ARTICLES OF INCORPORATION
OF
PATAPSCO BANCORP, INC.
The undersigned, Joseph J. Bouffard, whose address is 1301 Merritt
Boulevard, Dundalk, Maryland 21222, being at least 18 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:
ARTICLE I
NAME
The name of the corporation is Patapsco Bancorp, Inc. (herein the
"Corporation").
ARTICLE II
PRINCIPAL OFFICE
The address of the Corporation's principal office in the State of
Maryland is 1301 Merritt Boulevard, Dundalk, Maryland 21222, or such other place
as may be designated in the bylaws of the Corporation.
ARTICLE III
POWERS
The purpose for which the Corporation is organized is to act as a
financial institution holding company and to transact all other lawful business
for which corporations may be incorporated pursuant to the General Laws of the
State of Maryland. The Corporation shall have all the powers of a corporation
organized under the General Laws of the State of Maryland.
ARTICLE IV
RESIDENT AGENT
The name and mailing address of the initial resident agent of the
Corporation in the State of Maryland is Joseph J. Bouffard, 1301 Merritt
Boulevard, Dundalk, Maryland 21222. The resident agent is a citizen of the State
of Maryland.
ARTICLE V
INITIAL DIRECTORS
The number of directors constituting the initial board of directors of
the Corporation is eight, which number may be increased or decreased pursuant to
the bylaws of the Corporation and Article XI of these Articles, but shall never
be less than the minimum number permitted by the General Laws of the State of
Maryland now or hereafter in
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force. The names of the persons who are to serve as directors until the first
annual meeting and until their successors are elected and qualified, are:
Name
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Joseph J. Bouffard Douglas H. Ludwig
Nicole N. Kantorski Joseph N. McGowan
S. Robert Kinghorn Thomas P. O'Neill
Robert M. Lating Theodore C. Patterson
ARTICLE VI
CAPITAL STOCK
The aggregate number of shares of all classes of capital stock which the
Corporation has authority to issue is 5,000,000, of which 4,000,000 are to be
shares of common stock, $.01 par value per share, and of which 1,000,000 are to
be shares of serial preferred stock, $.01 par value per share. The aggregate par
value of all shares of capital stock is $50,000. The shares may be issued by the
Corporation from time to time as approved by the board of directors of the
Corporation without the approval of the stockholders except as otherwise
provided in this Article VI or to the extent that such approval is required by
governing law, rule or regulation. The consideration for the issuance of the
shares shall be paid to or received by the Corporation in full before their
issuance and shall not be less than the par value per share. The consideration
for the issuance of the shares, other than cash, shall be determined by the
board of directors in accordance with the General Laws of the State of Maryland.
In the absence of actual fraud in the transaction, the judgment of the board of
directors as to the value of such consideration shall be conclusive. Upon
payment of such consideration such shares shall be deemed to be fully paid and
nonassessable. In the case of a stock dividend or stock split, the part of the
surplus of the Corporation which is transferred to stated capital upon the
issuance of shares as a stock dividend or stock split shall be deemed to be the
consideration for their issuance.
A description of the different classes and series (if any) of the
Corporation's capital stock, and a statement of the relative powers,
designations, preferences and rights of the shares of each class and series (if
any) of capital stock, and the qualifications, limitations or restrictions
thereof, are as follows:
A. Common Stock. Except as provided in these Articles, the holders of the
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common stock shall exclusively possess all voting power. Each holder of shares
of common stock shall be entitled to one vote for each share held by such
holder.
Whenever there shall have been paid, or declared and set aside for payment,
to the holders of the outstanding shares of any class of stock having preference
over the common stock as to the payment of dividends, the full amount of
dividends and sinking fund or retirement fund or other retirement payments, if
any, to which such holders are respectively entitled in preference to the common
stock, then dividends may be paid on the common stock, and on any class or
series of stock entitled to participate therewith as to dividends, out of any
assets legally available for the payment of dividends, but only as declared by
the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, after there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class having preference
over the common stock in any such event, the full preferential amounts to which
they are respectively entitled, the holders of the common stock and of any class
or series of stock entitled to participate therewith, in whole or in part, as to
distribution of assets shall be entitled, after payment or provision for payment
of all debts and liabilities of the Corporation, to receive the remaining assets
of the Corporation available for distribution, in cash or in kind.
Each share of common stock shall have the same relative powers, preferences
and rights as, and shall be identical in all respects with, all the other shares
of common stock of the Corporation.
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B. Serial Preferred Stock. Except as provided in these Articles, the board
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of directors of the Corporation is authorized, by resolution or resolutions from
time to time adopted, to provide for the issuance of serial preferred stock in
series and to fix and state the powers, designations, preferences and relative,
participating, optional or other special rights of the shares of each such
series, and the qualifications, limitations or restrictions thereof, including,
but not limited to determination of any of the following:
1. the distinctive designation and the number of shares constituting such
class or series;
2. the dividend rates or the amount of dividends to be paid on the shares
of such class or series, whether dividends shall be cumulative and, if so, from
which date or dates, the payment date or dates for dividends, and the
participating or other special rights, if any, with respect to dividends;
3. the voting powers, full or limited, if any, of the shares of such class
or series;
4. whether the shares of such class or series shall be redeemable and, if
so, the price or prices at which, and the terms and conditions upon which such
shares may be redeemed;
5. the amount or amounts payable upon the shares of such class or series in
the event of voluntary or involuntary liquidation, dissolution or winding up of
the Corporation;
6. whether the shares of such class or series shall be entitled to the
benefits of a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and, if so entitled, the amount of such fund and the
manner of its application, including the price or prices at which such shares
may be redeemed or purchased through the application of such funds;
7. whether the shares of such class or series shall be convertible into, or
exchangeable for, shares of any other class or classes or any other series of
the same or any other class or classes of stock of the Corporation and, if so
convertible or exchangeable, the conversion price or prices, or the rate or
rates of exchange, and the adjustments thereof, if any, at which such conversion
or exchange may be made, and any other terms and conditions of such conversion
or exchange;
8. the subscription or purchase price and form of consideration for which
the shares of such class or series shall be issued;
9. whether the shares of such class or series which are redeemed or
converted shall have the status of authorized but unissued shares of serial
preferred stock and whether such shares may be reissued as shares of the same or
any other class or series; and
10. any other preferences, rights, restrictions, including restrictions on
transferability, and qualifications of shares of such class or series, not
inconsistent with law and these Articles.
Each share of each series of serial preferred stock shall have the same
relative powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of preferred stock of the same series.
ARTICLE VII
PREEMPTIVE RIGHTS
No holder of any of the shares of any class 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 stock of any class or series, or any
unissued bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock of any class or series or carrying
any right to purchase stock of any class or series, but any such unissued stock,
bonds, certificates or indebtedness, debentures or other securities convertible
into or exchangeable for stock or carrying any right to
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purchase stock may be issued pursuant to resolution of the board of directors of
the Corporation to such persons, firms, corporations or associations, whether or
not holders thereof, and upon such terms as may be deemed advisable by the board
of directors in the exercise of its sole discretion.
ARTICLE VIII
REPURCHASE OF SHARES
The Corporation may from time to time, pursuant to authorization by the
board of directors of the Corporation and without action by the stockholders,
purchase or otherwise acquire shares of any class, bonds, debentures, notes,
scrip, warrants, obligations, evidences of indebtedness, or other securities of
the Corporation in such manner, upon such terms, and in such amounts as the
board of directors shall determine; subject, however, to such limitations or
restrictions, if any, as are contained in the express terms of any class of
shares of the Corporation outstanding at the time of the purchase or acquisition
in question or as are imposed by law.
ARTICLE IX
MEETINGS OF STOCKHOLDERS; CUMULATIVE VOTING
A. Any action required to be taken or which may be taken at any meeting of
stockholders of the Corporation may be taken without a meeting if a consent in
writing setting forth the action so taken shall be signed by all of the
stockholders entitled to vote with respect to the subject matter thereof and if
a written waiver of any right to dissent is signed by each stockholder entitled
to notice of the meeting but not entitled to vote at it.
B. Special meetings of the stockholders of the Corporation for any purpose
or purposes may be called at any time by the chairman of the board, by the
president, by the board of directors of the Corporation, by a committee of the
board of directors which has been duly designated by the board of directors and
whose powers and authorities, as provided in a resolution of the board of
directors or in the bylaws of the Corporation, include the power and authority
to call such meetings, or by the holders of not less than 25% of all the
outstanding shares entitled to vote on the matter for which the meeting is
called, but such special meetings may not be called by any other person or
persons. Unless requested by stockholders entitled to cast a majority of all the
votes entitled to be cast at the meeting, a special meeting need not be called
to consider any matter which is substantially the same as a matter voted on at
any special meeting of the stockholders held during the preceding 12 months.
C. There shall be no cumulative voting by stockholders of any class or
series in the election of directors of the Corporation.
D. Meetings of stockholders may be held at any place within the United
States as the bylaws may provide.
ARTICLE X
NOTICE FOR NOMINATIONS AND PROPOSALS
A. Nominations for the election of directors and proposals for any new
business to be taken up at any annual or special meeting of stockholders may be
made by the board of directors of the Corporation or by any stockholder of the
Corporation entitled to vote generally in the election of directors. In order
for a stockholder of the Corporation to make any such nominations and/or
proposals, he or she shall give notice thereof in writing, delivered or mailed
by first class United States mail, postage prepaid, to the secretary of the
Corporation not less than 30 days nor more than 60 days prior to any such
meeting; provided, however, that if less than 40 days' notice of the meeting is
given to stockholders, such written notice shall be delivered or mailed, as
prescribed, to the secretary of the Corporation not later than the close of the
tenth day following the day on which notice of the meeting was mailed to
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stockholders. Each such notice given by a stockholder with respect to
nominations for the election of directors shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed in
such notice, (ii) the principal occupation or employment of each such nominee,
and (iii) the number of shares of stock of the Corporation which are
beneficially owned by each such nominee. In addition, the stockholder making
such nomination shall promptly provide any other information reasonably
requested by the Corporation.
B. Each such notice given by a stockholder to the secretary of the
Corporation with respect to business proposals to bring before a meeting shall
set forth in writing as to each matter: (i) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at the meeting; (ii) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business; (iii) the class
and number of shares of the Corporation which are beneficially owned by the
stockholder; and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in these Articles to the contrary, no business shall be
conducted at the meeting except in accordance with the procedures set forth in
this Article X.
C. The chairman of the annual or special meeting of stockholders may, if
the facts warrant, determine and declare to such meeting that a nomination or
proposal was not made in accordance with the foregoing procedure, and, if he
should so determine, he shall so declare to the meeting and the defective
nomination or proposal shall be disregarded and laid over for action at the next
succeeding adjourned, special or annual meeting of the stockholders taking place
thirty days or more thereafter. This provision shall not require the holding of
any adjourned or special meeting of stockholders for the purpose of considering
such defective nomination or proposal.
ARTICLE XI
DIRECTORS
A. Number; Vacancies. The number of directors of the Corporation shall be
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such number, not less than five nor more than eleven (exclusive of directors, if
any, to be elected by holders of preferred stock of the Corporation, voting
separately as a class), as shall be provided from time to time in or in
accordance with the bylaws, provided that no action shall be taken to decrease
or increase the number of directors unless at least two-thirds of the directors
then in office shall concur in said action, and further provided that no
increase or decrease in the number of directors shall affect the tenure of
office of any director. Subject to the rights of the holders of any class of
preferred stock then outstanding, newly created directorships resulting from any
increase in the authorized number of directors or any vacancies on the Board of
Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall be filled by a majority vote of the
stockholders or the directors then in office. A director so chosen by the
stockholders shall hold office for the balance of the term then remaining. A
director so chosen by the remaining directors shall hold office until the next
annual meeting of stockholders and until his successor is elected and qualifies,
at which time the stockholders shall elect a director to hold office for the
balance of the term then remaining.
B. Classified Board. At the first annual meeting of stockholders of the
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Corporation, the board of directors of the Corporation shall be divided into
three classes as nearly equal in number as the then total number of directors
constituting the entire board of directors shall permit, which classes shall be
designated Class I, Class II and Class III. At such annual meeting of
stockholders, directors assigned to Class I shall be elected to hold office for
a term expiring at the first succeeding annual meeting of stockholders
thereafter, directors assigned to Class II shall be elected to hold office for a
term expiring at the second succeeding annual meeting thereafter, and directors
assigned to Class III shall be elected to hold office for a term expiring at the
third succeeding annual meeting thereafter. Thereafter, at each annual meeting
of stockholders of the Corporation, directors of classes the terms of which
expire at such annual meeting shall be elected for terms of three years.
Notwithstanding the foregoing, a director whose term shall expire at any annual
meeting shall continue to serve until such time as his successor shall have been
duly elected and shall have qualified unless his position on the board of
directors shall have been abolished by action taken to reduce the size of the
board of directors prior to said meeting.
Should the number of directors of the Corporation be reduced, the
directorship(s) eliminated shall be allocated among classes as appropriate so
that the number of directors in each class is as specified in the immediately
preceding paragraph. The board of directors shall designate, by the name of the
incumbent(s), the
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position(s) to be abolished. Notwithstanding the foregoing, no decrease in
the number of directors shall have the effect of shortening the term of any
incumbent director. Should the number of directors of the Corporation be
increased, the additional directorships shall be allocated among classes as
appropriate so that the number of directors in each class is as specified in the
immediately preceding paragraph.
Whenever the holders of any one or more series of preferred stock of the
Corporation shall have the right, voting separately as a class, to elect one or
more directors of the Corporation, the board of directors shall consist of said
directors so elected in addition to the number of directors fixed as provided
above in this Article XI. Notwithstanding the foregoing, and except as otherwise
may be required by law and provisions of the preferred stock of the Corporation,
whenever the holders of any one or more series of preferred stock of the
Corporation shall have the right, voting separately as a class, to elect one or
more directors of the Corporation, the terms of the director or directors
elected by such holders shall expire at the next succeeding annual meeting of
stockholders.
ARTICLE XII
REMOVAL OF DIRECTORS
Notwithstanding any other provision of these Articles or the bylaws of the
Corporation, any director or the entire board of directors of the Corporation
may be removed at any time, but only for cause and only by the affirmative vote
of the holders of at least 80% of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (considered
for this purpose as one class) cast at a meeting of the stockholders called for
that purpose. Notwithstanding the foregoing, whenever the holders of any one or
more series of preferred stock of the Corporation shall have the right, voting
separately as a class, to elect one or more directors of the Corporation, the
preceding provisions of this Article XII shall not apply with respect to the
director or directors elected by such holders of preferred stock.
ARTICLE XIII
ACQUISITION OF CAPITAL STOCK
A. Five-Year Prohibition. For a period of five years from the effective
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date of the completion of the conversion of Patapsco Federal Savings and Loan
Association (the "Association") from mutual to stock form (which entity shall
become a wholly owned subsidiary of the Corporation upon such conversion), no
person shall directly or indirectly offer to acquire or acquire the beneficial
ownership of more than 10% of any class of equity security of the Corporation,
unless such offer or acquisition shall have been approved in advance by a
two-thirds vote of the Continuing Directors, as defined in Article XIV. In
addition, for a period of five years from the completion of the conversion of
the Association from mutual to stock form (which entity shall become a wholly
owned subsidiary of the Corporation upon such conversion), and notwithstanding
any provision to the contrary in these Articles or in the bylaws of the
Corporation, where any person directly or indirectly acquires beneficial
ownership of more than 10% of any class of equity security of the Corporation in
violation of this Article XIII, the securities beneficially owned in excess of
10% shall not be counted as shares entitled to vote, shall not be voted by any
person or counted as voting shares in connection with any matter submitted to
the stockholders for a vote, and shall not be counted as outstanding for
purposes of determining a quorum or the affirmative vote necessary to approve
any matter submitted to the stockholders for a vote.
B. Prohibition after Five Years. If, at any time after five years from the
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effective date of the completion of the conversion of the Association from
mutual to stock form (which entity shall become a wholly owned subsidiary of the
Corporation upon such conversion), any person shall acquire the beneficial
ownership of more than 10% of any class of equity security of the Corporation
without the prior approval by a two-thirds vote of the Continuing Directors, as
defined in Article XIV, then the record holders of voting stock of the
Corporation beneficially owned by such acquiring person shall have only the
voting rights set forth in this paragraph B on any matter requiring the vote or
consent of shareholders. With respect to each vote in excess of 10% of the
voting power of the outstanding shares of voting stock of the Corporation which
such record holders would otherwise be entitled
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to cast without giving effect to this paragraph B, the record holders in the
aggregate shall be entitled to cast only one-hundredth of a vote, and the
aggregate voting power of such record holders, so limited for all shares of
voting stock of the Corporation beneficially owned by such acquiring person,
shall be allocated proportionately among such record holders. For each such
record holder, this allocation shall be accomplished by multiplying the
aggregate voting power, prior to imposing the limitations of this paragraph B,
of the outstanding shares of voting stock of the Corporation beneficially owned
by such record holder by a fraction whose numerator is the number of votes equal
to 10% of the shares of voting stock of the Corporation and whose denominator is
the total number of votes represented by the shares of voting stock of the
Corporation that are beneficially owned by such acquiring person; any share held
by such record holder in excess of the allocated amount as determined in
accordance with the previous clause shall be entitled to cast one-hundredth of a
vote. A person who is a record owner of shares of voting stock of the
Corporation that are beneficially owned simultaneously by more than one person
shall have, with respect to such shares, the right to cast the least number of
votes that such person would be entitled to cast under this paragraph B by
virtue of such shares being so beneficially owned by any of such acquiring
persons.
C. Continuing Service of Directors as Advisory Directors. In the event
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that, following any acquisition by a person of more that 10% of any class of
equity security of the Corporation or merger involving the Corporation, whether
or not the Corporation is the surviving corporation, the board of directors
fails to nominate for election as a director, or the stockholders of the
Corporation do not elect as a director, a Continuing Director, as defined in
Article XIV (unless a majority of the Continuing Directors fail to nominate such
Continuing Director for election as a director), or terminates the service of an
advisory director serving as such prior to such acquisition, then such
Continuing Director or advisory director shall be entitled to serve as an
advisory director of the Corporation or any successor thereto. This paragraph C
shall survive and shall remain in full force and effect until December 31, 2001
notwithstanding any such acquisition or merger. The requirements of this
paragraph C shall expire on December 31, 2001.
D. Definitions. The term "person" means an individual, a group acting in
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concert, a corporation, a partnership, an association, a joint stock company, a
trust, an unincorporated organization or similar company, a syndicate or any
other group acting in concert formed for the purpose of acquiring, holding,
voting or disposing of securities of the Corporation. The term "acquire"
includes every type of acquisition, whether effected by purchase, exchange,
operation of law or otherwise. The term group "acting in concert" includes (a)
knowing participation in a joint activity or conscious parallel action towards a
common goal whether or not pursuant to an express agreement, and (b) a
combination or pooling of voting or other interest in the Corporation's
outstanding shares for a common purpose, pursuant to any contract,
understanding, relationship, agreement or other arrangement, whether written or
otherwise. The term "beneficial ownership" shall have the meaning defined in
Rule 13d-3 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, as in effect on the date of filing of these Articles.
E. Exclusion for Employee Benefit Plans, Directors, Officers, Employees and
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Certain Proxies. The restrictions contained in this Article XIII shall not apply
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to (i) any underwriter or member of an underwriting or selling group involving a
public sale or resale of securities of the Corporation or a subsidiary thereof;
provided, however, that upon completion of the sale or resale of such
securities, no such underwriter or member of such selling group is a beneficial
owner of more than 10% of any class of equity security of the Corporation, (ii)
any proxy granted to one or more Continuing Directors, as defined in Article
XIV, by a stockholder of the Corporation or (iii) any employee benefit plans of
the Corporation or a subsidiary thereof. In addition, the Continuing Directors
of the Corporation, the officers and employees of the Corporation and its
subsidiaries, the directors of subsidiaries of the Corporation, the employee
benefit plans of the Corporation and its subsidiaries, entities organized or
established by the Corporation or any subsidiary thereof pursuant to the terms
of such plans and trustees and fiduciaries with respect to such plans acting in
such capacity shall not be deemed to be a group with respect to their beneficial
ownership of voting stock of the Corporation solely by virtue of their being
directors, officers or employees of the Corporation or a subsidiary thereof or
by virtue of the Continuing Directors of the Corporation, the officers and
employees of the Corporation and its subsidiaries and the directors of
subsidiaries of the Corporation being fiduciaries or beneficiaries of an
employee benefit plan of the Corporation or a subsidiary of the Corporation.
Notwithstanding the foregoing, no director, officer or employee of the
Corporation or any of its subsidiaries or group of any of them shall be exempt
from the provisions of this Article XIII should any such person or group become
a beneficial owner of more than 10% of any class of equity security of the
Corporation.
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F. Determinations. A majority of the Continuing Directors, as defined in
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Article XIV, shall have the power to construe and apply the provisions of this
Article XIII and to make all determinations necessary or desirable to implement
such provisions, including but not limited to matters with respect to (a) the
number of shares beneficially owned by any person, (b) whether a person has an
agreement, arrangement or understanding with another as to the matters referred
to in the definition of beneficial ownership, (c) the application of any other
definition or operative provision of this Article XIII to the given facts or (d)
any other matter relating to the applicability or effect of this Article XIII.
Any constructions, applications, or determinations made by the Continuing
Directors pursuant to this Article XIII 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.
ARTICLE XIV
APPROVAL OF CERTAIN BUSINESS COMBINATIONS
The stockholder vote required to approve Business Combinations (as
hereinafter defined) shall be as set forth in this section.
A. (1) Except as otherwise expressly provided in this Article XIV, the
affirmative vote of the holders of (i) at least 80% of the outstanding
shares entitled to vote thereon (and, if any class or series of shares is
entitled to vote thereon separately, the affirmative vote of the holders of
at least 80% of the outstanding shares of each such class or series), and
(ii) at least a majority of the outstanding shares entitled to vote
thereon, not including shares deemed beneficially owned by a Related Person
(as hereinafter defined), shall be required in order to authorize any of
the following:
(a) any merger, consolidation or share exchange of the
Corporation with or into a Related Person (as hereinafter defined);
(b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) of all
or any Substantial Part (as hereinafter defined) of the assets of the
Corporation (including without limitation any voting securities of a
subsidiary) or of a subsidiary, to a Related Person;
(c) any merger, consolidation or share exchange of a Related
Person with or into the Corporation or a subsidiary of the Corporation;
(d) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) of all
or any Substantial Part of the assets of a Related Person to the
Corporation or a subsidiary of the Corporation;
(e) the issuance of any securities of the Corporation or a
subsidiary of the Corporation to a Related Person;
(f) the acquisition by the Corporation or a subsidiary of the
Corporation of any securities of a Related Person;
(g) any reclassification of the common stock of the Corporation,
or any recapitalization involving the common stock of the Corporation; and
(h) any agreement, contract or other arrangement providing for
any of the transactions described in this Article XIV.
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(2) Such affirmative vote shall be required notwithstanding any
other provision of these Articles, any provision of law, or any agreement
with any regulatory agency or national securities exchange or interdealer
securities system which might otherwise permit a lesser vote or no vote.
(3) The term "Business Combination" as used in this Article XIV
shall mean any transaction which is referred to in any one or more of
subparagraphs A(1)(a) through (h) above.
B. The provisions of paragraph A shall not be applicable to any particular
Business Combination, and such Business Combination shall require only such
affirmative vote as is required by any other provision of this certificate, any
provision of law, or any agreement with any regulatory agency or national
securities exchange or interdealer securities system, if the Business
Combination shall have been approved by a two-thirds vote of the Continuing
Directors (as hereinafter defined); provided, however, that such approval shall
only be effective if obtained at a meeting at which a Continuing Director Quorum
(as hereinafter defined) is present.
C. For the purposes of this Article XIV the following definitions apply:
(1) The term "Related Person" shall mean and include (a) any
individual, corporation, partnership or other person or entity which
together with its "affiliates" (as that term is defined in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of
1934, as amended), "beneficially owns" (as that term is defined in Rule
13d-3 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended) in the aggregate 10% or more of the outstanding
shares of the common stock of the Corporation; and (b) any "affiliate" (as
that term is defined in Rule 12b-2 under the Securities Exchange Act of
1934, as amended) of any such individual, corporation, partnership or other
person or entity. Without limitation, any shares of the common stock of the
Corporation which any Related Person has the right to acquire pursuant to
any agreement, or upon exercise or conversion rights, warrants or options,
or otherwise, shall be deemed "beneficially owned" by such Related Person.
(2) The term "Substantial Part" shall mean more than 25 percent
of the total assets of the Corporation, as of the end of its most recent
fiscal year ending prior to the time the determination is made.
(3) The term "Continuing Director" shall mean any member of the
board of directors of the Corporation who is unaffiliated with the Related
Person and was a member of the board prior to the time that the Related
Person became a Related Person, and any successor of a Continuing Director
who is unaffiliated with the Related Person and is recommended to succeed a
Continuing Director by a majority of Continuing Directors then on the
board.
(4) The term "Continuing Director Quorum" shall mean a majority
of the Continuing Directors capable of exercising the powers conferred on
them.
ARTICLE XV
EVALUATION OF BUSINESS COMBINATIONS
In connection with the exercise of its judgment in determining what is
in the best interests of the Corporation and of the stockholders, when
evaluating a Business Combination (as defined in Article XIV hereof) or a tender
or exchange offer, the board of directors of the Corporation may, in addition to
considering the adequacy of the amount to be paid in connection with any such
transaction, consider all of the following factors and any other factors which
it deems relevant; (i) the social and economic effects of the transaction on the
Corporation and its subsidiaries, employees, depositors, loan and other
customers, creditors and other elements of the communities in which the
Corporation and its subsidiaries operate or are located; (ii) the business and
financial condition and earnings prospects of the acquiring person or entity,
including, but not limited to, debt service and other existing financial
obligations, financial obligations to be incurred in connection with the
acquisition, and other likely financial obligations of the acquiring person or
entity, and the possible effect of such conditions upon the Corporation and its
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subsidiaries and the other elements of the communities in which the Corporation
and its subsidiaries operate or are located; and (iii) the competence,
experience, and integrity of the acquiring person or entity and its or their
management.
ARTICLE XVI
LIMITATION OF OFFICERS' AND DIRECTORS' LIABILITY
An officer or director of the Corporation, as such, shall not be liable to
the Corporation or its stockholders for money damages, except (i) 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; (ii) 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 (iii) to the
extent otherwise required by Maryland law. If Maryland law is amended or enacted
after the date of filing of these articles 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 Maryland 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.
ARTICLE XVII
INDEMNIFICATION
A. The Corporation shall indemnify, to the fullest extent permissible under
the Maryland General Corporation Law, any individual who is or was a director,
officer, employee or agent of the Corporation, and any individual who serves or
served at the Corporation's request as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
other enterprise or employee benefit plan, in any proceeding in which the
individual is made a party as a result of his service in such capacity.
B. (1) Reasonable expenses incurred by any person identified in paragraph A
of this Article XVII who is a party to a proceeding will be paid or reimbursed
by the Corporation in advance of the final disposition of the proceeding upon
receipt by the Corporation of: (i) a written affirmation by such person of his
good faith belief that the standard of conduct necessary for indemnification by
the Corporation as authorized in this Article XVII has been met; and (ii) a
written undertaking by or on behalf of such person to repay the amount if it
shall ultimately be determined that the standard of conduct has not been met.
(2) The undertaking required by subparagraph (ii) of paragraph (1) of
this subsection shall be an unlimited general obligation of such person but need
not be secured and may be accepted without reference to financial ability to
make the repayment.
C. Nonexclusive. The indemnification and advance payment of expenses
------------
provided by paragraphs A and B shall not be exclusive of any other rights to
which a person may be entitled by law, bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise.
D. Continuation. The indemnification and advancement of expenses provided
------------
by this Article XVII shall be deemed to be a contract between the Corporation
and the persons entitled to indemnification thereunder, and any repeal or
modification of this Article XVII shall not affect any rights or obligations
then existing with respect to any state of facts then or theretofore existing or
any action, suit or proceeding theretofore or thereafter brought based in whole
or in part upon any such state of facts. The indemnification and advance payment
provided by paragraphs A and B shall continue as to a person who has ceased to
hold a position named in paragraph A and shall inure to his heirs, executors and
administrators.
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E. Insurance. The Corporation shall purchase and maintain insurance on
---------
behalf of any person who holds or who has held any position named in paragraph
A, against any liability incurred by him in any such position, or arising out of
his status as such, whether or not the Corporation would have power to indemnify
him against such liability under paragraphs A and B.
F. Intention and Savings Clause. It is the intention of this Article XVII
-----------------------------
to provide for indemnification to the fullest extent permitted by the General
Corporation Law of the State of Maryland, and this Article XVII shall be
interpreted accordingly. If this Article XVII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director, officer, employee, and
agent of the Corporation as to costs, charges, and expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement with respect
to any action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, including an action by or in the right of the Corporation, to the
full extent permitted by any applicable portion of this Article XVII that shall
not have been invalidated and to the full extent permitted by applicable law. If
the General Corporation Law of the State of Maryland is amended, or other
Maryland law is enacted, to permit further or additional indemnification of the
persons defined in this Article XVII.A, then the indemnification of such persons
shall be to the fullest extent permitted by the General Corporation Law of the
State of Maryland, as so amended, or such other Maryland law.
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.
ARTICLE XVIII
AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the Corporation is expressly authorized to adopt,
repeal, alter, amend and rescind the bylaws of the Corporation by a vote of
two-thirds of the board of directors. Notwithstanding any other provision of
these Articles or the bylaws of the Corporation (and notwithstanding the fact
that some lesser percentage may be specified by law), the bylaws shall not be
adopted, repealed, altered, amended or rescinded by the stockholders of the
Corporation except by the vote of the holders of not less than 80% of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the stockholders called for that purpose (provided
that notice of such proposed adoption, repeal, alteration, amendment or
rescission is included in the notice of such meeting), or, as set forth above,
by the board of directors.
ARTICLE XIX
AMENDMENT OF ARTICLES OF INCORPORATION
The Corporation reserves the right to repeal, alter, amend or rescind any
provision contained in these Articles in the manner now or hereafter prescribed
by law, and all rights conferred on stockholders herein are granted subject to
this reservation. Notwithstanding the foregoing, the provisions set forth in
Articles IX, X, XI, XII, XIII, XIV, XV, XVI, XVII, XVIII and this Article XIX of
these Articles may not be repealed, altered amended or rescinded in any respect
unless the same is approved by the affirmative vote of the holders of not less
than 80% of the outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors (considered for this purpose as a
single class) cast at a meeting of the stockholders called for that purpose
(provided that notice of such proposed adoption, repeal, alteration, amendment
or rescission is included in the notice of such meeting); except that such
repeal, alteration, amendment or rescission may be made by the affirmative vote
of the holders of a majority of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (considered
for this purpose as a single class) if the same is first approved by a majority
of the Continuing Directors, as defined in Article XIV of these Articles.
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IN WITNESS WHEREOF, I have signed these articles and acknowledge the same
to be my act this 8th day of November, 1995.
/s/ Joseph J. Bouffard
------------------------------------
Joseph J. Bouffard, Incorporator
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<PAGE>
ARTICLES SUPPLEMENTARY
TO THE
ARTICLES OF INCORPORATION
OF
PATAPSCO BANCORP, INC.
WHEREAS, by the Articles of Incorporation (the "Articles") of Patapsco
Bancorp, Inc. (the "Corporation"), 1,000,000 shares of serial preferred stock,
with $0.01 par value per share (the "Preferred Stock") are authorized; and
WHEREAS, in and by Article VI of the Articles, the Board of Directors
of the Corporation, pursuant to Section 2-208 of the Maryland General
Corporation Law (the "Act"), is expressly authorized, by resolution or
resolutions from time to time adopted, to provide for the issuance of Preferred
Stock in series and to fix and state the powers, designations, preferences, and
relative, participating, optional or other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof; and
WHEREAS, the Board of Directors now desires to fix and determine the
terms of the Preferred Stock with respect to the issuance of certain shares of
Preferred Stock.
NOW, THEREFORE, BE IT RESOLVED, as follows:
A. Issuance and Designation Thereof.
--------------------------------
There is hereby created a series of such Preferred Stock to be
designated as the Series A Non-cumulative, Perpetual Convertible Preferred Stock
(the "Series A Shares"). The Series A Shares shall be a closed series consisting
of 114,107 Series A Shares, each Series A Share having a Liquidation Preference
(as defined in Section C.1) of $25.00. The number of Series A Shares may not be
increased, but may be decreased, but not below the number of Series A Shares
then outstanding. Each Series A Share shall have the same relative powers,
preferences and rights as, and shall be identical in all respects with the other
Series A Shares.
B. Dividends.
---------
(1) The holders of Series A Shares shall be entitled to receive when,
as and if declared by the Board of Directors, but only out of funds legally
available therefor, from the date of issue of such shares to and including the
last day of the calendar quarter (March 31, June 30, September 30 or December
31, as the case may be) which includes the date of issue (the "Initial Dividend
Period") and for each dividend period commencing on the first day of each
calendar quarter (January 1, April 1, July 1 or October 1, as the case may be)
commencing after the Initial Dividend Period and ending on and including the
last day of each such calendar quarter (the Initial Dividend Period and each
such other dividend periods herein referred to as a "Dividend Period"), cash
dividends at the fixed annual rate per share of 7.5% of its Liquidation
Preference per annum ($25.00 per annum per Series A Share), as adjusted for
stock splits, stock dividends, recapitalizations, reclassifications and similar
events that affect the number of outstanding Series A Shares. Dividends shall be
payable to holders of record of the Series A Shares on any date fixed for that
purpose by the Board of Directors, provided, however, that such record date
--------
shall
<PAGE>
not exceed 30 days prior to the Payment Date. The dividends accruing hereunder
shall be computed on the basis of a three hundred sixty (360) day year composed
of twelve (12) months of thirty (30) days each.
(2) When dividends are not paid in full upon the Series A Shares and
any other series of Preferred Stock ranking on a parity as to dividends with the
Series A Shares, all dividends declared upon the Series A Shares and any other
series of Preferred Stock ranking on a parity as to dividends with the Series A
Shares shall be declared pro rata so that the amount of dividends declared per
share on the Series A Shares and such other Preferred Stock shall in all cases
bear to each other the same ratio that accrued dividends per share on the Series
A Shares and such other Preferred Stock bear to each other. No interest or sum
of money in lieu of interest shall be payable in respect of any dividend payment
or payments on the Series A Shares which may be in arrears.
(3) The rights of holders of Series A Shares to receive dividends is
non-cumulative. Accordingly, if the Board of Directors of the Corporation fails
to declare a dividend on the Series A Shares for any Dividend Period, the
Corporation shall have no obligation to pay a dividend for such Dividend Period,
whether or not dividends on the Series A Shares or any other class or series of
capital stock of the Corporation are declared for any future Dividend Period.
(4) If dividends at the rate per share set forth in Paragraph B(1) for
the then-current Dividend Period shall not have been declared and paid or set
apart for payment on all outstanding shares of Series A Shares for such Dividend
Period then, if the deficiency shall not be declared and fully paid or set apart
for payment prior to the next Dividend Period, the Corporation shall not, with
respect to the then-current Dividend Period, (i) declare or pay or set apart for
payment any dividends or make any other distribution on Junior Stock, other than
dividends or distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Junior Stock, or (ii) make any payment on
account of the repurchase, redemption or other retirement of any Junior Stock.
(5) If and whenever the Corporation fails to pay in whole or in part
three quarterly dividends (whether or not consecutive) payable on the Series A
Shares as provided for in this Section B, the Corporation, in connection with
the declaration and payment of any dividend upon Junior Stock which is otherwise
permissible as provided in this Section B, shall not declare and pay a quarterly
dividend in an amount in excess of the last quarterly dividend declared and paid
upon such Junior Stock.
C. Liquidation Rights.
------------------
(1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, then, before any
distribution or payment shall be made to the holders of any Junior Stock, the
holders of Series A Shares shall be entitled to be paid in full an amount equal
to $25.00 per share (which amount is referred to hereafter as the "Liquidation
Preference"), as adjusted for stock splits, stock dividends, recapitalizations,
reclassifications and similar events that affect the number of outstanding
Series A Shares, without accumulation of unpaid dividends for prior Dividend
Periods, or such lesser amount remaining after the claims of all creditors have
been satisfied. If such payment shall have been made in full to all holders of
shares of Preferred Stock, the remaining assets of the Corporation shall be
distributed among the
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<PAGE>
holders of Junior Stock, according to their respective rights and preferences
and in each case according to their respective number of shares, but in no event
shall the holders of the Series A Shares be entitled to any further
participation in any distribution of assets by the Corporation. In the event
that, upon any voluntary or involuntary liquidation, dissolution or winding up,
the available assets of the Corporation are insufficient to pay such Liquidation
Preference on all outstanding Series A Shares and the liquidation preferences
payable on all shares of other classes or series of stock of the Corporation
ranking on a parity with the Series A Shares in the distribution of assets, then
the holders of Series A Shares and of all other such classes or series shall
share ratably in any distribution of assets in proportion to the full amounts to
which they would otherwise be respectively entitled.
(2) Nothing herein contained shall be deemed to prevent redemption of
Series A Shares by the Corporation in the manner provided in Section D hereof.
Any (i) sale, lease or other disposition of all or substantially all of the
assets of the Corporation, (ii) consolidation or merger of the Corporation with
or into any other corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of the Corporation immediately prior
to such consolidation, merger or reorganization, own less than 50% of the
outstanding voting power of the surviving entity (or its parent) following the
consolidation, merger or reorganization, or (iii) transaction (or series of
related transactions involving a person or entity, or a group of affiliated
persons or entities) in which in excess of 50% of the Corporation's outstanding
voting power is transferred, shall be deemed to be a dissolution, liquidation or
winding up of the Corporation within the meaning of this Section C.
D. Redemption.
----------
(1) Subject to Section D(4) hereof and the prior approval of the Board
of Governors of the Federal Reserve System, the Corporation, at the option of
the Board of Directors, may redeem the whole or any part of the Series A Shares
at the time outstanding, at any time or from time to time, after five years from
the date of its issuance, or prior thereto upon the approval of at least a
majority of the outstanding Series A Shares, upon notice given as hereinafter
specified, at $25.00 per share together with all accrued and unpaid dividends as
of the redemption date for the then-current Dividend Period (without
accumulation of unpaid dividends for prior Dividend Periods). The Corporation
shall not be required to establish a sinking or retirement fund with respect to
the Series A Shares.
(2) Notice of every redemption of Series A Shares shall be given by
first class mail, postage prepaid, addressed to the holders of record of the
shares to be redeemed at their respective last addresses as they shall appear on
the books of the Corporation. Such mailing shall be at least 40 days and not
more than 70 days prior to the date fixed for redemption.
(3) In case of redemption of only a portion of the Series A Shares at
the time outstanding, the redemption may be either pro rata or by lot, at the
option of the Board of Directors of the Corporation. The Board of Directors
shall have full power and authority, subject to the provisions herein contained
and applicable regulatory approval, to prescribe the terms and conditions upon
which any or all of the Series A Shares shall be redeemed from time to time.
(4) If notice of redemption shall have been duly given, or if the
Corporation shall have given to a bank or trust company designated to act as
redemption agent irrevocable and
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<PAGE>
unconditional authorization and direction to give such notice, at least 40 days
and not more than 70 days prior to the date fixed for redemption (which date
shall not be more than 70 days after the date of such authorization and
direction), and if on or before the redemption date specified therein the cash
funds necessary for such redemption shall have been deposited by the Corporation
with such bank or trust company in trust with irrevocable instruction and
authority, subject to Section D(5), to pay the redemption price to the holders
of the Series A Shares called for redemption upon surrender of the certificate
therefor, then, notwithstanding that any certificate for such Series A Shares
called for redemption shall not have been surrendered for cancellation, from and
after the time of such deposit, all such Series A Shares so called for
redemption shall no longer be deemed to be outstanding and all rights with
respect to such shares shall forthwith cease and terminate, except only the
right of the holders thereof to receive from such bank or trust company at any
time after the close of business on the date fixed for redemption the funds so
deposited, without interest. Any bank or trust company selected by the
Corporation to act as redemption agent shall be organized and in good standing
under the laws of the United States of America or any State thereof, and shall
be identified in the notice of redemption. Any interest accrued on such funds
shall be paid to the Corporation from time to time. In case fewer than all the
Series A Shares represented by a stock certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof; provided, however, that such replacement certificate shall
be issuable only in denominations of whole shares and cash will be payable in
respect of fractional interests.
(5) Any funds so set aside or deposited, as the case may be, and
unclaimed at the end of three years from such redemption date shall, to the
extent permitted by law, be released or repaid to the Corporation, after which
repayment the holders of the shares so called for redemption shall look only to
the Corporation for payment thereof.
(6) No sinking fund shall be established for the retirement or
redemption of the Series A Shares.
E. Voting Rights.
-------------
(1) The holders of Series A Shares shall not have any voting rights
except as may be provided for in this Section E or except as may be required by
law.
(2) If and whenever the Corporation fails to pay in whole or in part
eight quarterly dividends (whether or not consecutive) payable on the Series A
Shares as provided for in Section B herein, the number of directors then
constituting the Board of Directors shall be increased by one director (such
additional director being referred to herein as the "Representative Director")
and the holders of Series A Shares, together with the holders of shares of every
other series of Preferred Stock ranking on a parity with the Series A Shares
with respect to the payment of dividends or distribution on liquidation
similarly entitled to vote for the Representative Director, voting separately as
a class, regardless of series, shall be entitled to elect the Representative
Director at any annual meeting of shareholders or special meeting held in place
thereof, or at a special meeting of the holders of such series of the Preferred
Shares called as hereinafter provided and at each annual meeting thereafter with
respect to the election of the Representative Director.
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<PAGE>
(a) At any time after the voting power shall have been so
vested in the holders of Series A Shares and of any other such series of the
Preferred Stock, the secretary of the Corporation shall call a special meeting
of the holders of the Series A Shares and of such other series of the Preferred
Stock entitled to vote for the election of the Representative Director to be
elected by them as herein provided, the call to be made by notice similar to
that provided in the by-laws for a special meeting of the shareholders or as
required by law.
(b) The Representative Director elected at any such special
meeting shall hold office for the balance of the term of the class or classes to
which such Representative Director was elected, and until his or her successor
shall have been elected and qualified. In case any vacancy shall occur in the
Representative Director elected by the holders of shares of such series of the
Preferred Stock, a successor shall be elected by the holders of such series,
such successor Representative Director to serve until the earlier of the: (i)
next annual meeting of shareholders or special meeting held in place thereof and
until his successor shall have been elected and qualified; or (ii) such
successor Representative Director's removal pursuant to the next sentence
hereof. The Representative Director may be removed from office only upon the
direction and order of applicable regulatory authorities or upon the vote of the
holders of the Preferred Stock which elected such Representative Director.
(c) At any meeting of shareholders held while holders of
Preferred Stock have the voting power to elect the Representative Director, the
holders of a majority of the voting power of the outstanding shares of Preferred
Stock so entitled to vote who are present in person or by proxy shall be
sufficient to constitute a quorum for the election of the Representative
Director as herein provided.
(d) Any new series of Preferred Stock other than any Junior
Stock shall be entitled to participate with the Series A Shares and any other
series so entitled in voting for the election of the Representative Director to
the extent and under the conditions set forth in the resolutions creating such
class or series, provided that the relative voting power of such series in such
election shall be as set forth in Section E(2) hereof.
(3) So long as any Series A Shares are outstanding, in addition to any
other vote of shareholders required by law or by the Corporation's Articles of
Incorporation, the affirmative vote of the holders of at least a majority of the
Series A Shares and of all other series of the Preferred Stock similarly
entitled to vote upon the matter then being considered, acting as a single class
regardless of series, given in person or by proxy, at any meeting called for the
purpose, shall be necessary for effecting or validating:
(a) Any amendment, alteration or repeal of any of the
provisions of these Articles Supplementary which affects materially or adversely
the voting rights, designations, Liquidation Preferences and other preferences,
qualifications, privileges, limitations, or other special rights or that would
reduce the redemption price or alter the redemption rights, of the holders of
the Series A Shares; provided, however, that for purposes of this subparagraph
(a), the amendment of the provisions of these Articles Supplementary so as to
authorize or create, or to increase the authorized amount of, any shares of any
class ranking junior to the Series A Shares with respect to both the payment of
dividends and distribution on liquidation shall not be deemed to affect
adversely the voting rights, designations, preferences, qualifications,
privileges, limitations, conversion rights or other special rights, if any, of
the holders of the Series A Shares,
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<PAGE>
and provided further that if any such amendment, alteration or repeal would
affect materially or adversely any voting rights, designations, preferences,
qualifications, privileges, limitations or other special rights, if any, of the
holders of the Series A Shares which are not enjoyed by some or all of the other
series otherwise entitled to vote in accordance with this Section E(3), the
affirmative vote of the holders of at least a majority of the Series A Shares
and of all other series, if any, similarly affected, similarly given, shall be
required in lieu of the affirmative vote of the holders of at least a majority
of the Series A Shares and of all other series of the Preferred Stock otherwise
entitled to vote in accordance with this Subsection (3); or
(b) The creation or authorization of any shares of any class
or series, or any security convertible into shares of any class or series,
ranking prior to or on a parity with the Series A Shares in the distribution of
assets on any liquidation, dissolution, or winding up of the Corporation or in
the payment of dividends.
provided, however, no such consent of the holders of the Series A Shares
pursuant to subparagraphs (a) and (b) of this Section E(3) above shall be
required if, at or prior to the time when any such action is to take effect or
when the issuance of any such securities is to be made, as the case may be, all
Series A Shares shall have been redeemed (payment having been made to the
holders of Series A Shares) or converted into Common Stock.
F. Conversion.
----------
At any time after the issuance of the Series A Shares (hereinafter in
this Section F only called the "Shares"), the Shares shall be convertible into
Common Stock on the following terms and conditions:
(1) Subject to and upon compliance with the provisions of this Section
F, the holder of any Shares may at such holder's option convert any such Shares
into such number of fully paid and non-assessable shares of Common Stock as are
issuable pursuant to subsection (3) of this Section F based on the Conversion
Rate, as such Rate may be adjusted in accordance with the provisions of this
Section F. No adjustment shall be made for dividends unpaid on any Shares that
shall be converted or for dividends on any Common Stock that shall be issuable
upon the conversion of such shares.
(2) The surrender of any Shares for conversion shall be made by the
holder thereof at the office of any bank or trust company in this state
including the Corporation itself or an affiliate thereof, which is appointed by
the Corporation as the conversion agent for the Series A Shares ("Conversion
Agent"), and such holder shall give written notice to the Corporation at said
office that such holder elects to convert such Shares in accordance with the
provisions of this Section F. Such notice also shall state name or names (with
addresses) in which the certificate or certificates for Common Stock which shall
be issuable on such conversion shall be issued. Subject to the provisions of
subsection (1) of this Section F, every notice of election to convert shall
constitute a contract between the holder of such Shares and the Corporation,
whereby such holder shall be deemed to subscribe for the number of shares of
Common Stock which such holder will be entitled to receive upon such conversion,
and in payment and satisfaction of such subscription, to surrender such Shares
and to release the Corporation from all obligations thereon, and whereby the
Corporation shall be deemed to agree that the surrender of such Shares
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<PAGE>
and the extinguishment of its obligations thereon shall constitute full payment
for the Common Stock so subscribed for and to be issued upon such conversion.
As soon as practicable after the receipt of such notice and Shares, the
Corporation shall issue and shall deliver at said office of the Conversion Agent
to the person for whose account such Shares were so surrendered, a certificate
or certificates for the number of full shares of Common Stock issuable upon the
conversion of such Shares, and a check or cash for the payment (if any) to which
such person is entitled pursuant to subsection (5) of this Section F, together
with a certificate or certificates representing the Shares, if any, which are
not to be converted, but which constituted a portion of the Shares represented
by the certificate or certificates surrendered by such person. Such conversion
shall be deemed to have been effected on the date on which the Corporation shall
have received such notice, and the person or persons in whose name or names any
certificate or certificates for Common Stock shall be issuable upon such
conversion and surrender of Shares for the purpose shall be deemed to have
become on said date the holder or holders or record of the shares represented
thereby.
(3) The Conversion Rate shall be one share of Common Stock for each
Share surrendered for conversion.
(4) The Conversion Rate shall be subject to adjustment from time to
time as follows:
(a) If the Corporation shall (i) pay a dividend in shares of
its Common Stock, or effect a subdivision of its outstanding shares of Common
Stock (otherwise than by a payment of a dividend in Common Stock), (ii) combine
its outstanding shares of Common Stock into a smaller number of shares or (iii)
issue by reclassification of its shares of its Common Stock any shares of
capital stock, then the Conversion Rate in effect immediately prior thereto
shall be adjusted so that the holder of a Share surrendered for conversion after
the record date fixing stockholders to be affected by such event shall be
entitled to receive upon conversion the number of such shares of the Corporation
which such holder would have been entitled to receive after the happening of
such event had such Shares been converted immediately prior to such record date.
Such adjustment shall be made whenever any of such events shall happen, and
shall also be effective retroactively as to Shares converted between such record
date and the date of the happening of such event.
(b) In the event of any consolidation of the Corporation with
or merger of the Corporation into another corporation, or in the event of any
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation to another corporation, or in the case of any reorganization of
the Corporation, the holder of each Share then outstanding shall have the right
thereafter to convert such Shares into the kind and amount of shares of stock
and other securities and property, including cash, which would have been
deliverable to such holder upon such consolidation, merger, sale, conveyance,
exchange, transfer or reorganization if such holder had converted such holder's
Shares into Common Stock immediately prior to such consolidation, merger, sale,
conveyance, exchange, transfer or reorganization. In any such event, effective
provision shall be made in the instrument effecting or providing for such
consolidation, merger, sale, conveyance, exchange, transfer or reorganization so
that that provisions set forth herein for the protection of the conversion
rights of the Shares shall thereafter be applicable, as nearly as may be
practicable, in relation to any shares of stock or other securities or property,
including
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cash, deliverable after such consolidation, merger, sale, conveyance, exchange,
transfer or reorganization upon the conversion of the Shares, or such other
securities as shall have been issued to the holders thereof in lieu thereof or
in exchange therefor. The provisions of this subsection (4)(b) shall similarly
apply to successive consolidations, mergers, sales, conveyances, exchanges,
transfers and reorganizations.
(c) No adjustment in the Conversion Rate shall be required
unless such adjustment would require an increase or decrease of at least two
percent (2%) in such Rate; provided, however, that any adjustments which by
reason of this subsection (4)(c) are not required to be, and are not, made shall
be carried forward and taken into account in any subsequent adjustment. All
calculations under this subsection (4)(c) shall be made to the nearest one
hundredth of a share.
(d) Whenever the Conversion Rate shall be adjusted as provided
in this Section F, the Corporation shall forthwith file at the office of the
Conversion Agent maintained by the Corporation pursuant to subsection (2) of
this Section F a statement signed by the Chairman of the Board or the President
of the Corporation and by its Treasurer stating the adjusted Conversion Rate
determined as provided herein. Such statement shall show in detail the facts
requiring such adjustment. Whenever the Conversion Rate is adjusted, the
Corporation shall cause a notice stating the adjustment and the new Conversion
Rate to be mailed to each holder of record Shares.
(5) No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of any Shares. If more than one Share shall be
surrendered for conversion at one time by the same holder, the number of full
shares issuable upon conversion thereof shall be computed on the basis of the
aggregate number of such Shares so surrendered. If the conversion of any Shares
results in a fraction, an amount equal to such fraction multiplied by the
Closing Price of the Common Stock on the business day next preceding the date of
conversion shall be paid to such holder in cash by the Corporation. The Closing
Price of the Common Stock for each day shall be the last reported sales price,
regular way, on the principal national securities exchange upon which the Common
Stock is listed, or in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices, regular way, on such
national securities exchange, or if the Common Stock is not then listed on a
national securities exchange, the average of the closing prices or, if
applicable, closing bid and asked prices, in the over-the-counter market as
furnished by the nationally recognized securities firm or association selected
from time to time by the Corporation for that purpose. If no such prices are
available, the value of a share of Common Stock for purposes of this Section
F(5) shall be determined in good faith by the Board of Directors of the
Corporation.
(6) If any Share shall be called for redemption, the right to convert
such Share shall terminate and expire at the close of business on the business
day next preceding the date fixed for said redemption pursuant to Paragraph D
hereof.
(7) The issuance of stock certificates on conversion of Shares shall be
made free of any tax in respect of such issue. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in a name other than that
of the holder of the Shares converted, and the Corporation shall not be required
to issue or deliver any such stock certificates unless and until the person or
persons
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requesting the issuance thereof shall have paid to the Corporation the amount of
any such tax or shall have established to the satisfaction of the Corporation
that such tax has been paid.
(8) If in any case a state of facts occurs where in the opinion of the
Board of Directors of the Corporation the other provisions of this Section F are
not strictly applicable, or if strictly applicable, would not fairly protect the
conversion rights of the Shares in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall make an
adjustment in the application of such provisions in accordance with such
essential intent and principles as to protect such conversion rights as
aforesaid.
(9) The Corporation shall, at all times reserve and keep available out
of its authorized Common Stock the full number of shares of Common Stock
deliverable upon the conversion of all outstanding Shares and shall take all
such corporate action as may be required from time to time in order that it may
validly and legally issue fully paid and non-assessable shares of Common Stock
upon conversion of the Shares.
(10) Shares converted shall not be reissued as Series A Shares but
assume the status of authorized but unissued shares of Preferred Stock of the
Corporation.
(11) For purposes of this Section F:
(a) "Conversion Rate" at any time shall mean the amount of
Common Stock of the Corporation into which at such time one Share shall be
convertible in accordance with the provisions of this Section F. Subject to
adjustment as provided in this Section F, the Conversion Rate shall be as
provided in Section F(3).
(b) "Common Stock" shall mean stock of the Corporation of any
class, whether now or hereafter authorized, which has the right to participate
in the distribution of either earnings or assets of the Corporation without
limit or preferences as to the amount or percentage. If by reason of the
operation of subsection (4)(b) of this Section F the Shares shall be convertible
into any other shares of stock or other securities or property of the
Corporation, any reference herein to the conversion of Shares pursuant to this
Section F shall be deemed to refer to and include the conversion of Shares into
such other shares of stock or other securities or property.
G. Notice of Record Date.
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In the event:
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(1) that the Corporation takes a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend) or any other distribution,
any right to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other right;
(2) that the Corporation subdivides or combines its outstanding shares
of Common Stock;
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(3) of any reclassification of the Common Stock of the Corporation
(other than a subdivision or combination of its outstanding shares of Common
Stock or a stock dividend or stock distribution thereon), or of any
consolidation or merger of the Corporation into or with another corporation, or
of the sale of all or substantially all of the assets of the Corporation; or
(4) of the involuntary or voluntary dissolution, liquidation or winding
up of the Corporation; then the Corporation shall cause to be filed at its
principal office or at the office of the transfer agent of the Series A
Preferred, and shall cause to be mailed to the holders of the Series A Preferred
at their last addresses as shown on the records of the Corporation or such
transfer agent, at least ten days prior to the record date specified in (A)
below or twenty days before the date specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such dividend,
distribution, subdivision or combination are to be determined, or
(B) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, dissolution or winding up.
H. Definitions. As used herein with respect to the Series A Shares, the term
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"Junior Stock" shall mean the common stock and any other class or series of
shares of the Corporation hereafter authorized over which Series A Shares have
preference or priority in the payment of dividends or in the distribution of
assets on any liquidation, dissolution or winding up of the Corporation.
I. No Other Rights. Except as required by law, the Series A Shares shall not
---------------
have any relative, participating, optional or other special rights and powers
other than as set forth herein.
The Board of Directors of Patapsco Bancorp, Inc. (the "Corporation"), duly
adopted the Resolution contained in these Articles Supplementary on August 23,
2000.
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IN WITNESS WHEREOF, Joseph J. Bouffard, its President, has executed
this instrument and its secretary, Theodore C. Patterson, has affixed the
corporate seal hereto and attested said seal on the 23 day of August 2000.
PATAPSCO BANCORP, INC.
By: /s/ Joseph J. Bouffard
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Joseph J. Bouffard, President
SEAL
ATTEST:
/s/ Theodore C. Patterson
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Theodore C. Patterson, Secretary
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