EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
FIRST FEDERAL OF NORTHERN MICHIGAN BANCORP, INC.
The undersigned, Robert B. Pomerenk, whose address is 5335 Wisconsin
Avenue, N.W., Suite 400, Washington, DC 20015, being at least eighteen years of
age, acting as incorporator, does hereby form a corporation under the general
laws of the State of Maryland, having the following Articles of Incorporation
(the "Articles"):
ARTICLE 1. NAME. The name of the corporation is First Federal of
Northern Michigan Bancorp, Inc. (herein the "Corporation").
ARTICLE 2. PRINCIPAL OFFICE. The address of the principal office of the
Corporation in the State of Maryland is c/o CSC-Lawyers Incorporating Service
Company, 11 East Chase Street, Baltimore, Maryland 21202.
ARTICLE 3. PURPOSE. The purpose for which the Corporation is formed is
to engage in any lawful act or activity for which corporations may be organized
under the general laws of the State of Maryland as now or hereafter in force.
ARTICLE 4. RESIDENT AGENT. The name and address of the registered agent
of the Corporation in the State of Maryland is CSC-Lawyers Incorporating Service
Company, 11 East Chase Street, Baltimore, Maryland 21202. Said resident agent is
a Maryland corporation.
ARTICLE 5.
A. CAPITAL STOCK. The total number of shares of capital stock of
all classes which the Corporation has authority to issue is thirty million
(30,000,000) shares, consisting of:
1. Ten million (10,000,000) shares of preferred stock, par
value one cent ($.01) per share (the "Preferred Stock"); and
2. Twenty million (20,000,000) shares of common stock, par
value one cent ($.01) per share (the "Common Stock").
The aggregate par value of all the authorized shares of capital stock is
three hundred thousand dollars ($300,000). Except to the extent required by
governing law, rule or regulation, the shares of capital stock may be issued
from time to time by the Board of Directors without further approval of the
stockholders of the Corporation. The Corporation shall have the authority to
purchase its capital stock out of funds lawfully available therefor which funds
shall include, without limitation, the Corporation's unreserved and unrestricted
capital surplus.
B. COMMON STOCK. Except as provided under the terms of any series
of Preferred Stock and as limited by Section D of this Article 5, the exclusive
voting power shall be vested in the Common Stock, the holders thereof being
entitled to one vote for each share of such Common Stock standing in the
holder's name on the books of the Corporation. Subject to any rights and
preferences of any series of Preferred Stock, holders of Common Stock shall be
entitled to such dividends as may be declared by the Board of Directors out of
funds lawfully
available therefor. Upon any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, holders of Common
Stock shall be entitled to receive pro rata the remaining assets of the
Corporation after payment or provision for payment of all debts and liabilities
of the Corporation and payment or provision for payment of any amounts owed to
the holders of any series of Preferred Stock having preference over the Common
Stock on distributions on liquidation, dissolution or winding up of the
Corporation.
C. PREFERRED STOCK. The Board of Directors is hereby expressly
authorized, subject to any limitations prescribed by law, to provide for the
issuance of the shares of Preferred Stock in series, 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 the 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 by law or pursuant to the terms of such Preferred Stock.
D. RESTRICTIONS ON VOTING RIGHTS OF THE CORPORATION'S EQUITY
SECURITIES.
1. Notwithstanding any other provision of these Articles,
in no event shall any record owner of any outstanding Common Stock which is
beneficially owned, directly or indirectly, by a Person who, as of any record
date for the determination of stockholders entitled to vote on any matter,
beneficially owns in excess of 10% of the then-outstanding shares of Common
Stock (the "Limit"), be entitled, or permitted to any vote in respect of the
shares held in excess of the Limit. The number of votes which may be cast by any
record owner by virtue of the provisions hereof in respect of Common Stock
beneficially owned by such Person owning shares in excess of the Limit shall be
a number equal to the total number of votes which a single record owner of all
Common Stock owned by such Person would be entitled to cast after giving effect
to the provisions hereof, multiplied by a fraction, the numerator of which is
the number of shares of such class or series 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 D
of this Article 5.
(a) An "affiliate" of a specified Person shall mean a Person
that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is
under common control with, the Person specified.
(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 December 31, 2003; provided,
however, that a Person shall, in any event, also be
deemed the "beneficial owner" of any Common Stock:
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(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 the
Corporation to effect any transaction which is
described in any one or more of the clauses of
Section A of Article 9 hereof) 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 the
Corporation; and provided further, however, that
(i) no director or officer of the 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 any other such director or
officer (or any affiliate thereof), and (ii)
neither any employee stock ownership or similar
plan of the Corporation or any subsidiary of the
Corporation nor any trustee with respect thereto
(or any affiliate of such trustee) shall, solely
by reason of such capacity of such trustee, be
deemed, for any purposes hereof, to beneficially
own any Common Stock held under any such plan.
For purposes of computing the percentage
beneficial ownership of Common Stock of a
Person, the outstanding Common Stock shall
include shares deemed owned by such Person
through application of this subsection but shall
not include any other Common Stock which may be
issuable by the 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 the Corporation pursuant to any
agreement, or upon the exercise of conversion
rights, warrants or options, or otherwise.
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(c) A "Person" shall mean any individual, firm, corporation,
or other entity.
(d) The Board of Directors shall have the power to construe
and apply the provisions of this Section D 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 D to
the given facts, or (v) any other matter relating to the
applicability or effect of this section.
3. 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) (a "Holder in Excess")
supply the Corporation with complete information as to
(i) the record owner(s) of all shares beneficially owned
by such Holder in Excess, and (ii) any other factual
matter relating to the applicability or effect of this
section as may reasonably be requested of such Holder in
Excess. The Board of Directors shall further have the
right to receive from any Holder in Excess reimbursement
for all expenses incurred by the Board in connection
with its investigation of any matters relating to the
applicability or effect of this section on such Holder
in Excess, to the extent such investigation is deemed
appropriate by the Board of Directors as a result of the
Holder in Excess refusing to supply the Corporation with
the information described in the previous sentence.
4. Except as otherwise provided by law or expressly
provided in this Section D, the presence, in Person or by proxy, of the holders
of record of shares of capital stock of the Corporation entitling the holders
thereof to cast a majority of the votes (after giving effect, if required, to
the provisions of this Section D) entitled to be cast by the holders of shares
of capital stock of the Corporation entitled to vote shall constitute a quorum
at all meetings of the stockholders, and every reference in these Articles to a
majority or other proportion of capital stock (or the holders thereof) for
purposes of determining any quorum requirement or any requirement for
stockholder consent or approval shall be deemed to refer to such majority or
other proportion of the votes (or the holders thereof) then entitled to be cast
in respect of such capital stock.
5. Any constructions, applications, or determinations made
by the Board of Directors pursuant to this Section D 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.
6. In the event any provision (or portion thereof) of this
Section D shall be found to be invalid, prohibited or unenforceable for any
reason, the remaining provisions (or portions thereof) of this Section D 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 the Corporation and its
stockholders that each such remaining
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provision (or portion thereof) of this Section D 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.
E. MAJORITY VOTE. Notwithstanding any provision of law requiring
the authorization of any action by a greater proportion than a majority of the
total number of shares of all classes of capital stock or of the total number of
shares of any class of capital stock, such action shall be valid and effective
if authorized by the affirmative vote of the holders of a majority of the total
number of shares of all classes outstanding and entitled to vote thereon, except
as otherwise provided in these Articles.
ARTICLE 6. PREEMPTIVE RIGHTS. No holder of the capital stock of the
Corporation or series of stock or of options, warrants or other rights to
purchase shares of any class or series of stock or of other securities of the
Corporation shall have any preemptive right to purchase or subscribe for any
unissued capital stock of any class or series, or any unissued bonds,
certificates of indebtedness, debentures or other securities convertible into or
exchangeable for capital stock of any class or series, or carrying any right to
purchase stock of any class or series, except such as may be established by the
Board of Directors.
ARTICLE 7. DIRECTORS. 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. MANAGEMENT OF THE CORPORATION. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors. All
powers of the Corporation may be exercised by or under the authority of the
Board of Directors, except as conferred on or as reserved to the stockholders by
law or by these Articles or the Bylaws of the Corporation.
B. NUMBER, CLASS AND TERMS OF DIRECTORS; NO CUMULATIVE VOTING. The
number of directors constituting the Board of Directors of the Corporation shall
initially be five, which number may be increased or decreased in the manner
provided in the Bylaws of the Corporation; provided, however, that such number
shall never be less than the minimum number of directors required by the
Maryland General Corporation Law (the "MGCL") now or hereafter in force. The
directors, other than those who may be elected by the holders of any series of
Preferred Stock, shall be divided into three classes, as nearly equal in number
as reasonably possible, with the term of office of the first class ("Class I")
to expire at the conclusion of the first annual meeting of stockholders, the
term of office of the second class ("Class II") to expire at the conclusion of
the annual meeting of stockholders one year thereafter and the term of office of
the third class ("Class III") to expire at the conclusion of 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 expire shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders after their election or for such
shorter period of time as the Board of Directors may determine, with each
director to hold office until his or her successor shall have been duly elected
and qualified.
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The names of the individuals who will serve as directors of the
Corporation until their successors are elected and qualify are as follows:
CLASS I DIRECTORS: TERM TO EXPIRE IN
James C. Rapin 2005
Martin A. Thomson 2005
CLASS II DIRECTORS: TERM TO EXPIRE IN
Thomas R. Townsend 2006
Gary C. VanMassenhove 2006
CLASS III DIRECTORS: TERM TO EXPIRE IN
Keith D. Wallace 2007
Stockholders shall not be permitted to cumulate their votes in the
election of directors.
C. VACANCIES. Any vacancies in the Board of Directors may be filled
in the manner provided in the Bylaws of the Corporation.
D. REMOVAL. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any director, or the entire Board of
Directors, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least 80% 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 5 hereof) voting together as a single class.
E. STOCKHOLDER PROPOSALS AND NOMINATIONS OF DIRECTORS. 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.
ARTICLE 8. BYLAWS. 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 a majority of the total number of directors the Corporation
would have if there were no vacancies on the Board of Directors. The
stockholders shall also have power to adopt, amend or repeal the Bylaws of the
Corporation. In addition to any vote of the holders of any class or series of
stock of the Corporation required by law or by these Articles, the affirmative
vote of the holders of at least 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 5 hereof), voting together as a single class, shall be required for the
adoption, amendment or repeal of any provisions of the Bylaws of the Corporation
by the stockholders.
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ARTICLE 9. APPROVAL OF CERTAIN BUSINESS COMBINATIONS.
A. SUPER-MAJORITY VOTING REQUIREMENT; BUSINESS COMBINATION DEFINED.
In addition to any affirmative vote required by law or by these Articles, and
except as otherwise expressly provided in this Section:
1. any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested Stockholder (as
hereinafter defined) or (b) 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 hereafter defined) equaling or exceeding 25% or more of the combined
assets of the Corporation and its Subsidiaries; or
3. the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any securities of
the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate
of any Interested Stockholder in exchange for cash, securities or other property
(or a combination thereof) having an aggregate Fair Market Value equaling or
exceeding 25% of the combined assets 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 any Interested
Stockholder or any Affiliate of any Interested Stockholder; or
5. any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of increasing the
proportionate 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 any Interested Stockholder or any Affiliate of any
Interested Stockholder (a "Disproportionate Transaction"); provided, however,
that no such transaction shall be deemed a Disproportionate Transaction if the
increase in the proportionate ownership of the Interested Stockholder or
Affiliate as a result of such transaction is no greater than the increase
experienced by the other stockholders generally;
shall require the affirmative vote of the holders of at
least 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"),
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 these Articles
(including those applicable to any class or series of capital stock) or in any
agreement with any national securities exchange or quotation system or
otherwise.
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The term "Business Combination" as used in this Article 9 shall mean any
transaction which is referred to in any one or more of paragraphs 1 through 5 of
Section A of this Article 9.
B. EXCEPTION TO SUPER-MAJORITY VOTING REQUIREMENT. The provisions
of Section A of this Article 9 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, or such vote as is required by law or by these Articles, 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 and 2 are met:
1. The Business Combination shall have been approved by a
majority 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 be equal to at least the
higher of the following:
(1) (if applicable) the Highest Per Share Price,
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; and
(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 9 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 equal to at least 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):
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(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 previously paid for
shares of such class of Voting Stock. If the Interested
Stockholder has paid for shares of any class of Voting
Stock with varying forms of consideration, the form of
consideration 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 Section B.2. of this Article 9 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: (i) 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; (ii) there shall have been (X) 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 (Y) 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 Common Stock, unless the
failure to so increase such annual rate is approved by a
majority of the Disinterested Directors; and (iii)
neither such Interested Stockholder nor 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.
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(e) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder
shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder), of
any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax
advantages provided by the Corporation, whether in
anticipation of or in connection with such Business
Combination or otherwise.
(f) A proxy or information statement describing the proposed
Business Combination and complying with the requirements
of the Securities Exchange Act of 1934 and the rules and
regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be
mailed to stockholders of the Corporation at least 30
days prior to the consummation of such Business
Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act
or subsequent provisions).
C. CERTAIN DEFINITIONS. For the purposes of this Article 9:
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 or entity 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 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 more than 10% 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 any Interested
Stockholder, if such assignment or succession shall have
occurred in the course of a transaction or series of
transactions not involving a public offering within the
meaning of the Securities Act of 1933.
3. A Person shall be a "beneficial owner" of any Voting
Stock:
(a) which such Person or any of its Affiliates or Associates
(as hereinafter defined) beneficially owns, directly or
indirectly within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934 as may be subsequently
amended; or
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(b) which such Person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or
(ii) the right to vote pursuant to any agreement,
arrangement or understanding (but neither such Person
nor any such Affiliate or Associate shall be deemed to
be the beneficial owner of any shares of Voting Stock
solely by reason of a revocable proxy granted for a
particular meeting of stockholders, pursuant to a public
solicitation of proxies for such meeting, and with
respect to which shares neither such Person nor any such
Affiliate or Associate is otherwise deemed the
beneficial owner); or
(c) which are beneficially owned, directly or indirectly
within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as may be subsequently amended, by
any other Person with which such Person or any of its
Affiliates or Associates has any agreement, arrangement
or understanding for the purposes of acquiring, holding,
voting (other than solely by reason of a revocable proxy
as described in Subparagraph (b) of this Paragraph 3) or
in disposing of any shares of Voting Stock;
provided, however, that in the case of any employee
stock ownership or similar plan of the Corporation or of
any Subsidiary in which the beneficiaries thereof
possess the right to vote any shares of Voting Stock
held by such plan, no such plan nor any trustee with
respect thereto (nor 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 shares of Voting Stock held under any such plan.
4. For the purpose of determining whether a Person is an
Interested Stockholder pursuant to Section C.2., the number of shares of Voting
Stock deemed to be outstanding shall include shares deemed owned through
application of Section C.3. except that it shall not include any shares of
Voting Stock which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
5. "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12D-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on December
31, 2003.
6. "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 Section C.2., 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.
7. "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 on the Board of Directors or who is elected and who,
in
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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.
8. "Fair Market Value" means: (a) in the case of stock, the
highest closing sale price of the stock during the 30-day period immediately
preceding the date in question of a share of such stock on the Nasdaq 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 sale 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 in 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.
9. 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.
10. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be received"
as used in Sections B.2.(a) and B.2.(b) of this Article 9 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. CONSTRUCTION AND INTERPRETATION. A majority of the Disinterested
Directors of the Corporation shall have the power and duty to determine for the
purposes of this Article 9, on the basis of information known to them after
reasonable inquiry, (a) whether a Person is an Interested Stockholder; (b) the
number of shares of Voting Stock beneficially owned by any Person; (c) whether a
Person is an Affiliate or Associate of another; and (d) whether the assets which
are the subject of any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the Corporation or any
Subsidiary in any Business Combination has, an aggregate Fair Market Value
equaling or exceeding 25% of the combined assets of the Corporation and its
Subsidiaries. A majority of the Disinterested Directors shall have the further
power to interpret all of the terms and provisions of this Article 9.
E. FIDUCIARY DUTY. Nothing contained in this Article 9 shall be
construed to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
F. MARYLAND BUSINESS COMBINATION STATUTE. Notwithstanding any
contrary provision of law, the provisions of Sections 3-601 through 3-604 of the
MGCL, as now and hereafter in force, shall not apply to any "business
combination" (as defined in Section 3-601(e) of the MGCL, as now and hereafter
in force), of the Corporation.
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ARTICLE 10. EVALUATION OF CERTAIN OFFERS. The Board of Directors, when
evaluating (i) any offer of another Person (as defined in Article 9 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 or (ii) any other actual or proposed transaction which
would or may involve a change in control of the Corporation (whether by
purchases of shares of stock or any other securities of the Corporation in the
open market, or otherwise, tender offer, merger, consolidation, share exchange,
dissolution, liquidation, sale of all or substantially all of the assets of the
Corporation, proxy solicitation or otherwise), may, in connection with the
exercise of its business judgment in determining what is in the best interests
of the Corporation and its stockholders and in making any recommendation to the
Corporation's stockholders, give due consideration to all relevant factors,
including, but not limited to: (A) the economic effect, both immediate and
long-term, upon the Corporation's stockholders, including stockholders, if any,
who do not participate in the transaction; (B) the social and economic effect on
the present and future employees, creditors and customers of, and others dealing
with, the Corporation and its subsidiaries and on the communities in which the
Corporation and its subsidiaries operate or are located; (C) whether the
proposal is acceptable based on the historical, current or projected future
operating results or financial condition of the Corporation; (D) whether a more
favorable price could be obtained for the Corporation's stock or other
securities in the future; (E) the reputation and business practices of the other
entity to be involved in the transaction and its management and affiliates as
they would affect the employees of the Corporation and its subsidiaries; (F) the
future value of the stock or any other securities of the Corporation or the
other entity to be involved in the proposed transaction; (G) any antitrust or
other legal and regulatory issues that are raised by the proposal; (H) the
business and historical, current or expected future financial condition or
operating results of the other entity to be involved in the transaction,
including, but not limited to, debt service and other existing financial
obligations, financial obligations to be incurred in connection with the
proposed transaction, and other likely financial obligations of the other entity
to be involved in the proposed transaction; and (I) the ability of the
Corporation to fulfill its objectives as a financial institution holding company
and on the ability of its subsidiary financial institution(s) to fulfill the
objectives of a federally insured financial institution under applicable
statutes and regulations. If the Board of Directors determines that any proposed
transaction of the type described in clause (i) or (ii) of the immediately
preceding sentence should be rejected, it may take any lawful action to defeat
such transaction, including, but not limited to, any or all of the following:
advising stockholders not to accept the proposal; instituting litigation against
the party making the proposal; filing complaints with governmental and
regulatory authorities; acquiring the stock or any of the securities of the
Corporation; selling or otherwise issuing authorized but unissued stock, other
securities or granting options or rights with respect thereto; acquiring a
company to create an antitrust or other regulatory problem for the party making
the proposal; and obtaining a more favorable offer from another individual or
entity. This Article 10 does not create any inference concerning factors that
may be considered by the Board of Directors regarding any proposed transaction
of the type described in clause (i) or (ii) of the first sentence of this
Article 10.
ARTICLE 11. ACQUISITIONS OF EQUITY SECURITIES FROM INTERESTED PERSONS.
A. SUPER-MAJORITY VOTING REQUIREMENT. Except as set forth in
Section B of this Article 11, in addition to any affirmative vote of
stockholders required by law or these Articles,
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any direct or indirect purchase or other acquisition by the Corporation of any
Equity Security (as hereinafter defined) of any class from any Interested Person
(as defined in this Article 11) shall require the affirmative vote of the
holders of at least 80% of the Voting Stock of the Corporation that is not
beneficially owned (for purposes of this Article 11 beneficial ownership shall
be determined in accordance with Section D.2(b) of Article 5 hereof) by such
Interested Person, 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 these
Articles (including those applicable to any class or series of capital stock) or
in any agreement with any national securities exchange or quotation system, or
otherwise. Certain defined terms used in this Article 11 are as set forth in
Section C below.
B. EXCEPTIONS. The provisions of Section A of this Article 11 shall
not be applicable with respect to:
1. any purchase or other acquisition of securities made as
part of a tender or exchange offer by the Corporation or a Subsidiary (which
term, as used in this Article 11, is as defined in the first clause of Section
C.6 of Article 9 hereof) of the Corporation to purchase securities of the same
class made on the same terms to all holders of such securities and complying
with the applicable requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent provision replacing such
Act, rules or regulations);
2. any purchase or acquisition made pursuant to an open
market purchase program approved by a majority of the Board of Directors,
including a majority of the Disinterested Directors (which term, as used in this
Article 11, is as defined in Article 9 hereof); or
3. any purchase or acquisition which is approved by a
majority of the Board of Directors, including a majority of the Disinterested
Directors, and which is made at no more than the Market Price (as hereinafter
defined), on the date that the understanding between the Corporation and the
Interested Person is reached with respect to such purchase (whether or not such
purchase is made or a written agreement relating to such purchase is executed on
such date), of shares of the class of Equity Security to be purchased.
C. CERTAIN DEFINITIONS. For the purposes of this Article 11:
1. The term Interested Person shall mean any Person (other
than the Corporation, Subsidiaries of the Corporation, pension, profit sharing,
employee stock ownership or other employee benefit plans of the Corporation or
its Subsidiaries, entities organized or established by the Corporation or any of
its Subsidiaries pursuant to the terms of such plans and trustees and
fiduciaries with respect to any such plan acting in such capacity) that is the
direct or indirect beneficial owner of 5% or more of the Voting Stock of the
Corporation, and any Affiliate or Associate of any such Person. For purposes of
this Article 11, the terms "Affiliate" and "Associate" shall have the
definitions given them in Article 9 hereof.
2. The Market Price of shares of a class of Equity Security
on any day shall mean the highest sale price of shares of such class of Equity
Security on such day, or, if that day is not a trading day, on the trading day
immediately preceding such day, on the national securities
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exchange or the Nasdaq System or any other system then in use on which such
class of Equity Security is traded.
3. The term Equity Security shall mean any security
described in Section 3(a)(11) of the Securities Exchange Act of 1934, as may be
amended, which is traded on a national securities exchange or the Nasdaq System
or any other system then in use.
4. For purposes of this Article 11, all references to the
term Interested Stockholder in the definition of Disinterested Director shall be
deemed to refer to the term Interested Person.
ARTICLE 12. INDEMNIFICATION, ETC. OF DIRECTORS AND OFFICERS.
A. INDEMNIFICATION. The Corporation shall indemnify (1) its current
and former directors and officers, whether serving the Corporation or at its
request any other entity, to the fullest extent required or permitted by the
MGCL now or hereafter in force, including the advancement of expenses under the
procedures and to the fullest extent permitted by law, and (2) other employees
and agents to such extent as shall be authorized by the Board of Directors and
permitted by law; provided, however, that, except as provided in Section B
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. PROCEDURE. If a claim under Section A of this Article 12 is not
paid in full by the Corporation within 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 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 also be entitled
to be reimbursed the expense of prosecuting or defending such suit. It shall be
a defense to any action for advancement of expenses that the Corporation has not
received both (i) an undertaking as required by law to repay such advances in
the event it shall ultimately be determined that the standard of conduct has not
been met and (ii) a written affirmation by the indemnitee of his good faith
belief that the standard of conduct necessary for indemnification by the
Corporation has been met. 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) 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
the applicable standard for indemnification set forth in the MGCL. 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 MGCL, 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,
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in the case of such a suit brought by the indemnitee, be a defense to such suit.
In any suit brought by the indemnitee to enforce a right to indemnification or
to an advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article 12 or otherwise shall be on the
Corporation.
C. NON-EXCLUSIVITY. The rights to indemnification and to the
advancement of expenses conferred in this Article 12 shall not be exclusive of
any other right which any Person may have or hereafter acquire under any
statute, these Articles, the Corporation's Bylaws, any agreement, any vote of
stockholders or the Board of Directors, or otherwise.
D. INSURANCE. 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 MGCL.
E. MISCELLANEOUS. The Corporation shall not be liable for any
payment under this Article 12 in connection with a claim made by any indemnitee
to the extent such indemnitee has otherwise actually received payment under any
insurance policy, agreement, or otherwise, of the amounts otherwise
indemnifiable hereunder. The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article 12 shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
director or officer and shall inure to the benefit of the indemnitee's heirs,
executors and administrators.
Any repeal or modification of this Article 12 shall not in any way
diminish any rights to indemnification or advancement of expenses of such
director or officer or the obligations of the Corporation arising hereunder with
respect to events occurring, or claims made, while this Article 12 is in force.
ARTICLE 13. LIMITATION OF LIABILITY. An officer or director of the
Corporation, as such, shall not be liable to the Corporation or its stockholders
for money damages, except (A) to the extent that it is proved that the Person
actually received an improper benefit or profit in money, property or services
for the amount of the benefit or profit in money, property or services actually
received; (B) to the extent that a judgment or other final adjudication adverse
to the Person is entered in a proceeding based on a finding in the proceeding
that the Person's action, or failure to act, was the result of active and
deliberate dishonesty and was material to the cause of action adjudicated in the
proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is
amended to further eliminate or limit the Personal liability of officers and
directors, then the liability of officers and directors of the Corporation shall
be eliminated or limited to the fullest extent permitted by the MGCL, 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 or officer of the Corporation existing at the time of
such repeal or modification.
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ARTICLE 14. AMENDMENT OF THE ARTICLES OF INCORPORATION. The Corporation
reserves the right to amend or repeal any provision contained in these Articles
in the manner prescribed by the MGCL, including any amendment altering the terms
or contract rights, as expressly set forth in these Articles, of any of the
Corporation's outstanding stock by classification, reclassification or
otherwise, and all rights conferred upon stockholders are granted subject to
this reservation; provided, however, that, notwithstanding any other provision
of these Articles 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 these Articles, the
affirmative vote of the holders of at least 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 5), voting together as a single class, shall be required
to amend or repeal this Article 14, Section C, D or E of Article 5, Article 7,
Article 8, Article 9, Article 11, Article 12 or Article 13.
ARTICLE 15. NAME AND ADDRESS OF INCORPORATOR. The name and mailing
address of the sole incorporator are as follows:
Robert B. Pomerenk, Esq.
5335 Wisconsin Ave., 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 Maryland, do make, file and record
this Charter, do certify that the facts herein stated are true, and,
accordingly, have hereto set my hand this 7th day of December, 2004.
/s/ Robert B. Pomerenk
---------------------------------------
Robert B. Pomerenk, Incorporator
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