<PAGE>
[Poughkeepsie Savings Bank, FSB Letterhead]
March 20, 1997
Dear Stockholder:
Enclosed is a Notice of Annual Meeting, a Proxy Statement-Prospectus and a
proxy card for the upcoming Annual Meeting of Stockholders of Poughkeepsie
Savings Bank, FSB ("Poughkeepsie Savings" or the "Bank"), Poughkeepsie, New
York, which will be held on April 30, 1997, at 9:30 a.m. at the Sheraton Civic
Center Hotel, 40 Civic Center Plaza, Poughkeepsie, New York 12601.
In addition to the election of directors and the ratification of the
selection of auditors, at the Annual Meeting you will be asked to consider and
vote upon an Agreement and Plan of Reorganization pursuant to which the Bank
would become a wholly-owned subsidiary of "Poughkeepsie Financial Corp." (the
"Company"), a recently-formed company organized under the laws of the State of
Delaware (the "Reorganization"). Upon consummation of the Reorganization, each
outstanding share of Bank common stock will be converted into one share of
common stock of the Company and the Bank will be a wholly-owned subsidiary of
the Company, operating with the same directors, officers and employees as before
the Reorganization.
The Board of Directors of Poughkeepsie Savings believes that the formation
of a holding company, among other things, will provide greater financial and
operating flexibility. Therefore, the Board of Directors of the Bank has
unanimously approved the proposal to form a holding company for the Bank and
recommends that you vote in favor of this proposal.
The accompanying Proxy Statement-Prospectus provides a detailed description
of the Reorganization, including descriptions of the effects of the
Reorganization on the rights of stockholders. Please give this information your
careful attention.
<PAGE>
In view of the importance of the action to be taken, we urge you to
complete, sign, and date your proxy and return it promptly in the enclosed
envelope, whether or not you plan to attend the Annual Meeting. If you attend
the Annual Meeting, you may vote in person even if you have previously mailed
your proxy.
Sincerely yours,
/s/ JOSEPH B. TOCKARSHEWSKY
JOSEPH B. TOCKARSHEWSKY
Chairman, President and Chief
Executive Officer
<PAGE>
POUGHKEEPSIE SAVINGS BANK, FSB
249 Main Mall
Poughkeepsie, New York 12601
914-431-6200
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 30, 1997
March 20, 1997
To the Stockholders of
POUGHKEEPSIE SAVINGS BANK, FSB:
You are cordially invited to attend the Annual Meeting of the
Stockholders ("Annual Meeting") of Poughkeepsie Savings Bank, FSB
("Poughkeepsie Savings" or the "Bank"), which will be held on April 30, 1997
at 9:30 a.m., at the Sheraton Civic Center Hotel, 40 Civic Center Plaza,
Poughkeepsie, New York 12601, for the following purposes:
1. To elect three directors to hold office until the Annual Meeting of
Stockholders in 2000 and until their successors are duly elected and
qualified.
2. To consider a proposal to approve the formation of a new thrift
holding company for Poughkeepsie Savings by approving an Agreement and Plan
of Reorganization pursuant to which (a) Poughkeepsie Savings will, subject to
necessary approvals, become a wholly-owned subsidiary of a recently-formed
Delaware corporation known as "Poughkeepsie Financial Corp." (the "Company")
and (b) each outstanding share of common stock of Poughkeepsie Savings will
become, by operation of law, one share of common stock of the Company.
3. To ratify the appointment of Deloitte & Touche LLP as independent
certified public accountants of the Bank for the year ending December 31,
1997.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Stockholders of record at the close of business on March 5, 1997 will be
entitled to notice of and to vote at the Annual Meeting or at any such
adjournment.
By Order of the Board of Directors
/s/SUZANNE A. GILLESPIE
SUZANNE A. GILLESPIE
Secretary
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THIS
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY
BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE
THEREOF.
<PAGE>
POUGHKEEPSIE SAVINGS BANK, FSB
POUGHKEEPSIE FINANCIAL CORP.
--------------------
PROXY STATEMENT-PROSPECTUS
This document serves as a Proxy Statement for the Annual Meeting of
Stockholders of Poughkeepsie Savings Bank, FSB ("Poughkeepsie Savings" or the
"Bank"), to be held on April 30, 1997 and at any adjournment of such meeting
(the "Annual Meeting"). This document also serves as a Prospectus of
Poughkeepsie Financial Corp. (the "Company") with respect to the issuance of
shares of the Company's common stock, par value $.01 per share ("Company
Common Stock"), to stockholders of Poughkeepsie Savings in exchange for an
equal number of shares of common stock of Poughkeepsie Savings, par value
$.01 per share ("Poughkeepsie Savings Common Stock"), upon consummation of
the Bank's reorganization into the holding company form of organization (the
"Reorganization").
This Proxy Statement-Prospectus and the accompanying Notice of Annual
Meeting of Stockholders and Proxy Card are first being mailed to stockholders
on or about March 20, 1997.
This Proxy Statement-Prospectus does not cover any resales of Company
Common Stock received by the Bank's stockholders upon completion of the
Reorganization. No person is authorized to make any use of this Proxy
Statement-Prospectus in connection with any such resale or in connection with
the offer or sale of any other securities.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION ("SEC") OR BY ANY STATE SECURITIES COMMISSION NOR HAS
THE SEC OR ANY SUCH STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------------
The date of this Proxy Statement-Prospectus is March 20, 1997.
1
<PAGE>
TABLE OF CONTENTS
Heading Page
- - ------- -----
Available Information..................................................... 4
Summary................................................................... 6
The Annual Meeting........................................................ 9
General............................................................... 9
Voting of Proxies..................................................... 9
Election of Directors..................................................... 12
General............................................................... 12
Nominations for Election to the Board of Directors ................... 12
Nominees for Directors................................................ 13
Directors Whose Terms Continue........................................ 13
Director Emeritus..................................................... 14
Executive Officers Who Are Not Directors or Director Nominees......... 15
Board of Directors, Its Committees, Meetings and Functions............ 18
Committees of the Board............................................... 18
Compliance with Section 16(a) of the Securities Exchange Act.......... 19
Compensation of Directors............................................. 19
Certain Transactions and Relationships................................ 20
Employment Agreements with Management................................. 21
Executive Compensation Overview....................................... 21
Table of Option Grants in 1996........................................ 23
Table of Option Exercises in 1996 and Year-End Option Values.......... 24
Pension Plan Table.................................................... 24
Report of Compensation Committee...................................... 26
Comparison of Total Stockholder Return................................ 28
Holding Company Formation................................................. 29
General............................................................... 29
Reasons for the Reorganization........................................ 30
Description of the Reorganization..................................... 31
Capital Resources..................................................... 32
Conditions to the Reorganization; Abandonment......................... 32
Certain Federal Tax Consequences...................................... 33
Accounting Treatment of the Reorganization............................ 34
Dissenters' Rights.................................................... 34
Board of Directors and Management of the Company...................... 34
Management Remuneration and Effect on Employee
Benefit Plans....................................................... 35
Market for Company Common Stock; Anticipated Dividend Policy;
and Resales of Company Common Stock................................. 35
Regulation of the Company............................................. 37
Description of Company Capital Stock.................................. 39
2
<PAGE>
Heading Page
- - ------- ----
Comparison of Stockholders' Rights................................... 41
Ratification of Appointment of Independent Certified Public Accountants.. 53
Proxy Solicitation....................................................... 53
Quorum................................................................... 53
1998 Stockholder Proposals............................................... 53
Annual Reports and Financial Statements.................................. 54
Other Matters............................................................ 54
Legal Matters............................................................ 55
Appendix A - Agreement and Plan of Reorganization........................ A-1
Appendix B - Certificate of Incorporation of the Company................. B-1
Appendix C - Bylaws of the Company....................................... C-1
3
<PAGE>
AVAILABLE INFORMATION
Under the rules and regulations of the SEC, the solicitation of
stockholders of the Bank to approve the Reorganization may be deemed to
constitute an offering of Company Common Stock to be issued in connection
therewith. Accordingly, the Company has filed a Registration Statement with
the SEC on Form S-4 (the "Registration Statement") under the Securities Act
of 1933, as amended ("Securities Act"), with respect to such offering, and
this Proxy Statement-Prospectus constitutes a Prospectus of the Company filed
as part of the Registration Statement. This Proxy Statement-Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information pertaining to the Company
Common Stock and related matters, reference is made to the Registration
Statement, including the exhibits filed as a part thereof. The Registration
Statement, including exhibits, may be inspected or copied at prescribed rates
at the public reference facilities maintained by the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549; Room 1024, and at the public reference
facilities in the Commission's regional offices located at 7 World Trade
Center, 13th Floor, New York, New York 10048 and at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621. Copies of such material
may be obtained at prescribed rates by writing to the Securities and Exchange
Commission, Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549. If available, such information may also be accessed through the
SEC's electronic data gathering, analysis and retrieval system via electronic
means, including the SEC's web site on the Internet (http://www.sec.gov).
Poughkeepsie Savings is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
administered by the Office of Thrift Supervision ("OTS"), and in accordance
therewith files reports and other information with the OTS. Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities maintained by the OTS's Dissemination Branch,
Records Management and Information Policy Division, 1700 G Street, N.W.,
Washington, D.C. 20552.
The Company currently is a wholly-owned subsidiary of Poughkeepsie
Savings that was formed for the purpose of becoming the parent holding
company of Poughkeepsie Savings upon consummation of the Reorganization. As
a wholly-owned subsidiary, the Company has not previously been subject to the
requirements of the Exchange Act, and there is currently no public market for
the Company Common Stock. However, in connection with the Reorganization,
the Company will become subject to the same information, reporting and proxy
statement requirements under the Exchange Act as currently apply to
Poughkeepsie Savings, except that such filings will be required to be made
with the SEC rather than the OTS and will be available for inspection and
copying at prescribed rates at the public reference facilities maintained by
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549; and at the SEC's
regional office at 7 World Trade Center,
4
<PAGE>
Suite 1300, New York, New York 10048. Poughkeepsie Savings' reporting
obligations under the Exchange Act will terminate when the Company's
reporting obligations begin. The Poughkeepsie Savings Common Stock is quoted
on the Nasdaq Stock Market's National Market, and the Company Common Stock
will be quoted on the Nasdaq Stock Market's National Market upon consummation
of the Reorganization. Reports, proxy statements and other information
concerning Poughkeepsie Savings and, upon consummation of the Reorganization,
the Company, may be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed an Application H-(e)1-S under the Home Owners' Loan
Act, as amended ("HOLA") with the Northeast Regional Office of the OTS under
authority delegated by the OTS. A copy of such application can be obtained from
the Northeast Regional Office of the OTS, 10 Exchange Place, 18th Floor, Jersey
City, New Jersey 07302.
-------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT-PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS PROXY
STATEMENT-PROSPECTUS IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF THE
SECURITIES BEING OFFERED PURSUANT TO THIS PROXY STATEMENT-PROSPECTUS SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY, POUGHKEEPSIE SAVINGS OR THE INFORMATION SET
FORTH HEREIN SINCE THE DATE OF THIS PROXY STATEMENT-PROSPECTUS.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE OFFICE OF THRIFT
SUPERVISION OR ANY OTHER GOVERNMENT AGENCY. THE SECURITIES ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL INVESTED.
5
<PAGE>
SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED
ELSEWHERE IN THIS PROXY STATEMENT-PROSPECTUS. REFERENCE IS MADE TO, AND THIS
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION
CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS, INCLUDING THE AGREEMENT AND
PLAN OF REORGANIZATION, CERTIFICATE OF INCORPORATION AND BYLAWS ATTACHED AS
APPENDICES HERETO.
DATE, TIME AND PLACE OF THE ANNUAL MEETING AND RECORD DATE. The Annual
Meeting will be held at the Sheraton Civic Center Hotel located at 40 Civic
Center Plaza, Poughkeepsie, New York, on April 30, 1997, at 9:30 a.m.,
Eastern Time, and at any adjournment thereof. Stockholders of record at the
close of business on March 5, 1997 are entitled to notice of and to vote at
the Annual Meeting.
PURPOSES OF THE ANNUAL MEETING. At the Annual Meeting, stockholders will
be asked to consider (1) a proposal to elect three directors for a three-year
term and, in each case, until their successors are elected and qualified; (2)
a proposal to form a thrift holding company for Poughkeepsie Savings pursuant
to an Agreement and Plan of Reorganization (the "Agreement") pursuant to
which (a) Poughkeepsie Savings will, subject to necessary approvals, become a
wholly-owned subsidiary of a newly-formed Delaware corporation known as
"Poughkeepsie Financial Corp." and (b) each outstanding share of Poughkeepsie
Savings Common Stock will become, by operation of law, one share of Company
Common Stock; (3) a proposal to ratify the appointment of Deloitte & Touche
LLP as Poughkeepsie Savings' independent certified public accountants for the
year ending December 31, 1997; and (4) such other business as may properly
come before the meeting or any adjournment thereof.
REASONS FOR THE REORGANIZATION. The Board of Directors of Poughkeepsie
Savings believes that a holding company form of organization will (1) provide
flexibility for meeting the future financial needs of Poughkeepsie Savings,
(2) facilitate the acquisition of other financial institutions, subject to
restrictions of applicable laws and regulations, and (3) increase
Poughkeepsie Savings' ability to compete effectively with commercial banks in
its market area, many of which are subsidiaries of holding companies. See
"Holding Company Formation - Reasons for the Reorganization."
RECOMMENDATION OF THE BOARD OF DIRECTORS. The Board of Directors of
Poughkeepsie Savings has unanimously approved the Agreement, subject to the
receipt of stockholder approval and necessary regulatory approvals, and
unanimously recommends that stockholders of Poughkeepsie Savings approve such
Agreement.
REQUIRED STOCKHOLDER APPROVAL. The affirmative vote of the holders of a
majority of the issued and outstanding Poughkeepsie Savings Common Stock is
required to approve the Agreement. As of March 5, 1997, directors and
executive officers of Poughkeepsie
6
<PAGE>
Savings as a group (14 persons) beneficially owned 7.9% of the issued and
outstanding shares of Poughkeepsie Savings Common Stock, all of which are
expected to be voted in favor of the Agreement and the other proposals to be
considered at the Annual Meeting. See "Beneficial Ownership of Common Stock"
and "Holding Company Formation."
DISSENTERS' RIGHTS. Pursuant to 12 C.F.R. Section 552.14, no holder of
shares of Poughkeepsie Savings Common Stock shall have any dissenter or
appraisal rights in connection with the Reorganization.
REQUIRED REGULATORY APPROVALS AND REGULATION. The Reorganization is
subject to the approval of the OTS. Upon consummation of the Reorganization,
the Company will be a thrift holding company subject to regulation by the OTS
under the HOLA and by the SEC with respect to certain matters arising under
federal securities laws. See "Holding Company Formation - Regulation of the
Company."
CERTAIN FEDERAL TAX CONSEQUENCES. Poughkeepsie Savings has received a
legal opinion to the effect that none of the Company, Poughkeepsie Savings or
the stockholders of Poughkeepsie Savings will recognize gain or loss for
federal income tax purposes as a result of the Reorganization. See "Holding
Company Formation - Certain Federal Tax Consequences."
MANAGEMENT OF THE COMPANY. Directors and officers of the Company consist
of certain persons who also currently serve as directors and officers of
Poughkeepsie Savings. See "Holding Company Formation - Management of the
Company."
MARKET FOR COMMON STOCK. The Company Common Stock will be substituted
for the Poughkeepsie Savings Common Stock on the Nasdaq Stock Market's
National Market under the symbol "PKPS" upon consummation of the
Reorganization. On January 22, 1997, the last full trading day prior to the
public announcement of the proposed Reorganization, the closing sale price of
a share of Poughkeepsie Savings Common Stock on the Nasdaq Stock Market's
National Market was $5.438. On March 5, 1997, the closing sale price of a
share of Poughkeepsie Savings Common Stock on the Nasdaq Stock Market's
National Market was $6.375. See "Holding Company Formation - Market for
Company Common Stock; Anticipated Dividend Policy; and Resales of Company
Common Stock."
DIVIDENDS. It is not anticipated that the dividend policy of the Company
will differ from that of Poughkeepsie Savings. See "Holding Company
Formation -Market for Company Common Stock; Anticipated Dividend Policy; and
Resales of Company Common Stock."
EFFECTS OF THE REORGANIZATION ON RIGHTS OF STOCKHOLDERS. Poughkeepsie
Savings is regulated under the HOLA, and the Company, as a Delaware corporation,
is governed by the corporate laws under the Delaware General Corporation Law, as
amended ("GCL"). Although Poughkeepsie Savings believes that the rights of
stockholders of Poughkeepsie
7
<PAGE>
Savings and the Company are substantially similar, there are certain
differences between the HOLA and the GCL, and the provisions of the
Certificate of Incorporation and Bylaws of the Company and the Amended and
Restated Federal Stock Charter and Bylaws, as amended, of Poughkeepsie
Savings differ in certain respects. For a comparison of the rights of
stockholders under the laws of HOLA and the GCL and the Certificate of
Incorporation and Bylaws of the Company and the Amended and Restated Federal
Stock Charter and Bylaws, as amended, of Poughkeepsie Savings, see "Holding
Company Formation - Comparison of Stockholders' Rights."
8
<PAGE>
POUGHKEEPSIE SAVINGS BANK, FSB
POUGHKEEPSIE FINANCIAL CORP.
----------------------------
PROXY STATEMENT - PROSPECTUS
----------------------------
THE ANNUAL MEETING
GENERAL
This Proxy Statement-Prospectus is first being distributed to
stockholders of the Bank on or about March 20, 1997. The Board of Directors
(the "Board") of Poughkeepsie Savings is requesting your proxy for the Annual
Meeting to be held on Wednesday, April 30, 1997 and at any adjournments
thereof.
At the Annual Meeting, stockholders will be asked to consider (1) a
proposal to elect three directors for a three-year term and, in each case,
until their successors are elected and qualified; (2) a proposal to adopt the
Agreement; (3) a proposal to ratify the appointment of Deloitte & Touche LLP
as Poughkeepsie Savings' independent certified public accountants for the
year ended December 31, 1997; and (4) such other business as may properly
come before the meeting or any adjournment thereof.
The close of business on March 5, 1997 is the record date (the
"Record Date") for determining the stockholders who are entitled to receive
notice of, and to vote at, the Annual Meeting. There were outstanding
12,592,525 shares of Poughkeepsie Savings Common Stock at the Record Date,
held by approximately 1,743 holders of record.
The Bylaws of the Bank provide that a majority of the shares of
Poughkeepsie Savings Common Stock issued and outstanding and entitled to
vote, present in person or represented by proxy, will constitute a quorum for
the transaction of business at the Annual Meeting. If less than a majority
of the outstanding shares are represented at the Annual Meeting, a majority
of the shares so represented may adjourn the Annual Meeting from time to time.
VOTING OF PROXIES
The shares represented by all properly executed proxies which are
timely received by the Bank will be voted as designated. Executed but
unmarked proxies will be voted FOR the election of the three nominees for
director named below, FOR approval of the Agreement, and FOR ratification of
the selection of Deloitte & Touche LLP. The persons
9
<PAGE>
named as proxies in the accompanying proxy card reserve the right to cumulate
the vote of proxies in their sole discretion among one or more of the slate
of directors described herein. If any other matters are properly brought
before the Annual Meeting, the persons named in the accompanying proxy will
vote the shares represented by such proxies on such matters as directed by
the Board of Directors of the Bank, who have instructed the proxies to vote
in accordance with the proxies' own best judgment in the absence of express
instruction from the Board.
The presence of a stockholder at the Annual Meeting will not
automatically revoke such stockholder's proxy. However, a stockholder may
revoke a proxy at any time prior to its exercise by filing with the Secretary
of the Bank a written notice of revocation or a duly executed proxy bearing a
later date, or by notifying the Secretary and voting in person at the Annual
Meeting.
With respect to the election of directors, stockholders have
cumulative voting rights. Stockholders have the right to vote, in person or
by proxy, the number of shares they own for as many persons as there are
directors to be elected (3) and for whose election they have the right to
vote as stockholders as of the close of business on March 5, 1997, the record
date for the Annual Meeting. Stockholders also have the right to cumulate
their votes and to cast the number of votes equal to the number of shares
they own, multiplied by the number of directors to be elected (3), for any
candidate in any allotment. Any stockholder wishing to cumulate his or her
votes with respect to the election of directors must give notice of this
intent in written or oral form to the Secretary at or prior to the Annual
Meeting and the Secretary will provide a ballot for such purpose. The proxy
card which accompanies this Proxy Statement may not be used for cumulative
voting by stockholders. However, the proxies, in their discretion, may vote
cumulatively, although the proxies have no current intention to cumulate
votes. With respect to all matters other than the election of directors,
each share of Poughkeepsie Savings Common Stock is entitled to one vote at
the Annual Meeting.
Directors are elected by a plurality of the votes cast with a quorum
present. The affirmative vote of the holders of a majority of the issued and
outstanding shares of Poughkeepsie Savings Common Stock is required to
approve the Agreement. The affirmative vote of the holders of a majority of
the total votes present in person and by proxy is required to ratify the
appointment of the independent certified public accountants.
Under rules applicable to broker-dealers, the proposal to adopt the
Agreement is considered a "non-discretionary item" whereby brokerage firms
may not vote in their discretion on behalf of their clients if such clients
have not furnished voting instructions. The election of directors and the
proposal for ratification of independent certified public accountants,
however, are considered "discretionary" items and for which there will not be
broker "non-votes." Abstentions and broker "non-votes" (as well as withheld
votes in the case of the election of directors) will be considered in
determining the presence of a quorum at the Annual Meeting but will not be
counted as a vote cast for a proposal.
10
<PAGE>
Because the proposal to adopt the Agreement is required to be approved by the
holders of a majority of the outstanding shares of Poughkeepsie Savings
Common Stock, abstentions and broker "non-votes" will have the same effect as
a vote against the proposal. Assuming the presence of a quorum, abstentions
also will not be counted as votes to ratify the appointment of Poughkeepsie
Savings' independent certified public accountants, and accordingly will have
the same effect as votes against such proposal. Withheld votes will not
affect the votes required for election of directors.
THE DATE OF THIS PROXY STATEMENT IS MARCH 20, 1997
11
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL ONE)
GENERAL
The Federal stock charter of the Bank provides that the authorized
number of directors, as stated in the Bank's Bylaws, will not be fewer than
seven or more than 15, except when a greater number is approved by the Board
of Directors. Effective May 11, 1994, the Board amended the Bank's Bylaws to
increase the size of the Board from seven to nine directors. The Bylaws
provide that a director may resign by sending a written notice to the
Chairman of the Board of Directors. A vacancy occurring on the Board may be
filled by an affirmative vote of a majority of the remaining directors and a
director so elected shall serve until the next election of directors which
will take place within one year.
The Bylaws also provide that the Board of Directors be classified
into three classes as nearly equal in number as the then total number of
directors constituting the whole Board permits. Each class is to be elected
to separate three-year terms with each term expiring in different years. At
each Annual Meeting the directors or nominees constituting one class are
elected generally for a three-year term.
NOMINATIONS FOR ELECTION TO THE BOARD OF DIRECTORS
The Board of Directors of the Bank constitutes the Nominating
Committee and considers persons who would be eligible or desirable for
membership on the Board of Directors. Names are solicited from management as
well as directors and an effort is made to obtain information with respect to
all such potential nominees for the position of director. The Nominating
Committee also would consider any stockholder nomination made in writing
which is submitted prior to the Committee's deliberations. The Nominating
Committee delivers written nominations to the Secretary of the Bank at least
30 days prior to the date of the Annual Meeting.
Pursuant to the Bylaws of the Bank, stockholders may make
nominations for directors if the nominations are in writing and delivered to
the Secretary of the Bank in accordance with the Bylaws which state that
nominations shall be received at the principal executive offices of the Bank
not less than 20 calendar days prior to the Annual Meeting. Written
nominations which are so received will appear on the ballot at the Annual
Meeting. If nominations are not so made, only the nominations of the Board
of Directors may be voted upon at the Annual Meeting. If the Board of
Directors fails to make nominations at least 30 days prior to the Annual
Meeting date, however, nominations for directors may be made at the Annual
Meeting by any stockholder entitled to vote.
12
<PAGE>
NOMINEES FOR DIRECTORS
The three nominees for directors are listed below. It is the
intention of the persons named in the Proxy to vote for the election of all
nominees named. If any nominee(s) shall be unable to serve, which is not now
contemplated, the proxies will be voted for such substitute nominee(s) as the
Board of Directors recommends. See "Quorum".
INFORMATION WITH RESPECT TO DIRECTOR NOMINEES TO SERVE THREE-YEAR
TERMS EXPIRING AT THE 2000 ANNUAL MEETING IS AS FOLLOWS:
Name and Principal Occupation During Past Five Years
NOEL deCORDOVA, JR., Director since 1970. Member, Audit, Executive,
1985 Stock Option, and 1993 Stock Incentive Plan Committees. Of counsel to
the law firm of Van DeWater and Van DeWater, Poughkeepsie, New York. Partner
in the firm from 1958 to December, 1990. Served as Director of The Hammond
Company, a holding company for various subsidiaries including its primary
operating subsidiary, The Hammond Company, The Mortgage Bankers, from 1982
until December, 1995.
BURTON GOLD, Director since 1988. Member, Loan and 1985 Stock
Option Committees. President and Chief Executive Officer of Stewart-Scott
Associates, Inc., a building, developing and contracting firm since 1952, and
owner of Fallkill Properties, a real estate property management firm since
1988. Both firms are located in Poughkeepsie, New York.
HENRY C. MEAGHER, Director since 1972. Chair, Audit Committee;
member Executive, 1985 Stock Option, and 1993 Stock Incentive Plan
Committees. Chairman and Chief Executive Officer of Mechanical Construction
Corp., Poughkeepsie, New York from 1956 to January, 1995. Since January,
1995, Chairman and Chief Executive Officer of MCC Hudson Valley, Inc.,
Poughkeepsie, New York. Both firms are mechanical contracting companies
specializing in commercial and industrial construction.
THE BOARD OF DIRECTORS OF POUGHKEEPSIE SAVINGS RECOMMENDS A VOTE FOR
APPROVAL OF THE NOMINEES FOR DIRECTOR.
DIRECTORS WHOSE TERMS CONTINUE
DIRECTORS WHOSE TERMS EXPIRE AT THE 1999 ANNUAL MEETING:
JEH V. JOHNSON, Director since 1977. Member, Loan and 1985 Stock
Option Committees. Principal in Jeh V. Johnson, F.A.I.A., Architect,
Wappingers Falls, New York, and, since 1964, lecturer in architecture at
Vassar College, Poughkeepsie, New York.
13
<PAGE>
ROBERT M. PERKINS, Director since 1994. Member, Audit, Loan and
1985 Stock Option Committees. President since 1984 of Perkins Values and
Findings, Inc. ("PVF Inc."), a Registered Investment Advisor in Millbrook,
New York. From 1973 to 1984, served as Managing Director, The First Boston
Corporation in New York City, and, from 1960 to 1973, was associated with
Halsey, Stuart & Co. Inc., an investment banking firm in New York City,
serving as Executive Vice President of the firm from 1971 to 1973.
JOSEPH B. TOCKARSHEWSKY, Chairman of the Board, President and Chief
Executive Officer since 1992. Member, Executive and Loan Committees.
Elected Chairman, President and Chief Executive Officer of the Bank in July,
1992. From 1986 to 1992, Executive Vice President at American Security Bank
in Washington, D.C. From 1983 to 1986, Executive Vice President at Carteret
Savings and Loan Association in Morristown, New Jersey. From 1979 to 1982,
Executive Vice President and Director at First Federal Savings and Loan
Association in New York City.
DIRECTORS WHOSE TERMS EXPIRE AT THE 1998 ANNUAL MEETING:
ROBERT J. HUGHES, Director since 1995. Member, Loan Committee.
Executive Vice President and Chief Financial Officer since February, 1992.
Consultant to Poughkeepsie Savings during January and February, 1992. From
April 1983 to December 1991, Executive Vice President and Chief Financial
Officer of American Savings Bank, White Plains, New York. From July 1978 to
March 1983, Vice President and Assistant Corporate Comptroller of American
Express Company.
ELIZABETH K. SHEQUINE, Director since 1979. Member, Executive,
Loan, 1985 Stock Option and 1993 Stock Incentive Plan Committees.
Principally employed as an attorney engaged in the private practice of law in
Poughkeepsie, New York, and as town justice for the Town of Washington, New
York.
JAMES V. TOMAI, JR., Director since 1994. Member, Audit, Loan and
1985 Stock Option Committees. Vice Chairman Emeritus of Sterling Forest
Corporation, Tuxedo, New York, since June, 1991. Served as President of the
Corporation from 1979 to January, 1990 and Vice Chairman from January, 1990
to June, 1991. Sterling Forest Corporation is a subsidiary of The Home
Insurance Company, New York City. Served as a Trustee of Dry Dock Savings
Bank from 1972 to 1983 and as a director of Investors Preference Fund for
Income, Inc. and Investors Preference New York Tax-Free Fund, Inc. from their
inceptions in May, 1987 and February, 1991, respectively, until May, 1994.
DIRECTOR EMERITUS
Effective with the expiration of his term at the Annual Meeting of
Stockholders on April 26, 1995 and in recognition of his long and dedicated
service, Milton Chazen became a Director Emeritus of the Bank. Mr. Chazen
had been a Director since 1967. The Board of Directors invited Mr. Chazen to
attend meetings of the Board of Directors and of the
14
<PAGE>
Loan Committee. As Director Emeritus, Mr. Chazen provides advice and
consultation on matters under consideration but does not cast any vote.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS OR DIRECTOR NOMINEES
Set forth below is information with respect to the principal
occupations during the last five years for the five executive officers of the
Bank who are not directors or director nominees. Ms. Vanasse and Mr.
Sandlund became executive officers on January 1, 1997.
JOEL A. BROTMAN. Age 53. Mr. Brotman has been Senior Vice
President responsible for Residential Lending since July 1995, and was a
consultant to the Bank from April to July 1995. Mr. Brotman served as Senior
Vice President-Retail Mortgage Production Manager at First Fidelity Bank,
North Brunswick, NJ from 1993 to 1995; as Senior Vice President/Wholesale and
Retail Production at First Town Mortgage Corporation, Secaucus, NJ from 1991
to 1993, and as Senior Vice President of The Howard Savings Bank and
President and Chief Executive Officer of The Howard Mortgage Group, Inc.,
Livingston, NJ from 1990 to 1991. From 1984 to 1990 Mr. Brotman was Senior
Vice President/Production/Secondary Market Support at Margaretten and
Company, Inc., Perth Amboy, NJ.
RICHARD J. MALENA. Age 49. Mr. Malena was elected a Senior Vice
President of the Bank in September 1988. He joined the Bank in 1983 as an
Assistant Vice President and Manager of the Consumer Lending Department.
From 1988 to June 1990, Mr. Malena held the position of Northeast Regional
Manager of Market Street Mortgage Corporation (former Bank subsidiary).
Since 1990, he has served as Senior Vice President with responsibility for
Retail Banking.
JEFFREY C. MCDONOUGH. Age 33. Mr. McDonough was elected Vice
President responsible for Human Resources in December 1992; he had been the
Director of Human Resources since June 1992. Mr. McDonough joined the Bank
in 1988 as Compensation and Benefits Manager and served as Assistant Vice
President/Compensation and Benefits Manager from June 1991 to June 1992.
STEN F. B. SANDLUND. Age 42. Mr. Sandlund has been Vice President
responsible for the Commercial Real Estate Division since January 1997. From
September 1993 to 1996, he was Vice President/Special Assets. From June 1991
to September 1993, Mr. Sandlund served as Senior Vice President, American
Institutional Advisors of Illinois, Inc., a real estate debt and equity
placement firm in Chicago, Illinois.
TANYA G. VANASSE. Age 36. Ms. Vanasse has been Vice President and
Marketing Director since May 1996. From May 1994 to May 1996, Ms. Vanasse
was Second Vice President/Workplace Banking Manager at The Chase Manhattan
Bank; from November 1989 to April 1994, she held the position of Division
Marketing & Sales Manager (Westchester County) at The Chase Manhattan Bank.
15
<PAGE>
The ages, holdings and percentages of common stock ownership of the
Bank's Board of Directors, Director Nominees and each of the executive
officers named in the Summary Compensation Table are as follows:
BENEFICIAL
AGE AT OWNERSHIP AT
NAME OF BENEFICIAL OWNER MARCH 5, 1997 MARCH 5, 1997*
- - -------------------------- ------------- ---------------
Noel deCordova, Jr. .................... 67 62,672(a)(b)
Burton Gold............................. 70 26,465(a)(c)(d)
Jeh V. Johnson.......................... 65 24,355(a)(e)
Henry C. Meagher........................ 71 59,442(a)(f)
Robert M. Perkins....................... 61 16,500(g)
Elizabeth K. Shequine................... 66 32,525(a)(h)
Joseph B. Tockarshewsky................. 57 356,964(i)
James V. Tomai, Jr. .................... 75 17,000(g)(j)
Robert J. Hughes........................ 50 201,846(k)
Joel A. Brotman......................... 53 37,203(l)
Richard J. Malena....................... 49 91,937(m)
----------------
All directors and executive
officers of the Bank as a group
(14 persons).......................... 991,495
- - -------------------
* Based upon information furnished by the respective individuals, each of the
above-named individuals, except Joseph B. Tockarshewsky and Robert J.
Hughes, owns less than 1 percent of the issued and outstanding Poughkeepsie
Savings Common Stock. Messrs. Tockarshewsky and Hughes beneficially own
2.83 percent and 1.60 percent, respectively, of the issued and outstanding
shares of Poughkeepsie Savings Common Stock. Under applicable regulations,
shares are deemed to be beneficially owned by a person if he or she,
directly or indirectly, has or shares the power to vote or dispose of the
shares, whether or not he or she has any economic interest in the shares.
A person is deemed to have beneficial ownership of shares which may be
received upon the exercise of outstanding options if the option is
exercisable within 60 days.
(a) Includes currently exercisable nonqualified options for 16,000 shares under
the 1993 Directors' Stock Option Plan.
(Footnotes continued on following page)
16
<PAGE>
- - -------------------
(b) Includes 12,001 shares held by Mr. deCordova's wife who has sole voting and
investment power. Mr. deCordova disclaims beneficial ownership of these
shares.
(c) Includes currently exercisable nonqualified options for 5,000 shares under
the 1985 Stock Option Plan.
(d) Includes 465 shares held by Mr. Gold's wife, who has sole voting and
investment power. Mr. Gold disclaims beneficial ownership of these shares.
(e) Includes 1,044 shares held by Mr. Johnson's wife, who has sole voting and
investment power. Mr. Johnson disclaims beneficial ownership of these
shares.
(f) Includes 6,196 shares held by Mr. Meagher's wife, who has sole voting and
investment power. Mr. Meagher disclaims beneficial ownership of these
shares.
(g) Includes currently exercisable nonqualified options for 11,500 shares under
the 1993 Directors' Stock Option Plan.
(h) Includes 25 shares held by Mrs. Shequine's adult son, who has sole voting
and investment power. Mrs. Shequine disclaims beneficial ownership of
these shares.
(i) Includes currently exercisable nonqualified options for 298,975 shares and
3,261 shares allocated to him under the Employee Stock Ownership Plan
("ESOP").
(j) Includes 3,000 shares held by Mr. Tomai's wife, who has sole voting and
investment power. Mr. Tomai disclaims beneficial ownership of these
shares.
(k) Includes currently exercisable nonqualified options for 166,199 shares and
3,261 shares allocated to him under the ESOP.
(l) Includes currently exercisable nonqualified options for 36,000 shares and
192 shares allocated to him under the ESOP.
(m) Includes 2,079 shares and 331 shares held by Mr. Malena's wife and adult
daughter, respectively, each of whom has sole voting and investment power.
Mr. Malena disclaims beneficial ownership of these shares and 331 shares
for which Mr. Malena's wife is custodian for their son. Also includes
currently exercisable nonqualified options for 76,980 shares and 4,827
shares allocated to him under the ESOP.
17
<PAGE>
BOARD OF DIRECTORS, ITS COMMITTEES, MEETINGS AND FUNCTIONS
During 1996 the Board held 15 meetings. In addition, the following
committees of the Board held the number of meetings indicated during fiscal
year 1996: Audit, five; Executive, 20; Loan, 21; Nominating, one; 1993 Stock
Incentive Plan, four. In 1996, the Board established an ad hoc Building
Committee which held three meetings. Each director attended at least 75% of
the aggregate of all meetings of the Board of Directors and of the committees
of which he or she was a member.
COMMITTEES OF THE BOARD
The Executive Committee, has and may exercise, when the Board of
Directors is not in session, all of the authority of the Board of Directors
except for powers specifically reserved to the Board by the Bank's Bylaws.
The Executive Committee reviews and recommends, for approval by the Board of
Directors: accounting, finance and asset risk policies, election of
officers; corporate plans and organizational structures; compensation of and
retirement plans for directors; salary administration for the Bank; and
performance and compensation of executive officers. Directors deCordova,
Meagher, Shequine and Tockarshewsky comprise the Executive Committee.
The Audit Committee, which is composed of all non-employee
directors, reviews the reports and recommendations of the Bank's internal
auditor and independent auditors and their assessments of the adequacy of
internal controls; reviews and recommends, for approval of the Board of
Directors, the establishment of policies to ensure the integrity of all
financial statements and disclosures and full compliance by the Bank with
existing laws and regulations; and oversees and evaluates management's
effectiveness in implementing the policy statement on internal controls and
ensuing compliance with the code of conduct and ethics. The Audit Committee
also recommends to the Board of Directors the appointment of the independent
auditors, which appointment then is presented to the stockholders for
ratification. Directors deCordova, Meagher, Perkins and Tomai comprise the
Audit Committee.
The Loan Committee approves all loans not delegated to management
for approval and all commercial loans over $1 million. On a monthly basis,
the Loan Committee reviews delinquency and problem loan reports for all loan
functions and reviews commercial loan workout and asset disposition
proposals. On a quarterly basis, the Loan Committee reviews, among other
things, the asset risk review summary. The Loan Committee also reviews and
recommends, for approval of the Board of Directors, lending policies and
procedures and policy resolutions with respect to delegated loan authority.
Directors Gold, Hughes, Johnson, Perkins, Shequine, Tomai and Tockarshewsky
comprise the Loan Committee. Director Emeritus Chazen attends meetings of the
Loan Committee but is not a voting member of the Committee.
The Stock Option Committee, which is composed of all non-employee
directors, administers the 1985 Stock Option Plan and makes recommendations
to the Board of Directors respecting the grant of options pursuant to the
Plan. Currently this committee is composed of
18
<PAGE>
all directors except directors Hughes and Tockarshewsky, the only directors
who are employees of the Bank. The 1993 Stock Incentive Plan Committee,
which consists of two or more members of the Board, none of whom is an
officer or employee of the Bank and each of whom is a "disinterested person"
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") administers the 1993 Stock Incentive Plan.
Currently this committee is composed of directors deCordova, Meagher and
Shequine.
The Nominating Committee makes director nominations. The Board of
Directors constitutes the Nominating Committee. In 1996 the Nominating
Committee held one meeting.
From time to time, the Board of Directors may establish one or more
ad hoc committees for special purposes and designate specific directors to
serve on such committees.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
During 1996, all directors and executive officers made timely
filings with respect to Form 4 reports. In making this statement, the Bank
has relied on the written representations of its directors and officers.
COMPENSATION OF DIRECTORS
Non-employee directors of the Bank receive an $8,000 annual
retainer, which is paid in quarterly installments. In addition to the
annual retainer, all non-employee directors receive a fee of $300 and $400
for participation in meetings of the Board of Directors and the Audit,
Executive, Loan and any ad hoc committees, respectively. In recognition of
his additional responsibilities, the Chairman of the Audit Committee receives
$800 for his attendance at each meeting of this committee. Director Emeritus
Milton Chazen receives $150 and $200 for his participation in each meeting of
the Board of Directors and the Loan Committee, respectively.
Directors also may be paid for special services rendered to the Bank
at the specific direction of the Board of Directors and may be reimbursed for
reasonable expenses for attendance at meetings of the Board of Directors and
Board committees. During 1996, non-employee directors and the director
emeritus received compensation for an all-day property site inspection and
planning meeting, respectively.
The Bank has a non-contributory, non-qualified Non-Employee
Directors' Retirement Plan ("Retirement Plan") for directors who are not
employees of the Bank. Benefits are payable only to non-employee directors
who retire from the Board on or after age 65 with at least five years of
continuous service as a non-employee director. The annual benefit is an
amount equal to 50% of the annual retainer payable to outside directors on
the date a director retires, increased by 10% for each year by which a
director's years of service on the Board are more than five, but not more
than ten. The benefit will be paid to an eligible retired non-employee
director for life and, upon the death of such retired outside director,
one-half of the benefit will be paid to such director's surviving spouse for
life. Benefits will be paid in quarterly installments.
19
<PAGE>
Since 1986, the Bank has had a deferred compensation plan for
eligible non-employee members of its Board of Directors, whereby such
directors may defer all or a percentage of his or her directors' fees. The
director may elect the time and manner of distribution of deferred fees.
Effective April 18, 1995, the Board of Directors adopted an amended
Poughkeepsie Savings Bank, FSB Board of Directors Deferred Compensation Plan
("Directors Deferred Compensation Plan").
CERTAIN TRANSACTIONS AND RELATIONSHIPS
All loans by the Bank to directors and executive officers were made
in the ordinary course of the Bank's business and on the same terms as loans
to nonaffiliated third parties, except that home equity loans granted prior
to passage of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 ("FIRREA"), in August 1989, were made to directors, officers and
employees at a rate 1.5% below that charged to nonaffiliated persons, but not
below the Bank's cost of funds, and loan fees on all loans to officers and
employees were waived. The Bank amended its loan policy in August 1989 to
eliminate such favorable rate loans to the Bank's directors, executive
officers or controlling stockholders. The following home equity loans were
granted to directors or executive officers prior to FIRREA:
<TABLE>
<CAPTION>
Largest Balance
Date of Outstanding Balance at Interest
Name Loan During 1996 December 31, 1996 Rate
- - -------------------------- -------- ---------------- ----------------- ---------
<S> <C> <C> <C> <C>
Richard J. Malena......... 12/30/87 $74,997.45 --(a) (b)
</TABLE>
- - -------------------------
(a) Home equity line of credit paid off on August 5, 1996 and account
closed.
(b) Interest rate is based on the prime rate and is equal to the prime
rate quoted in The Wall Street Journal on the last business day of
the prior month.
During 1996, all loans to directors and executive officers of the
Bank were performing in accordance with their terms. In addition, all loans
by the Bank to directors and executive officers were made in the ordinary
course of the Bank's business and, in the judgment of management, at the time
of origination did not involve more than the normal risk of collectibility or
present other unfavorable features.
EMPLOYMENT AGREEMENTS WITH MANAGEMENT
The Bank entered into a two-year employment agreement with Joseph B.
Tockarshewsky on February 27, 1997. The agreement provides that the term of
the agreement will continue to extend each year upon approval by the Board of
Directors, but the term of the agreement will not extend beyond January 11,
2005. The agreement provides for an annual base salary of $295,000 effective
January 1, 1997.
20
<PAGE>
The Bank's three-year employment agreement with Robert J. Hughes
expires on April 10, 1999, except that the term may be extended by additional
consecutive one-year periods upon annual review and approval by the Board of
Directors. The agreement provides for an annual base salary of $199,650.
Under their respective employment agreements, Messrs. Tockarshewsky
and Hughes will receive payments or entitlements under any incentive
compensation program of the Bank in effect, from time to time, which shall
include participation in the Bank's existing Management Award Program
("MAP"), in such amounts as the Board determines to be appropriate, in a
profit-sharing provision of the Bank's 401(k) Plan and in option award grants.
If Messrs. Tockarshewsky and Hughes are terminated without cause,
they will receive all accrued but unpaid compensation, including incentive
compensation, then owed, and will receive a severance benefit commensurate
with the predetermined formula contained in their respective employment
agreements.
EXECUTIVE COMPENSATION OVERVIEW
The Bank is committed to attracting, retaining and motivating
qualified personnel and to creating an environment in which employees
recognize that they are valued as individuals and treated with respect,
dignity and fairness.
The Bank uses a merit-based system of compensation to encourage
individual employees to achieve their productive and creative potential. The
Bank regularly compares its compensation system with those of competitors and
refines its system as necessary to encourage a motivated and productive work
force.
The following tables provide information regarding the compensation
of the Bank's chief executive officer and three other executive officers
whose salary and bonus exceeded $100,000 for 1996. No other person serving
as an executive officer as of December 31, 1996 had a total salary and bonus
in 1996 in excess of $100,000.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------------------------ -------------------------------------
Name and Principal Other Annual Securities Underlying All Other
Position Year Salary Bonus Compensation(1) Options (in Shares) Compensation
- - ---------------------------------- ---- -------- ---------- --------------- --------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Joseph B. Tockarshewsky........... 1996 $275,000 $44,087(2) $ 0 150,000 $11,633(3)
Chairman, President and 1995 275,000 67,316 0 12,538
Chief Executive Officer 1994 275,000 72,174 70,000 11,705
21
<PAGE>
Robert J. Hughes.................. 1996 199,650 25,605(2) 0 87,000 11,711(4)
Executive Vice President and 1995 199,650 49,292 0 12,411
Chief Financial Officer 1994 199,301 43,919 35,000 12,062
Richard J. Malena................. 1996 121,866 17,078(2) 0 65,000 9,060(5)
Senior Vice President 1995 114,693 26,250 0 9,931
1994 98,826 28,410 20,000 8,001
Joel A. Brotman................... 1996 105,000 57,919(2)(6) 0 65,000 9,810(7)
Senior Vice President 1995 74,714 38,168 20,000 7,592
1994 0 0 0 0
</TABLE>
- - ---------------------------------
(1) The dollar value of perquisites and other personal benefits for each of the
named executive officers was less than the established reporting
thresholds.
(2) Awards made under the Bank's 1996 Management Award Program ("1996 MAP").
Messrs. Tockarshewsky, Hughes and Brotman elected to defer their awards
under the Poughkeepsie Savings Bank, FSB Employees Deferred Compensation
Plan ("Deferred Compensation Plan") and a portion of their awards was
invested in Poughkeepsie Savings Common Stock.
(3) Included in All Other Compensation is $439, representing 78 shares under
the Employees Stock Ownership Plan ("ESOP") for the year 1996 valued at
$5.625, the closing price of the stock on February 12, 1997, the date the
shares were allocated; $4,760 and $6,434 representing a matching
contribution made by the Bank and a discretionary profit sharing payment,
respectively, under the Bank's 401(k).
(4) Included in All Other Compensation is $439, representing 78 shares under
the ESOP for the year 1996 valued at $5.625, the closing price of the stock
on February 12, 1997, the date the shares were allocated; $4,838 and $6,434
representing a matching contribution made by the Bank and a discretionary
profit sharing payment, respectively, under the Bank's 401(k).
(Footnotes continued on following page)
22
<PAGE>
- - --------------------
(5) Included in All Other Compensation is $608, representing 108 shares under
the ESOP for the year 1996 valued at $5.625, the closing price of the stock
on February 12, 1997, the date the shares were allocated; $3,515 and $4,937
representing a matching contribution made by the Bank and a discretionary
profit sharing payment, respectively, under the Bank's 401(k).
(6) Mr. Brotman's compensation includes a performance bonus on residential loan
closings above specified thresholds. In 1996, Mr. Brotman's performance
bonus was $50,269.
(7) Included in All Other Compensation is $101, representing 18 shares under
the ESOP for the year 1996 valued at $5.625, the closing price of the stock
on February 12, 1997, the date the shares were allocated; $2,724 and $2,117
representing a matching contribution made by the Bank and a discretionary
profit sharing payment, respectively, under the Bank's 401(k); and $4,868
representing reimbursement for relocation expenses.
TABLE OF OPTION GRANTS IN 1996
The following table sets forth information with respect to the named
executive officers concerning option grants during 1996.
STOCK OPTIONS
INDIVIDUAL GRANTS IN 1996
<TABLE>
<CAPTION>
Potential
Realizable Value
% of At Assumed
Total Annual Rates of
Options Exercise Stock Price
Options Granted to or Base Appreciation For
Granted Employees Price Option Term
(# of in ($ per Expiration ---------------------------
Name Shares) Fiscal Year Share) Date 5% 10%
- - ------------------------ ------- ----------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph B. Tockarshewsky................. 150,000 34.2% $5.125 12/10/06(a) $497,250.00 $1,311,750.00
Robert J. Hughes........................ 87,000 19.9% 5.125 12/10/06(a) 288,405.00 760,815.00
Joel A. Brotman......................... 65,000 14.8% 5.125 12/10/06(a) 215,475.00 568,425.00
Richard J. Malena....................... 65,000 14.8% 5.125 12/10/06(a) 215,475.00 568,425.00
</TABLE>
(Footnote on following page)
23
<PAGE>
_________________________
(a) The terms of these incentive stock options granted to Messrs.
Tockarshewsky, Hughes, Brotman and Malena under the 1993 Stock Incentive Plan,
as amended effective January 28, 1997, include five-year vesting, with 40
percent vesting on March 1, 1997 and 15 percent vesting on March 1 of 1998,
1999, 2000 and 2001.
TABLE OF OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
The following table sets forth information with respect to the named
executive officers concerning the exercise of options during 1996, and
unexercised options held as of December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1996
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-The-Money
Shares Options at Fiscal Options at Fiscal
Acquired Year-End (#) Year End
on Value Exercisable(E) Exercisable(E)
Name Exercise Realized(1) Unexercisable (U) Unexercisable (U)
- - ---------------------------------------- -------- ----------- ------------------ ------------------
<S> <C> <C> <C> <C>
Joseph B. Tockarshewsky................. 0 0 238,975/E $536,443/E(2)
220,000/U 211,250/U
Robert J. Hughes........................ 0 0 131,399/E 316,821/E(2)
122,000/U 107,125/U
Joel A. Brotman......................... 0 0 10,000/E 0/E(2)
75,000/U 8,125/U
Richard J. Malena....................... 0 0 50,980/E 98,088/E(2)
65,000/U 8,125/U
</TABLE>
__________________________
(1) Market Value of underlying securities at exercise date or year-end, as the
case may be, minus the exercise price of "in-the-money" options.
(2) At December 31, 1996, all 238,975, 131,399, 10,000 and 50,980 options,
respectively, were fully exercisable. Values are based on the closing
market price of the common stock on December 31, 1996, the last trading
date in 1996.
PENSION PLAN TABLE
The Bank has maintained a noncontributory, multiple-employer
defined benefit plan (the "Pension Plan") for its employees. The Pension
Plan is subject to the provisions of the
24
<PAGE>
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and is
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended.
As part of a broad-based expense reduction program initiated in
1991, the Board approved an amendment to the Pension Plan, which provides
that, effective October 1, 1991, there will be (i) no new enrollments in the
Pension Plan and (ii) no further benefit accruals under the Pension Plan,
until the amendment is rescinded by the Board.
The following table sets forth the approximate annual benefits
relating to the Pension Plan that would be payable as of December 31, 1996
under various assumptions as to average credit earnings (as defined in the
Pension Plan) and years of credited service (as defined in the Pension Plan)
to employees in higher salary classifications who are 65 years of age as of
such date.
ESTIMATE OF ANNUAL PENSION BENEFITS
BASED ON YEARS OF CREDITED SERVICE(1)
Final Years of Credited Service
Average ---------------------------------------------------
Salary 15 20 25 30 35
- - -------- ------ ------ ------ ------ ------
$125,000 25,279 33,706 42,132 50,558 58,985
150,000 30,904 41,206 51,507 61,808 72,110
175,000 36,529 48,706 60,882 73,058 85,235
200,000 42,154 56,206 70,257 84,308 98,360
225,000 44,224 58,966 73,707 88,448 103,190
250,000 44,224 58,966 73,707 88,448 103,190
300,000 44,224 58,966 73,707 88,448 103,190
400,000 44,224 58,966 73,707 88,448 103,190
450,000 44,224 58,966 73,707 88,448 103,190
500,000 44,224 58,966 73,707 88,448 103,190
(Footnote on following page)
25
<PAGE>
- - -------------------
(1) The benefit of normal retirement is an annual allowance equal to 1.5
percent of a participant's average annual earnings multiplied by the
number of years of an employee's credited service, after January 1,
1986, up to a maximum of 40 years, reduced by 1.5% of the primary
Social Security benefit multiplied by the same number of years of
credited service.
Since plan accruals were frozen as of September 30, 1991, benefit
amounts were determined based upon 1991 Internal Revenue Service Code ("IRC")
Regulations and the Financial Accounting Standards amounts presented above
using 1991 Social Security law. Should the plan resume accruals, benefit
amounts will be based on the current IRC Section 401(a)(17) (maximum
compensation) and 415(b) (maximum annual benefit) limits and current Social
Security law.
At December 31, 1996, of the named executive officers, only Mr.
Malena had any years of credited service or any average credit earnings. Mr.
Malena has 5 years and 9 months of credited service.
REPORT OF THE COMPENSATION COMMITTEE
The Executive Committee of the Board of Directors also functions as
the compensation committee which, on an annual basis, reviews the Bank's
Salary Administration Program, evaluates the performance and compensation of
the seven officers who constitute the senior management group, reviews
recommendations to the Board for a discretionary profit sharing payment under
the 401(k) Plan and activation of the MAP, and considers management
succession and related matters. Employee stock option grants are determined
by the committees for the respective stock option plans.
The members of the Executive Committee are Noel deCordova, Jr., Henry
C. Meagher, Elizabeth K. Shequine and Joseph B. Tockarshewsky. Mr.
Tockarshewsky, Chairman, President and Chief Executive Officer of the Bank,
is the only employee member of the Executive Committee and does not
participate in the review of his compensation.
In its capacity as the compensation committee, the Executive Committee
administers an executive compensation program which is designed to:
1. Allow the Bank to compete for and retain executives critical to
the Bank's future success by providing compensation that is
commensurate with the institution's position as a
well-capitalized institution which is engaged in various measures
to enhance its franchise.
26
<PAGE>
2. Align the interest of its executives with the interest of the
Board and the stockholders by providing performance-based awards
through an annual management award program.
3. Increase ownership in Poughkeepsie Savings Common Stock by the
Bank's executive officers through the Employees Deferred
Compensation Plan which offers Poughkeepsie Savings Common Stock
as an investment option, thereby providing further incentive to
executive officers to improve the performance of the Bank and its
common stock.
The Board believes that compensation for the Bank's executive officers
should be based on achievement of an overall corporate profit goal as well as
business unit/individual goals and should provide an incentive for effective
management of the Bank's assets. The Board established the MAP to support
the achievement of these goals and, on an annual basis, determines the
earnings performance threshold for the MAP and considers the compensation
committee's recommendation for activation of the MAP. The Board may delegate
authority to the compensation committee to approve individual participant
goals.
In 1996, the compensation committee based its evaluation of the
performance and compensation of the senior management group primarily on
their leadership and performance in achieving the 1996 corporate performance
goals, as well as on peer data for comparable positions in financial
institutions of a similar size. In recognition of corporate achievements,
the Board activated the 1996 MAP.
NOEL deCORDOVA, JR.
HENRY C. MEAGHER
ELIZABETH K. SHEQUINE
JOSEPH B. TOCKARSHEWSKY
27
<PAGE>
COMPARISON OF TOTAL STOCKHOLDER RETURN
The following graph sets forth the Bank's total stockholder return
over the five-year period beginning December 31, 1991, and ending December
31, 1996, as compared to the NASDAQ Stock Market (US) Index and the NASDAQ
Banks Index.
[Performance Graph]
Years Ended December 31
--------------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Poughkeepsie Savings Bank, FSB $100 $123 $400 $440 $569 $581
NASDAQ Stock Market-US Index 100 116 134 131 185 227
NASDAQ Bank Index 100 146 166 165 246 326
- - ------------------------
*$100 invested on 12/31/91 in stock or index-including reinvestment of
dividends. Fiscal years ending December 31.
28
<PAGE>
HOLDING COMPANY FORMATION
(PROPOSAL TWO)
General
Stockholders of Poughkeepsie Savings are being asked to approve an
Agreement and Plan of Reorganization between Poughkeepsie Savings,
Poughkeepsie Interim Federal Savings Bank ("Interim") and the Company,
pursuant to which Interim will merge with and into Poughkeepsie Savings and,
as a result, the Company will become the parent holding company of
Poughkeepsie Savings and all of the outstanding shares of Poughkeepsie
Savings Common Stock will be converted into and exchanged for shares of
Company Common Stock on a one-for-one basis. The full text of the Agreement
is attached as Appendix A to this Proxy Statement-Prospectus, and the
discussion below is qualified in its entirety by reference thereto.
The Company is a recently-formed Delaware corporation that was formed
by Poughkeepsie Savings as a direct wholly-owned subsidiary for the purpose
of becoming the parent holding company of Poughkeepsie Savings and,
therefore, has no operating history. As part of the Reorganization,
Poughkeepsie Savings and the Company will organize Interim as a wholly-owned
subsidiary of the Company. If the Reorganization is approved by the
stockholders of Poughkeepsie Savings, and subject to the satisfaction of all
other conditions set forth in the Agreement, Interim will be merged with and
into Poughkeepsie Savings, with Poughkeepsie Savings as the surviving
institution.
After the Reorganization, Poughkeepsie Savings will continue its
existing business and operations as a wholly-owned subsidiary of the Company.
The consolidated assets, liabilities, stockholders' equity and income of the
Company immediately following the Reorganization will be the same as those of
Poughkeepsie Savings immediately prior to the consummation of the
Reorganization. The Board of Directors of the Company is comprised of the
members of the Board of Directors of Poughkeepsie Savings, and the officers
of the Company are the executive officers of Poughkeepsie Savings. It is the
Bank's current intention that upon consummation of the Reorganization it will
continue to operate under the name "Poughkeepsie Savings Bank, FSB" and its
deposit accounts will continue to be insured by the FDIC to the maximum
extent permitted by law. The corporate existence of Poughkeepsie Savings
will continue unaffected and unimpaired by the Reorganization, except that
all of the outstanding shares of Poughkeepsie Savings Common Stock will be
owned by the Company. The existing stockholders of Poughkeepsie Savings
will, in turn, own all of the outstanding shares of Company Common Stock,
having received that stock in exchange for their shares of Poughkeepsie
Savings Common Stock as part of the Reorganization.
29
<PAGE>
The Board of Directors of Poughkeepsie Savings has unanimously
approved the Agreement, subject to the receipt of stockholder approval and
necessary regulatory approvals, and unanimously recommends that stockholders
of Poughkeepsie Savings approve such Agreement.
Reasons for the Reorganization
The Board of Directors of Poughkeepsie Savings believes that the
holding company form of organization will provide flexibility for meeting the
future financial needs of Poughkeepsie Savings or other subsidiaries of the
Company. For example, the holding company form of organization would permit
the Company to repurchase shares of Company Common Stock without the adverse
tax consequences which would be experienced by Poughkeepsie Savings in the
event that it repurchased shares of Poughkeepsie Savings Common Stock, which
tax consequences would be a result of the recapture of a portion of the bad
debt reserves which Poughkeepsie Savings has established for federal income
tax purposes under Section 593 of the Internal Revenue Code of 1986 ("Code").
In addition, applicable laws and regulations limit the types of
businesses in which Poughkeepsie Savings and its subsidiaries may engage and
the amount which Poughkeepsie Savings can invest in its subsidiaries. The
establishment of the holding company for Poughkeepsie Savings will permit
diversification of operations free of these restrictions. It is anticipated
that the increased acquisition and diversification flexibility provided by
the holding company form of organization ultimately will increase
Poughkeepsie Savings' ability to compete effectively with commercial banks in
its market area, many of which are subsidiaries of holding companies.
The Board of Directors of Poughkeepsie Savings also believes that a
holding company form of organization will facilitate the acquisition of other
financial institutions, subject to restrictions of applicable laws and
regulations. For example, the holding company form of organization will
permit an acquired institution to operate on a more autonomous basis as a
wholly-owned subsidiary of the Company and to retain its own directors,
officers, corporate name and local identity. In addition, the Company would
be able to acquire a new subsidiary, for cash or stock, in a transaction that
may not require approval of the Company's stockholders. Poughkeepsie Savings
has not been actively involved in evaluating prospective acquisition
candidates and there are no current agreements or understandings with respect
to the acquisition of any financial institution or other company. The Board
of Directors of Poughkeepsie Savings believes, however, that Poughkeepsie
Savings' ability to act promptly to take advantage of any desirable
opportunities in this regard that may arise in the future could be
jeopardized if formation of the holding company is deferred.
Poughkeepsie Savings is regulated under the HOLA while the Company
will be subject to the provisions of the GCL. Although Poughkeepsie Savings
believes that the rights of shareholders of the Bank and the Company are
substantially similar, there are certain differences in shareholder rights
arising from distinctions between the Bank's
30
<PAGE>
Amended and Restated Federal Stock Charter and Bylaws, as amended, and
the Company's Certificate of Incorporation and Bylaws and from distinctions
between laws with respect to federally-chartered savings banks and Delaware
law. For example, as discussed below, Section 203 of the GCL imposes certain
limitations on business combinations with interested shareholders. For
additional information, see "-Comparison of Shareholders' Rights."
Poughkeepsie Savings' management recognizes that some increased costs
will be incurred in the operation of the Company and that securities of the
Company, unlike those of Poughkeepsie Savings, must be registered with the
SEC and may not be legal investments for institutions as fiduciaries in some
jurisdictions. Nevertheless, for the reasons stated above, the Board of
Directors believes that the holding company formation is in the best
interests of Poughkeepsie Savings and its stockholders.
Description of the Reorganization
Poughkeepsie Savings incorporated the Company as a direct wholly-owned
subsidiary under the laws of the State of Delaware on January 16, 1997 for
purposes of becoming the parent holding company of Poughkeepsie Savings upon
consummation of the Reorganization, and Poughkeepsie Savings and the Company
are currently in the process of organizing Interim solely for purposes of
facilitating such Reorganization. Pursuant to the Agreement, Interim will
merge with and into Poughkeepsie Savings, with Poughkeepsie Savings as the
surviving institution. In connection with such merger, (i) each share of
Poughkeepsie Savings Common Stock will be converted into one share of Company
Common Stock, (ii) each share of capital stock of Interim held by the Company
will be automatically converted on a one-for-one basis into shares of
Poughkeepsie Savings Common Stock, and (iii) shares of Company Common Stock
indirectly held by Poughkeepsie Savings prior thereto will be cancelled. The
result of the merger of Interim with and into Poughkeepsie Savings will be
that the Company will become the owner of all of the outstanding shares of
Poughkeepsie Savings Common Stock and each stockholder of Poughkeepsie
Savings will become the owner of one share of Company Common Stock for each
share of Poughkeepsie Savings Common Stock held by him or her immediately
prior thereto.
The merger of Interim with and into Poughkeepsie Savings and the
resultant holding company formation will become effective on the date that
the Agreement and the transactions contemplated thereby have received the
approval of the OTS and all other regulatory agencies having jurisdiction
over the Merger, if any ("Effective Date").
Upon consummation of the Reorganization, the outstanding stock
certificates which prior thereto represented shares of Poughkeepsie Savings
Common Stock will thereafter for all purposes represent an equal number of
shares of Company Common Stock. After the Reorganization, stockholders will
be entitled to exchange their present stock certificates for new certificates
evidencing shares of Company Common Stock, although stockholders will not
need to make such an exchange in order to have all of the rights of
stockholders of the
31
<PAGE>
Company. An agent appointed by the Company and Poughkeepsie Savings will
notify stockholders of record by mail promptly after consummation of the
Reorganization of the procedures to be followed in order to surrender their
certificates evidencing shares of Poughkeepsie Savings Common Stock to the
transfer agent for the Company and Poughkeepsie Savings in exchange for
certificates evidencing an identical number of shares of Company Common Stock.
Until so exchanged, certificates evidencing shares of Poughkeepsie Savings
Common Stock will for all purposes represent the same number of shares of
Company Common Stock, and the holders of those certificates will have all the
rights of stockholders of the Company.
Because the Company and Interim were organized at the direction of
Poughkeepsie Savings and because all members of the managements of the
Company and Interim prior to the Reorganization also serve as directors or
officers of Poughkeepsie Savings, the Agreement cannot be considered the
result of arm's-length negotiations.
Capital Resources
Poughkeepsie Savings intends to provide the Company with an initial
capitalization by contributing $100,000 to the Company immediately prior to
consummation of the Reorganization. Additional financial resources may be
available to the Company in the future through dividends paid to the Company
by Poughkeepsie Savings, acquired entities or new businesses, borrowings or
debt or equity financings. Poughkeepsie Savings plans to pay periodic
dividends to the Company based on Poughkeepsie Savings' profitability,
applicable OTS regulations and the Company's dividend policy. For a
discussion of regulatory limitations on the payment of dividends by
Poughkeepsie Savings, see "Holding Company Formation - Market for Company
Common Stock; Anticipated Dividend Policy; and Resales of Company Common
Stock." Currently, Poughkeepsie Savings has capital resources which
substantially exceed applicable requirements.
Conditions to the Reorganization; Abandonment
The Agreement provides that it shall not become effective until all of
the following first shall have occurred: (i) the Agreement shall have been
approved by a vote of the holders of a majority of the issued and outstanding
Poughkeepsie Savings Common Stock; (ii) the Reorganization shall have been
approved by the OTS and all applicable waiting periods shall have expired;
(iii) the Company, Poughkeepsie Savings and Interim shall have received a
favorable opinion from counsel concerning the federal income tax consequences
of the Agreement and the formation of a holding company, as contemplated
therein; (iv) the Company Common Stock to be issued in exchange for
Poughkeepsie Savings Common Stock shall be registered or qualified for
issuance under the Securities Act and applicable state securities laws,
except in each case to the extent that the Company relies on an available
exemption therefrom; and (v) Poughkeepsie Savings and the Company shall have
obtained any other necessary consents or approvals required for the
Reorganization.
32
<PAGE>
An application has been filed with the OTS to obtain approval of the
Reorganization. A favorable opinion of counsel regarding the federal income
tax consequences of the Reorganization has been received. See "Holding
Company Formation - Federal Income Tax Consequences."
If stockholders of Poughkeepsie Savings approve the Reorganization at
the Annual Meeting, the Reorganization is expected to become effective as
soon thereafter as required regulatory approvals are received, required
waiting periods have expired and the other conditions to consummation of the
Reorganization have either been satisfied or waived. If the Reorganization
is not approved by Poughkeepsie Savings' stockholders, Poughkeepsie Savings
will continue to operate without a holding company structure. All expenses
which relate solely to the Reorganization will be paid by Poughkeepsie
Savings whether or not the Reorganization is approved by its stockholders and
the Reorganization is consummated.
The Agreement provides that it may be abandoned by the Board of
Directors of Poughkeepsie Savings, Interim or the Company if, among other
things, (i) any action, suit, proceeding or claim has been instituted, made
or threatened relating to the Agreement which shall make consummation of the
transaction contemplated inadvisable in the opinion of Poughkeepsie Savings,
Interim or the Company, or (ii) for any other reason consummation of the
transaction contemplated thereby is inadvisable in the opinion of
Poughkeepsie Savings, Interim or the Company.
Certain Federal Tax Consequences
Poughkeepsie Savings, Interim and the Company have obtained an opinion
of counsel from Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., to
the effect that, for federal income tax purposes: (1) no gain or loss will
be recognized by the stockholders of Poughkeepsie Savings upon the receipt of
Company Common Stock in exchange for their shares of Poughkeepsie Savings
Common Stock; (2) the basis of the Company Common Stock to be received by
stockholders of Poughkeepsie Savings will be the same, in each instance, as
the basis of the Poughkeepsie Savings Common Stock surrendered; (3) the
holding period of the Company Common Stock to be received by each stockholder
of Poughkeepsie Savings will include the holding period of the Poughkeepsie
Savings Common Stock surrendered, provided that the Poughkeepsie Savings
Common Stock was held as a capital asset on the date of the Reorganization;
and (4) the Reorganization will not result in any taxable gain or loss to
Poughkeepsie Savings or the Company.
The foregoing discussion is based upon current law and is intended for
general information only. Each stockholder is urged to consult his or her
own tax advisor concerning the specific tax consequences of the
Reorganization to such stockholder, including the applicability and effect of
foreign, state, local or other tax laws and of any proposed changes in the
Code.
33
<PAGE>
Accounting Treatment of the Reorganization
The Reorganization is expected to be treated as a "pooling of
interests" (rather than a "purchase") for financial reporting and related
purposes. Under the pooling of interests method of accounting, the
historical basis of the assets and liabilities of Poughkeepsie Savings and
the Company will be combined at the effective time of the Reorganization and
carried forward at their previously recorded amounts and the stockholders'
equity accounts of Poughkeepsie Savings and the Company will be combined.
Income and other financial statements of the Company issued after the
Reorganization will be restated retroactively to reflect the consolidated
operations of Poughkeepsie Savings and the Company as if the Reorganization
had taken place prior to the periods covered by such financial statements.
Dissenters' Rights
Pursuant to 12 C.F.R. Section 552.14, no holder of shares of
Poughkeepsie Savings Common Stock shall have any dissenter or appraisal
rights in connection with the Reorganization.
Board of Directors and Management of the Company
Board of Directors. Following consummation of the Reorganization, the
Board of Directors of the Company will be elected by the stockholders of the
Company and the Board of Directors of Poughkeepsie Savings will be elected by
the Company, as the sole stockholder of Poughkeepsie Savings. The initial
composition of the Board of Directors of the Company is identical with the
Board of Directors of Poughkeepsie Savings as the initial directors of the
Company are the nine persons who currently serve as directors of Poughkeepsie
Savings, all of whom will have the same classes and terms as directors of the
Company. For information about the principal occupation and business
experience during the past five years of the directors of the Company, see
"Election of Directors - Nominees for Director" and "Election of Directors
- - -Directors Whose Terms Continue."
The directors of the Company and Poughkeepsie Savings are divided into
three approximately equal classes, with members of one class to be elected
annually for a term of three years and until their successors are elected and
qualified. The first class of directors consists of Messrs. Hughes and
Tomai, Jr. and Ms. Shequine, the second class of directors consists of
Messrs. Johnson, Perkins and Tockarshewsky and the third class of directors
consists of Messrs. deCordova, Jr., Gold and Meagher. The directors in the
first, second and third classes of directors have terms which correspond to
their current classes as directors of Poughkeepsie Savings and which will
expire at the first, second and third annual meeting of stockholders after
the effective date of the Company's Certificate of Incorporation,
respectively. Approval of the Reorganization by the stockholders of
Poughkeepsie Savings will be deemed to be approval of the directors of the
Company without further action and without changes in classes and terms.
34
<PAGE>
The Board of Directors of the Company intends, after the
Reorganization, to establish audit, personnel and nominating committees which
have the same responsibilities and members as the comparable committees of
the Board of Directors of Poughkeepsie Savings. See "Election of Directors -
Committees of the Board."
Management. Following consummation of the Reorganization, the
executive officers of the Company and Poughkeepsie Savings will be elected or
appointed annually by or under the direction of their respective Boards of
Directors and will hold office until their successors are elected and
qualified. The executive officers of the Company currently are as follows:
Joseph B. Tockarshewsky, Chairman of the Board, President and Chief Executive
Officer, Robert J. Hughes, Executive Vice President and Chief Financial
Officer, and Suzanne A. Gillespie, Secretary. At the present time, the
Company does not intend to employ any persons other than its management.
Management Remuneration and Effect on Employee Benefit Plans
It is not anticipated that separate compensation will be paid to the
directors and officers of the Company until such time as the directors and
officers of the Company devote significant time to the separate management of
the Company's affairs, which is not expected to occur until the Company
becomes actively involved in additional businesses. The Company may
determine that such compensation is appropriate in the future, however.
Upon consummation of the Reorganization, the ESOP of Poughkeepsie
Savings will become the ESOP of the Company.
Because the directors and officers of the Company initially will not
be compensated by the Company but will continue to serve and be compensated
by Poughkeepsie Savings, no separate employee benefit plans of the Company
are anticipated at this time. Poughkeepsie Savings will continue to maintain
its other employee benefit plans.
Market for Company Common Stock; Anticipated Dividend Policy; and Resales of
Company Common Stock
Market for Company Common Stock. Because the Company is a
newly-formed corporation and there is currently no established trading market
for its securities, no information can be provided as to historical market
prices for the Company Common Stock. Poughkeepsie Savings and the Company
will take all action as may be necessary or advisable to ensure that the
Company Common Stock will be approved for quotation on the Nasdaq Stock
Market's National Market upon consummation of the Reorganization.
On January 22, 1997, the last full trading day prior to the public
announcement of the proposed Reorganization, the closing sale price of a
share of Poughkeepsie Savings Common Stock on the Nasdaq Stock Market's
National Market was $5.438. On March 5,
35
<PAGE>
1997, the closing sale price of a share of Poughkeepsie Savings Common Stock
on the Nasdaq Stock Market's National Market was $6.375.
Anticipated Dividend Policy. Holders of Company Common Stock will be
entitled to receive dividends when, as and if declared by the Board of
Directors of the Company out of funds legally available therefor. The timing
and amount of future dividends will be within the discretion of the Board of
Directors of the Company and will depend on the consolidated earnings,
financial condition, liquidity and capital requirements of the Company and
its subsidiaries, applicable governmental regulations and policies and other
factors deemed relevant by the Board of Directors. Currently, it is not
anticipated that the dividend policy of the Company will differ from that of
Poughkeepsie Savings.
After consummation of the Reorganization, dividends from Poughkeepsie
Savings will be the Company's primary source of funds for the payment of
dividends because initially the Company will have no source of income other
than such dividends and the capital contributed to the Company by
Poughkeepsie Savings immediately prior to consummation of the Reorganization.
Poughkeepsie Savings' payment of dividends to the Company will be subject to
the limitations on capital distributions under OTS regulations.
The ability of Poughkeepsie Savings to make funds available to the
Company also will be subject to other restrictions imposed by federal law on
the ability of any such savings association to extend credit to the Company
and its non-bank subsidiaries, to purchase the assets thereof, to issue a
guarantee, acceptance or letter of credit on their behalf (including an
endorsement or standby letter of credit) or to invest in the stock or
securities thereof, or to take such stock or securities as collateral for
loans to any borrower. For additional information, see "Holding Company
Formation - Regulation of the Company - Transactions with Affiliates."
Resales of Company Common Stock. The Company Common Stock to be
issued to stockholders of Poughkeepsie Savings in connection with the
Reorganization has been registered under the Securities Act. Accordingly,
shares of Company Common Stock received by stockholders of Poughkeepsie
Savings upon consummation of the Reorganization will be freely transferable
under the Securities Act by those stockholders of Poughkeepsie Savings not
deemed to be "affiliates" of the Company or Poughkeepsie Savings. Affiliates
are generally defined as persons who control, are controlled by, or are under
common control with the Company or Poughkeepsie Savings at the time of the
Annual Meeting (generally executive officers and directors).
This Proxy Statement-Prospectus does not cover any resales of Company
Common Stock received by persons who may be deemed to be affiliates of the
Company upon consummation of the Reorganization.
36
<PAGE>
Regulation of the Company
The references to laws and regulations which are applicable to the
Company and Poughkeepsie Savings set forth below and elsewhere herein are
brief summaries thereof which do not purport to be complete and are qualified
in their entirety by reference to such laws and regulations.
From time to time various bills are introduced in the United States
Congress which could result in additional or in less regulation of the
business of the Company and Poughkeepsie Savings. It cannot be predicted at
this time whether any such legislation actually will be adopted or how such
adoption would affect the business of the Company or Poughkeepsie Savings.
General. The Company has applied for the approval of the OTS to
become a registered savings and loan holding company pursuant to the HOLA by
acquiring all the stock of Poughkeepsie Savings. The Company, as a savings
and loan holding company, will be subject to regulation and supervision by
the OTS. The Company will be required to file annually a report of its
operations with, and will be subject to examination by, the OTS.
Activities Restrictions. There are generally no restrictions on the
activities of a savings and loan holding company which holds only one
subsidiary savings institution. However, if the Director of the OTS
determines that there is reasonable cause to believe that the continuation by
a savings and loan holding company of an activity constitutes a serious risk
to the financial safety, soundness or stability of its subsidiary savings
institution, the Director may impose such restrictions as deemed necessary to
address such risk, including limiting (i) payment of dividends by the savings
institution; (ii) transactions between the savings institution and its
affiliates; and (iii) any activities of the savings institution that might
create a serious risk that the liabilities of the holding company and its
affiliates may be imposed on the savings institution. Notwithstanding the
above rules as to permissible business activities of unitary savings and loan
holding companies, if the savings institution subsidiary of such a holding
company fails to meet the qualified thrift lender ("QTL") test then such
unitary holding company also shall become subject to the activities
restrictions applicable to multiple savings and loan holding companies and,
unless the savings institution requalifies as a QTL within one year
thereafter, shall register as, and become subject to the restrictions
applicable to, a bank holding company.
If the Company were to acquire control of another savings institution,
other than through merger or other business combination with the Association,
the Company would thereupon become a multiple savings and loan holding
company. Except where such acquisition is pursuant to the authority to
approve emergency thrift acquisitions and where each subsidiary savings
institution meets the QTL test, as set forth below, the activities of the
Company and any of its subsidiaries (other than the Association or other
subsidiary savings institutions) would thereafter be subject to further
restrictions. Among other things, no multiple savings and loan holding
company or subsidiary thereof which is not a savings
37
<PAGE>
institution shall commence or continue for a limited period of time after
becoming a multiple savings and loan holding company or subsidiary thereof
any business activity, upon prior notice to, and no objection by the OTS,
other than: (i) furnishing or performing management services for a subsidiary
savings institution; (ii) conducting an insurance agency or escrow business;
(iii) holding, managing, or liquidating assets owned by or acquired from a
subsidiary savings institution; (iv) holding or managing properties used or
occupied by a subsidiary savings institution; (v) acting as trustee under
deeds of trust; (vi) those activities authorized by regulation as of March 5,
1987 to be engaged in by multiple savings and loan holding companies; or
(vii) unless the Director of the OTS by regulation prohibits or limits such
activities for savings and loan holding companies, those activities
authorized by the Federal Reserve Board ("FRB") as permissible for bank
holding companies. Those activities described in (vii) above also must be
approved by the Director of the OTS prior to being engaged in by a multiple
savings and loan holding company.
Limitations on Transactions with Affiliates. Transactions between
savings institutions and any affiliate are governed by Sections 23A and 23B
of the Federal Reserve Act. An affiliate of a savings institution is any
company or entity which controls, is controlled by or is under common control
with the savings institution. In a holding company context, the parent
holding company of a savings institution (such as the Company) and any
companies which are controlled by such parent holding company are affiliates
of the savings institution. Generally, Sections 23A and 23B (i) limit the
extent to which the savings institution or its subsidiaries may engage in
"covered transactions" with any one affiliate to an amount equal to 10% of
such institution's capital stock and surplus, and contain an aggregate limit
on all such transactions with all affiliates to an amount equal to 20% of
such capital stock and surplus and (ii) require that all such transactions be
on terms substantially the same, or at least as favorable, to the institution
or subsidiary as those provided to a non-affiliate. The term "covered
transaction" includes the making of loans, purchase of assets, issuance of a
guarantee and other similar transactions. In addition to the restrictions
imposed by Sections 23A and 23B, no savings institution may (i) loan or
otherwise extend credit to an affiliate, except for any affiliate which
engages only in activities which are permissible for bank holding companies,
or (ii) purchase or invest in any stocks, bonds, debentures, notes or similar
obligations of any affiliate, except for affiliates which are subsidiaries of
the savings institution.
In addition, Sections 22(h) and (g) of the Federal Reserve Act places
restrictions on loans to executive officers, directors and principal
stockholders. Under Section 22(h), loans to a director, an executive officer
and to a greater than 10% stockholder of a savings institution, and certain
affiliated interests of either, may not exceed, together with all other
outstanding loans to such person and affiliated interests, the savings
institution's loans to one borrower limit (generally equal to 15% of the
institution's unimpaired capital and surplus). Section 22(h) also requires
that loans to directors, executive officers and principal stockholders be
made on terms substantially the same as offered in comparable transactions to
other persons and also requires prior board approval for certain loans. In
addition, the
38
<PAGE>
aggregate amount of extensions of credit by a savings institution to all
insiders cannot exceed the institution's unimpaired capital and surplus.
Furthermore, Section 22(g) places additional restrictions on loans to executive
officers.
Restrictions on Acquisitions. Except under limited circumstances,
savings and loan holding companies are prohibited from acquiring, without
prior approval of the Director of the OTS, (i) control of any other savings
institution or savings and loan holding company or substantially all the
assets thereof or (ii) more than 5% of the voting shares of a savings
institution or holding company thereof which is not a subsidiary. Except
with the prior approval of the Director of the OTS, no director or officer of
a savings and loan holding company or person owning or controlling by proxy
or otherwise more than 25% of such company's stock, may acquire control of
any savings institution, other than a subsidiary savings institution, or of
any other savings and loan holding company.
The Director of the OTS may only approve acquisitions resulting in the
formation of a multiple savings and loan holding company which controls
savings institutions in more than one state if (i) the multiple savings and
loan holding company involved controls a savings institution which operated a
home or branch office located in the state of the institution to be acquired
as of March 5, 1987; (ii) the acquiror is authorized to acquire control of
the savings institution pursuant to the emergency acquisition provisions of
the Federal Deposit Insurance Act ("FDIA"); or (iii) the statutes of the
state in which the institution to be acquired is located specifically permit
institutions to be acquired by the state-chartered institutions or savings
and loan holding companies located in the state where the acquiring entity is
located (or by a holding company that controls such state-chartered savings
institutions).
Under the Bank Holding Company Act of 1956, the FRB is authorized to
approve an application by a bank holding company to acquire control of a
savings institution. In addition, a bank holding company that controls a
savings institution may merge or consolidate the assets and liabilities of
the savings institution with, or transfer assets and liabilities to, any
subsidiary bank which is a member of the BIF with the approval of the
appropriate federal banking agency and the FRB. As a result of these
provisions, there have been a number of acquisitions of savings institutions
by bank holding companies in recent years.
Description of Company Capital Stock
General. The Certificate of Incorporation of the Company authorizes
the issuance of capital stock consisting of 40,000,000 shares of Company
Common Stock and 2,000,000 shares of serial preferred stock, par value $.01
per share ("Company Preferred Stock"). There are 100 shares of Company
Common Stock currently issued and outstanding, all of which are owned by
Poughkeepsie Savings. After the Reorganization is consummated, such
39
<PAGE>
shares will be cancelled. The Company Common Stock, like the Poughkeepsie
Savings Common Stock, will represent non-withdrawable capital, will not be of an
insurable type and will not be insured by the FDIC.
In the future, the authorized but unissued and unreserved shares of
Company Common Stock and the authorized and unissued shares of Company
Preferred Stock will be available for general corporate purposes, including,
but not limited to, possible issuance as stock dividends or stock splits, in
future mergers or acquisitions, pursuant to stock compensations plans of the
Company, or in future private placements or public offerings. Currently, the
Company has no plans for the issuance of additional authorized shares of its
capital stock. Except as otherwise may be required to approve a merger or
other transaction in which the additional authorized shares of Company Common
Stock or authorized shares of Company Preferred Stock would be issued or as
may then be required by the National Association of Securities Dealers, Inc.
("NASD") for companies to have their equity securities quoted on the Nasdaq
Stock Market (or by any exchange on which the Company's capital stock may
then be listed), no stockholder approval will be required for the issuance of
additional shares of capital stock of the Company.
Company Common Stock. Each share of Company Common Stock has the same
relative rights as, and is identical in all respects with, each other share
of Company Common Stock. Until such time as Preferred Stock with voting
rights is issued, if ever, the holders of shares of Company Common Stock will
possess all rights, including exclusive voting rights, pertaining to the
capital stock of the Company. Each share of Company Common Stock will
entitle the holder thereof to one vote on all matters upon which stockholders
have the right to vote, and stockholders of the Company will not be entitled
to cumulate their votes for the election of directors. The holders of
Company Common Stock will be entitled to dividends when, as and if declared
by the Company's Board of Directors out of funds legally available therefor.
Holders of shares of Company Common Stock will not be entitled to
preemptive rights with respect to any shares which may be issued. The Company
Common Stock will not be subject to call or redemption and, upon receipt by
the Company of the full purchase price therefor, each share of Company Common
Stock will be fully paid and non-assessable.
In the event of any liquidation or dissolution of the Company, the
holders of Company Common Stock will be entitled to receive, after payment or
provision for payment of all debts and liabilities of the Company, all assets
of the Company available for distribution, in cash or in kind. If Company
Preferred Stock should be issued, the holders thereof may have a priority
over the holders of Company Common Stock in the event of liquidation or
dissolution.
Company Preferred Stock. The Board of Directors of the Company is
authorized to issue Company Preferred Stock in series and fix and state
voting powers, designations, preferences or other special rights of the
shares of each such series of Company Preferred
40
<PAGE>
Stock and the qualifications, limitations and restrictions thereof. Company
Preferred Stock may rank prior to Company Common Stock as to dividend rights,
liquidation preferences, or both, may have full or limited voting rights, and
may be convertible into Company Common Stock. The holders of any class or
series of Company Preferred Stock also may have the right to vote separately
as a class or series under the terms of such class or series or as may be
otherwise provided by Delaware law. No Company Preferred Stock will be
issued in connection with the Reorganization and the Company does not have
any current plans to issue any such stock.
Comparison of Shareholders' Rights
General. As a result of the Reorganization, shareholders of the Bank,
a federally-chartered savings bank will become shareholders of the Company, a
Delaware corporation.
There are certain differences in shareholder rights arising from
distinctions between the Bank's Amended and Restated Federal Stock Charter
and Bylaws, as amended, and the Company's Certificate of Incorporation and
Bylaws and from distinctions between laws with respect to federally-chartered
savings banks and Delaware law. For example, as discussed below, Section 203
of the GCL imposes certain limitations on business combinations with
interested shareholders.
The discussion herein is not intended to be a complete statement of
the differences affecting the rights of shareholders, but rather summarizes
the more significant differences and certain important similarities. The
discussion herein is qualified in its entirety by reference to the
Certificate of Incorporation and Bylaws of the Company and the Delaware GCL.
Authorized Capital Stock. The Company's authorized capital stock
consists of 40,000,000 shares of Company Common Stock and 2,000,000 shares of
Company Preferred Stock. Such capitalization is the same as the Bank's
authorized capital stock of 40,000,000 shares of Poughkeepsie Savings Common
Stock and 2,000,000 shares of serial preferred stock ("Poughkeepsie Savings
Preferred Stock").
The Company will be subject to annual franchise taxes under Delaware
law based on its authorized capitalization. As a federally-chartered
institution, the Bank is not subject to franchise taxes, regardless of the
amount of its authorized capitalization.
Issuance of Capital Stock. Neither the Amended and Restated Federal
Stock Charter of the Bank nor the Certificate of Incorporation of the Company
contain a restriction on the issuance of shares of capital stock to
directors, officers or controlling persons of the Company and the Bank,
respectively. Thus, stock-related compensation plans such as stock option
plans could be adopted by the Company and the Bank without shareholder
approval and shares of Company capital stock and Bank capital stock could be
issued directly to directors, officers or controlling persons without
shareholder approval.
41
<PAGE>
The Bylaws of the NASD, however, generally require corporations with
securities which are quoted on the NASDAQ National Market to obtain
shareholder approval of most stock compensation plans for directors, officers
and key employees of the corporation. Moreover, although generally not
required, shareholder approval of stock-related compensation plans may be
sought in certain instances in order to qualify such plans for favorable
federal income tax and securities law treatment under current laws and
regulations.
Neither the Amended and Restated Federal Stock Charter and Bylaws, as
amended, of the Bank nor the Certificate of Incorporation and Bylaws of the
Company provide for pre-emptive rights to shareholders in connection with the
issuance of capital stock.
Voting Rights. Unlike the Bank's Bylaws, as amended, which authorize
cumulative voting in election of directors commencing on the fifth
anniversary of the completion of the conversion of the Bank from mutual to
stock form of organization (the "Conversion"), the Certificate of
Incorporation and Bylaws of the Company do not authorize cumulative voting in
election of directors. Elimination of cumulative voting will help to ensure
continuity and stability of the Company's Board of Directors and the policies
adopted by it by making it more difficult for the holders of a relatively
small amount of the Bank Common Stock to elect their nominees to the Board of
Directors and possibly by delaying, deterring or discouraging proxy contests.
The Bank's Amended and Restated Federal Stock Charter permits the
provision of separate class voting rights for holders of a class of the
Poughkeepsie Savings Preferred Stock only under specified circumstances,
including (i) mergers, consolidations and sales, leases or conveyances of
property of the Bank if the class of the Poughkeepsie Savings Preferred Stock
is to be exchanged for securities of another corporation, (ii) amendments of
the Charter that would adversely change the specific terms of any class or
series of the Poughkeepsie Savings Preferred Stock and (iii) the provision of
class voting rights to holders of the Poughkeepsie Savings Preferred Stock
permitting such holders to elect a specified number of directors of the Board
of Directors of the Bank (which must be less than a majority of directors) in
the event of default in the payment of dividends on the Poughkeepsie Savings
Preferred Stock. The Certificate of Incorporation of the Company does not
contain any specification of or limitation on the circumstances under which
separate class voting rights may be provided to a particular class or series
of Company Preferred Stock.
For additional information relating to voting rights, see
"- Limitations on Acquisitions of Voting Stock and Voting Rights" below.
Payment of Dividends. The ability of the Bank to pay dividends on its
capital stock is restricted by OTS regulations and by tax considerations
related to savings associations such as the Bank. See "Regulation - The Bank
- - - Capital Distributions" and "Taxation - Federal Taxation." Although the
Company is not subject to these restrictions as a Delaware corporation, such
restrictions will indirectly affect the Company because dividends from the
42
<PAGE>
Bank will be a primary source of funds of the Company for the payment of
dividends to shareholders of the Company.
The Delaware GCL generally provides that, subject to any restrictions
in the corporation's Certificate of Incorporation, dividends may be declared
from the corporation's surplus or, if there is no surplus, from its net
profits for the fiscal year in which the dividend is declared and the
preceding fiscal year. However, if the corporation's capital (generally
defined in the Delaware GCL as the sum of the aggregate par value of all
shares of the corporation's capital stock, where all such shares have a par
value and the board of directors has not established a higher level of
capital) has been diminished to an amount less than the aggregate amount of
the capital represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets, dividends may not be
declared and paid out of such net profits until the deficiency in such
capital has been repaired.
Board of Directors. The Bank's Bylaws, as amended, and the
Certificate of Incorporation and Bylaws of the Company respectively require
the Board of Directors of the Bank and the Company to be divided into three
classes as nearly equal in number as possible and that the members of each
class shall be elected for a term of three years and until their successors
are elected and qualified, with one class being elected annually.
Under the Bank's Bylaws, as amended, any vacancies in the Board of
Directors of the Bank may be filled by the affirmative vote of a majority of
the remaining directors although less than a quorum of the board of
directors. Persons elected by the directors of the Bank to fill vacancies
may only serve until the next annual meeting of shareholders. However, under
the Company's Certificate of Incorporation, any vacancy occurring in the
Board of Directors of the Company, including any vacancy created by reason of
an increase in the number of directors, may be filled by a majority vote of
the directors then in office, whether or not a quorum is present, or by a
sole remaining director, and any director so chosen shall hold office for the
remainder of the term to which the director has been elected and until his or
her successor is elected and qualified.
Limitations on Liability. The Company's Certificate of Incorporation
provides that the personal liability of the directors and officers of the
Company for monetary damages shall be eliminated to the fullest extent
permitted by the GCL of the State of Delaware as it exists on the effective
date of the Certificate of Incorporation or as such law may be thereafter in
effect. Section 102(b)(7) of the Delaware GCL currently provides that
directors (but not officers) of corporations that have adopted such a
provision will not be so liable, except (i) for any breach of the director's
duty of loyalty to the corporation or its shareholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) for the payment of certain unlawful dividends
and the making of certain stock purchases or redemptions, or (iv) for any
transaction from which the director derived an improper personal benefit.
This provision would absolve directors of personal liability for negligence
in the performance of their duties, including gross negligence. It would not
permit a director to be exculpated, however, for liability for
43
<PAGE>
actions involving conflicts of interest or breaches of the traditional "duty
of loyalty" to the Company and its shareholders, and it would not affect the
availability of injunctive or other equitable relief as a remedy.
If Delaware law was amended in the future to provide for greater
limitations on the personal liability of directors or to permit corporations
to limit the personal liability of officers, the provision in the Company's
Certificate of Incorporation limiting the personal liability of directors and
officers would automatically incorporate such authorities without further
action by shareholders. Similarly, if Delaware law was amended in the future
to restrict the ability of a corporation to limit the personal liability of
directors, the Company's Certificate of Incorporation would automatically
incorporate such restrictions without further action by shareholders.
Currently, the scope of the provision in the Company's Certificate of
Incorporation limiting the personal liability of directors is uncertain
because of the absence of judicial precedent interpreting similar provisions.
In addition, the SEC takes the position that similar provisions added to
other corporations' certificates of incorporation would not protect those
corporations' directors from liability for violations of the federal
securities laws. Federal banking regulators also may take the same position
with respect to violations of federal banking laws and regulations.
The provision limiting the personal liability of the Company's
directors does not eliminate or alter the duty of the Company's directors; it
merely limits personal liability for monetary damages to the maximum extent
now or hereafter permitted by the Delaware GCL. Moreover, it currently
applies only to claims against a director arising out of his role as a
director; it currently does not apply to claims arising out of his role as an
officer (if he is also an officer) or arising out of any other capacity in
which he serves because Section 102(b)(7) does not authorize such a
limitation of liability.
The provision in the Company's Certificate of Incorporation which
limits the personal liability of directors is designed to ensure that the
ability of the Company's directors to exercise their best business judgment
in managing the Company's affairs is not unreasonably impeded by exposure to
the potentially high personal costs or other uncertainties of litigation.
The nature of the tasks and responsibilities undertaken by directors of
publicly-held corporations often require such persons to make difficult
judgments of great importance which can expose such persons to personal
liability, but from which they will acquire no personal benefit. In recent
years, litigation against publicly-held corporations and their directors and
officers challenging good faith business judgments and involving no
allegations of personal wrongdoing has become common. Such litigation
regularly involves damage claims in huge amounts which bear no relationship
to the amount of compensation received by the directors or officers,
particularly in the case of directors who are not employees of the
corporation. The expense of such litigation, whether it is well-founded or
not, can be enormous. The provision of the Certificate of Incorporation
relating to director
44
<PAGE>
liability is intended to reduce, in appropriate cases, the risk incident to
serving as a director and to enable the Company to elect and retain the persons
most qualified to serve as directors.
Currently, federal law does not permit federally-chartered savings
banks such as the Bank to limit the personal liability of directors in the
manner authorized by the Delaware GCL and the laws of many other states.
Indemnification of Directors, Officers and Employees. The Bank's
Amended and Restated Federal Stock Charter and Bylaws, as amended, do not
contain any provision relating to indemnification of directors and officers
of the Bank. Under present OTS regulations, however, the Bank shall
indemnify its directors, officers and employees for any costs incurred in
connection with any litigation involving any such person's activities as a
director, officer or employee if such person obtains a final judgment on the
merits in his or her favor. In addition, indemnification is permitted in the
case of a settlement, a final judgment against such person or final judgement
other than on the merits, if a majority of disinterested directors determine
that such person was acting in good faith within the scope of his or her
employment as he or she could reasonably have perceived it under the
circumstances and for a purpose he or she could reasonably have believed
under the circumstances was in the best interest of the Bank or its
shareholders. The Bank also is permitted to pay ongoing expenses incurred by
a director, officer or employee if a majority of disinterested directors
concludes that such person may ultimately be entitled to indemnification.
Before making any indemnification payment, the Bank is required to notify the
OTS of its intention and such payment cannot be made if the OTS objects
thereto.
The Company's Bylaws provide that the Company shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer or employee of the Company or any
predecessor of the Company, or is or was serving at the request of the
Company or any predecessor of the Company as a director, officer or employee
of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines,
excise taxes and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding to the
fullest extent authorized by Section 145(a)-(d) of the GCL of the State of
Delaware, provided that the Company shall not be liable for any amounts which
may be due in connection with a settlement of any action, suit or proceeding
effected without its prior written consent or any action, suit or proceeding
initiated by any person seeking indemnification thereunder without its prior
written consent.
Under Section 145(a)-(d) of the Delaware GCL as currently in effect,
other than in actions brought by or in the right of the Company, such
indemnification would apply if it was determined in the specific case that
the proposed indemnitee acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of
45
<PAGE>
the Company and, with respect to any criminal proceeding, if he or she had no
reasonable cause to believe that his or her conduct was unlawful. In actions
brought by or in the right of the Company, such indemnification would
probably be limited to reasonable expenses (including attorneys' fees), and
would apply if it were determined in the specific case that the proposed
indemnitee acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the Company, except that no
indemnification may be made with respect to any claim, issue or matter as to
which such person is adjudged liable to the Company unless, and only to the
extent that, the Delaware Court of Chancery or the court in which that action
was brought determines upon application that, in view of all the
circumstances of the case, the proposed indemnitee is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper. To the
extent that any director, officer, employee or agent of the Company has been
successful on the merits or otherwise in defense of any proceeding, he or she
must be indemnified against reasonable expenses incurred by him or her in
connection therewith.
The Company's Bylaws also provide that reasonable expenses (including
attorneys' fees) incurred by a director, officer or employee of the Company
in defending any civil, criminal, administrative or investigative action,
suit or proceeding described above shall be paid by the Company in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors upon receipt of an undertaking by or on behalf of such
person to repay such amount if it shall ultimately be determined that the
person is not entitled to be indemnified by the Company.
Special Meetings of Shareholders. The Bank's Bylaws, as amended,
provide that special meetings of the shareholders of the Bank may be called
by the Chairman, President, a majority of the Board of Directors or the
holders of not less than one-tenth of the outstanding capital stock of the
Bank entitled to vote at the meeting. The Amended and Restated Federal Stock
Charter of the Bank provides, however, that until the fifth anniversary of
the Conversion special meetings of shareholders relating to changes in
control of the Bank or amendments to its Charter shall only be called upon
direction of the Board of Directors of the Bank. The Company's Certificate
of Incorporation contains a provision pursuant to which special meetings of
shareholders relating to changes in control of the Company or amendments to
the Certificate of Incorporation may be called only upon direction of the
Board of Directors.
Shareholder Nominations and Proposals. The Bank's Bylaws, as amended,
generally provide that shareholders who have complied with the notice
provisions in the Bylaws may submit nominations for election as director at
an annual meeting of shareholders and any new business to be taken up at such
a meeting at least 20 calendar days before the date of any such meeting.
The Company's Bylaws provide that, subject to the rights of the
holders of any class or series of stock having a preference over the Company
Common Stock as to dividends or upon liquidation, all nominations for
election to the Board of Directors, other than those
46
<PAGE>
made by the Board or a committee thereof, shall be made by a shareholder who
has complied with the notice provisions in the Bylaws. Written notice of a
shareholder nomination must be communicated to the attention of the secretary
and either delivered to, or mailed and received at, the principal executive
offices of the Company not later than (i) with respect to an annual meeting
of the shareholders of the Company, 90 days prior to the anniversary date of
the mailing of proxy materials by the Company in connection with the
immediately preceding annual meeting of shareholders of the Company, or the
case of the first annual meeting following the Conversion and Reorganization,
90 days prior to the anniversary date of the mailing of proxy materials by
the Bank in connection with the preceding annual meeting of the Bank prior to
the Conversion and Reorganization, and (ii) with respect to a special meeting
of shareholders for the election of directors, the close of business on the
tenth day following the date on which notice of such meeting is first given
to the shareholders. Each such notice shall include, among other things:
(a) the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the shareholder is a holder of record of stock of the Company entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the SEC; and (e) the consent of each
nominee to serve as a director of the Company if elected. The presiding
officer of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedure.
The Company's Bylaws also provide that only such business as shall
have been properly brought before an annual meeting of shareholders shall be
conducted at the annual meeting. To be properly brought before an annual
meeting, business must be specified in the notice of the meeting (or any
supplement thereto) given by or at the direction of the Board of Directors,
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before an annual meeting by
a shareholder, the shareholder must have given timely notice thereof in
writing to the Secretary of the Company. To be timely, a shareholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Company not later than 90 days prior to the anniversary date
of the mailing of proxy materials by the Company in connection with the
immediately preceding annual meeting of shareholders of the Company or, in
the case of the first annual meeting of shareholders of the Company following
the Conversion and Reorganization, 90 days prior to the anniversary date of
the mailing of proxy materials by the Bank in connection with the immediately
preceding annual meeting of the Bank prior to the Conversion and
Reorganization. The Company's Bylaws also require that the notice must
contain certain information in order to be considered. The shareholder's
notice must include a brief description of the business desired to be brought
before the annual meeting,
47
<PAGE>
the name and address, as they appear on the Company's books, of the
shareholder and the class and number of shares of Company capital stock which
are beneficially owned by such shareholder and any material interest of the
shareholder in such business. The presiding officer of an annual meeting
shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting in accordance with the
Company's Bylaws, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall
not be transacted.
The procedures regarding shareholder proposals and nominations will
provide the Board of Directors of the Company with the information which will
be necessary to evaluate a shareholder proposal or nomination and other
relevant information, such as existing shareholder support, as well as the
time necessary to consider and evaluate such information in advance of the
applicable meeting. The proposed procedures, however, will give incumbent
directors advance notice of a business proposal or nomination. This may make
it easier for the incumbent directors to defeat a shareholder proposal or
nomination, even when certain shareholders view such proposal or nomination
as in the best interests of the Company or its shareholders.
Inspectors of Election. The Bank's Bylaws, as amended, provide that
in advance of any meeting the Board of Directors may appoint one or three
persons other than nominees for office as inspectors of election at a meeting
of shareholders, and that if inspectors of election are not so appointed, the
Chairman of the Board or the President may, or on the request of not less
than 10% of the votes represented at the meeting shall, make such appointment
at the meeting. In accordance with Delaware law, the Company's Bylaws
provide that the Board of Directors of the Company shall appoint one or more
persons other than nominees for office as inspectors of election, and that
the chairman of any meeting of shareholders shall make such an appointment in
the event that the inspector(s) appointed by the Board of Directors shall be
unable to act or the Board shall fail to appoint any inspector. The Bylaws,
as amended, of the Bank and the Company also specify the duties of inspectors
of election.
Shareholder Action Without a Meeting. The Bylaws, as amended, of the
Bank provide that any action required to be taken or which may be taken at
any annual or special meeting of shareholders may be taken without a meeting
if a consent in writing, setting forth the actions so taken, is given by all
of the shareholders entitled to vote with respect to the subject matter. The
Certificate of Incorporation of the Company provides that no action required
by the Delaware GCL to be taken at any annual or special meetings of
shareholders, nor any action which may be taken at any annual or special
meeting of shareholders, may be taken without a meeting, without prior notice
and without a vote of such shareholders.
Shareholder's Right to Examine Books and Records. A federal
regulation which is applicable to the Bank provides that shareholders may
inspect and copy specified books and records of a federally-chartered savings
association after proper written notice for a proper
48
<PAGE>
purpose. The Delaware GCL similarly provides that a shareholder may inspect
books and records upon written demand under oath stating the purpose of the
inspection, if such purpose is reasonably related to such person's interest
as a shareholder.
Restrictions on Acquisitions. Federal laws and regulations generally
require any person who intends to acquire control of a savings and loan
holding company or savings association to give at least 60 days prior written
notice to the OTS. "Control" is defined as the power, directly or
indirectly, to direct the management or policies of an insured institution or
to vote 25% or more of any class of voting securities of the insured
institution. In addition to the foregoing restrictions, a company must secure
the approval of the OTS before it can acquire control of an insured
institution. Under federal regulations, a person (including business
entities) is deemed conclusively to have acquired control if, among other
things, such person acquires: (a) 25% or more of any class of voting stock
of the insured institution; (b) irrevocable proxies representing 25% or more
of any class of voting stock of the insured institution; (c) any combination
of voting stock and irrevocable proxies representing 25% or more of any class
of such institution's voting stock; or (d) control of the election of a
majority of the directors of the insured institution. In addition, a
rebuttable presumption of control arises in the event a person acquires more
than 10% of any class of voting stock (or more than 25% of any class of
nonvoting stock) and is subject to one or more of eight enumerated control
factors. Such regulations also set forth rebuttable presumptions of
concerted action and the procedures to follow to rebut any such presumptions.
The OTS is specifically empowered to disapprove such an acquisition of
control if it finds, among other reasons, that (i) the acquisition would
substantially lessen competition; (ii) the financial condition of the
acquiring person might jeopardize the institution or its depositors; (iii)
the acquiring person might jeopardize the institution or its depositors; or
(iv) the competency, experience or integrity of the acquiring person
indicates that it would not be in the interest of the depositors, the
institution or the public to permit the acquisition of control by such person.
In addition to the applicable provisions under Federal law and
regulation, shares of Poughkeepsie Savings Common Stock are subject to the
provisions of a shareholders' rights plan which was adopted by the Bank in
1988. It is anticipated that, on or prior to consummation of the
Reorganization, the Company will implement a shareholders' rights plan with
provisions substantially similar to provisions of the Bank's existing
shareholders' rights plan. Similar to the Bank's adoption of its current
plan in 1988, any such action by the Company may be implemented solely by the
Board of Directors of the Company.
The foregoing could have the effect of discouraging non-negotiated
takeover attempts, including proxy contests, which certain stockholders might
deem to be in their interest, decrease the likelihood of temporary increases
in the price of the Common Stock which frequently results from such activity
and may tend to perpetuate existing management.
49
<PAGE>
Mergers, Consolidations and Sales of Assets. A federal regulation
requires the approval of the Board of Directors of the Bank and the holders
of two thirds of the outstanding stock of the Bank entitled to vote thereon
for mergers, consolidations and sales of all or substantially all of the
Bank's assets. Such regulation permits the Bank to merge with another
corporation without obtaining the approval of its shareholders if: (i) it
does not involve an interim savings association; (ii) the Bank's Charter is
not changed; (iii) each share of the Bank's stock outstanding immediately
prior to the effective date of the transaction is to be an identical
outstanding share or a treasury share of the Bank after such effective date;
and (iv) either: (A) no shares of voting stock of the Bank and no securities
convertible into such stock are to be issued or delivered under the plan of
combination or (B) the authorized unissued shares or the treasury shares of
voting stock of the Bank to be issued or delivered under the plan of
combination, plus those initially issuable upon conversion of any securities
to be issued or delivered under such plan, do not exceed 15% of the total
shares of voting stock of the Bank outstanding immediately prior to the
effective date of the transaction.
The Delaware GCL requires the approval of the Board of Directors and
the holders of a majority of the outstanding stock of the Company entitled to
vote thereon for mergers or consolidations, and for sales, leases or
exchanges of all or substantially all of the Company's assets. The Delaware
GCL permits the Company to merge with another corporation without obtaining
the approval of the Company's shareholders if: (i) the Company is the
surviving corporation of the merger; (ii) the merger agreement does not amend
the Company's Certificate of Incorporation; (iii) each share of the Company's
stock outstanding immediately prior to the effective date of the merger is to
be an identical outstanding or treasury share of the Company after the
merger; and (iv) any authorized but unissued shares or treasury shares of
Common Stock to be issued or delivered under the plan of merger plus those
initially issuable upon conversion of any other securities or obligations to
be issued or delivered under such plan do not exceed 20% of the shares of the
Common Stock outstanding immediately prior to the effective date of the
merger.
As holder of all of the outstanding Poughkeepsie Savings Common Stock
after consummation of the Reorganization, the Company generally will be able
to authorize a merger, consolidation or other business combination involving
the Bank without the approval of the shareholders of the Company.
Business Combinations with Interested Shareholders. Section 203 of
the Delaware GCL ("Section 203") imposes certain restrictions on business
combinations between the Company and large shareholders. Specifically,
Section 203 prohibits a "business combination" (as defined in Section 203,
generally including mergers, sales and leases of assets, issuances of
securities and similar transactions) between the Company or a subsidiary and
an "interested shareholder" (as defined in Section 203, generally the
beneficial owner of 15% or more of the Company Common Stock) within three
years after the person or entity becomes an interested shareholder, unless
(i) prior to the person or entity becoming an interested shareholder, the
business combination or the transaction pursuant to which
50
<PAGE>
such person or entity became an interested shareholder shall have been
approved by the Company's Board of Directors, (ii) upon consummation of the
transaction in which the interested shareholder became such, the interested
shareholder holds at least 85% of the Company Common Stock (excluding shares
held by persons who are both officers and directors and shares held by
certain employee benefit plans), or (iii) the business combination is
approved by the Company's Board of Directors and by the holders of at least
two-thirds of the outstanding Company Common Stock, excluding shares owned by
the interested shareholders.
One of the effects of Section 203 may be to prevent highly leveraged
takeovers, which depend upon getting access to the acquired corporation's
assets to support or repay acquisition indebtedness and certain coercive
acquisition tactics. By requiring approval of the holders of two-thirds of
the shares held by disinterested shareholders for business combinations
involving an interested shareholder, Section 203 may prevent any interested
shareholder from taking advantage of its position as a substantial, if not
controlling, shareholder and engaging in transactions with the Company that
may not be fair to the Company's other shareholders or that may otherwise not
be in the best interests of the Company, its shareholders and other
constituencies.
For similar reasons, however, these provisions may make more difficult
or discourage an acquisition of the Company, or the acquisition of control of
the Company by a principal shareholder, and thus the removal of incumbent
management, because a business combination within the specified three-year
period that is not approved by a majority of the Board of Directors prior to
the transaction in which a person becomes an interested shareholder will
require the approval of the Board of Directors and the holders of two-thirds
of the shares held by disinterested shareholders. In addition, to the extent
that Section 203 discourages takeovers that would result in the change of the
Company's management, such a change may be less likely to occur.
Neither the Bank's Amended and Restated Federal Stock Charter and
Bylaws, as amended, nor federal laws and regulations contain a provision
which restricts business combinations between the Bank and interested
shareholders in the manner set forth in Section 203.
Dissenters' Rights of Appraisal. A federal regulation which is
applicable to the Bank generally provides that a shareholder of a
federally-chartered savings association which engages in a merger,
consolidation or sale of all or substantially all of its assets shall have
the right to demand from such association payment of the fair or appraised
value of his or her stock in the association, subject to specified procedural
requirements. This regulation also provides, however, that the shareholders
of a federally-chartered savings association with stock which is listed on a
national securities exchange or quoted on the NASDAQ System are not entitled
to dissenters' rights in connection with a merger involving such savings
association if the shareholder is required to accept only "qualified
consideration" for his or her stock, which is defined to include cash, shares
of stock of any association or
51
<PAGE>
corporation which at the effective date of the merger will be listed on a
national securities exchange or quoted on the NASDAQ System or any
combination of such shares of stock and cash.
After the Reorganization, the rights of appraisal of dissenting
shareholders of the Company will be governed by the Delaware GCL. Pursuant
thereto, a shareholder of a Delaware corporation generally has the right to
dissent from any merger or consolidation involving the corporation or sale of
all or substantially all of the corporation's assets, subject to specified
procedural requirements. However, no such appraisal rights are available for
the shares of any class or series of a corporation's capital stock if (i) as
of the record date fixed to determine the shareholders entitled to receive
notice of and to vote at the meeting of shareholders to act upon the
agreement of merger or consolidation, such shares were either listed on a
national securities exchange or held of record by more than 2,000
shareholders, or (ii) the corporation is the surviving corporation of a
merger and the merger did not require the approval of the corporation's
shareholders, unless in either case, the holders of such stock are required
by an agreement of merger or consolidation to accept for that stock something
other than: (a) shares of stock of the corporation surviving or resulting
from the merger or consolidation; (b) shares of stock of any other
corporation that, at the effective date of the merger, will be listed on a
national securities exchange or held of record by more than 2,000
shareholders; (c) cash in lieu of fractional shares of a corporation
described in clause (a) or (b) above; or (d) any combination of the shares of
stock and cash in lieu of fractional shares described in clauses (a) through
(c) above. There were 1,743 holders of the Bank's Common Stock on March 5,
1997 and such stock is currently listed on the NASDAQ National Market System.
Amendment of Governing Instruments. No amendment of the Bank's
Amended and Restated Federal Stock Charter may be made unless it is first
proposed by the Board of Directors of the Bank, then preliminarily approved
by the OTS, and thereafter approved by the holders of a majority of the total
votes eligible to be cast at a legal meeting. Except for the requirement of
preliminary OTS approval, the Company's Certificate of Incorporation
similarly provides that no amendment of the Company's Certificate of
Incorporation shall be made unless it is first approved by the Board of
Directors of the Company and thereafter is approved by the holders of a
majority of the shares of the Company entitled to vote generally in an
election of directors, voting together as a single class.
The Bylaws, as amended, of the Bank may be amended by a three-fourths
vote of the full Board of Directors of the Bank or by a majority vote of the
votes cast by the shareholders of the Bank at any legal meeting. The Bylaws
of the Company may be amended by a majority vote of the Board of Directors of
the Company or by the affirmative vote of the holders of a majority of the
votes cast by shareholders of the Company at a meeting of shareholders.
52
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
(Proposal Three)
The Board of Directors has appointed the firm of Deloitte & Touche LLP
as independent certified public accountants of the Bank for the year ending
December 31, 1997, subject to ratification of such appointment by the
stockholders. The firm has served as independent certified public
accountants for the Bank since 1990. Representatives of Deloitte & Touche
LLP are expected to be present at the Annual Meeting to make such comments as
they desire and to respond to appropriate questions from stockholders of the
Bank.
The Board of Directors unanimously recommends a vote by stockholders
FOR ratification of the appointment of Deloitte & Touche LLP as the Bank's
independent certified public accountants for the year ending December 31,
1997.
PROXY SOLICITATION
The expense of soliciting proxies will be borne by the Bank. Proxies
will be solicited principally by mail, but may also be solicited by the
directors, officers and other regular employees of the Bank, who will receive
no compensation therefore in addition to their regular compensation. Banks,
brokerage houses, custodians, nominees and fiduciaries are being requested to
forward the soliciting materials to their principals and will be reimbursed
for their expenses. In addition, the Bank has retained Morrow & Co., Inc. to
assist in the solicitation of proxies at an estimated cost of $7,500 plus
reasonable out-of-pocket expenses.
QUORUM
A majority of the outstanding shares of Poughkeepsie Savings Common
Stock entitled to vote, or 6,296,263 shares, represented in person or by
proxy, will constitute a quorum at the Annual Meeting.
1998 STOCKHOLDER PROPOSALS
In order for Stockholder proposals for the 1998 Annual Meeting of
Stockholders of the Company or Poughkeepsie Savings, as applicable, to be
eligible for inclusion in the Proxy Statement, they must be received by the
Secretary on or prior to November 20, 1997. Proposals may be excluded from
the Proxy Statement pursuant to Rule 14a-8 under the Exchange Act, provided
certain conditions are met.
53
<PAGE>
ANNUAL REPORTS AND FINANCIAL STATEMENTS
Stockholders of Poughkeepsie Savings as of the record date for the
Annual Meeting are being forwarded a copy of Poughkeepsie Savings' Annual
Report to Stockholders for the year ended December 31, 1996 (the "Annual
Report"). Included on pages 52 to 85 of the Annual Report are the
consolidated financial statements of Poughkeepsie Savings as of December 31,
1996 and 1995 and for each of the years in the three-year period ended
December 31, 1996, prepared in accordance with generally accepted accounting
principles, and the related report of Poughkeepsie Savings' independent
public accountants, which are incorporated herein by reference. The Annual
Report is not a part of this Proxy Statement-Prospectus.
Upon receipt of a written request, Poughkeepsie Savings will furnish
to any stockholder without charge a copy of its Annual Report on Form 10-K
filed with the OTS under the Exchange Act for the year ended December 31,
1996. Upon written request, Poughkeepsie Savings will furnish to any such
stockholder a copy of the exhibits to the Annual Report on Form 10-K. Such
written requests should be directed to Suzanne A. Gillespie, Secretary,
Poughkeepsie Savings Bank, FSB, 249 Main Mall, Poughkeepsie, New York 12601.
The Annual Report on Form 10-K is not a part of this Proxy
Statement-Prospectus.
OTHER MATTERS
The Board of Directors does not know of any other business to be
presented at the Annual Meeting and does not intend to bring other matters
before the Annual Meeting. However, if any other matters properly come
before the Annual Meeting, the persons named in the accompanying Proxy will
vote thereon according to their best judgement and the interest of the Bank.
If sufficient votes in favor of any of the proposals set forth in the Notice
of the Meeting are not received by the time scheduled for the meeting, the
persons named as proxies may propose one or more adjournments of the meeting
for a period or periods of not more than 30 days in the aggregate to permit
further solicitation of proxies with respect to any of such proposals.
54
<PAGE>
LEGAL MATTERS
Elias, Matz, Tiernan & Herrick L.L.P, Washington, D.C., has delivered
an opinion to the Company and the Bank to the effect that the Company Common
Stock to be issued to the holders of Bank Common Stock in the Reorganization,
when issued as contemplated by the Agreement, will be validly issued, fully
paid and non-assessable. Elias, Matz, Tiernan & Herrick L.L.P. also has
rendered opinions to the parties as to certain income tax consequences of the
Reorganization.
By Order of the Board of Directors,
/s/SUZANNE A. GILLESPIE
SUZANNE A. GILLESPIE
Secretary
March 20, 1997
Poughkeepsie, New York
55
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
Agreement and Plan of Reorganization, dated as of January 17, 1997 (the
"Agreement"), by and between Poughkeepsie Savings Bank, FSB (the "Bank" or the
"Surviving Bank"), a federally chartered stock savings bank, Poughkeepsie
Interim Federal Savings Bank ("Interim"), an interim federally chartered stock
savings bank, and Poughkeepsie Financial Corp., a Delaware corporation.
WITNESSETH:
WHEREAS, the Board of Directors of the Bank has determined that it is in
the best interests of the Bank and its stockholders for the Bank to be
reorganized into a holding company form of ownership; and
WHEREAS, the Bank will cause Poughkeepsie Financial Corp. to be organized
under Delaware law as a wholly-owned subsidiary for the purpose of becoming the
holding company of the Bank (such corporation being referred to herein as the
"Company"); and
WHEREAS, the formation of a holding company by the Bank will be facilitated
by causing the Company to become the sole stockholder of Interim, and then
merging Interim with and into the Bank, so that as part of the merger all of the
outstanding shares of common stock of the Bank will be converted automatically
into and become shares of common stock of the Company, which would then become
the sole stockholder of the Bank (the "Merger"); and
WHEREAS, Interim is being organized by the Bank as an interim federally
chartered stock savings bank with the Company as its sole stockholder in order
to effect the Merger; and
WHEREAS, the Bank and Interim (the "Constituent Banks") and the Company
desire to provide for the terms and conditions of the Merger;
NOW, THEREFORE, the Bank, Interim and the Company hereby agree as follows:
1. Effective Date. The Merger shall not become effective until this
Agreement and the transactions contemplated hereby have received the approval of
the Office of Thrift Supervision ("OTS") and all other regulatory agencies
having jurisdiction over the Merger, if any (the "Effective Date").
A-1
<PAGE>
2. The Merger and Effect Thereof. Subject to the terms and conditions set
forth herein, including, without limitation, the prior approval of the OTS and
the expiration of all applicable waiting periods, Interim shall merge with and
into the Bank, which shall be the Surviving Bank. Upon consummation of the
Merger, the Surviving Bank shall be considered the same business and corporate
entity as each of the Constituent Banks and thereupon and thereafter all the
property, rights, powers and franchises of each of the Constituent Banks shall
vest in the Surviving Bank and the Surviving Bank shall be subject to and be
deemed to have assumed all of the debts, liabilities, obligations and duties of
each of the Constituent Banks and shall have succeeded to all of each of their
relationships, fiduciary or otherwise, as fully and to the same extent as if
such property, rights, privileges, powers, franchises, debts, obligations,
duties and relationships had been originally acquired, incurred or entered into
by the Surviving Bank. In addition, any reference to either of the Constituent
Banks in any contract, will or document, whether executed or taking effect
before or after the Effective Date, shall be considered a reference to the
Surviving Bank if not inconsistent with the other provisions of the contract,
will or document; and any pending action or other judicial proceeding to which
either of the Constituent Banks is a party shall not be deemed to have abated or
to have been discontinued by reason of the Merger, but may be prosecuted to
final judgment, order or decree in the same manner as if the Merger had not
occurred or the Surviving Bank may be substituted as a party to such action or
proceeding, and any judgment, order or decree may be rendered for or against it
that might have been rendered for or against either of the Constituent Banks if
the Merger had not occurred.
3. Conversion of Stock.
(a) On the Effective Date, (i) each share of common stock, par value $.01
per share, of the Bank ("Bank Common Stock") issued and outstanding immediately
prior to the Effective Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into one share of common
stock, par value $.01 per share, of the Company ("Company Common Stock"), (ii)
each share of common stock, par value $.01 per share, of Interim ("Interim
Common Stock") issued and outstanding immediately prior to the Effective Date
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into one share of Bank Common Stock, and (iii) each share
of Company Common Stock issued and outstanding immediately prior to the
Effective Date shall, by virtue of the Merger and without any action on the part
of the holder thereof, be cancelled. By voting in favor of this Agreement, the
Company, as the sole stockholder of Interim, shall (i) issue shares of Company
Common Stock in accordance with the terms hereof and (ii) cancel all previously
issued and outstanding shares of Company Common Stock upon the effectiveness of
the Merger.
(b) On and after the Effective Date, there shall be no registrations or
transfers on the stock transfer books of Interim or the Bank of shares of
Interim Common Stock or Bank Common Stock which were outstanding immediately
prior to the Effective Date.
A-2
<PAGE>
4. Exchange of Shares.
(a) At or after the Effective Date, each holder of a certificate or
certificates theretofore evidencing issued and outstanding shares of Bank Common
Stock, upon surrender of the same to an agent, duly appointed by the Company
("Exchange Agent"), shall be entitled to receive in exchange therefor a
certificate or certificates representing the number of full shares of Company
Common Stock for which the shares of Bank Common Stock theretofore represented
by the certificate or certificates so surrendered shall have been converted as
provided in Section 3 hereof. The Exchange Agent shall mail to each holder of
record of an outstanding certificate which immediately prior to the Effective
Date evidenced shares of Bank Common Stock, and which is to be exchanged for
Company Common Stock as provided in Section 3 hereof, a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to such certificate shall pass, only upon delivery of such
certificate to the Exchange Agent) advising such holder of the terms of the
exchange effected by the Merger and of the procedure for surrendering to the
Exchange Agent such certificate in exchange for a certificate or certificates
evidencing Company Common Stock.
(b) After the Effective Date, certificates representing shares of Bank
Common Stock shall be treated as evidencing ownership of the number of full
shares of Company Common Stock into which the shares of Bank Common Stock
represented by such certificates shall have been converted by virtue of the
Merger, notwithstanding the failure on the part of the holder thereof to
surrender such certificates.
(c) If any certificate evidencing shares of Company Common Stock is to be
issued in a name other than that in which the certificate evidencing Bank Common
Stock surrendered in exchange therefor is registered, it shall be a condition of
the issuance thereof that the certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such exchange pay to the Exchange Agent any transfer or other tax
required by reason of the issuance of a certificate for shares of Company Common
Stock in any name other than that of the registered holder of the certificate
surrendered or otherwise establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(d) If, between the date hereof and the Effective Date, the shares of Bank
Common Stock shall be changed into a different number or class of shares by
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or a stock dividend thereon shall be
declared with a record date within said period, the exchange ratio specified in
Section 3(a) hereof shall be adjusted accordingly.
5. Dissenting Shares. Pursuant to 12 C.F.R. ss. 552.14, no holder of shares
of Bank Common Stock shall have any dissenter or appraisal rights in connection
with the Merger.
A-3
<PAGE>
6. Name of Surviving Bank. The name of the Surviving Bank shall be
"Poughkeepsie Savings Bank, FSB."
7. Directors of the Surviving Bank. Upon and after the Effective Date,
until changed in accordance with the Charter and Bylaws of the Surviving Bank
and applicable law, the number of directors of the Surviving Bank shall be nine.
The names and addresses of those persons who, upon and after the Effective Date,
shall be directors of the Surviving Bank are set forth in Schedule A hereto,
which is hereby incorporated herein by reference. Each such director shall serve
for the term which expires at the annual meeting of stockholders of the
Surviving Bank in the year set forth after his respective name in Schedule A,
and until a successor is elected and qualified.
8. Officers of the Surviving Bank. Upon and after the Effective Date, until
changed in accordance with the Charter and Bylaws of the Surviving Bank and
applicable law, the officers of the Bank immediately prior to the Effective Date
shall be the officers of the Surviving Bank.
9. Offices. Upon the Effective Date, all offices of the Bank and Interim
(which shall have no offices) shall be offices of the Surviving Bank. As of the
Effective Date, the home office of the Surviving Bank shall remain at 249 Main
Mall, Poughkeepsie, New York 12601 and the location of the other offices of the
Surviving Bank shall be as set forth in Schedule B hereto, which is hereby
incorporated herein by reference, except for the addition of offices authorized
or the deletion of offices closed subsequent to the date hereof and the
Effective Date.
10. Charter and Bylaws. On and after the Effective Date, the Charter and
Bylaws of the Bank as in effect immediately prior to the Effective Date shall be
the Charter and Bylaws of the Surviving Bank until amended in accordance with
the terms thereof and applicable law.
11. Savings Accounts. Upon the Effective Date, all savings accounts of
Interim, without reissue, shall be and become savings accounts of the Surviving
Bank without change in their respective terms, including, without limitation,
maturity, minimum required balances or withdrawal value.
12. Stock Compensation Plans. By voting in favor of this Agreement, the
stock compensation plans of the Bank will become the stock compensation plans of
the Company (the "Plans"). The rights under the Plans shall be assumed by the
Company and thereafter shall be rights only for shares of Company Common Stock,
with each such right being for a number of shares of Company Common Stock equal
to the number of shares of Bank Common Stock that were available thereunder
immediately prior to the Effective Date of the Merger, and with no change in the
price or any other term or condition of such right. The Company shall make
appropriate amendments to the Plans to reflect the adoption of
A-4
<PAGE>
the Plans by the Company without adverse effect upon the options or grants
outstanding thereunder.
13. Stockholder Approval. The affirmative vote of the holders of a majority
of the issued and outstanding Bank Common Stock shall be required to approve
this Agreement on behalf of the Bank and the approval of the Company, as the
sole holder of Interim Common Stock, shall be required to approve this Agreement
on behalf of Interim.
14. Registration; Other Approvals. In addition to the approval set forth in
Section 2 hereof, the parties' obligations to consummate the Merger shall be
subject to (i) the Company Common Stock to be issued hereunder in exchange for
Bank Common Stock being registered under the Securities Act of 1933 and
registered or qualified under applicable state securities laws, except in each
case to the extent that the Company relies on an applicable exemption therefrom,
and (ii) the receipt of all other approvals, consents or waivers as the parties
may deem necessary or advisable.
15. Income Tax Matters. The parties hereto shall have received an opinion
of counsel, satisfactory to them in form and substance, with respect to the
federal income tax consequences of the Agreement and the formation of a holding
company, as contemplated therein.
16. Abandonment of Agreement. This Agreement may be abandoned by the Bank,
Interim or the Company at any time before the Effective Date in the event that
(a) any action, suit, proceeding or claim has been instituted, made or
threatened relating to the Agreement which shall make consummation of the
transaction contemplated hereby inadvisable in the opinion of the Bank, Interim
or the Company, or (b) for any other reason consummation of the transaction
contemplated hereby is inadvisable in the opinion of the Bank, Interim or the
Company. Such abandonment shall be effected by written notice by the Bank,
Interim or the Company to the other parties hereto, authorized or approved by
the Board of Directors of the party giving such notice. Upon the giving of such
notice, this Agreement shall be terminated and there shall be no liability
hereunder or on account of such termination on the part of the Bank, Interim or
the Company or the directors, officers, employees, agents or stockholders of any
of them. In the event of abandonment of this Agreement, the Bank shall pay the
fees and expenses incurred by itself, Interim and the Company in connection with
this Agreement and the Merger.
17. Amendments. To the extent permitted by law, this Agreement may be
amended by a subsequent writing signed by the parties hereto upon the approval
of the Board of Directors of each of the parties hereto; provided, however, that
the provisions of Section 3 hereof relating to the consideration to be exchanged
for shares of Bank Common Stock shall not be amended after the meeting of
stockholders of the Bank at which this Agreement is considered so as to decrease
the amount or change the form of such consideration without the approval of such
stockholders.
A-5
<PAGE>
18. Successors. This Agreement shall be binding on the successors of the
Bank, Interim and the Company.
19. Counterparts. This Agreement may be executed in one or more
counterparts.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the United States of
America, and the rules and regulations promulgated thereunder, including without
limitation, the rules and regulations of the OTS. In the event of a conflict,
federal law will apply.
A-6
<PAGE>
IN WITNESS WHEREOF, the Bank, Interim and the Company have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
POUGHKEEPSIE SAVINGS BANK, FSB
Attest:
/s/ Suzanne A. Gillespie By: /s/ Joseph B. Tockarshewsky
- - -------------------- -----------------------
Suzanne A. Gillespie Joseph B. Tockarshewsky
Secretary Chairman, President
and Chief
Executive Officer
POUGHKEEPSIE INTERIM FEDERAL
SAVINGS BANK
(In Organization)
Attest:
/s/ Suzanne A. Gillespie By: /s/ Joseph B. Tockarshewsky
- - -------------------- --------------------------
Suzanne A. Gillespie Joseph B. Tockarshewsky
Secretary Chairman, President
and Chief
Executive Officer
POUGHKEEPSIE FINANCIAL CORP.
Attest:
/s/ Suzanne A. Gillespie By: /s/ Joseph B. Tockarshewsky
- - ------------------------ --------------------------
Suzanne A. Gillespie Joseph B. Tockarshewsky
Secretary Chairman, President
and Chief
Executive Officer
A-7
<PAGE>
SCHEDULE A
Directors of the Surviving Bank
Term
Name Expires
- - ---- -------
Jeh V. Johnson 1999
Robert M. Perkins 1999
Joseph B. Tockarshewsky 1999
Robert J. Hughes 1998
Elizabeth K. Shequine 1998
James V. Tomai, Jr. 1998
Noel DeCordova, Jr. 2000
Burton Gold 2000
Henry C. Meagher 2000
A-8
<PAGE>
SCHEDULE B
Offices of the Surviving Bank
Branch Offices: 21 Market Street
- - --------------- Poughkeepsie, NY 12601
707 Main Street & Innis Avenue
Poughkeepsie, NY 12601
Hudson Plaza, 423 South Road
Poughkeepsie, NY 12601
Hyde Park Mall, Route 9
Hyde Park, NY 12638
South Hills Mall
838 South Road
Poughkeepsie, NY 12601
Lakeside Plaza
136 Lake Street, Suite 10
Newburgh, NY 12550
In-Store Locations: Alpine Commons,
- - ------------------- Inside Super Stop & Shop
Route 9
Wappingers Falls, NY 12590
14 Spring Valley Marketplace
Inside Shop Rite
Spring Valley, NY 10977
Route 9W & Samsondale Plaza
Inside Shop Rite
West Haverstraw, NY 10993
Post Road Plaza
Inside Super Stop & Shop
Route 9
Poughkeepsie, NY 12601
Routes 300 & 94
Inside Price Chopper
Vails Gate, NY 12553
A-9
<PAGE>
Financial Services Center: 25 Market Street
Poughkeepsie, NY 12601
Savings Bank Life Insurance: 25 Market Street
Poughkeepsie, NY 12601
Residential Mortgage Offices: 25 Market Street
Poughkeepsie, NY 12601
155 East Main Street, Suite 3
Brewster, NY 10509
133 Boices Lane
Kingston, NY 12401
17 Squadron Boulevard, Suite 205
New City, NY 10956
50 Main Street, Suite 1000
White Plains, NY 10606
690 Kinderkamack Road
Oradell, NJ 07649
200 Connecticut Avenue
Norwalk, CT 06854
A-10
<PAGE>
APPENDIX B
CERTIFICATE OF INCORPORATION OF
POUGHKEEPSIE FINANCIAL CORP.
ARTICLE I
NAME
The name of the corporation is Poughkeepsie Financial Corp. (hereinafter
referred to as the "Corporation").
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, in the city of Wilmington, county of New Castle.
The name of the registered agent at such address is The Corporation Trust
Company.
ARTICLE III
NATURE OF BUSINESS
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
ARTICLE IV
CAPITAL STOCK
The total number of shares of capital stock which the Corporation has
authority to issue is 42,000,000, of which 2,000,000 shall be serial preferred
stock, $.01 par value per share (hereinafter the "Preferred Stock"), and
40,000,000 shall be common stock, par value $.01 per share (hereinafter the
"Common Stock").
The Board of Directors is hereby expressly authorized, by resolution or
resolutions to provide, out of the unissued shares of Preferred Stock, for
series of Preferred Stock. Before any shares of any such series are issued, the
Board of Directors shall fix, and hereby is expressly empowered to fix, by
resolution or resolutions, the following provisions of the shares thereof:
(a) the designation of such series, the number of shares to constitute
such series and the stated value thereof if different from the par value
thereof;
B-1
<PAGE>
(b) whether the shares of such series shall have voting rights, in addition
to any voting rights provided by law, and, if so, the terms of such voting
rights, which may be general or limited;
(c) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and, if so, from what dates, the conditions and
dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any shares of stock
of any other class or any other series of this class;
(d) whether the shares of such series shall be subject to redemption by the
Corporation, and, if so, the times, prices and other conditions of such
redemption;
(e) the amount or amounts payable upon shares of such series upon, and the
rights of the holders of such series in, the voluntary or involuntary
liquidation, dissolution or winding up, or upon any distribution of the assets,
of the Corporation;
(f) whether the shares of such series shall be subject to the operation of
a retirement or sinking fund and, if so, the extent to and manner in which any
such retirement or sinking fund shall be applied to the purchase or redemption
of the shares of such series for retirement or other corporate purposes and the
terms and provisions relative to the operation thereof;
(g) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other series of this
class or any other securities, and, if so, the price or prices or the rate or
rates of conversion or exchange and the method, if any, of adjusting the same,
and any other terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective while any
shares of such series are outstanding upon the payment of dividends or the
making of other distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or shares of stock of any
other class or any other series of this class;
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of this class
or of any other class; and
(j) any other powers, preferences and relative, participating, optional and
other special rights, and any qualifications, limitations and restrictions
thereof.
The powers, preferences and relative, participating, optional and other
special rights, of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof,
B-2
<PAGE>
if any, may differ from those of any and all other series at any time
outstanding. All shares of any one series of Preferred Stock shall be identical
in all respects with all other shares of such series, except that shares of any
one series issued at different times may differ as to the dates from which
dividends thereon shall accrue and/or be cumulative.
ARTICLE V
INCORPORATOR
The name and mailing address of the sole incorporator is as follows:
Name Address
---- -------
Poughkeepsie Savings Bank, FSB 249 Main Mall
Poughkeepsie, New York 12601
ARTICLE VI
PREEMPTIVE RIGHTS
No holder of the capital stock of the Corporation shall be entitled as
such, as a matter of right, to subscribe for or purchase any part of any new or
additional issue of stock of any class whatsoever of the Corporation, or of
securities convertible into stock of any class whatsoever, whether now or
hereafter authorized, or whether issued for cash or other consideration or by
way of a dividend.
ARTICLE VII DIRECTORS
A. Directors and Number of Directors. The business and affairs of the
Corporation shall be managed by or under the direction of a Board of Directors.
Except as otherwise fixed pursuant to the provisions of Article IV hereof
relating to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
additional directors, the number of directors shall be determined as stated in
the Corporation's Bylaws, as may be amended from time to time.
B. Classification and Term. The Board of Directors, other than those who
may be elected by the holders of any class or series of stock having preference
over the Common Stock as to dividends or upon liquidation, shall be divided into
three classes as nearly equal in number as possible, with one class to be
elected annually. The term of office of the initial directors shall be as
follows: the term of directors of the first class shall expire at the first
annual meeting of stockholders after the effective date of this Certificate of
Incorporation; the term of office of the directors of the second class shall
expire at the second annual meeting of stockholders after the effective date of
this Certificate of
B-3
<PAGE>
Incorporation; and the term of office of the third class shall expire at the
third annual meeting of stockholders after the effective date of this
Certificate of Incorporation; and, as to directors of each class, when their
respective successors are elected and qualified. At each annual meeting of
stockholders, directors elected to succeed those whose terms are expiring shall
be elected for a term of office to expire at the third succeeding annual meeting
of stockholders and when their respective successors are elected and qualified.
C. No Cumulative Voting. Stockholders of the Corporation shall not be
permitted to cumulate their votes for the election of directors.
D. Vacancies. Except as otherwise fixed pursuant to the provisions of
Article IV hereof relating to the rights of the holders of any class or series
of stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors, any vacancy occurring in the Board of Directors,
including any vacancy created by reason of an increase in the number of
directors, may be filled by a majority vote of the directors then in office,
whether or not a quorum is present, or by a sole remaining director, and any
director so chosen shall hold office for the remainder of the term to which the
director has been selected and until such director's successor shall have been
elected and qualified. When the number of directors is changed, the Board of
Directors shall determine the class or classes to which the increased or
decreased number of directors shall be apportioned; provided that no decrease in
the number of directors shall shorten the term of any incumbent director.
E. Removal. Subject to the rights of any class or series of stock having
preference over the Common Stock as to dividends or upon liquidation to elect
directors, any director (including persons elected by directors to fill
vacancies in the Board of Directors) may be removed from office only with cause
by an affirmative vote of not less than a majority of the votes eligible to be
cast by stockholders at a duly constituted meeting of stockholders called
expressly for such purpose.
ARTICLE VIII
MEETINGS OF STOCKHOLDERS AND BYLAWS
A. Meetings of Stockholders. No action required by the General Corporation
Law of the State of Delaware to be taken at any annual or special meetings of
stockholders, nor any action which may be taken at any annual or special
meetings of stockholders, may be taken without a meeting, without prior notice
and without a vote of such stockholders. Except as otherwise required by law and
subject to the rights of the holders of any class or series of Preferred Stock,
special meetings of the stockholders relating to changes in control of the
Corporation or amendments to this Certificate of Incorporation may be called
only upon direction of the Board of Directors.
B-4
<PAGE>
B. Bylaws. The Board of Directors or stockholders may adopt, alter, amend
or repeal the Bylaws of the Corporation. Such action by the Board of Directors
shall require the affirmative vote of a majority of the directors then in office
at any regular or special meeting of the Board of Directors. Such action by the
stockholders shall require the affirmative vote of the holders of a majority of
the shares of the Corporation entitled to vote generally in an election of
directors, voting together as a single class, as well as such additional vote of
the Preferred Stock as may be required by the provisions of any series thereof.
ARTICLE IX
LIABILITY OF DIRECTORS AND OFFICERS
The personal liability of the directors and officers of the Corporation for
monetary damages shall be eliminated to the fullest extent permitted by the
General Corporation Law of the State of Delaware as it exists on the effective
date of this Certificate of Incorporation or as such law may be thereafter in
effect. No amendment, modification or repeal of this Article IX shall adversely
affect the rights provided hereby with respect to any claim, issue or matter in
any proceeding that is based in any respect on any alleged action or failure to
act prior to such amendment, modification or repeal.
ARTICLE X
AMENDMENT
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by law, and all rights conferred upon stockholders herein
are granted subject to this reservation. No amendment, addition, alteration,
change or repeal of this Certificate of Incorporation shall be made unless it is
first approved by the Board of Directors of the Corporation pursuant to a
resolution adopted by the affirmative vote of a majority of the directors then
in office, and, to the extent required by applicable law, is thereafter approved
by the holders of a majority of the shares of the Corporation entitled to vote
generally in an election of directors, voting together as a single class, as
well as such additional vote of the Preferred Stock as may be required by the
provisions of any series thereof.
B-5
<PAGE>
POUGHKEEPSIE SAVINGS BANK, FSB, being the sole Incorporator herein before
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, does make this Certificate, hereby
declaring and certifying that this is the Incorporator's act and deed and that
the facts herein stated are true, and accordingly has caused this Certificate to
be signed on its behalf by the undersigned, thereunto duly authorized, on this
16th day of January 1997.
POUGHKEEPSIE SAVINGS BANK, FSB
By: /s/ Joseph B. Tockarshewsky
--------------------------------
Joseph B. Tockarshewsky
President and Chief
Executive Officer
B-6
<PAGE>
APPENDIX C
BYLAWS
OF
POUGHKEEPSIE FINANCIAL CORP.
ARTICLES I. OFFICES
1.1 Registered Office and Registered Agent. The registered office of
Poughkeepsie Financial Corp. ("Corporation") shall be located in the State of
Delaware at such place as may be fixed from time to time by the Board of
Directors upon filing of such notices as may be required by law, and the
registered agent shall have a business office identical with such registered
office.
1.2 Other Offices. The Corporation may have other offices within or without
the State of Delaware at such place or places as the Board of Directors may from
time to time determine.
ARTICLE II. STOCKHOLDERS' MEETINGS
2.1 Meeting Place. All meetings of the stockholders shall be held at the
principal place of business of the Corporation, or at such other place within or
without the State of Delaware as shall be determined from time to time by the
Board of Directors, and the place at which any such meeting shall be held shall
be stated in the notice of the meeting.
2.2 Annual Meeting Time. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year on the last Wednesday
of April at the hour of 10:00 a.m., if not a legal holiday, and if a legal
holiday, then on the day following, at the same hour, or at such other date and
time as may be determined by the Board of Directors and stated in the notice of
such meeting.
2.3 Organization. Each meeting of the stockholders shall be presided over
by the Chairman of the Board, or in his absence by the President. The Secretary,
or in his absence a temporary Secretary, shall act as secretary of each meeting
of the stockholders. In the absence of the Secretary and any temporary
Secretary, the chairman of the meeting may appoint any person present to act as
secretary of the meeting. The chairman of any meeting of the stockholders shall
announce the date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting and, unless prescribed
by law or regulation or unless the Board of Directors has otherwise determined,
shall determine the order of the business and the procedure at the meeting,
including such regulation of the manner of voting and the conduct of discussions
as seem to him in order.
C-1
<PAGE>
2.4 Special Meetings. Except as otherwise required by law and subject to
the rights of the holders of any class or series of Preferred Stock, special
meetings of the stockholders may be called only by the Board of Directors
pursuant to a resolution approved by the affirmative vote of a majority of the
directors then in office.
2.5 Notice.
(a) Notice of the time and place of the annual meeting of stockholders
shall be given by delivering personally or by mailing a written notice of the
same, not less than ten days and not more than sixty days prior to the date of
the meeting, to each stockholder of record entitled to vote at such meeting.
When any stockholders' meeting, either annual or special, is adjourned for
thirty days or more, or if a new record date is fixed for an adjourned meeting
of stockholders, notice of the adjourned meeting shall be given as in the case
of an original meeting. It shall not be necessary to give any notice of the time
and place of any meeting adjourned for less than thirty days (unless a new
record date is fixed therefor), other than an announcement at the meeting at
which such adjournment is taken. At the adjourned meeting the Corporation may
transact any business which might have been transacted at the original meeting.
(b) Not less than ten days and not more than sixty days prior to the
meeting, a written notice of each special meeting of stockholders, stating the
place, day and hour of such meeting, and the purpose or purposes for which the
meeting is called, shall be either delivered personally or mailed to each
stockholder of record entitled to vote at such meeting.
2.6 Voting Record Date. At least ten days before each meeting of
stockholders, a complete record of the stockholders entitled to vote at such
meeting, or any adjournment thereof, shall be made, arranged in alphabetical
order, with the address of and number of shares registered in the name of each,
which record shall be kept open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to such meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The record also shall be kept open at the time and place of such meeting for the
inspection of any stockholder.
2.7 Quorum; Actions of Stockholders. Except as otherwise required by law:
(a) A quorum at any annual or special meeting of stockholders shall consist
of stockholders representing, either in person or by proxy, a majority of the
outstanding capital stock of the Corporation entitled to vote at such meeting.
(b) In all matters other than the election of directors, the affirmative
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders. Directors shall be elected
C-2
<PAGE>
by a plurality of the votes of the shares present in person or represented by
proxy at the meeting and entitled to vote on the election of directors. If, at
any meeting of the stockholders, due to a vacancy or vacancies or otherwise,
directors of more than one class of the Board of Directors are to be elected,
each class of directors to be elected at the meeting shall be elected in a
separate election by a plurality vote.
2.8 Voting of Shares. Except as otherwise provided in these Bylaws or to
the extent that voting rights of the shares of any class or classes are limited
or denied by the Certificate of Incorporation, each stockholder, on each matter
submitted to a vote at a meeting of stockholders, shall have one vote for each
share of stock registered in his name on the books of the Corporation.
2.9 Closing of Transfer Books and Fixing of the Record Date. For the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders, or any adjournment thereof, or entitled to receive
payment of any dividend, the Board of Directors may provide that the stock
transfer books shall be closed for a stated period not to exceed sixty days nor
less than ten days preceding such meeting. In lieu of closing the stock transfer
books, the Board of Directors may fix in advance a record date for any such
determination of stockholders, which record date shall not precede the date upon
which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than sixty days and, in case
of a meeting of stockholders, not less than ten days prior to the date on which
the particular action requiring such determination of stockholders is to be
taken.
2.10 Proxies. A stockholder may vote either in person or by proxy executed
in writing by the stockholder or his duly authorized attorney-in-fact. Without
limiting the manner in which a stockholder may authorize another person or
persons to act for him as proxy, a stockholder may grant such authority in the
manner specified in Section 212(c) of the General Corporation Law of the State
of Delaware. No proxy shall be valid after three years from the date of its
execution, unless otherwise provided in the proxy.
2.11 Waiver of Notice. A waiver of any notice required to be given any
stockholder, signed by the person or persons entitled to such notice, whether
before or after the time stated therein for the meeting, shall be equivalent to
the giving of such notice.
2.12 Voting of Shares in the Name of Two or More Persons. When ownership
stands in the name of two or more persons, whether fiduciaries, members of a
partnership, joint tenants, tenants in common, tenants by the entirety or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, unless the Secretary of the Corporation is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided, at
any meeting of the stockholders of the Corporation any one or more of such
stockholders may cast, in person or by proxy, all votes to which such ownership
is entitled. In the event an attempt is made to cast conflicting votes, in
person or by proxy, by the several persons
C-3
<PAGE>
in whose names shares of stock stand, the vote or votes to which those persons
are entitled shall be cast as directed by a majority of those holding such stock
and present in person or by proxy at such meeting, but no votes shall be cast
for such stock if a majority cannot agree, except to the extent provided in
Section 217(b)(3) of the General Corporation Law of the State of Delaware.
2.13 Voting of Shares by Certain Holders. Shares standing in the name of
another corporation may be voted by an officer, agent or proxy as the bylaws of
such corporation may prescribe, or, in the absence of such provision, as the
Board of Directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by him, either in
person or by proxy, without a transfer of such shares into his name. Shares
standing in the name of a trustee may be voted by him, either in person or by
proxy, but no trustee shall be entitled to vote shares held by him without a
transfer of such shares into his name. Shares standing in the name of a receiver
may be voted by such receiver, and shares held by or under the control of a
receiver may be voted by such receiver without the transfer thereof into his
name if authority to do so is contained in an appropriate order of the court or
other public authority by which such receiver was appointed. A stockholder whose
shares are pledged shall be entitled to vote such shares until the shares have
been transferred into the name of the pledgee, and thereafter the pledgee shall
be entitled to vote the shares so transferred.
2.14 Proposals. At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, or (b) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be timely a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not later than 90 days prior to
the anniversary date of the mailing of proxy materials by the Corporation in
connection with the immediately preceding annual meeting of stockholders of the
Corporation or, in the case of the first annual meeting of stockholders of the
Corporation following its acquisition of all of the outstanding capital stock of
Poughkeepsie Savings Bank, FSB (the "Bank"), 90 days prior to the anniversary
date of the mailing of proxy materials by the Bank in connection with the
immediately preceding annual meeting of the Bank prior to such acquisition. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting, (b) the name
and address, as they appear on the Corporation's books, of the stockholder
proposing such business, (c) the class and number of shares of the Corporation
which are beneficially owned by the stockholder, and (d) any material interest
of the stockholder in such business. The chairman of an annual meeting shall, if
the facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
Article II, Section 2.14, and if
C-4
<PAGE>
he should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted. This provision
is not a limitation on any other applicable laws and regulations.
2.15 Inspectors. For each meeting of stockholders, the Board of Directors
shall appoint one or more inspectors of election, who shall make a written
report of such meeting. If for any meeting the inspector(s) appointed by the
Board of Directors shall be unable to act or the Board of Directors shall fail
to appoint any inspector, one or more inspectors shall be appointed at the
meeting by the chairman thereof. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his
ability. An inspector or inspectors shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the shares represented
at a meeting and the validity of proxies and ballots, (iii) count all votes and
ballots, (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors and
(v) certify their determination of the number of shares represented at the
meeting and their count of all votes and ballots. The date and time of the
opening and the closing of the polls for each matter upon which the stockholders
will vote at a meeting shall be announced at the meeting by the chairman
thereof. An inspector or inspectors shall not accept a ballot, proxy or vote,
nor any revocations thereof or changes thereto, after the closing of the polls
(unless the Court of Chancery of the State of Delaware upon application by a
stockholder shall determine otherwise) and may appoint or retain other persons
or entities to assist them in the performance of their duties. Inspectors need
not be stockholders and may not be nominees for election as directors.
ARTICLE III. CAPITAL STOCK
3.1 Certificates. Certificates of stock shall be issued in numerical order,
and each stockholder shall be entitled to a certificate signed by the Chairman
of the Board or the President, and the Secretary, and may be
sealed with the seal of the Corporation or facsimile thereof. The signatures of
such officers may be facsimiles if the certificate is manually signed on behalf
of a transfer agent, or registered by a registrar, other than the Corporation
itself or an employee of the Corporation. If an officer who has signed or whose
facsimile signature has been placed upon such certificate ceases to be an
officer before the certificate is issued, it may be issued by the Corporation
with the same effect as if the person were an officer on the date of issue. Each
certificate of stock shall state:
(a) that the Corporation is organized under the laws of the State of
Delaware;
(b) the name of the person to whom issued;
C-5
<PAGE>
(c) the number and class of shares and the designation of the series, if
any, which such certificate represents; and
(d) the par value of each share represented by such certificate, or a
statement that such shares are without par value.
3.2 Transfers.
(a) Transfers of stock shall be made only upon the stock transfer books of
the Corporation, kept at the registered office of the Corporation or at its
principal place of business, or at the office of its transfer agent or
registrar, and before a new certificate is issued the old certificate shall be
surrendered for cancellation. The Board of Directors may, by resolution, open a
share register in any state of the United States, and may employ an agent or
agents to keep such register, and to record transfers of shares therein.
(b) Shares of stock shall be transferred by delivery of the certificates
therefor, accompanied either by an assignment in writing on the back of the
certificate or an assignment separate from the certificate, or by a written
power of attorney to sell, assign and transfer the same, signed by the holder of
said certificate. No shares of stock shall be transferred on the books of the
Corporation until the outstanding certificates therefor have been surrendered to
the Corporation.
(c) A written restriction on the transfer or registration of transfer of a
certificate evidencing stock of the Corporation, if permitted by the General
Corporation Law of the State of Delaware and noted conspicuously on such
certificate, may be enforced against the holder of the restricted certificate or
any successor or transferee of the holder, including an executor, administrator,
trustee, guardian or other fiduciary entrusted with like responsibility for the
person or estate of the holder.
3.3 Registered Owner. Registered stockholders shall be treated by the
Corporation as the holders in fact of the stock standing in their respective
names and the Corporation shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as expressly provided
by the laws of the State of Delaware.
3.4 Lost, Stolen or Destroyed Certificates. The Corporation may issue a new
certificate of stock in place of any certificate previously issued by it which
is alleged to have been lost, stolen or destroyed, and the Corporation may
require the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the Corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
3.5 Fractional Shares or Scrip. The Corporation may (a) issue fractions of
a share which shall entitle the holder to exercise voting rights, to receive
dividends thereon and to
C-6
<PAGE>
participate in any of the assets of the Corporation in the event of liquidation;
(b) arrange for the disposition of fractional interests by those entitled
thereto; (c) pay in cash the fair value of fractions of a share as of the time
when those entitled to receive such shares are determined; or (d) issue scrip in
registered or bearer form which shall entitle the holder to receive a
certificate for a full share upon the surrender of such scrip aggregating a full
share.
3.6 Shares of Another Corporation. Shares owned by the Corporation in
another corporation, domestic or foreign, may be voted by such officer, agent or
proxy as the Board of Directors may determine or, in the absence of such
determination, by the President of the Corporation.
ARTICLE IV. BOARD OF DIRECTORS
4.1 Powers. The business and affairs of the Corporation shall be managed by
or under the direction of a Board of Directors, which may exercise all such
authority and powers of the Corporation and do all such lawful acts and things
as are not by law, the Certificate of Incorporation or these Bylaws directed or
required to be exercised or done by the stockholders.
4.2 Classification and Term. The Board of Directors shall be divided into
three classes as nearly equal in number as possible. The term of office of the
initial directors shall be as follows: the term of directors of the first class
shall expire at the first annual meeting of stockholders after the effective
date of the Corporation's Certificate of Incorporation; the term of office of
the directors of the second class shall expire at the second annual meeting of
stockholders after the effective date of the Corporation's Certificate of
Incorporation; and the term of office of the third class shall expire at the
third annual meeting of stockholders after the effective date of the
Corporation's Certificate of Incorporation; and as to directors of each class,
when their respective successors are elected and qualified. At each annual
meeting of stockholders, directors elected to succeed those whose terms are
expiring shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders and when their respective successors are elected
and qualified.
4.3 Number of Directors. The initial Board of Directors shall consist of
nine persons. The number of directors may at any time be increased or decreased
by a vote of a majority of the Board of Directors, provided that no decrease
shall have the effect of shortening the term of any incumbent director.
4.4 Vacancies. All vacancies in the Board of Directors shall be filled in
the manner provided in the Corporation's Certificate of Incorporation.
C-7
<PAGE>
4.5 Removal of Directors. Directors may be removed in the manner provided
in the Corporation's Certificate of Incorporation.
4.6 Regular Meetings. Regular meetings of the Board of Directors or any
committee thereof may be held without notice at the principal place of business
of the Corporation or at such other place or places, either within or without
the State of Delaware, as the Board of Directors or such committee, as the case
may be, may from time to time designate. Unless otherwise determined by the
Board of Directors, the annual meeting of the Board of Directors shall be held
without notice immediately after the adjournment of the annual meeting of
stockholders.
4.7 Special Meetings.
(a) Special meetings of the Board of Directors may be called at any time by
the Chairman of the Board, the President or by a majority of the authorized
number of directors, to be held at the principal place of business of the
Corporation or at such other place or places as the Board of Directors or the
person or persons calling such meeting may from time to time designate. Notice
of all special meetings of the Board of Directors shall be given to each
director by five days' service of the same by telegram, by letter or personally.
Such notice need not specify the business to be transacted at, nor the purpose
of, the meeting.
(b) Special meetings of any committee of the Board of Directors may be
called at any time by such person or persons and with such notice as shall be
specified for such committee by the Board of Directors, or in the absence of
such specification, in the manner and with the notice required for special
meetings of the Board of Directors.
4.8 Waiver of Notice. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened. A waiver of notice signed by the
director or directors, whether before or after the time stated for the meeting,
shall be equivalent to the giving of notice.
4.9 Quorum; Actions of the Board of Directors. Except as may be otherwise
specifically provided by law, the Certificate of Incorporation or these Bylaws,
at all meetings of the Board of Directors, a majority of the entire Board of
Directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
4.10 Action by Directors Without a Meeting. Any action required or which
may be taken at a meeting of the directors, or of a committee thereof, may be
taken without a
C-8
<PAGE>
meeting if a consent in writing, setting forth the action so taken or to be
taken, shall be signed by all of the directors, or all of the members of the
committee, as the case may be, and such consents are filed with the minutes of
proceedings of the Board of Directors or committee, as the case may be. Such
consent shall have the same effect as a unanimous vote.
4.11 Action by Directors by Communications Equipment. Any action required
or which may be taken at a meeting of directors, or of a committee thereof, may
be taken by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time.
4.12 Registering Dissent. A director who is present at a meeting of the
Board of Directors at which action on a corporate matter is taken shall be
presumed to have assented to such action unless his dissent shall be entered in
the minutes of the meeting, or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting, before the
adjournment thereof, or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
4.13 Executive and Other Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees which in each case consist of one or more directors of the
Corporation, and may from time to time invest such committees with such powers
as it may see fit, subject to such conditions as may be prescribed by the Board.
An Executive Committee may be appointed by resolution passed by a majority of
the full Board of Directors which shall include the chief executive officer and
two or more of the other directors. It shall have and exercise all of the
authority of the Board of Directors, except in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation
or plan of voluntary liquidation, recommending to the stockholders the sale,
lease or exchange or other disposition of all or substantially all the property
and assets of the Corporation, declaring a dividend on the Corporation's capital
stock or amending these Bylaws. The designation of any such committee, and the
delegation of authority thereto, shall not relieve the Board of Directors, or
any member thereof, of any responsibility imposed by law.
4.14 Remuneration. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors, a stated salary as
director and/or such other compensation as may be fixed by the Board of
Directors. Members of special or standing committees may be allowed like
compensation for serving on committees of the Board of Directors. No such
payments shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
4.15 Nominations of Directors Subject to the rights of holders of any class
or series of stock having a preference over the common stock as to dividends or
upon liquidation,
C-9
<PAGE>
nominations for the election of directors may be made by the Board of Directors
or committee appointed by the Board of Directors or by any stockholder entitled
to vote generally in an election of directors. However, any stockholder entitled
to vote generally in an election of directors may nominate one or more persons
for election as directors at a meeting only if written notice of such
stockholder's intent to make such nomination or nominations has been given,
either by personal delivery or by United States mail, postage prepaid to the
Secretary of the Corporation not later than (i) 90 days prior to the anniversary
date of the mailing of proxy materials by the Corporation in connection with the
immediately preceding annual meeting of stockholders of the Corporation or, in
the case of the first annual meeting of stockholders of the Corporation
following its acquisition of all of the outstanding capital stock of the Bank,
90 days prior to the anniversary date of the mailing of proxy materials by the
Bank in connection with the immediately preceding annual meeting of the Bank
prior to such acquisition, and (ii) with respect to an election to be held at a
special meeting of stockholders for the election of directors, the close of
business on the tenth day following the date on which notice of such meeting is
first given to stockholders. Each such notice shall set forth: (a) the name and
address of the stockholder who intends to make the nomination and of the person
or persons to be nominated; (b) a representation that the stockholder is a
holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all arrangements
or understandings between the stockholder and each nominee and any arrangements
or understandings between the stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission; and (e) the consent of each nominee to serve
as a director of the Corporation if so elected. The presiding officer of the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedures.
ARTICLE V. OFFICERS
5.1 Designations. The officers of the Corporation shall be a Chairman of
the Board, a President and a Secretary appointed by the Board of
Directors, as well as such Vice Presidents, Assistant Vice Presidents, Assistant
Secretaries, and such other officers as the Board of
Directors or the Chairman of the Board and President may designate. Officers of
the Corporation shall be elected for one year by the directors at their first
meeting after the annual meeting of stockholders, and officers of the
Corporation shall hold office until their successors are elected and qualified.
Any two or more offices may be held by the same person, except the offices of
President and Secretary.
C-10
<PAGE>
5.2 Powers and Duties. The officers of the Corporation shall have such
authority and perform such duties as the Board of Directors or, in the case of
officers with a title of Vice President or lower, the Chairman of the Board and
President, may from time to time authorize or determine. In the absence of
action by the Board of Directors or the Chairman of the Board and President, as
applicable, the officers shall have such powers and duties as generally pertain
to their respective offices.
5.3 Delegation. In the case of absence or inability to act of any officer
of the Corporation and of any person herein authorized to act in his place, the
Board of Directors may from time to time delegate the powers or duties of such
officer to any other officer or any director or other person whom it may select.
5.4 Vacancies. Vacancies in any office arising from any cause may be filled
by the Board of Directors at any regular or special meeting of the Board.
5.5 Term - Removal. The officers of the Corporation shall hold office until
their successors are chosen and qualified. Any officer or agent elected or
appointed by the Board of Directors or by the Chairman and the President may be
removed at any time, with or without cause, by the affirmative vote of a
majority of the whole Board of Directors, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
5.6 Bonds. The Board of Directors may, by resolution, require any and all
of the officers to give bonds to the Corporation, with sufficient surety or
sureties, conditions for the faithful performance of the duties of their
respective offices, and to comply with such other conditions as may from time to
time be required by the Board of Directors.
ARTICLE VI. INDEMNIFICATION, ETC. OF DIRECTORS,
OFFICERS AND EMPLOYEES
6.1 Indemnification. The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director,
officer or employee of the Corporation or any predecessor of the Corporation, or
is or was serving at the request of the Corporation or any predecessor of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines, excise taxes and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding to the fullest extent authorized by Section
145(a)-(d) of the General Corporation Law of the State of Delaware, provided
that the Corporation shall not be liable for any amounts which may be due to any
person in connection with a settlement of any action, suit or proceeding
C-11
<PAGE>
effected without its prior written consent or any action, suit or proceeding
initiated by any person seeking indemnification hereunder without its prior
written consent.
6.2 Advancement of Expenses. Reasonable expenses (including attorneys'
fees) incurred by a director, officer or employee of the Corporation in
defending any civil, criminal, administrative or investigative action, suit or
proceeding described in Section 6.1 shall be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as authorized by the
Board of Directors only upon receipt of an undertaking by or on behalf of such
person to repay such amount if it shall ultimately be determined that the person
is not entitled to be indemnified by the Corporation.
6.3 Other Rights and Remedies. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article VI shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under the Corporation's Certificate of
Incorporation, any agreement, vote of stockholders or disinterested directors or
otherwise, both as to actions in their official capacity and as to actions in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer or employee and shall inure to the
benefit of the heirs, executors and administrators of such person.
6.4 Insurance. Upon resolution passed by the Board of Directors, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer or employee of the Corporation, or is or was serving
at the request of the corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against him or incurred by him in any such capacity or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of its
Certificate of Incorporation or this Article VI.
6.5 Modification. The duties of the Corporation to indemnify and to advance
expenses to a director, officer or employee provided in this Article VI shall be
in the nature of a contract between the Corporation and each such person, and no
amendment or repeal of any provision of this Article VI shall alter, to the
detriment of such person, the right of such person to the advance of expenses or
indemnification related to a claim based on an act or failure to act which took
place prior to such amendment or repeal.
ARTICLE VII. DIVIDENDS; FINANCE; AND FISCAL YEAR
7.1 Dividends. Subject to the applicable provisions of the General
Corporation Law of the State of Delaware, dividends upon the capital stock of
the Corporation may be declared by the Board of Directors at any regular or
special meeting, and may be paid in cash, in property or in shares of the
capital stock of the Corporation. Before payment of
C-12
<PAGE>
any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, may deem proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the Corporation, or for any other proper purpose, and the Board
of Directors may modify or abolish any such reserve.
7.2 Disbursements. All checks or demand for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
7.3 Depositories. The monies of the Corporation shall be deposited in the
name of the Corporation in such bank or banks or trust company or trust
companies as the Board of Directors shall designate, and shall be drawn out only
by check or other order for payment of money signed by such persons and in such
manner as may be determined by resolution of the Board of Directors.
7.4 Fiscal Year. The fiscal year of the Corporation shall end on the 31st
day of December of each year.
ARTICLE VIII. NOTICES
Except as may otherwise be required by law, any notice to any stockholder
or director may be delivered personally or by mail. If mailed, the notice shall
be deemed to have been delivered when deposited in the United States mail,
addressed to the addressee at his last known address in the records of the
Corporation, with postage thereon prepaid.
ARTICLE IX. SEAL
The corporate seal of the Corporation shall be in such form and bear such
inscription as may be adopted by resolution of the Board of Directors, or by
usage of the officers on behalf of the Corporation.
ARTICLE X. BOOKS AND RECORDS
The Corporation shall keep correct and complete books and records of
account and shall keep minutes and proceedings of its stockholders and Board of
Directors (including committees thereof); and it shall keep at its registered
office or principal place of business,
C-13
<PAGE>
or at the office of its transfer agent or registrar, a record of its
stockholders, giving the names and addresses of all stockholders and the number
and class of the shares held by each. Any books, records and minutes may be in
written form or any other form capable of being converted into written form
within a reasonable time.
ARTICLE XI. AMENDMENTS
11.1 Amendments. These Bylaws may be altered, amended or repealed by the
affirmative vote of a majority of the Board of Directors or by the affirmative
vote of the holders of a majority of the votes cast by stockholders of the
Corporation at an annual or special meeting of the stockholders.
11.2 Emergency Bylaws. The Board of Directors may adopt emergency Bylaws,
subject to repeal or change or by action of the stockholders, which shall be
operative during any emergency in the conduct of the business of the Corporation
resulting from an attack on the United States or any nuclear or atomic disaster.
ARTICLE XII. USE OF PRONOUNS
Use of the masculine gender in these Bylaws shall be considered to
represent either masculine or feminine gender whenever appropriate.
C-14
