SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant x
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Filed by a Party other than the Registrant
Check the appropriate box:
X Preliminary Proxy Statement __ Confidential, for Use of the
Definitive Proxy Statement Commission Only (as permitted
Definitive Additional Materials by Rule 14a-6(e)(2))
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
IBW FINANCIAL CORPORATION
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total Fee Paid:
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Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.:
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3 Filing Party:
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4. Date Filed:
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PRELIMINARY COPY
IBW FINANCIAL CORPORATION
NOTICE OF SPECIAL MEETING
AND
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 25, 1997
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IBW FINANCIAL CORPORATION
4812 GEORGIA AVENUE
WASHINGTON, D.C. 20011
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 25, 1997
TO THE SHAREHOLDERS OF IBW FINANCIAL CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of IBW Financial Corporation, a District of Columbia corporation (the
"Company"), will be held in the Board Room at the Company's executive offices,
located at 4812 Georgia Avenue, NW, Washington, D.C., on Thursday, September 25,
1997 at 5:00 pm for the following purposes:
1. To consider and vote upon an amendment to Article FOURTH of the
Articles of Incorporation of the Company to change the authorized
capital stock of the Company to permit the issuance of up to five
hundred thousand (500,0000) shares of voting preferred stock and
five hundred thousand (500,000) shares of non-voting preferred
stock, the relative rights and preferences of which may be
determined by the Board of Directors at the time of issuance.
2. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Shareholders of record as of the close of business on August 29, 1997
are entitled to notice of and to vote at the Meeting or any adjournment or
postponement thereof.
By Order of the Board of Directors
Clinton W. Chapman, Chairman
September 5, 1997
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING IN PERSON. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE
MEETING, YOU MAY, IF YOU DESIRE, REVOKE YOUR PROXY AND VOTE IN PERSON.
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IBW FINANCIAL CORPORATION
4812 Georgia Avenue
Washington, DC 20011
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SPECIAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
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INTRODUCTION
This Proxy Statement is furnished to shareholders of IBW Financial
Corporation, a District of Columbia corporation (the "Company"), in connection
with the solicitation of proxies by the Board of Directors of the Company for
use at a Special Meeting of Shareholders to be held at 5:00 p.m. on Thursday,
September 25, 1997 (the "Meeting"), and at any adjournment or postponement
thereof, for the purposes of (1) considering and voting upon an amendment (the
"Amendment") to Article FOURTH of the Articles of Incorporation of the Company
to change the authorized capital stock of the Company to permit the issuance of
up to five hundred thousand (500,0000) shares of voting preferred stock and five
hundred thousand (500,000) shares of non-voting preferred stock, the relative
rights and preferences of which may be determined by the Board of Directors at
the time of issuance; and (2) transacting such other business as may properly
come before the Meeting or any adjournment or postponement thereof.
The Meeting will be held in the Board Room at the executive offices of
the Company, located at 4812 Georgia Avenue, NW, Washington D.C.
This Proxy Statement and the accompanying form of proxy are being sent
to shareholders of the Company on or about September 5, 1997.
The cost of this proxy solicitation is being borne by the Company. In
addition to the use of the mail, proxies may be solicited personally or by
telephone by officers, regular employees or directors of the Company or the
Bank, who will not be compensated for any such services. The Company may also
reimburse brokers, custodians, nominees and other fiduciaries for their
reasonable out-of-pocket and clerical costs for forwarding proxy materials to
their principals.
VOTING RIGHTS AND PROXIES
VOTING RIGHTS
Only shareholders of record at the close of business on August 29,
1997, will be entitled to notice of and to vote at the Meeting or any
adjournment or postponement thereof. On that date, the Company had outstanding
637,160 shares of common stock, par value $1.00 per share (the "Common Stock"),
constituting the only class of stock outstanding, and held by approximately 565
shareholders of record. Each share of Common Stock is entitled to one vote on
all matters submitted to a vote of the shareholders. The presence, in person or
by proxy, of not less than a majority of the total number of outstanding shares
of Common Stock is necessary to constitute a quorum at the Meeting. Members of
the Board of Directors, and family members thereof, having the power to vote or
direct the voting of in excess of fifty percent of the outstanding shares of
Common Stock have indicated their intention to vote in favor of the proposed
Amendment.
PROXIES
Shares represented by proxies received by the Company will be voted in
accordance with the instructions contained therein. Shares represented by
proxies for which no instruction is given will be voted FOR the Amendment, and
in the discretion of the holders of the proxies on all other matters properly
brought before the Meeting and any adjournment or postponement thereof. The
judges of election appointed by the Board of Directors
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for the Meeting will determine the presence of a quorum and will tabulate the
votes cast at the Meeting. Abstentions will be treated as present for purposes
of determining a quorum, but as unvoted for purposes of determining the approval
of any matter submitted to the vote of shareholders. If a broker indicates that
he or she does not have discretionary authority to vote any shares of Common
Stock as to a particular matter, such shares will be treated as present for
general quorum purposes, but will not be considered as present or voted with
respect to such matter.
Shareholders are requested to sign, date, mark and return promptly the
enclosed proxy in the postage paid envelope provided for this purpose in order
to assure that their shares are voted. A proxy may be revoked at any time prior
to the voting thereof at the Meeting through the granting of a later proxy with
respect to the same shares, by written notice to B. Doyle Mitchell, Jr.,
President of the Company, at the address noted above, at any time prior to the
voting thereof, or by voting in person at the Meeting. Attendance at the Meeting
will not, in itself, revoke a proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
SECURITIES OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of June 30, 1997
concerning the number and percentage of shares of the Company's Common Stock
beneficially owned by its directors, certain executive officers, and by its
directors and all executive officers as a group, as well as information
regarding each other person known by the Company to own in excess of 5% of the
outstanding Common Stock. Except as otherwise indicated, all shares are owned
directly, and the named person possesses sole voting and sole investment power
with respect to all such shares. Except as set forth below, the Company knows of
no other person or persons, who beneficially own in excess of five percent of
the Company's Common Stock. Further, the Company is not aware of any arrangement
which at a subsequent date may result in a change of control of the Company.
Name Number of Shares(1) Percent of Class
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Clinton W. Chapman, Esquire 11,121(2) 1.75%
George H. Windsor, Esquire 16,340(3) 2.56%
Benjamin L. King, CPA 1,176(4) *
B. Doyle Mitchell, Jr. 74,813(5) 11.74%
4812 Georgia Avenue, NW
Washington, DC 20011
Massie S. Fleming 5,233(6) *
Cynthia T. Mitchell 100,763(7) 15.81%
2029 Trumbull Terrace, NW
Washington, DC 20011
Patricia Mitchell 77,407(8) 12.15%
4812 Georgia Avenue, NW
Washington, DC 20011
Marjorie H. Parker, Ph.D 7,521 1.18%
Margaret B. Stewart 19,833 3.11%
Robert L. White 1,000(9) *
Emerson A. Williams, M.D. 3,646 *
Industrial Bank, National Association 54,720 8.59%
Employee Stock Ownership Plan
4812 Georgia Avenue, NW
Washington, DC 20011
All directors and executive 296,746 46.57%(10)
officers as a group (14 persons)
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* Less than one percent
(Footnotes continued on following page)
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(Footnotes continued from prior page)
(1) For purposes hereof, a person is deemed to be the beneficial owner of
securities with respect to which he has or shares voting or investment
power. Except as otherwise indicated, the named beneficial owner has sole
voting and investment power with respect to all shares beneficially owned
by such person.
(2) Does not include 54,720 shares held by the Industrial Bank of Washington
Employee Stock Ownership Plan ("ESOP") as to which Mr. Chapman is a
co-trustee. Includes 4,200 shares held jointly with spouse, as to which Mr.
Chapman shares voting and investment power.
(3) Includes 16,340 shares held by a trust of which Mr. Windsor and his spouse
are trustees. Does not include 2,000 shares held by Mr. Windsor's daughter,
and as to which Mr. Windsor disclaims beneficial ownership.
(4) Does not include 54,720 shares held by ESOP as to which Mr. King is a
co-trustee.
(5) Includes 73,813 shares held in a revocable trust of which Mr. Mitchell is
the trustee, and Mr. Mitchell's spouse and son are beneficiaries. Does not
include shares held by Mrs. Cynthia Mitchell as trustee for Mr. Mitchell
and Ms. Mitchell. Does not include 1,500 shares held by Mr. Mitchell's
spouse. Does not include 54,720 shares held by ESOP as to which Mr.
Mitchell is a co-trustee.
(6) Includes 533 shares held jointly with son and as to which Mrs. Fleming
shares voting and investment power.
(7) Includes shares held by three trusts of which Mrs. Mitchell is trustee, and
with respect to one of which Mr. Mitchell and Ms. Mitchell are
beneficiaries.
(8) Includes shares held in a revocable trust of which Ms. Mitchell is the
trustee, and of which Mr. Mitchell is the beneficiary. Does not include
shares held by Mrs. Cynthia Mitchell as trustee for Mr. Mitchell and Ms.
Mitchell. Ms. Mitchell is an employee of the Bank.
(9) Includes 800 shares held jointly with spouse and as to which Mr. White
shares voting and investment power.
(10) Includes 54,720 shares held by ESOP as to which Messrs. Chapman, King and
Mitchell are trustees. If these shares were not included, the directors and
executive officers as a group would beneficially own 242,026 shares, or
37.99% of the outstanding shares of Common Stock. Does not include shares
held by Ms. Mitchell.
AMENDMENT TO THE ARTICLES OF INCORPORATION
The Board of Directors has adopted an Amendment to the Articles of
Incorporation and has directed that the proposed Amendment be submitted to the
shareholders for their consideration and approval. If adopted, the Amendment
would have the effect of eliminating the existing class of authorized Preferred
Stock and authorizing two new classes of preferred stock, one of which would be
voting preferred stock, and one of which would be non-voting preferred stock.
The existing class of Common Stock would not be affected. The full text of the
Amendment is set forth in Exhibit A, attached hereto and made a part hereof.
The Board of Directors believes that the proposed Amendment is in the
best interests of the Company and recommends that shareholders vote "FOR"
adoption of the proposed Amendment.
Reasons for the Proposed Amendment
The Articles of Incorporation of the Company currently provide that the
authorized capital stock of the Company consists of one million shares of common
stock, $1.00 par value, and one million shares of preferred stock, $1.00 par
value (the "Preferred Stock"). The Board of Directors is authorized to issue
shares of Preferred Stock in one or more series or classes, and to fix by
resolution the designations, preferences, voting powers, participation,
redemption, sinking fund, conversion, dividend and other optional or special
rights of such classes or series, and the qualifications, limitations or
restrictions thereof.
Although the Articles of Incorporation purport to authorize the Board
of Directors to fix the voting powers of any class of Preferred Stock, the
District of Columbia Business Corporation Act (the "Act"), under which the
Company is organized, provides that unless the articles of incorporation of a
corporation expressly provide otherwise,
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each share of capital stock is entitled to one vote. As the filing procedure to
be followed by the Company where the Board of Directors establishes the terms of
a class or series of Preferred Stock, does not result in those terms becoming a
part of the Articles of Incorporation, the Company is effectively prohibited
from issuing shares of Preferred Stock without voting power in those
circumstances where it may be convenient or desirable to do so. The Company has
entered into an agreement, described further below, for the sale of shares of
its Common Stock and shares of a non-voting class of Preferred Stock to an
institutional investor. Additional opportunities for the sale of non-voting
Preferred Stock may arise in the future.
The Proposed Amendment
In light of the foregoing, the Board of Directors has determined that
it is advisable and in the best interests of the Company and its shareholders
that Article FOURTH of the Articles of Incorporation be amended to read in its
entirety as set forth in Exhibit A.
In general, the proposed Amendment would eliminate the existing class
of authorized Preferred Stock, and in its place substitute two new classes of
preferred stock. One class would consist of five hundred thousand (500,000)
shares of voting preferred stock (the "Voting Preferred"), and the second class
would consist of five hundred thousand (500,000) shares of non-voting preferred
stock (the "Non-Voting Preferred"). The total number of shares of authorized
Preferred Stock would remain one million (1,000,000) shares.
If the Amendment is approved, the Board of Directors would be
authorized, by action of a majority of the full Board of Directors, to issue the
shares of Voting Preferred or Non-Voting Preferred from time to time on such
terms as it may determine, and to divide each such class of preferred stock into
one or more classes or series, and, in connection with the creation of such
classes or series to fix by resolution the designations, powers, preferences,
participation, redemption, sinking fund, conversion, dividend, and other
optional or special rights of such classes or series, and the qualifications,
limitations or restrictions thereof, and in respect of the Voting Preferred, the
voting powers thereof. Except as expressly provided by law, such as in
connection with certain amendments to the Articles of Incorporation which would
adversely effect the rights of outstanding shares of Non-Voting Preferred Stock,
and in connection with the merger or consolidation of the Company, in which
cases the Non-Voting Preferred Stock would be entitled to vote as a class,
shares of Non-Voting Preferred Stock will not be entitled to vote on any matter
submitted to the vote of shareholders, including but not limited to the election
of directors.
The Board of Directors believes that it is desirable to approve the
Amendment in order to enable the Company to consummate its agreement, discussed
below, to sell shares of Non-Voting Preferred. The existence of shares of
Non-Voting Preferred will also enable the Company to meet possible contingencies
or opportunities in which the issuance of shares of Non-Voting Preferred may be
advisable, such as in the case of acquisition or financing transactions. Shares
of Non-Voting Preferred could be issued to stockholders of another institution
enabling the Company to acquire such other institution without the expenditure
of any cash. Shares of Non-Voting Preferred also could be sold in a public or
private transaction to enable the Company to engage in acquisition activity, to
expand the Company's ability to engage in lending activities, or for other
corporate purposes. Having shares of Non-Voting Preferred available for issuance
would give the Company greater flexibility than it presently has in such
situations, in that it would be able to avoid the expense and delay of calling a
meeting of shareholders at the time the contingency or opportunity arises. Any
issuance of Non-Voting Preferred (or Voting Preferred) could have a dilutive
effect on the existing holders of Common Stock. Except for the agreement with an
institutional investor pursuant to which the Company would sell 31,200 shares of
Common Stock and 20,000 shares of NonVoting Preferred, the Company has no
current plans, agreements or understandings pursuant to which it would issue any
shares of Non-Voting Preferred or Voting Preferred.
The existence of authorized shares of Voting Preferred and Non-Voting
Preferred could have the effect of rendering more difficult or discouraging
hostile takeover attempts or of facilitating a negotiated acquisition of the
Company. Shares of Voting Preferred or Non-Voting Preferred having such rights
as the Board of Directors deems appropriate in response to the then current
situation, could be issued to a third party seeking to acquire control of
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the Company as a means of facilitating such attempt. Alternatively, such shares,
which may be convertible into shares of Common Stock, could be issued to the
Company's stockholders or to a third party in an attempt to frustrate or render
more expensive a hostile acquisition of the Company. The Company is not aware of
any existing or planned effort on the part of any person to accumulate material
amounts of voting stock or to acquire the Company by means of a merger, tender
offer, solicitation of proxies in opposition to management, or otherwise, to
change the Company's management, or to acquire substantially all of the assets
of the Company.
Vote Required
Approval of the proposed Amendment requires the affirmative vote of the
holders of at least a majority of the Common Stock entitled to vote. Directors
of the Company and members of their family having the power to vote or direct
the voting of in excess of fifty percent (50%) of the shares of Common Stock
outstanding as of the record date have indicated that they intend to vote in
favor of the proposed Amendment.
No Dissenter's Rights of Appraisal
Dissenters' rights of appraisal will not be available under the law of
the District of Columbia with respect to the proposed Amendment.
Stock Purchase Agreement
The Company has entered into a Stock Purchase Agreement, dated as of
August 16, 1997, with the Federal National Mortgage Association ("Fannie Mae"),
pursuant to which the Company will sell Fannie Mae, in a private placement
transaction, 31,200 shares of Common Stock and 20,000 shares of 5% cumulative
non-voting preferred stock, Series A (the "Series A Non-Voting Preferred"), for
a purchase price of twenty five dollars ($25.00) per share of Common Stock and
twenty five dollars ($25.00) per share Series A Non-Voting Preferred, for an
aggregate purchase price of one million two hundred and eighty thousand dollars
($1,280,000). Upon consummation of the Stock Purchase Agreement, the shares of
Common Stock purchased by Fannie Mae will represent 4.67% of the outstanding
shares of Common Stock, and the shares of Series A Non-Voting Preferred Stock
will represent all of the outstanding shares of that series.
The Company will use the proceeds from the sale of shares in the
conduct of its business and to engage in programs and activities, including
lending activities, that will promote the availability of affordable housing in
the Company's market area. The Company will contribute substantially all of the
proceeds of the sale to Industrial Bank, N.A., its wholly owned subsidiary (the
"Bank"), for use in expanding the Bank's business. The Company has received a
waiver from the FDIC of the requirement in its interim capital assistance loan
agreement that the Company prepay that loan from the proceeds of any capital
sale.
In connection with the issuance of shares to Fannie Mae, the Board of
Directors will adopt a resolution fixing the relative rights and preferences of
the Series A Non-Voting Preferred, the form of which is included herewith as
Exhibit B, attached hereto and made a part hereof. The Board of Directors has
established the size of the series at twenty thousand (20,000) shares. The
Series A Non-Voting Preferred will be entitled to receive a dividend, prior to
payment of any cash dividends on any class of Common Stock or other class of
stock junior to the Series A Non-Voting Preferred Stock during the quarter to
which such dividend relates, cumulative cash dividends at an annual rate of five
percent (5%) of the Liquidation Amount of the Series A Non-Voting Preferred of
twenty five dollars ($25.00) per share. The Series A Non-Voting Preferred is
redeemable by the Company at any time, or from time to time, at the sole option
of the Company, in whole or in part, at a redemption price equal to the
Liquidation Amount of the Series A Non-Voting Preferred, plus the amount of any
dividends which are accrued but unpaid as of the date set for such redemption
(including, dividends at the rate of five percent (5%) per year from the most
recent dividend payment date to the date set for redemption). The Series A
Preferred Stock will be entitled to receive an amount equal to the Liquidation
Amount of the Series A Preferred upon the liquidation, dissolution or winding up
of the Company's business prior to the holders of the Common Stock receiving any
amounts. In the
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Stock Purchase Agreement, the Company has agreed not to issue shares of any
class or series of preferred stock which has dividend or liquidation rights
higher or prior to those of the Series A Non-Voting Preferred.
Except as may be expressly required by the laws of the District of
Columbia, the holder of the Series A Non-Voting Preferred shall not be entitled
to vote on any matter submitted for the vote of stockholders, including but not
limited to the election of directors. The Series A Non-Voting Preferred is not
entitled to the benefit of any sinking or redemption fund, is not convertible
into, or exchangeable for any other class of stock or other securities of the
Company.
The Board of Directors believes that it is in the best interests of the
Company to sell shares of Common Stock and Series A Non-Voting Preferred to
Fannie Mae. The transaction will provide additional capital to the Company, at a
cost below that which such capital would ordinarily be available to the Company
in a public offering of its securities. The Board also believes that the
investment by Fannie Mae will enhance the Company's business plan of providing
financial services to its community. The Bank periodically sells qualifying
residential mortgage loans it originates to Fannie Mae, in the ordinary course
of their respective businesses.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters
to be presented for action by shareholders at the Meeting. If, however, any
other matters not now known are properly brought before the meeting or any
adjournment thereof, the persons named in the accompanying proxy will vote such
proxy in accordance with their judgment on such matters.
By Order of the Board of Directors
Clinton W. Chapman, Chairman
September 5, 1997
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EXHIBIT A
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION
RESOLVED, that Article IV of the Articles of Incorporation of the
Company be and hereby is amended to read in its entirety as follows:
"The aggregate number of all classes of stock which the
corporation shall have authority to issue shall be two million shares
(2,000,000), consisting of one million shares of common stock, par
value $1.00 per share, five hundred thousand shares (500,000) of voting
preferred stock, par value $1.00 per share ("voting preferred stock"),
and five hundred thousand shares (500,000) of non-voting preferred
stock, par value $1.00 per share ("non-voting preferred stock").
The shares of authorized common stock shall be of a single
class and shall be identical and have equal rights and privileges.
The Board of Directors, by action of a majority of the full
Board of Directors shall have the authority to issue the shares of
voting preferred stock from time to time on such terms as it may
determine, and to divide the voting preferred stock into one or more
classes or series, and, in connection with the creation of such classes
or series to fix by resolution or resolutions the designations, voting
powers, preferences, participation, redemption, sinking fund,
conversion, dividend, and other optional or special rights of such
classes or series, and the qualifications, limitations or restrictions
thereof.
The Board of Directors, by action of a majority of the full
Board of Directors shall have the authority to issue the shares of
non-voting preferred stock from time to time on such terms as it may
determine, and to divide the non-voting preferred stock into one or
more classes or series, and, in connection with the creation of such
classes or series to fix by resolution or resolutions the designations,
powers, preferences, participation, redemption, sinking fund,
conversion, dividend, and other optional or special rights of such
classes or series, and the qualifications, limitations or restrictions
thereof. Except as expressly required by the laws of the District of
Columbia, shares of non-voting preferred stock shall not be entitled to
vote on any matter submitted to the vote of shareholders, including but
not limited to the election of directors.
The holders of the capital stock of the corporation shall not
have any preemptive or preferential rights to purchase or otherwise
acquire any shares of any class of capital stock of the corporation,
whether now or hereafter authorized, or any unissued bonds,
certificates of indebtedness, debentures or other securities
convertible into or exchangeable for shares of any class or series or
carrying any right to purchase shares of any class or series except as
the Board of Directors may specifically provide."
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EXHIBIT B
DESIGNATION OF THE SERIES A NON-VOTING PREFERRED STOCK
"Series A Non-Voting Preferred Stock. (a) Designation. The series of
non-voting preferred stock shall be designated and known as "Series A
Non-Voting Preferred Stock."
(b) Number of Shares. The Series A Non-Voting Preferred Stock shall
consist of twenty thousand (20,000) shares of the authorized non-voting
preferred stock, $1.00 par value, of the Company.
(c) Rank. The Series A Non-Voting Preferred Stock shall rank prior to
common stock of all classes (collectively, the "Common Stock") of the
Company and, except as provided below, to all other classes and series of
equity securities of the Company now or hereafter authorized, issued or
outstanding (the Common Stock and such other classes and series of equity
securities of the Company are collectively referred to herein as the
"Junior Stock"), other than any class or series of equity securities of the
Company expressly designated as ranking on a parity with (the "Parity
Stock") or senior to (the "Senior Stock") the Series A Non-Voting Preferred
Stock as to dividend rights and rights and payment of assets upon
liquidation, winding up or dissolution of the Company. The Series A
Non-Voting Preferred Stock shall be on a parity with all other series of
non-voting preferred stock and voting preferred stock of the Company. The
Series A Non-Voting Preferred Stock shall be junior to the creditors of the
Company. The Series A Non-Voting Preferred Stock shall be subject to the
creation of Senior Stock, Parity Stock and Junior Stock to the extent not
expressly prohibited herein, by the Articles of Incorporation of the
Company or by other agreements entered into by the Company.
The number of shares of Series A Non-Voting Preferred Stock may not be
increased or decreased without the prior written consent of the holders of
the outstanding shares of Series A Non-Voting Preferred Stock.
Notwithstanding the immediately preceding sentence, in no event shall any
decrease of the number of shares of Series A Non-Voting Preferred Stock
reduce the number of shares of Series A Non-Voting Preferred Stock to a
number less than the number of shares of Series A Non-Voting Preferred
Stock then outstanding plus the number of shares reserved for issuance upon
the exercise of any outstanding options, rights or warrants, if any, to
purchase shares of Series A Non-Voting Preferred Stock, or upon the
conversion of any outstanding securities issued by the Company convertible
into shares of Series A NonVoting Preferred Stock.
(d) Dividends and Distributions. Subject to the prior or superior
rights of the holders of Senior Stock, whether now existing or hereafter
created, the holders of shares of Series A Non-Voting Preferred Stock shall
be entitled to receive prior to payment of any cash dividends on any class
of Junior Stock during the quarter to which such dividend relates, out of
funds legally available therefore, cumulative cash dividends per share at
an annual rate of five percent (5%) of the Liquidation Amount of the Series
A NonVoting Preferred Stock (as hereinafter defined) payable in equal
quarterly installments on the fifteenth day of January, April, July and
October of each year (each a "Dividend Payment Date") to the record holder
of the Series A Non-Voting Preferred Stock as of the last day of the month
immediately preceding the Dividend Payment Date, commencing on the first
Dividend Payment Date following the first issuance of any shares of Series
A Non-Voting Preferred Stock. In the event that any share of Series A
Non-Voting Preferred Stock is outstanding for only a part of the quarterly
period preceding any Dividend Payment Date, then the dividend payable with
respect to such share shall be prorated for the period such share was
outstanding during such period. Dividends declared and paid in an amount
less than the total amount payable on all shares of Series A Non-Voting
Preferred Stock shall be allocated pro rata among the shares of Series A
Non-Voting Preferred Stock outstanding.
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No full dividends shall be declared or paid or set apart for payment
on any Parity Stock or Junior Stock for any quarterly period unless full
dividends have been or contemporaneously are declared and paid (or declared
and a sum sufficient for the payment thereof set apart for such payment) on
the Series A NonVoting Preferred Stock for such period.
In addition to the foregoing restriction, the Company shall not
declare, pay or set apart funds for any dividends of other distributions
(other than in Common Stock or other Junior Stock) with respect to any
Common Stock or other Junior Stock of the Company, or repurchase, redeem or
otherwise acquire, or set apart funds for repurchase, redemption or other
acquisition of any Common Stock or other Junior Stock through a sinking
fund or otherwise, unless and until (i) the Company shall have paid full
dividends on the Series A Non-Voting Preferred Stock for the most recent
preceding quarterly period or funds have been paid over to the dividend
disbursing agent of the Company for payment of such dividends, and (ii) the
Company has declared a cash dividend on the Series A Non-Voting Preferred
Stock for the current quarterly period, and sufficient funds have been paid
over to the dividend disbursing agent for the Company for the payment of
such cash dividend for such current quarterly period.
(e) Voting Rights. Except as may be expressly required by the laws of
the District of Columbia, the holders of the Series A Non-Voting Preferred
Stock shall not be entitled to vote on any matter submitted for the vote of
stockholders, including but not limited to the election of directors.
(f) Redemption. (i) Shares of the Series A Non-Voting Preferred Stock
may be redeemed, in whole or in part, at the option and in the sole
discretion only of the Company, at any time or from time to time, at a
redemption price (the "Redemption Price") equal to the Liquidation Amount
of the Series A Non-Voting Preferred Stock, plus the amount of any
dividends which are accrued but unpaid as of the date set for such
redemption (including, if the date set for redemption is not a Dividend
Payment Date, dividends at the rate of five percent (5%) per year from the
most recent Dividend Payment Date to the date set for redemption). At the
time of such redemption as specified in the resolution of the Board of
Directors authorizing such redemption, all rights of the holders of the
Series A Non-Voting Preferred Stock redeemed shall terminate, except for
the right to receive the Redemption Price. If less than all of the
outstanding shares of Series A Non-Voting Preferred Stock are to be
redeemed, the Company shall select those shares to be redeemed pro rata.
(ii) Notice of any redemption, setting forth (i) the date and place
fixed for said redemption, (ii) the redemption price and (iii) a statement
that dividends on the shares of Series A Non-Voting Preferred Stock to be
redeemed by the Company will cease to accrue on such redemption date, shall
be mailed, postage prepaid, at least thirty (30) days, but not more than
sixty (60) days, prior to said redemption date to each holder of record of
Series A Non-Voting Preferred Stock to be redeemed at his or her address as
the same shall appear on the stock transfer records of the Company. If less
than all of the shares of Series A NonVoting Preferred Stock owned by such
holder are then to be redeemed, such notice shall specify the number of
shares thereof that are to be redeemed and the numbers of the certificates
representing such shares. Notice of any redemption shall be given by first
class mail, postage prepaid. Neither failure to mail such notice, nor any
defect therein or in the mailing thereof, to any particular holder shall
affect the sufficiency of the notice or the validity of the proceedings for
redemption with respect to the other holders. Any notice which was mailed
in the manner herein provided shall be conclusively presumed to have been
duly given whether or not the holder receives such notice.
(g) Conversion. The Series A Non-Voting Preferred Stock shall not be
convertible into or otherwise exchangeable for shares of any other class of
stock or securities of the Company.
(h) Liquidation, Dissolution or Winding Up. Subject to the prior or
superior rights of the holders of any shares of Senior Stock, whether now
existing or hereafter created, upon any liquidation, dissolution
B - 2
<PAGE>
or winding up of the Company, the holders of the Series A Non-Voting
Preferred Stock shall be entitled to receive, prior to the payment of any
amounts in liquidation, dissolution or winding up in respect of any Junior
Stock, but after the payment or provision for all amounts due to creditors
of the Company, an amount per share equal to the "Liquidation Amount of the
Series A Non-Voting Preferred Stock", plus the amount of any dividends
accrued but unpaid to the date set of distribution of such amounts in
liquidation, dissolution or winding up of the Company. Following receipt of
such amounts, the holders of the Series A Non-Voting Preferred Stock shall
have no right to receive any other amounts in connection with the
liquidation, dissolution or winding up of the Company. For purposes hereof,
the Liquidation Amount of the Series A Non-Voting Preferred Stock shall
mean $25.00 per share, the purchase price at which the Series A Non-Voting
Preferred Stock was originally issued by the Company, as proportionally
adjusted after the date of issuance of the Series A Non-Voting Preferred
Stock to reflect any stock split or other subdivision of the Series A
Non-Voting Preferred Stock, stock dividend on the Series A Non-Voting
Preferred Stock payable in shares of Series A Non-Voting Preferred Stock or
other subdivision, combination or reclassification of the shares of Series
A Non-Voting Preferred Stock.
If the amounts available for distribution in respect of shares of
Series A Non-Voting Preferred Stock and any outstanding Parity Stock are
not sufficient to satisfy the full liquidation rights of all of the
outstanding shares of Series A Non-Voting Preferred Stock and such Parity
Stock, then the holders of such outstanding shares shall share ratably in
any such distribution of assets in proportion to the full respective
preferential amounts to which they are entitled. All distributions made in
respect of Series A Non-Voting Preferred Stock in connection with such
liquidation, dissolution or winding up of the Company shall be made pro
rata to the holders entitled thereto.
(i) Preemptive Rights. The holders of the Series A Non-Voting
Preferred Stock shall not have any preemptive or preferential right to
acquire any shares of any class of capital stock of the Company, whether
now or hereafter authorized, except as the Board of Directors may
specifically provide."
B - 3
<PAGE>
FRONT REVOCABLE PROXY
IBW FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby makes, constitutes and appoints Mervin O.
Parker, Sr., Ernestine G. Mann and Frances S. Wash, and each of them (with the
power of substitution), proxies for the undersigned to represent and to vote, as
designated below, all shares of common stock of IBW Financial Corporation (the
"Company ") which the undersigned would be entitled to vote if personally
present at the Company's Special Meeting of Shareholders to be held on September
25, 1997 and at any adjournment or postponement thereof.
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
The proposal to amend Article FOURTH of the Articles of Incorporation
to change the authorized capital stock of the Company to permit the
issuance of five hundred thousand (500,000) shares of voting preferred
stock and five hundred thousand (500,000) shares of non-voting
preferred stock, the relative rights, powers and privileges of which
may be determined by the Board of Directors by resolution at the time
of issuance.
|_| FOR |_| AGAINST |_| ABSTAIN
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR the proposal set forth above. In addition, this proxy will be voted at
the discretion of the proxy holder(s) upon any other matter which may properly
come before the Meeting or any adjournment or postponement thereof.
BACK
Important: Please date and sign your name as addressed, and return this proxy in
the enclosed envelope. When signing as executor, administrator, trustee,
guardian, etc., please give full title as such. If the shareholder is a
corporation, the proxy should be signed in the full corporate name by a duly
authorized officer whose title is stated.
----------------------------------------
Signature of Shareholder
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Signature of Shareholder
Dated:_________________, 1997
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
