voting, including on the election of Directors but excepting where
otherwise required by law or by the governing documents of the Corporation, may
be made by a voice vote; provided, however, that upon demand therefor by a
stockholder entitled to vote or his or her proxy, a stock vote shall be taken.
Every stock vote shall be taken by ballot, each of which shall state the name of
the stockholder or proxy voting and such other information as may be required
under the procedures established for the meeting. The Corporation shall, in
advance of any meeting of stockholders, appoint one or more inspectors to act at
the meeting and make a written report thereof. The Corporation may designate one
or more persons as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate is able to act at a meeting of stockholders,
the person presiding at the meeting shall appoint one or more inspectors to act
at the meeting. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his ability.
All elections of Directors shall be determined by a plurality of the votes
cast, and except as otherwise required by law, all other matters shall be
determined by a majority of the votes cast affirmatively or negatively.
SECTION 8. STOCK LIST.
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be open to the examination of any such stockholder, for any
purpose germane to the meeting, during ordinary business hours for a period of
at least ten (10) days prior to the meeting in the manner provided by law.
The stock list shall also be open to the examination of any such
stockholder during the duration of the meeting as provided by law. This list
shall presumptively determine the identity of the stockholders entitled to vote
at the meeting and the number of shares held by each of them.
SECTION 9. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING.
Subject to the rights of the holders of any class of series of preferred
stock of the Corporation, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or special meeting
of stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders.
ARTICLE II - BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS NUMBER AND TERM OF OFFICE.
The business and affairs of the Corporation shall be under the direction
of its Board of Directors. The number of Directors who shall constitute the
Whole Board shall be such number as the Board of Directors shall from time to
time have designated, except in the absence of such
E-5
designation such number shall be nine (9). The Board of Directors shall annually
elect a Chairman of the Board from among its members who shall, when present,
preside at its meetings.
The Directors, other than those who may be elected by the holders of any
class or series of preferred stock, shall be divided, with respect to the time
for which they severally hold office, into three classes, with the term of
office of the first class to expire at the first annual meeting of stockholders,
the term of office of the second class to expire at the annual meeting of
stockholders one year thereafter and the term of office of the third class to
expire at the annual meeting of stockholders two years, thereafter, with each
Director to hold office until his or her successor shall have been duly elected
and qualified. At each annual meeting of stockholders, Directors elected to
succeed those Directors whose terms then expire shall be elected for a term of
office to expire at the third succeeding annual meeting of stockholders after
their election, with each Director to hold office until his or her successor
shall have been duly elected and qualified.
SECTION 2. VACANCIES AND NEWLY CREATED DIRECTORSHIPS.
Subject to the rights of the holders of any class or series of Preferred
Stock, and unless the Board of Directors otherwise determines, newly created
directorships resulting from any increase in the authorized number of directors
or any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the Directors then in office (and not by
stockholders), though less than a quorum, and Directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of office of the class to which they have been elected expires and until
such Director's successor shall have been duly elected and qualified. No
decrease in the number of authorized directors constituting the Board shall
shorten the term of any incumbent Director.
SECTION 3. REGULAR MEETINGS.
Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all Directors. A
notice of each regular meeting shall not be required.
SECTION 4. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by one-third
(1/3) of the Directors then in office (rounded up to the nearest whole number),
by the Chairman of the Board or the President and shall be held at such place,
on such date, and at such time as they, or he or she, shall fix. Notice of the
place, date, and time of each such special meeting shall be given each Director
by whom it is not waived by mailing written notice not less than five (5) days
before the meeting or by telegraphing or telexing or by facsimile transmission
or electronic transmission of the same not less than twenty-four (24) hours
before the meeting. Unless otherwise indicated in the notice thereof, any and
all business may be transacted at a special meeting.
E-6
SECTION 5. QUORUM.
At any meeting of the Board of Directors, a majority of the Whole Board
shall constitute a quorum for all purposes. If a quorum shall fail to attend any
meeting, a majority of those present may adjourn the meeting to another place,
date, or time, without further notice or waiver thereof.
SECTION 6. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE.
Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
SECTION 7. CONDUCT OF BUSINESS.
At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the Directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing or by electronic transmission, and the writing or writings or
electronic transmission or transmissions are included with the minutes of
proceedings of the Board of Directors.
SECTION 8. POWERS.
The Board of Directors may, except as otherwise required by law, exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, including, without limiting the generality of the foregoing,
the unqualified power:
(1) To declare dividends, from time to time in accordance with
law;
(2) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form
as it may determine, of written obligations of every kind, negotiable or
non-negotiable, secured or unsecured, and to do all things necessary in
connection therewith;
(4) To remove any officer of the Corporation with or without
cause, and from time to time to devolve the powers and duties of any officer
upon any other person for the time being;
(5) To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers, employees and agents;
(6) To adopt from time to time such stock, option, stock purchase,
bonus or other compensation plans for Directors, officers, employees and agents
of the Corporation and its subsidiaries as it may determine;
E-7
(7) To adopt from time to time such insurance, retirement, and
other benefit plans for Directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine; and,
(8) To adopt from time to time regulations, not inconsistent with
these Bylaws, for the management of the Corporation's business and affairs.
SECTION 9. COMPENSATION OF DIRECTORS.
Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as Directors,
including, without limitation, their services as members of committees of the
Board of Directors.
SECTION 10. QUALIFICATIONS.
Any person appointed or elected to the Board of Directors, in order to
qualify as such, shall own at least 100 shares of the Corporation's common
stock, and shall reside or work in a county in which Sound Federal Savings and
Loan Association (the banking subsidiary of the Corporation) maintains an office
(at the time of appointment or election) or in a county contiguous to a county
in which Sound Federal Savings and Loan Association maintains an office.
ARTICLE III - COMMITTEES
SECTION 1. COMMITTEES OF THE BOARD OF DIRECTORS.
The Board of Directors, by a vote of a majority of the Board of Directors,
may from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for these committees and any others provided for herein,
elect a Director or Directors to serve as the member or members, designating, if
it desires, other Directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. Any committee so designated
may exercise the power and authority of the Board of Directors to declare a
dividend, to authorize the issuance of stock or to adopt a certificate of
ownership and merger pursuant to Section 253 of the Delaware General Corporation
Law if the resolution which designates the committee or a supplemental
resolution of the Board of Directors shall so provide. In the absence or
disqualification of any member of any committee and any alternate member in his
or her place, the member or members of the committee present at the meeting and
not disqualified from voting, whether or not he or she or they constitute a
quorum, may by unanimous vote appoint another member of the Board of Directors
to act at the meeting in the place of the absent or disqualified member.
SECTION 2. CONDUCT OF BUSINESS.
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third (1/3) of the members shall
constitute a quorum unless the committee shall consist of one (1) or two (2)
members, in which event one (1) member shall constitute a quorum; and all
matters shall be determined by a
E-8
majority vote of the members present. Action may be taken by any committee
without a meeting if all members thereof consent thereto in writing or by
electronic transmission, and the writing or writings or electronic transmission
or transmissions are included with the minutes of the proceedings of such
committee.
SECTION 3. NOMINATING COMMITTEE.
The Board of Directors may appoint a Nominating Committee of the Board
consisting of not less than three (3) members. The Nominating Committee shall
have authority (a) to review any nominations for election to the Board of
Directors made by a stockholder of the Corporation pursuant to Section 6(c)(ii)
of Article I of these Bylaws in order to determine compliance with such Bylaw,
and (b) to recommend to the Whole Board nominees for election to the Board of
Directors to replace those Directors whose terms expire at the annual meeting of
stockholders next ensuing.
ARTICLE IV - OFFICERS
SECTION 1. GENERALLY.
(a) The Board of Directors as soon as may be practicable after the
annual meeting of stockholders shall choose a Chairman of the Board, a Chief
Executive Officer and President, one or more Vice Presidents, a Secretary and a
Treasurer and from time to time may choose such other officers as it may deem
proper. The Chairman of the Board shall be chosen from among the Directors. Any
number of offices may be held by the same person.
(b) The term of office of all officers shall be until the next
annual election of officers and until their respective successors are chosen but
any officer may be removed from office at any time by the affirmative vote of a
majority of the authorized number of Directors then constituting the Board of
Directors.
(c) All officers chosen by the Board of Directors shall have such
powers and duties as generally pertain to their respective offices, subject to
the specific provisions of this ARTICLE IV. Such officers shall also have such
powers and duties as from time to time may be conferred by the Board of
Directors or by any committee thereof.
SECTION 2. CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board shall, subject to the provisions of these Bylaws
and to the direction of the Board of Directors, serve in general executive
capacity and unless the Board has designated another person, when present, shall
preside at all meetings of the stockholders of the Corporation. The Chairman of
the Board shall perform all duties and have all powers which are commonly
incident to the office of Chairman of the Board or which are delegated to him by
the Board of Directors. He shall have power to sign all stock certificates,
contracts and other instruments of the Corporation which are authorized.
E-9
SECTION 3. PRESIDENT AND CHIEF EXECUTIVE OFFICER.
The President and Chief Executive Officer (the "President") shall have
general responsibility for the management and control of the business and
affairs of the Corporation and shall perform all duties and have all powers
which are commonly incident to the offices of President and Chief Executive
Officer or which are delegated to him or her by the Board of Directors. Subject
to the direction of the Board of Directors, the President shall have power to
sign all stock certificates, contracts and other instruments of the Corporation
which are authorized and shall have general supervision of all of the other
officers (other than the Chairman of the Board), employees and agents of the
Corporation.
SECTION 4. VICE PRESIDENT.
The Vice President or Vice Presidents shall perform the duties of the
President in his absence or during his inability to act. In addition, the Vice
Presidents shall perform the duties and exercise the powers usually incident to
their respective offices and/or such other duties and powers as may be properly
assigned to them by the Board of Directors, the Chairman of the Board or the
President. A Vice President or Vice Presidents may be designated as Executive
Vice President or Senior Vice President.
SECTION 5. SECRETARY.
The Secretary or Assistant Secretary shall issue notices of meetings,
shall keep their minutes, shall have charge of the seal and the corporate books,
shall perform such other duties and exercise such other powers as are usually
incident to such office and/or such other duties and powers as are properly
assigned thereto by the Board of Directors, the Chairman of the Board or the
President. Subject to the direction of the Board of Directors, the Secretary
shall have the power to sign all stock certificates.
SECTION 6. TREASURER.
The Treasurer shall be the comptroller of the Corporation and shall have
the responsibility for maintaining the financial records of the Corporation. He
shall make such disbursements of the funds of the Corporation as are authorized
and shall render from time to time an account of all such transactions and of
the financial condition of the Corporation. The Treasurer shall also perform
such other duties as the Board of Directors may from time to time prescribe.
Subject to the direction of the Board of Directors, the Treasurer shall have the
power to sign all stock certificates.
SECTION 7. ASSISTANT SECRETARIES AND OTHER OFFICERS.
The Board of Directors may appoint one or more Assistant Secretaries and
such other officers who shall have such powers and shall perform such duties as
are provided in these Bylaws or as may be assigned to them by the Board of
Directors, the Chairman of the Board or the President.
E-10
SECTION 8. ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS.
Unless otherwise directed by the Board of Directors, the President or any
officer of the Corporation authorized by the President shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to, any action of stockholders of any
other corporation in which this Corporation may hold securities and otherwise to
exercise any and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such other corporation.
ARTICLE V - STOCK
SECTION 1. CERTIFICATES OF STOCK.
Each stockholder shall be entitled to a certificate signed by, or in the
name of the Corporation by, the Chairman of the Board or the President, and by
the Secretary or an Assistant Secretary, or any Treasurer or Assistant
Treasurer, certifying the number of shares owned by him or her. Any or all of
the signatures on the certificate may be by facsimile.
SECTION 2. TRANSFERS OF STOCK.
Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 4 of Article V of these Bylaws,
an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
SECTION 3. RECORD DATE.
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the next day preceding the day
on which the meeting is held, and, for determining stockholders entitled to
receive payment of any dividend or other distribution or allotment or rights or
to exercise any rights of change, conversion or exchange of stock or for any
other purpose, the record date shall be at the close of business on the day on
which the Board of Directors adopts a resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
E-11
SECTION 4. LOST, STOLEN OR DESTROYED CERTIFICATES.
In the event of the loss, theft or destruction of any certificate of
stock, another may be issued in its place pursuant to such regulations as the
Board of Directors may establish concerning proof of such loss, theft or
destruction and concerning the giving of a satisfactory bond or bonds of
indemnity.
SECTION 5. REGULATIONS.
The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.
ARTICLE VI - NOTICES
SECTION 1. NOTICES.
If mailed, notice to stockholders shall be deemed given when deposited in
the mail, postage prepaid, directed to the stockholder at such stockholder's
address as it appears on the records of the Corporation. Without limiting the
manner by which notice otherwise may be given effectively to stockholders, any
notice to stockholders may be given by electronic transmission in the manner
provided in Section 232 of the Delaware General Corporation Law.
SECTION 2. WAIVERS.
A written waiver of any notice, signed by a stockholder, Director,
officer, employee or agent, or waiver of electronic transmission by such person,
whether before or after the time of the event for which notice is to be given,
shall be deemed equivalent to the notice required to be given to such
stockholder, Director, officer, employee or agent. Neither the business nor the
purpose of any meeting need be specified in such a waiver.
ARTICLE VII - MISCELLANEOUS
SECTION 1. FACSIMILE SIGNATURES.
In addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these Bylaws, facsimile signatures of any officer or
officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
SECTION 2. CORPORATE SEAL.
The Board of Directors may provide a suitable seal, containing the name of
the Corporation, which seal shall be in the charge of the Secretary. If and when
so directed by the Board of Directors or a committee thereof, duplicates of the
seal may be kept and used by the Treasurer or by an Assistant Secretary or an
assistant to the Treasurer.
E-12
SECTION 3. RELIANCE UPON BOOKS, REPORTS AND RECORDS.
Each Director, each member of any committee designated by the Board of
Directors, and each officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of its officers or
employees, or committees of the Board of Directors so designated, or by any
other person as to matters which such Director or committee member reasonably
believes are within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Corporation.
SECTION 4. FISCAL YEAR.
The fiscal year of the Corporation shall end on March 31 of every year.
SECTION 5. TIME PERIODS.
In applying any provision of these Bylaws which requires that an act be
done or not be done a specified number of days prior to an event or that an act
be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
ARTICLE VIII - AMENDMENTS
The Board of Directors may amend, alter or repeal these Bylaws at any
meeting of the Board. The stockholders shall also have power to amend, alter or
repeal these Bylaws at any meeting of stockholders provided notice of the
proposed change was given in the notice of the meeting; provided, however, that,
notwithstanding any other provisions of the Bylaws or any provision of law which
might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the voting
stock required by law, the Certificate of Incorporation, any Preferred Stock
Designation or these Bylaws, the affirmative votes of the holders of at least
80% of the voting power of all the then-outstanding shares of the capital stock
of the Corporation entitled to vote generally in the election of Directors
(after giving effect to the provisions of Articles FOURTH), voting together as a
single class, shall be required to alter, amend or repeal any provisions of
these Bylaws.