RLF1-2109535-1
U.S. SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE 13D - Amendment #8
Under the Securities Exchange Act of 1934
Massachusetts Fincorp, Inc.
(Name of Issuer)
Common Stock
(Title of Class Securities)
57564R-10-8
(CUSIP Number)
Mark W. Jaindl
1964 Diehl Court, Allentown, PA 18104
(610) 366-1800
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
January 24, 2000
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule
13D to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d -
1(b) (3) or (4), check the following box ( ).
Check the following box if a fee is being paid with this
statement ( ). (A fee is not required only if the reporting
person: (1) has a previous statement on file reporting
beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of less than
five percent of such class. See Rule 13d-7.)
The information required on the remainder of this cover page
shall not be deemed to "file" for the purpose of Section 18 of
the Securities Exchange Act of 1934 ("Act") or otherwise subject
to the liabilities of that section of the Act but shall be
subject to all other provisions of the Act.
Cusip No. 57564R-10-8
1) Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons:
Frederick John Jaindl - SSN ###-##-####
_________________________________________________________________
____________
2) Check the Appropriate Box if a Member of a Group
(See Instruction): __________
(a)_______
(b) X
_________________________________________________________________
____________
3) SEC Use Only______
_________________________________________________________________
____________
4) Source of Funds (See Instructions) PF
00
_________________________________________________________________
____________
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to items 2 (d) or (e): Yes No XX
N/A
_________________________________________________________________
____________
6) Citizenship or Place of Organization: US
U.S.
_________________________________________________________________
____________
Number of 7) Sole Voting Power: 13,948
1,640,150
Shares Bene-
________________________________________________________________
ficially
Owned by 8) Shared Voting Power:
N/ A
Each Report-
________________________________________________________________
ing Person 9) Sole Dispositive Power: 13,948
With_____________________________________________________________
___________
10) Shared Dispositive Power:
_________________________________________________________________
____________
_________________________________________________________________
_________
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 13,948 shares
_________________________________________________________________
___________
12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares: Yes No XX
N/A
_________________________________________________________________
____________
13) Percent of Class Represented by Amount in Row (11)
2.55%
_________________________________________________________________
____________
14) Type of Reporting Person (See Instructions): IN
N________________________________________________________________
_____________
Cusip No. 57564R-10-8
1) Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons:
Mark Wilson Jaindl - SSN ###-##-####
_________________________________________________________________
____________
2) Check the Appropriate Box if a Member of a Group
(See Instruction): __________
(a)_______
(b) X
_________________________________________________________________
____________
3) SEC Use Only___________
_________________________________________________________________
____________
4) Source of Funds: PF : 00
_________________________________________________________________
____________
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to items 2 (d) or (e): Yes No XX N/A
_________________________________________________________________
____________
6) Citizenship or Place of Organization: US U.S.
_________________________________________________________________
____________
Number of 7) Sole Voting Power: 30,000 1,640,150
Shares Bene-
________________________________________________________________
ficially
Owned by 8) Shared Voting Power: N/ A
Each Report-
________________________________________________________________
ing Person 9) Sole Dispositive Power: 30,000
With_____________________________________________________________
___________
10) Shared Dispositive Power:
_________________________________________
_________________________________________________________________
____________
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 30,000 shares
_________________________________________________________________
___________
12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares Yes No XX N/A
_________________________________________________________________
____________
13) Percent of Class Represented by Amount in Row (11)
5.50%
6.20%
_________________________________________________________________
____________
14) Type of Reporting Person (See Instructions): INN
_________________________________________________________________
____________
Cusip No. 57564R-10-8
1) Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons:
Zachary John Jaindl Trust - EIN 23-6956997
_________________________________________________________________
____________
2) Check the Appropriate Box if a Member of a Group
(See Instruction): __________
(a)_______
(b) X
_________________________________________________________________
____________
3) SEC Use Only____________
_________________________________________________________________
____________
4) Source of Funds: : 00
_________________________________________________________________
____________
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to items 2 (d) or (e): Yes No XX N/A
_________________________________________________________________
____________
6) Citizenship or Place of Organization: US U.S.
_________________________________________________________________
____________
Number of 7) Sole Voting Power: 7,000 1,640,150
Shares Bene-
________________________________________________________________
ficially
Owned by 8) Shared Voting Power: N/ A
Each Report-
________________________________________________________________
ing Person 9) Sole Dispositive Power: 7,000
With_____________________________________________________________
___________
10) Shared Dispositive Power: N/A
_________________________________________________________________
____________
___________________________________________________
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 7,000 shares
_________________________________________________________________
___________
12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares: Yes No XX N/A
_________________________________________________________________
____________
13) Percent of Class Represented by Amount in Row (11)
1.28%
6.20%
_________________________________________________________________
____________
14) Type of Reporting Person: Trust IN
_________________________________________________________________
____________
Cusip No. 57564R-10-8
1) Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons:
Julianne Katherine Jaindl Trust - EIN - 23-7754111
_________________________________________________________________
____________
2) Check the Appropriate Box if a Member of a Group
(See Instruction): __________
(a)_______
(b) X
_________________________________________________________________
____________
3) SEC Use Only____________
_________________________________________________________________
____________
4) Source of Funds: : 00
_________________________________________________________________
____________
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to items 2 (d) or (e): Yes No XX N/A
_________________________________________________________________
____________
6) Citizenship or Place of Organization: US U.S.
_________________________________________________________________
____________
Number of 7) Sole Voting Power: 3,600 1,640,150
Shares Bene-
________________________________________________________________
ficially
Owned by 8) Shared Voting Power: N/ A
Each Report-
________________________________________________________________
ing Person 9) Sole Dispositive Power: 3,600
With_____________________________________________________________
___________
10) Shared Dispositive Power: N/A
_________________________________________________________________
____________
___________________________________________________
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 3,600 shares
_________________________________________________________________
___________
12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares: Yes No XX N/A
_________________________________________________________________
____________
13) Percent of Class Represented by Amount in Row (11)
.66%
6.20%
_________________________________________________________________
____________
14) Type of Reporting Person: Trust IN
_________________________________________________________________
____________
Item 1. Security and Issuer .
This Schedule 13D filing relates to the common stock, $.01
par value, of Massachusetts Fincorp, Inc., a Massachusetts co-
operative bank holding company having its principal business
offices at 70 Quincy Avenue, Quincy, Massachusetts 02269 (the
"Company").
Item 2. Identity and Background Identity and Background
No Amendment
Item 3. Source and Amount of Funds or other Consideration
No Amendment
Item 4. Purpose of Transaction Purpose of Transaction.
On January 24, 2000, Mark W. Jaindl ("Jaindl"), William E.
Schantz, II, and Scott E. Buck brought action against all of the
directors of the Company to redress the wrongful adoption and
discriminatory and inequitable application of certain director
qualification by-laws. On information and belief, such by-laws
were adopted as a knee-jerk and entrenchment motivated response
to learning that Jaindl had determined to nominate two persons to
stand for election to the board of directors of the Company.
Both the by-laws themselves and their purported application by
the Company constitute a blatant and entirely self interested
attempt at entrenchment by the current board of directors of the
Company, the members of which have been on notice since at least
late October, 1999, that the continued incumbency of the board
would be challenged by Jaindl, who together with his father
Frederick Jaindl and trusts for two of his children owns 9.99% of
the outstanding common shares of the Company. Moreover, as
applied by defendants, the challenged by-laws make it literally
impossible for any stockholder except those residing in the
immediate vicinity of the defendant Company's operations from
ever nominating candidates for election as director, thus
stripping virtually all stockholders of their right to challenge
the continued incumbency of this board. On January 19, 2000, five
days after Jaindl's nomination of Buck and Schantz, and almost
three full months after Jaindl's nomination for election as
director, the Company filed a report on Form 8-K with the SEC
announcing that it had amended its by-laws, purportedly on
January 12, 2000. As amended, the Company's by-laws purport to
impose a series of qualifications upon any individual who would
seek to serve as a director of the Company (the "New
Qualification By-Laws"). A copy of the Complaint is annexed as
Exhibit A.
The Reporting Persons each acquired their respective shares
of the Company's Common Stock for the purpose of investment. The
Reporting Persons are each evaluating, and expect to continue to
evaluate, their respective perceptions of their investment's
potential, the Company's business prospects and financial
position, the price level of the Common Stock, and opportunities
to acquire or dispose of Common Stock or realize trading profits.
The Reporting Persons may in the future take such actions with
respect to such holdings in the Company as each deems appropriate
in light of the circumstances existing from time to time. In
addition, the Reporting Persons, jointly or individually, may
either dispose of any or all securities of the Company, or
purchase additional Common Stock, in any manner permitted by
applicable securities laws.
The Reporting Persons believe that the per share value of
the Company's Common Stock is not adequately reflected in the
current market price of the Company's Common Stock and that the
Company should consider taking steps to realize the inherent
value of its franchise in a manner designed to maximize
shareholder value, including a possible sale of the Company.
As part of their continuing efforts to assess the value of
its investment in the Company, the Reporting Persons may and have
communicated with, among others, the Company's management, its
Board of Directors, and other stockholders of the Company, in
manners permitted by applicable securities laws. In addition,
the Reporting Persons reserve the right to exercise any and all
of their respective rights as stockholders of the Company in a
manner consistent with their equity interests.
In connection with the 2000 Annual Meeting of Stockholders
of the Company, on October 21, 1999 Frederick J. Jaindl nominated
Mark W. Jaindl as a director for a three year term expiring 2003
and on January 14, 2000 Mark W. Jaindl nominated Scott E. Buck
and William E. Schantz, II as directors for three year terms
expiring 2003 (collectively, the "Nominees"). Mark W. Jaindl
intends to commence solicitation of proxies in favor of the
Nominees and in opposition of at least three nominees proposed by
the Company as soon as is permitted by the rules of the
Securities and Exchange Commission (the "Commission") and will
file a preliminary proxy statement with the Commission pursuant
to Regulation 14A of the Securities and Exchange Act of 1934, as
amended. The Reporting Persons do not seek control of the
Company.
The Company is a savings and loan holding company and is
subject to regulation by the Office of Thrift Supervision
("OTS"). The above-stated actions are unrelated to the OTS
regulations. Specifically, the Reporting Persons are aware that
regulations promulgated by the OTS contain separate standards
with regard to acquisition of "control". Those regulations
require OTS approval for acquisition of control under certain
conditions. Some of the provisions are based in part on
numerical criteria. One of the provisions creates a rebuttable
presumption of control where a person acquires more than 10
percent of the voting stock of a savings association and other
conditions are met. Another provision creates a rebuttable
presumption of control where a person acquires proxies to elect
one-third or more of the savings associations board of directors
and other conditions are met. If the Reporting Persons proceed
with the course of action as outline above, the Reporting Persons
intend to address these OTS requirements at the appropriate time.
The Reporting Persons have no present plans to cross these
numerical thresholds.
Item 5. Interest in Securities Interest in Securities of the
Issuer.
(a) Fred Jaindl, Mark Jaindl, the ZJTrust and the JJTrust
own 13,948, 30,000, 7,000 and 3,600 shares respectively of common
stock of the Company. In total, these 54,548 shares constitute
approximately 9.99% of the 545,481 shares of Company common stock
outstanding as of August 10, 1999.
(b) Fred Jaindl, Mark Jaindl, the ZJTrust and the JJTrust
have the sole voting and dispositive power of 13,948, 30,000,
7,000 and 3,600 shares respectively of common stock they hold.
(c), (d), (e) Not applicable
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
Not applicable.7n
Item 7. Material to be File as Exhibits
See attached
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
January 24, 2000
/s/ Frederick J. Jaindl
________________________________________
Signature
Frederick J. Jaindl
/s/ Mark W. Jaindl
________________________________________
Signature
Mark W. Jaindl
Exhibit A
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MARK W. JAINDL, SCOTT E. BUCK )
and WILLIAM E. SCHANTZ, II, )
individually, and MARK W. )
JAINDL, derivatively on )
behalf of MASSACHUSETTS )
FINCORP, INC., a Delaware )
corporation, )
)
Plaintiffs, )
) Civil Action No.
v. ) ____________
)
JOHN R. BYRNE, RICHARD R. )
CAHILL, W. CRAIG DOLAN, PAUL )
C. GREEN, JOHN E. HURLEY, )
JR., ROBERT E. )
MC GOVERN, JOHN P. O'HEARN, )
JR., ROBERT H. QUINN, JOSEPH )
W. SULLIVAN, DIANE VALLE, )
)
Defendants, )
)
and MASSACHUSETTS FINCORP, )
INC., a Delaware corporation, )
Nominal Defendant
VERIFIED COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
Plaintiffs Mark W. Jaindl ("Jaindl"), Scott E. Buck
("Buck") and William E. Schantz, II ("Schantz")(collectively
"Plaintiffs"), by and through their attorneys, Richards, Layton &
Finger, P.A., plead as and for their Verified Complaint for
Declaratory and Injunctive Relief against Defendants:
1. This action is brought to redress the wrongful
adoption and discriminatory
and inequitable application of certain director qualification by-
laws. On information and belief, such by-laws were adopted as a
knee-jerk and entrenchment motivated response to learning that
plaintiff Jaindl had determined to nominate two persons to stand
for election to the board of directors of the Company. Both the
by-laws themselves and their purported application by the Company
constitute a blatant and entirely self interested attempt at
entrenchment by the current board of directors of the Company,
the members of which have been on notice since at least late
October, 1999, that the continued incumbency of the board would
be challenged by Jaindl, who together with his father Frederick
Jaindl and trusts for two of his children owns 9.99% of the
outstanding common shares of the Company. Moreover, as applied
by defendants, the challenged by-laws make it literally
impossible for any stockholder except those residing in the
immediate vicinity of the defendant Company's operations from
ever nominating candidates for election as director, thus
stripping virtually all stockholders of their right to challenge
the continued incumbency of this board.
The Parties
2. Plaintiff Mark W. Jaindl owns 30,000 shares of
common stock, par value
$.01 per share of Massachusetts Fincorp, Inc. (the "Company").
Together with his father Frederick Jaindl and trusts for two of
his children, Jaindl owns approximately 9.99% of the common stock
of the Company. Since October, 1997, Jaindl has served as
President and Chief Executive Officer of American Bank. Jaindl
has also served as Vice Chairman of American Bank since June,
1997. Jaindl brings this suit in both his individual capacity
and derivatively on behalf of the Company.
3. Plaintiffs Buck and Schantz are individuals who
have been nominated by
plaintiff Jaindl to stand for election as directors of the
Company. Each bring this action in their individual capacity.
4. Each of the named individual defendants is a
director of the Company.
Each is sued in his or her capacity as a director.
5. The Company is a bank holding company incorporated
in Delaware. The
Company's subsidiary, The Massachusetts Co-operative Bank was
originally organized in 1908 and operates in the greater Boston
metropolitan area. The Company has announced that it will hold
its annual meeting for the election of directors on April 26,
2000. The record date for the annual meeting is March 1, 2000.
Jaindl, Buck and Schantz Are Nominated For Election
6. On October 21, 1999, Jaindl was nominated for
election to the board of
directors of the Company by Mr. Frederick Jaindl, a stockholder
of the Company. Such nomination fully and completely complied
with the Company's by-laws as they existed at that time, and duly
qualified Jaindl to stand for election as a director.
7. On January 14, 2000, Jaindl nominated two
additional individuals for
election to the board of directors of the Company, plaintiffs
Buck and Schantz. Jaindl immediately filed Amendment No. 7 to
his Schedule 13D making public his nomination of plaintiffs Buck
and Schantz. Jaindl took action to nominate additional
candidates for election after becoming concerned about the
stewardship of the existing board, including, in particular,
certain questionable transactions relating to a real estate
purchase which will be the subject of a separate demand for books
and records by Jaindl.
8. At the time of Jaindl's January 14, 2000
nomination of Buck and
Schantz, the publically available by-laws of the Company did not
contain the qualifications relating to who could serve as a
director of the Company challenged in this action. Accordingly,
the January 14, 2000 nomination of Buck and Schantz by Jaindl
fully complied with the advance nomination by-laws of the Company
which were publically available at the time of the nomination and
on file with the U.S. Securities and Exchange Commission ("SEC").
9. At no time prior to the nomination of Jaindl, Buck
and Schantz as
nominees for election to the board of directors of the Company
had the Company made any public disclosure whatsoever of any by-
law or other provision purporting to impose the qualifications on
nominees for election to the board of directors of the Company
challenged here.
The Company Learns That Jaindl Is Considering Nominating Other
Candidates
10. In mid-December, 1999, Jaindl called defendant
Paul C. Green, President
and CEO of the Company, and inquired whether the by-laws of the
Company required that a nominee for election as a director of the
Company was required to be a stockholder of the Company. During
that conversation, Jaindl told Green that he intended to nominate
two other individuals to stand for election as directors. Thus,
no later than late December, 1999, the Company was on notice that
Jaindl intended to nominate two additional nominees for election
as directors of the Company.
11. On December 23, 1999, defendant Green wrote to
Jaindl responding to his
question relating to director nominations, and advised Jaindl
that the by-laws did not contain a requirement that nominees be
stockholders of the Company. Green also advised Jaindl to
address further questions "regarding your proposed nomination" to
Jaindl's counsel "given our different objectives...." Green's
December 23, 1999 letter is attached hereto as Exhibit A.
The Company Adopts a "Secret" Director Qualification Scheme
12. On January 19, 2000, five days after Jaindl's
nomination of Buck and Schantz, and almost three full months
after Jaindl's nomination for election as director, the Company
filed a report on Form 8-K with the SEC announcing that it had
amended its by-laws, purportedly on January 12, 2000.
13. As amended, the Company's by-laws purport to
impose a series of
qualifications upon any individual who would seek to serve as a
director of the Company (the "New Qualification By-Laws").
The Residency By-Law
14. Article I, Section 6(d) of the Company's by-laws
(the "Residency By-
Law") as purportedly adopted on January 12, 2000, imposes the
following qualification on anyone attempting to stand for
election as director of the Company:
(d) No person shall be eligible for
election or appointment to the Board of
Directors...(iv)...unless such person has
been, for a period of at least one year
immediately prior to his or her election,
nomination or appointment, a resident of a
county in which the Corporation or its
subsidiaries maintains a banking office or of
a county contiguous to any such county.
15. None of Jaindl, Buck or Schantz are residents of a
county in which the
Company (or its subsidiary bank) maintains an office, or a county
contiguous to any such county. Accordingly, if applied to
Jaindl, Buck and Schantz, the Residency By-Law would render them
ineligible for election at the upcoming annual meeting for the
election of directors.
16. Moreover, as written, even if the three plaintiffs
otherwise agreed to relocate their residences to the relevant
counties of Massachusetts now, (which, of course, they will not),
the Residency By-Law requires residency for at least one year
prior to the election of the director. Thus, as applied to
Jaindl, Buck or Schantz, the Residency By-Law is literally
impossible to comply with as written.
17. In fact, however, the Residency By-Law is further
inequitable in this case
because the by-law, as written and filed with the SEC, expressly
exempts from its application "persons serving as members of the
initial Board of Directors," that is, all of the current
incumbent members of the Company's board. There is no business
purpose whatsoever in imposing upon future nominees to the board
a restrictive residency requirement but exempting current
directors from such a requirement. Instead, the exemption for
sitting directors betrays a conscious entrenchment purpose
animating the adoption of the New Qualification By-Laws.
18. At the time that the Residency By-Law was adopted
by the defendant
directors, the board knew of the nomination of Jaindl as a
candidate for election as director and the fact that he intended
to nominate two additional individuals to run as candidates for
the board of directors. With this knowledge in mind, the
individual defendants purposefully tailored the by-law to
eliminate any threat to their incumbency posed by Jaindl and his
prospective nominees.
The "No Experience" By-Law
19. The board also acted to attempt to impose other
qualifications on potential
director nominees. One such qualification eliminates from
candidacy any nominee who has current relevant experience in the
banking business (the "No Experience By-Law").
20. The No Experience By-Law appears as part of
Article I, Section 6(d) of
the by-laws of the Company and states:
No person may serve on the Board of Directors
and at the same time be a director or other
officer of another co-operative bank, credit
union, savings bank, state or federally-
chartered savings and loan association, trust
company, bank holding company or state or
national banking association that engages in
business activities in the same market area
as the Corporation or any of its
subsidiaries.
21. Plaintiff Jaindl is the President and Chief
Executive Officer of the American Bank, a banking association
which offers banking services via the Internet on a nationwide
basis. Although, as of the date of this complaint, the American
Bank serves exactly eleven (11) customers in all of
Massachusetts, as written, the No Experience By-Law applies to
plaintiff Jaindl and, if applied retroactively to his prior
nomination, would disqualify him from serving as a nominee for
election as director of the Company. At the time that they
adopted the No Experience By-Law, the members of the board of
directors of the Company knew that plaintiff Jaindl was an
officer and director of the American Bank, and further knew that
the American Bank offered banking services via the Internet,
including in the Commonwealth of Massachusetts. Thus, at the
time that the No Experience By-Law was adopted, the defendants
knew that it would disqualify plaintiff Jaindl if applied
retroactively to his nomination.
The Imputed Disqualification By-Law
22. The board also adopted a third by-law, which
would disqualify the nominees of any individual or group of
stockholders where the individual or member of the group was
otherwise disqualified (the "Imputed Disqualification By-Law").
23. The Imputed Disqualification By-Law appears
at Article I, Section 6(d) of
the by-laws of the Company and states:
No person shall be eligible for election to
the Board of Directors if such person is the
nominee or representative of a person...who
is ineligible for election to the Board of
Directors under this Section 6.
24. Since Buck and Schantz are nominees of Jaindl, and
since the New Qualification By-Laws render Jaindl "ineligible for
election" if applied to his nomination, the Imputed
Disqualification By-Law would disqualify Buck and Schantz from
standing as nominees for election to the board if it was applied
to them.
The Company Purports To Apply The New Qualification By-Laws To
Plaintiffs
25. On the same date that the Company filed its Form 8-
K belatedly
announcing its formerly secret qualification by-laws, January 19,
2000, counsel to the Company wrote to Mr. Frederick Jaindl, (who
had nominated plaintiff Jaindl as a candidate for election as
director), conveyed the New Qualification By-Laws to him, and
announced the Company's position that the New Qualification By-
Laws were applicable to Jaindl's nomination. In particular,
counsel's letter advises that the Company concluded that Jaindl
"does not meet the local resident requirements . . . and is an
officer of a financial institution that competes . . . in the
market area of the company by virtue of its presence on the
Internet. . . ." The letter further advises that the Company
"will take no further action" regarding the nomination "until and
unless the Nominee [Jaindl] can provide conclusive evidence" that
he meets the residency requirement, and resigns as an officer of
the American Bank (where he makes his living) and divests himself
of any interest in American Bank in excess of 10%. Counsel's
letter rejecting Jaindl's nomination is attached hereto as
Exhibit B.
26. A substantially similar letter, also dated January
19, 2000, was sent by Company counsel to Jaindl announcing the
Company's rejection of Jaindl's nomination of Plaintiffs Buck and
Schantz. In particular, counsel's letter advised that the
"Company has concluded that the Nominees [defined in the letter
as Buck and Schantz] do not meet the local resident
requirements...and are nominees of an officer of a financial
institution that competes or does business in the market area of
the Company by virtue of American Bank's presence on the
Internet...." Thus, the letter concluded, the Company "has
deemed the nomination of the Nominees invalid...and will take no
further action regarding such nomination" until and unless the
nominees met the by-law requirements and plaintiff Jaindl had
resigned as an officer of American Bank and divested any interest
he held in American Bank in excess of 10%. The January 19, 2000
letter relating to Buck and Schantz is attached hereto as Exhibit
C.
27. The Company's two January 19 letters make clear
that the Company has determined to apply retroactively the New
Qualification By-Laws to Jaindl and to apply the formerly
unavailable "secret" by-law qualifications to Buck and Schantz.
COUNT I
(Individually as to Jaindl, Buck and Schantz)
28. Plaintiffs repeat and reallege paragraphs 1-27 of
the Complaint as if fully
set forth herein.
29. The New Qualification By-Laws are inequitable and
unreasonable per se
and their application should be enjoined permanently.
30. On their face, the New Qualification By-Laws
prohibit any non-resident of
certain counties in Massachusetts from serving as a director of
this public company, and also include discriminatory features
exempting current directors from this residency requirement.
Moreover, the Residency By-Law is literally impossible to comply
with in connection with the current election of directors of the
Company, thus making it impossible for Plaintiffs to comply, even
if they were otherwise inclined to do so.
31. Likewise, the Imputed Disqualification By-Law, on
its face, renders it
impossible for Jaindl, a substantial stockholder of the Company,
ever to nominate any candidate for election as director of the
Company, unless, of course, he is willing to move to
Massachusetts, reside there for more than a year, resign as a
director and officer of the American Bank where he currently
makes his living, and divest himself of a substantial portion of
his ownership interests (direct or indirect) in such bank. On
its face, the New Qualification By-Laws purport to remove from a
significant stockholder for no justifiable business reason the
ability to nominate anyone to serve as a director of the Company,
a right which every stockholder of a Delaware company enjoys and
which Jaindl enjoyed prior to the adoption of the New
Qualification By-Laws.
32. Moreover, the New Qualification By-Laws also
literally remove from any
stockholder who does not reside in certain counties in
Massachusetts the right to serve on the Board or to nominate
others to do so - even if the nominees themselves were residents
of Massachusetts. Thus, stockholders from 49 of the 50 States in
the Union are not permitted to nominate candidates for election
as director under the New Qualification By-Law no matter how many
shares they hold in the Company.
33. Plaintiffs have no adequate remedy at law.
COUNT II
(Individually as to Jaindl, Buck and Schantz)
34. Plaintiffs hereby repeat and reallege the
allegations of Paragraphs 1-33 of
the Complaint as if fully set forth herein.
35. As applied to Plaintiff Jaindl the New
Qualification By-Laws are illegal and unenforceable. At the time
Jaindl purchased his stock in the Company and at the time that he
was nominated for election as director, the New Qualification By-
Laws did not exist. Neither the General Corporation Law nor the
other laws of this State permit the application, on an ex post
facto basis, of qualifications of the type imposed here.
36. Moreover, application of the New Qualification By-
Laws to nominees of Jaindl based upon his status is inequitable
and illegal, since the New Qualification By-Laws are not
justified by any compelling business justification, do not
respond to any legally cognizable threat to corporate policy and
effectiveness, and, as applied here are preclusive.
37. In addition, even assuming arguendo that the New
Qualification By-Laws
are determined not to be inequitable in application in this
instance, the patently discriminatory nature of the Residency By-
Law demonstrates that the New Qualification By-Laws were not
adopted for any valid business purpose, but instead for the
blatantly self interested purpose of entrenchment.
38. As applied to Plaintiffs in this case, the New
Qualification By-Laws are
inequitable and should be enjoined.
39. Plaintiffs have no adequate remedy at law.
COUNT III
(Derivatively by Plaintiff Jaindl)
40. Plaintiff Jaindl repeats and realleges the
allegations of Paragraphs 1-39 of
the Complaint as if fully set forth herein.
41. Plaintiff Jaindl brings this count derivatively in
order to address the breach
of fiduciary duty of each and every member of the board of
directors of the Company and to vindicate all stockholders' right
to a full and fair opportunity to elect and nominate directors.
42. No demand on the board of directors of the Company
was made prior to
bringing this derivative count because there is more than a
reasonable doubt regarding the independence of the board in
connection with the action of the directors in adopting the New
Qualification By-Laws at a time when they knew that such by-laws
would preclude a substantial stockholder from exercising his
right to challenge the incumbency of the board.
43. In addition, the discriminatory feature of the
Residency By-Law
demonstrates, on its face, that the defendants have acted in a
manner which attempts to preserve their position and perquisites
as directors. There is no business purpose for imposing a
residency requirement on some nominees for election as director,
i.e., Jaindl and his nominees, but not others, i.e., the
incumbent board of directors.
44. Likewise, the Imputed Disqualification By-Law on
its face demonstrates that no stockholder except one residing in
certain counties in Massachusetts will ever be permitted to
nominate candidates for election as director, thus insuring the
incumbent directors that the pool of available nominees will be
extremely limited and further perpetuating their continued
incumbency as directors. Like the discriminatory feature of the
Residency By-Law, the Imputed Disqualification By-Law is
sufficiently pernicious as to call into question the business
judgment of the directors who adopted it, whether or not they are
independent, and thus demand is excused for this reason, as well.
45. Adopting and purporting to apply the New
Qualification By-Laws at a time when the board knew that Jaindl
would seek a seat on the board and had determined to nominate two
additional candidates to challenge the board's incumbency
constituted a breach of the duty of loyalty of each and every
member of the board, since the challenged action was designed
solely or primarily to preserve the incumbency of board members
against a challenge from Jaindl and/or will have that effect if
applied in the manner advocated by the defendant directors.
46. All stockholders are currently suffering harm as a
result of the New
Qualification By-Laws in that no stockholder other than
stockholders resident in certain counties in Massachusetts may
nominate candidates for election to the board, and, if this Court
were not to intervene to prevent the enforcement of these self-
interested by-laws, all stockholders will be deprived of having
the choice of electing the entrenched board's nominees, or Jaindl
and his nominees Buck and Schantz.
47. Plaintiff has no adequate remedy at law.
WHEREFORE, Plaintiffs demand that the Court enter its
Orders, Judgments and Decrees:
(a) declaring and decreeing that the New Qualification
By-Laws are invalid as a matter of law;
(b) preliminarily and permanently enjoining the
application of the New Qualification By-Laws to
Plaintiff Jaindl;
(c) preliminarily and permanently enjoining the
application of the New Qualification By-Laws to
any attempt by plaintiff Jaindl to nominate one or
more individuals as candidates for director;
(d) declaring and decreeing that each of Plaintiffs
Jaindl, Buck and Schantz have been properly
nominated in accordance with the by-laws of the
Company and are therefore qualified to stand for
election as directors of the Company;
(e) declaring and decreeing that the action of the
board of directors of the Company in adopting the
New Qualification By-Laws constituted a breach of
fiduciary duty of such directors;
(f) awarding Plaintiffs their costs and expenses
incurred in bringing and prosecuting this action,
including their attorneys' fees based on, inter
alia, any corporate benefit conferred by this
litigation; and
(g) awarding such other and further relief as may
be just and equitable in the circumstances.
___________________________
Gregory V. Varallo
Dominick Gattuso
Richards, Layton & Finger,
P.A.
10th & King Streets
Wilmington, DE 19899
Attorneys for Plaintiffs
Dated: January 24, 2000
