AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 19, 1999
1933 ACT FILE NO. 333-_____
1940 ACT FILE NO. 811- 09559
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-2
[X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[ ] AMENDMENT No. __
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EMIGRANT SECURITIES CORP.
(Exact Name of Registrant as Specified in Charter)
C/O EMIGRANT SAVINGS BANK
5 EAST 42ND STREET
NEW YORK, NEW YORK 10017
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 850-4000
Daniel C. Hickey, Jr., Esq.
EMIGRANT SAVINGS BANK
5 East 42nd Street
New York, New York 10017
(Name and Address of Agent for Service)
COPIES TO:
Douglas J. McClintock, Esq.
Thacher Proffitt & Wood
2 World Trade Center, 40th Floor
New York, New York 10048
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EMIGRANT SECURITIES CORP.
CROSS-REFERENCE SHEET
(PURSUANT TO RULE 481(A) UNDER THE SECURITIES ACT OF 1933)
PART A & B OF PROSPECTUS*
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ITEM CAPTION LOCATION
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1. Outside Front Cover......................................................................Not Applicable
2. Cover Pages; Other Offering Information..................................................Not Applicable
3. Fee Table and Synopsis...................................................................Not Applicable
4. Financial Highlights.....................................................................Not Applicable
5. Plan of Distribution.....................................................................Not Applicable
6. Selling Shareholders.....................................................................Not Applicable
7. Use of Proceeds..........................................................................Not Applicable
8. General Description of the Registrant..........................................................Summary;
Emigrant Securities Corp.;
Investment Objective and
Policies; Description of the
Capital Stock -- Voting Rights;
Organizational Requirements
9. Management......................................................................Management and Servicing
10. Capital Stock, Long-Term Debt, and Other Securities...................Investment Objective and Policies;
Description of the Capital Stock
11. Defaults and Arrears on Senior Securities.................................................Not Applicable
12. Legal Proceedings.........................................................................Not Applicable
13. Table of Contents of the Statement
of Additional Information.........................................................Not Applicable
14. Cover Page................................................................................Not Applicable
15. Table of Contents.........................................................................Not Applicable
16. General Information and History...........................................................Not Applicable
17. Investment Objective and Policies.....................................Investment Objective and Policies;
Risk Factors -- Incurrence of Debt;
18. Management......................................................................Management and Servicing
19. Control Persons and Principal Holders of Securities...........................Emigrant Securities Corp.;
Relationship with Emigrant Resource Corp.
and the Bank; conflicts of interest
20. Investment Advisory and Other Services.....................................Management and Other Services
21. Brokerage Allocation and Other Practices..................................................Not Applicable
22. Tax Status.....................................................Certain Federal Income Tax Considerations
23. Financial Statements................................................................Financial Statements
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* Pursuant to the General Instructions to Form N-2, all information required to
be set forth in Part B: Statement of Additional Information has been included in
Part A: The Prospectus. The Information required to be included in Part C is set
forth under the appropriate item so numbered in Part C of this Registration
Statement.
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EMIGRANT SECURITIES CORP. AND ITS BUSINESS
GENERAL
Emigrant Securities Corp. is a newly organized, diversified, closed-end
management investment company. Emigrant Securities Corp. is a subsidiary of
Emigrant Portfolio Resource Corp. ("Emigrant Resource Corp."), which in turn is
a wholly-owned subsidiary of Emigrant Savings Bank, a stock savings bank
chartered under the laws of the State of New York ("Bank"). The Bank is a
wholly-owned subsidiary of Emigrant Bancorp Inc., a Delaware Corporation
("Bancorp"). The Bank established Emigrant Securities Corp. as a Delaware
corporation and Emigrant Resource Corp. as a New York corporation, each to be
considered as an operating subsidiary of the Bank under the Banking Law of New
York ("Banking Law"). Emigrant Securities Corp. and Emigrant Resource Corp. each
maintain their respective offices at the executive headquarters of the Bank, 5
East 42nd Street, New York, New York 10017.
THE EXCHANGE AND OFFERING. On September 30, 1999, Emigrant Securities
Corp. exchanged 1,000 shares of its common stock, par value $0.01 per share
("Common Stock"), representing 100% of the issued and outstanding Common Stock,
and 800 shares of its 10% Cumulative Series A Preferred Stock, par value $0.01
per share ("Series A Preferred Stock") representing in excess of 80% of the
outstanding Series A Preferred Stock, for assets valued at approximately
$930,262,937 with Emigrant Resource Corp. ("Initial Capital Contribution"). On
September 30, 1999, Emigrant Securities Corp. also sold 125 shares of its Series
A Preferred Stock at a price of $1,000 per share through a private placement,
pursuant to Rule 506 of Regulation D under the Securities Act of 1933, as
amended, primarily to directors and senior officers of the Bank and direct and
indirect subsidiaries of the Bank, and to certain other persons selected by the
Emigrant Securities Corp. (hereinafter the sale of 125 shares of Series A
Preferred Stock will be called the "Offering"). Emigrant Securities Corp.
currently does not intend to sell any more of its capital stock.
CORPORATE STRUCTURE. On June 17, 1999, Emigrant Resource Corp. was
incorporated in New York. On August 12, 1999, Emigrant Securities Corp. was
incorporated in Delaware.
CAPITAL STRUCTURE. Emigrant Resource Corp. owns 100% of the Common
Stock and in excess of 80% of the Series A Preferred Stock. The persons who
subscribed in the Offering own less than 20% of the issued and outstanding
Series A Preferred Stock. The Bank owns 100% of the common stock, par value
$0.01 per share, of Emigrant Resource Corp.
TAXATION. Emigrant Securities Corp. will elect to be taxed as a
Regulated Investment Company ("RIC") under the Internal Revenue Code of 1986, as
amended ("Code") and generally will not be subject to federal income tax to the
extent that it distributes its earnings to its stockholders and maintains its
qualification as a RIC. Emigrant Securities Corp. currently expects to pay an
aggregate amount of dividends with respect to its outstanding shares of capital
stock equal to approximately 100% of Emigrant Securities Corp.'s "investment
company taxable income" (excluding net capital gains). In order to remain
qualified as a RIC, Emigrant Securities Corp. must distribute annually at least
90% of its "investment company taxable income" (excluding net capital gains) to
stockholders. See "FEDERAL INCOME TAX CONSIDERATIONS."
DIVIDENDS. Dividends will be declared at the discretion of the Board of
Directors of Emigrant Securities Corp. ("Board of Directors") after considering
Emigrant Securities Corp.'s distributable funds, financial requirements, tax
considerations and other factors. Because (i) Emigrant Securities Corp. expects
the majority of the investment assets held by Emigrant Securities Corp. to be
interest bearing and (ii) the Series A Preferred Stock represents substantially
less than 1% of Emigrant Securities Corp.'s capitalization, both its cash
available for distribution and its "investment company taxable income" will be
substantially in excess of amounts needed to pay dividends on the Series A
Preferred Stock, even in the event of a significant drop in interest rate
levels. Accordingly, Emigrant Securities Corp. intends, after paying all accrued
dividends on the Series A Preferred Stock for the current
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dividend period, to pay dividends as determined by its Board of Directors to
Emigrant Resource Corp. as the sole holder of the Common Stock. See "DESCRIPTION
OF CAPITAL STOCK-- SERIES A PREFERRED STOCK -- DIVIDENDS AND DISTRIBUTIONS."
RISK FACTORS
NO OPERATING HISTORY
Emigrant Securities Corp. has no operating history and has not
previously managed assets or operated as a RIC under the Code. Emigrant
Securities Corp. will be subject to some of the risks inherent in establishing
any new business enterprise, such as being highly dependent on its management.
Because Emigrant Securities Corp. is a new entity, prospective purchasers of the
Series A Preferred Stock do not have access to the same type of information in
assessing their proposed investment as would be available to them if Emigrant
Securities Corp. had a prior operating history.
INVESTMENT ADVISOR
Emigrant Securities Corp. will not be managed like a typical closed-end
investment company. Emigrant Securities Corp. will be internally managed by its
Board of Directors and its officers and will not have any separate investment
adviser. See "MANAGEMENT AND SERVICING -- DIRECTORS AND EXECUTIVE OFFICERS."
BANK REGULATORY RESTRICTIONS
The Bank is subject to the rules and regulations of the New York
Banking Department ("Banking Department") as a stock savings bank chartered
under the laws of the State of New York. The Bank is subject to the rules and
regulations of the Federal Deposit Insurance Corporation ("FDIC") as an insured
depository institution under the Federal Deposit Insurance Act, as amended.
Bancorp, the holding company for the Bank, is subject to the rules and
regulations of the Board of Governors of the Federal Reserve System ("FRB") as a
bank holding company under the Bank Holding Company Act of 1956, as amended.
Because Emigrant Securities Corp. is an indirect subsidiary of the Bank and
Bancorp, the Banking Department, the FDIC and the FRB (together, the "Banking
Regulators") will have the right to examine Emigrant Securities Corp. and its
activities. Formation of Emigrant Securities Corp. is subject to the
non-objection of the Banking Regulators. If the Banking Regulators object to the
formation of Emigrant Securities Corp. or require certain changes to Emigrant
Securities Corp.'s structure, Emigrant Securities Corp. may fail to qualify as a
RIC.
In addition, under certain circumstances, including any determination
that the Bank's relationship to Emigrant Securities Corp. results in an unsafe
and unsound banking practice, the Banking Regulators will have the authority to
issue orders which could restrict the ability of Emigrant Securities Corp. to
transfer assets, to make distributions to its stockholders (including dividends
to the holders of the Series A Preferred Stock) or to redeem shares of the
Series A Preferred Stock. Such actions could potentially result in Emigrant
Securities Corp. failing to qualify as a RIC.
RELATIONSHIP WITH EMIGRANT RESOURCE CORP. AND THE BANK; CONFLICTS OF INTEREST
The Bank and its direct and indirect subsidiaries will be involved in
virtually every aspect of Emigrant Securities Corp.'s existence. The Bank is the
sole stockholder of Emigrant Resource Corp. and Emigrant Resource Corp. is the
holder of 100% of the issued and outstanding shares of the Common Stock and in
excess of 80% of the issued and outstanding shares of the Series A Preferred
Stock. It is possible that the Bank or a direct or indirect subsidiary of the
Bank will service assets or mortgage loans held as investments by Emigrant
Securities Corp. See
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"MANAGEMENT AND OTHER SERVICES." In addition, all of the officers and several of
the directors of Emigrant Securities Corp. are officers or directors of the
Bank. As the sole shareholder of Emigrant Resource Corp., which holds 100% of
the Common Stock and holds at least 80% of the outstanding Series A Preferred
Stock, the Bank will have the right to elect all of the directors of Emigrant
Securities Corp. and to effectively control any vote involving the holders of
the Series A Preferred Stock. Either Emigrant Resource Corp. or the Bank could
cause the Certificate of Designations, Preferences and Rights of the Series A
Preferred Stock of Emigrant Securities Corp. ("Certificate of Designations") to
be amended in a manner that would adversely affect the rights of the other
holders of the Series A Preferred Stock. Neither Emigrant Resource Corp. nor the
Bank currently intends to amend the Certificate of Designations in any manner
that would adversely affect the rights of the other holders of the Series A
Preferred Stock. However, there can be no assurance that they will not do so in
the future.
REDUCTION OF CASH FLOW TO SERVICE THE SERIES A PREFERRED STOCK
Although Emigrant Securities Corp. currently has no intention of
distributing or selling any of the assets received in the initial capital
contribution, the Certificate of Incorporation of Emigrant Securities Corp.
("Certificate of Incorporation") does not prohibit Emigrant Securities Corp.
from taking such action. Should Emigrant Securities Corp. distribute a
substantial portion of the assets from the initial capital contribution,
Emigrant Securities Corp. would derive less annual income from such assets,
which may cause less cash to be available for distribution to the holders of the
Series A Preferred Stock.
FAILURE TO QUALIFY AS A RIC
Emigrant Securities Corp. intends to operate so as to qualify as a RIC
under the Code. Although Emigrant Securities Corp. believes that it will so
qualify, no assurance can be given that Emigrant Securities Corp. will so
qualify. Qualification as a RIC involves the application of highly technical and
complex Code provisions and provisions of the Investment Company Act of 1940, as
amended ("Investment Company Act") for which there are only limited judicial and
administrative interpretations. The determination of various factual matters and
circumstances, not entirely within Emigrant Securities Corp.'s control, may
affect Emigrant Securities Corp.'s ability to qualify as a RIC. The Bank expects
that Deloitte & Touche LLP ("Deloitte & Touche") will work with the Bank to help
ensure that the RIC operates in compliance with its intended purpose and to
address any unforeseen business, structural or tax law changes that occur within
one year of the RIC's implementation date. If in any taxable year Emigrant
Securities Corp. fails to qualify as a RIC, Emigrant Securities Corp. would not
be allowed a deduction for distributions to stockholders in computing its
taxable income and consequently would be subject to federal income tax
(including any applicable alternative minimum tax) on its taxable income at the
highest corporate rate. In addition, Emigrant Securities Corp. may be subject to
personal holding company taxes because Emigrant Securities Corp. is expected to
be a personal holding company. As a result, the amount available for
distribution to Emigrant Securities Corp.'s stockholders would be reduced for
the year or years involved.
INCURRENCE OF DEBT
Emigrant Resource Corp. currently intends to use borrowings, repurchase
agreements and other extensions of credit in making a substantial portion of the
investments that will, upon the initial capital contribution to Emigrant
Securities Corp., constitute the investment assets of Emigrant Securities Corp.
It has not yet been determined as to the extent to which such borrowings,
repurchase agreements or other extensions of credit will be assumed by Emigrant
Securities Corp. or the extent to which Emigrant Securities Corp. will utilize
borrowings, repurchase agreements and other extensions of credit in making
investments in the future. Should Emigrant Securities Corp. elect to utilize
borrowings, repurchase agreements or other extensions of credit in making
investments in the future, the rights of the holders of the Series A Preferred
Stock will be subordinate to the rights of Emigrant Securities Corp.'s
creditors. In addition, depending on the terms of the indebtedness, the amount
of cash available for distribution to stockholders may be reduced. The Bank will
neither lend funds or otherwise extend credit on behalf
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of Emigrant Securities Corp. nor guarantee Emigrant Securities Corp.'s
obligations except as permitted under the Investment Company Act or by the
Securities and Exchange Commission ("SEC").
REDEMPTION
The Series A Preferred Stock is not redeemable, except upon the
occurrence of a Tax Event (as defined below in "DESCRIPTION OF CAPITAL STOCK --
COMMON STOCK -- REDEMPTION"). Emigrant Securities Corp. will have the right, at
any time after the occurrence of a Tax Event to redeem the shares of the Series
A Preferred Stock, in whole, but not in part, at a redemption price of $1,000
per share, plus accrued and unpaid dividends thereon to the date fixed for
redemption.
RESTRICTIONS ON TRANSFER AND NO TRADING MARKET
The Certificate of Incorporation, Certificate of Designations, the
Bylaws and the policies of Emigrant Securities Corp. contain restrictions on
transfer of the securities offered hereby, including the restriction that no
person may transfer shares of the Series A Preferred Stock if such transfer
would result in the outstanding Common Stock and the Series A Preferred Stock to
be beneficially owned by less than 100 persons. Consequently, an investor must
be prepared to bear the economic risks of the Offering for an indefinite period
of time. Emigrant Securities Corp. will have less than 200 stockholders. Shares
of the Series A Preferred Stock will not be listed on any securities exchange or
the Nasdaq Stock Market. Because the Series A Preferred Stock contains such
restrictions on transfer and will not be listed on any securities exchange, no
trading market is expected to develop therefor.
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of Emigrant Securities Corp. is to provide
current income to shareholders using the income generated from the receipt of
interest or dividends from its investment portfolio. Emigrant Securities Corp.
intends to pay holders of Series A Preferred Stock a periodic dividend based on
the income generated from its investment portfolio. See "SERIES A PREFERRED
STOCK -- DIVIDENDS AND DISTRIBUTION." Emigrant Securities Corp. intends to
distribute 90% of its "investment company taxable income." See "FEDERAL INCOME
TAX CONSIDERATIONS."
INVESTMENT POLICIES AND SECURITIES
The Certificate of Incorporation authorizes Emigrant Securities Corp.
to engage in any lawful act or activity for which a corporation may be organized
under the Delaware General Corporation Law ("DGCL"). To meet its investment
objective, Emigrant Securities Corp. intends to invest and reinvest its assets
primarily in securities issued by the Government National Mortgage Association
("Ginnie Mae"), the Federal National Mortgage Association ("Fannie Mae"), the
Federal Home Loan Mortgage Corporation ("Freddie Mac"), securities which are
direct obligations of the United States or any of its instrumentalities, or for
which the full faith and credit of the United States or any of its
instrumentalities is pledged to provide for the payment of interest or
principal, commercial real estate loans, residential real estate loans and
similar types of investments and any other investments that are permissible
investments for a New York stock savings bank or an operating subsidiary of New
York stock savings bank (collectively, "Investment Assets"). It is not expected
that Emigrant Securities Corp.'s annual portfolio turnover rate will exceed 5%.
Emigrant Securities Corp. intends to qualify as a RIC for federal
income tax purposes under the Code, commencing with the taxable year ending
December 31, 1999. Because Emigrant Securities Corp. will make an election to be
taxed as a RIC pursuant to Section 851 of the Code, Emigrant Securities Corp.
will not engage in any
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activities other than those that are permissible for a RIC pursuant to Code
Sections 851 through 855 and the Investment Company Act, such as the holding of
securities, loans, investment securities and other assets permissible for a RIC.
The initial capital contribution by Emigrant Resource Corp. to Emigrant
Securities Corp. on September 30, 1999, consisted of such assets.
To maintain such a portfolio it is expected that, in the future,
Emigrant Securities Corp. may purchase additional assets from the Bank, direct
or indirect subsidiaries and affiliates of the Bank or unrelated third parties,
subject to restrictions under the Investment Company Act and based upon
investment policies adopted by the Board of Directors (these policies are
expected to be consistent with the Bank's current lending, underwriting and
investment policies). If Emigrant Securities Corp. purchases loans from the Bank
or a subsidiary of the Bank (including Emigrant Resource Corp.), it will do so
only on an arms-length basis pursuant to a loan purchase agreement with the
intention of maintaining parity of loan quality between the Bank's and Emigrant
Securities Corp.'s loan portfolios.
RIC ASSET TESTS. At the end of each quarter of the taxable year (a) at
least 50% of the value of Emigrant Securities Corp.'s assets must consist of
cash, cash items, government securities, securities of other RICs, and other
securities if such other securities of any one issuer do not represent more than
5% of Emigrant Securities Corp.'s assets and 10% of the outstanding voting
securities of the issuer, and (b) no more than 25% of the value of Emigrant
Securities Corp.'s assets may be invested in the securities of one issuer (other
than U.S. Government securities or securities of other RICs), or of two or more
issuers that are controlled by Emigrant Securities Corp. and are engaged in the
same or similar or related traded or businesses ("RIC Asset Test"). Emigrant
Securities Corp. expects to maintain a portfolio of Investment Assets that
satisfies the RIC Asset Test.
After initially meeting the RIC Asset Test at the close of its first
quarter, Emigrant Securities Corp. will not lose its status as a RIC if it fails
to satisfy the RIC Asset Test at the end of a later quarter solely by reason of
changes in asset values. If the failure to satisfy the RIC Asset Test results
from an acquisition of securities or other property during a quarter, the
failure can be cured by the disposition of sufficient nonqualifying assets
within 30 days after the close of that quarter. Emigrant Securities Corp.
intends to maintain adequate records of the value of its assets to ensure
compliance with the RIC Asset Test, and to take such action within 30 days after
the close of any quarter as may be required to cure any noncompliance, but no
assurance can be given that the RIC Asset Test will be met.
INVESTMENT COMPANY ASSET TESTS. Under the Investment Company Act, a
company is exempt from registration as, and cannot voluntarily register as, an
investment company if (i) at least 55% of the company's assets consist of what
are defined as "real estate assets" (generally defined to include real estate
fee interests, whole real estate loans secured exclusively by real estate,
whole-pool mortgage certificates issued by Ginnie Mae, Fannie Mae, or Freddie
Mac and certain participation interests in real property) and (ii) at least 25%
of the company's remaining assets consist of real estate assets or what are
defined to be "real estate-related assets" (generally defined to include
participation interests where the holder does not have the right to foreclose,
loans that are only partially secured by real estate and partial-pool mortgage
certificates issued by Ginnie Mae, Fannie Mae or Freddie Mac). To the extent
that more than 55% of a company's portfolio is invested in real estate assets,
the company can hold proportionately less real estate-related assets and still
fall within the exemption, as long as at least 80% of the assets are real estate
assets or real estate-related assets. Accordingly, in order for Emigrant
Securities Corp. to register as an investment company - that is, to not be
exempt from registration under the Investment Company Act - it must assure that,
at all relevant times, either (x) the amount of its real estate assets
constitute less than 55% of its total assets or (y) the aggregate amount of its
real estate assets and real estate-related assets constitute less than 80% of
its total assets. Emigrant Securities Corp. expects to assure that the
Investment Assets meet the requirement in (x) or (y) above at all relevant times
("Investment Company Asset Tests"). For instance, 100% of Emigrant Securities
Corp's Investment Assets may consist of partial-pool certificates issued by
Ginnie Mae, which would satisfy (x) above, permitting Emigrant Securities Corp.
to register as an investment company. Alternatively, if at least 20.1% of
Emigrant Securities Corp's Investment Assets consist of securities that are
neither real estate assets nor real estate-
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related assets (y) above would be satisfied, permitting Emigrant Securities
Corp. to register as an investment company.
CHANGES IN INVESTMENT POLICIES
The officers and directors of Emigrant Securities Corp. may not make
changes in the investment policies of Emigrant Securities Corp. which will
result in Emigrant Securities Corp. failing either the RIC Asset Test or both of
the Investment Company Asset Tests, without the vote of the majority of the
outstanding voting securities. The officers and directors of Emigrant Securities
Corp. may make any changes in the investment policies of Emigrant Securities
Corp., without the vote of the majority of the outstanding vote of securities of
Emigrant Securities Corp., as long as such changes ensure compliance of the RIC
Asset Test and one of the Investment Company Asset Tests.
MANAGEMENT AND OTHER SERVICES
DIRECTORS AND EXECUTIVE OFFICERS
Upon its formation, the incorporator of Emigrant Securities Corp.
appointed the initial Board of Directors, which consists of seven directors,
certain of whom are officers and directors of the Bank and officers of Emigrant
Securities Corp. Emigrant Securities Corp. will have at least one officer who
devotes substantial business time to its operations and management and
additional officers who are experienced in asset management and investments some
of whom will likely be directors and/or officers of the Bank. All investment
decisions will be made by the officers designated by the Board of Directors,
consistent with Emigrant Securities Corp.'s investment policies. The Bank will
neither lend funds or otherwise extend credit on behalf of Emigrant Securities
Corp. nor guarantee Emigrant Securities Corp.'s obligations except as permitted
under the Investment Company Act or by the SEC. See "INVESTMENT OBJECTIVES AND
POLICIES."
The following seven individuals serve as the members of the Board of
Directors of Emigrant Securities Corp. Unless otherwise indicated, the business
address of each of the following directors is 5 East 42nd Street, New York, NY
10017. A director who is an "interested person" of Emigrant Securities Corp., as
defined in the Investment Company Act, is indicated by an asterisk (*):
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Position held Principal Occupation
Name, Address With the Registrant During Past 5 Years
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(1) Philip L. Milstein* (1) Director (1) Director and Officer of Bank and Bancorp
(2) Stephen Goldsmith* (2) Director (2) Director and Officer of Bank and Bancorp
(3) Gilbert S. Stein* (3) Director, President and (3) Director and Officer of Bank and Bancorp
Chief Executive Officer
(4) Michael J. Jackson (4) Director (4) President of Emigrant Mortgage
Company, Inc., subsidiary of the Bank
(5) Michael Kahmann (5) Director (5) President of Emigrant Business Credit
Corp., subsidiary of the Bank
(6) Richard Wald (6) Director (6) President of Emigrant Funding Corp.,
subsidiary of the Bank
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(7) Douglas J. McClintock (7) Director (7) Partner of Thacher Proffitt & Wood
Thacher Proffitt & Wood counsel to the Bank and Emigrant
2 World Trade Center Securities Corp.
New York, NY 10048
</TABLE>
The principal officers of Emigrant Securities Corp. are as follows.
Unless indicated the business address of each of the following officers is 5
East 42nd Street, New York, NY 10017. An officer who is an "interested person"
of Emigrant Securities Corp., as defined in the Investment Company Act, is
indicated by an asterisk (*):
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Position held Principal Occupation
Name, Address With the Registrant During Past 5 Years
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(1) Gilbert S. Stein* (1) Director, President and (1) Director and Officer of Bank and Bancorp
Chief Executive Officer
(2) John R. Hart* (2) Senior Vice President (2) Officer of Bank and Bancorp
(3) Daniel C. Hickey* (3) Senior Vice President (3) Officer of Bank and Bancorp
and Secretary
(4) Francis R. May* (4) Senior Vice President (4) Officer of Bank and Bancorp
and Treasurer
(5) Jansen Noyes, III* (5) Senior Vice President (5) Officer of Bank and Bancorp
(6) James C. Woolsey* (6) Executive Vice President (6) Officer of Bank and Bancorp
</TABLE>
COMPENSATION
Officers and Directors of Emigrant Securities Corp. are compensated
according to an expense sharing agreement by and between the Bank, Emigrant
Resource Corp. and Emigrant Securities Corp. and the compensation is based on
the amount of time spent working at Emigrant Securities Corp. not on the
portfolio performance or any percentages of the portfolio.
SERVICING
It is expected that the Investment Assets held by Emigrant Securities
Corp. that require servicing will continue to be serviced by the existing
servicers, which may include the Bank or its direct or indirect subsidiaries.
LOAN PURCHASE AND SERVICING AGREEMENT
The Bank, Emigrant Resource Corp., and Emigrant Mortgage Company, Inc.,
a subsidiary of Emigrant Savings Bank ("Mortgage Corp.") have entered into an
agreement whereby the Bank contributed certain mortgage loans ("Mortgage Loans")
to Emigrant Resource Corp., Emigrant Resource Corp. agreed to buy such Mortgage
Loans and Mortgage Corp. agreed to service such Mortgage Loans. Emigrant
Resource Corp. acquired the Mortgage Loans with common stock, par value $0.01,
of Emigrant Resource Corp. The initial value of the Mortgage Loans contributed
to Emigrant Resource Corp. totaled approximately $501,079,591.
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DESCRIPTION OF THE CAPITAL STOCK
COMMON STOCK
GENERAL. Emigrant Securities Corp. is authorized to issue up to 1,100
shares of Common Stock, 1,000 of which are issued, outstanding and held by
Emigrant Resource Corp. Emigrant Resource Corp. intends that, so long as any
shares of the Series A Preferred Stock are outstanding, it will maintain direct
or indirect ownership of at least 80% of the issued and outstanding Common
Stock. All shares of Common Stock are equal as to dividends, distributions and
voting privileges.
DIVIDENDS. Holders of Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors out of funds legally
available therefor; PROVIDED, that so long as any shares of the Series A
Preferred Stock are outstanding, no dividends or other distributions (including
redemptions and purchases) may be made with respect to the Common Stock unless
full dividends on the shares of all series of preferred stock of Emigrant
Securities Corp. ("Preferred Stock"), including accumulations, have been paid.
In order to remain qualified as a RIC, Emigrant Securities Corp. must distribute
annually at least 90% of its annual "investment company taxable income" within
the meaning of the Code (not including net capital gains) to stockholders.
VOTING RIGHTS. Subject to the rights, if any, of the holders of any
class or series of Preferred Stock, all voting rights are vested in the Common
Stock. The holders of Common Stock are entitled to one vote per share. All of
the issued and outstanding shares of Common Stock are currently held by Emigrant
Resource Corp.
RIGHTS UPON LIQUIDATION. In the event of the liquidation, dissolution
or winding up of Emigrant Securities Corp., whether voluntary or involuntary,
after there have been paid or set aside for the holders of all series of
Preferred Stock, the full preferential amounts to which such holders are
entitled, the holders of Common Stock will be entitled to share equally and
ratably in any assets remaining after the payment of all debts and liabilities.
OTHER RIGHTS. The holders of Common Stock will have no preemptive,
conversion or other subscription rights, except as provided for in the DGCL, the
Certificate of Incorporation or the Certificate of Designations.
PREFERRED STOCK -- GENERAL
Emigrant Securities Corp. currently is authorized by the Certificate of
Incorporation to issue up to 1,000 shares of Preferred Stock. The Board of
Directors has broad authority to designate and establish the terms of one or
more series of Preferred Stock. Among other matters, the Board of Directors is
authorized to establish voting powers, designations, preferences and special
rights of each such series and any qualifications, limitations and restrictions
thereon.
SERIES A PREFERRED STOCK
The following summary sets forth the material terms and provisions of
the Series A Preferred Stock, and is qualified in its entirety by reference to
the terms and provisions of the Certificate of Designations and the Certificate
of Incorporation.
GENERAL. The Series A Preferred Stock is a series consisting of 1,000
shares. Emigrant Resource Corp. owns 800 shares of the Series A Preferred Stock.
Directors and senior officers of the Bank and of direct and indirect
subsidiaries of the Bank, and certain other persons selected by Emigrant
Securities Corp. own an aggregate of 125 shares of the Series A Preferred Stock.
Seventy-five shares of the Series A Preferred Stock remain authorized but
unissued. Emigrant Securities Corp. currently does not intend to issue such
shares. The Series A Preferred Stock are fully paid and nonassessable. The
rights of the holders of the Series A Preferred Stock are subordinate to the
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rights of Emigrant Securities Corp.'s general creditors. The Series A Preferred
Stock is perpetual in duration. The holders of the Series A Preferred Stock have
no preemptive rights with respect to any shares of the capital stock of Emigrant
Securities Corp. or any other securities of Emigrant Securities Corp.
convertible into or carrying rights or options to purchase any such shares. The
Series A Preferred Stock is not convertible into shares of Common Stock or any
other series of capital stock of Emigrant Securities Corp., is not subject to
any other series of capital stock of Emigrant Securities Corp. and is not
subject to any sinking fund or other obligation of Emigrant Securities Corp. for
its repurchase or retirement.
DELIVERY AND FORM. Shares of the Series A Preferred Stock were issued
and delivered in the form of registered certificates ("Certificates") upon
receipt of a properly completed and executed subscription form together with the
applicable aggregate purchase price. The Certificates may be transferred in
whole, but not in part. Ownership of the Certificates will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
Emigrant Securities Corp.
Emigrant Securities Corp. may at any time determine not to have the
Series A Preferred Stock represented by the Certificates. In either instance, an
owner of a beneficial interest in the Certificates will be entitled to have a
number of the Series A Preferred Stock equal to such beneficial interest
registered in his or her name and will be entitled to physical delivery of such
Series A Preferred Stock in definitive form.
RANK. Emigrant Securities Corp. may not issue any other series of
Preferred Stock ranking senior to the Series A Preferred Stock as to the payment
of dividends or upon liquidation or any other series of any equity securities
ranking senior to the Series A Preferred Stock as to the payment of dividends or
upon liquidation. Emigrant Securities Corp. may issue shares of Common Stock and
any other series of Preferred Stock on a parity with the Series A Preferred
Stock as to the payment of dividends or upon liquidation.
DIVIDENDS AND DISTRIBUTIONS. Dividends shall accrue daily on each share
of the Series A Preferred Stock for each dividend payment period at the rate of
10.0% PER ANNUM (multiplied by the $1,000 liquidation preference per share), or
$100.00 per share PER ANNUM, from the date of its issuance to and including the
last day of the calendar quarter of such issuance and for each dividend payment
period, commencing on April 1, July 1, October 1 and January 1, as the case may
be, of each year and ending on and including the day next preceding the first
day of the next such dividend payment period (each a "Dividend Period"). Such
dividends started accruing on September 30, 1999 and shall be payable when, as
and if declared by the Board of Directors and out of funds of Emigrant
Securities Corp. legally available for the payment of dividends, on the 15th day
of April, July, October and the last business day of December of each year (each
a "Dividend Payment Date") for the dividend periods ending December 31, March
31, June 30 and September 30, respectively, commencing October 15, 1999 with
respect to the initial Dividend Period. Dividends will accrue from the first day
of each Dividend Period, whether or not declared or paid for the prior Dividend
Period. Each such dividend shall be paid to the holders of record of shares of
the Series A Preferred Stock as they appear on the books of Emigrant Securities
Corp. on such record dates, not exceeding 30 days preceding the Dividend Payment
Dates thereof, as shall be fixed by the Board of Directors or by a duly
authorized committee thereof.
No dividends shall be declared or paid or set apart for payment on any
other series of Preferred Stock or any class of capital stock of Emigrant
Securities Corp. ranking, as to dividends or upon liquidation, on a parity with
or junior to the Series A Preferred Stock for any period (other than dividends
payable in the Common Stock or another stock ranking junior to the Series A
Preferred Stock as to dividends and upon liquidation), nor shall Emigrant
Securities Corp. make any other distribution on the Common Stock or on any other
stock of Emigrant Securities Corp. ranking junior to or on a parity with the
Series A Preferred Stock as to dividends or upon liquidation, until such time as
dividends on all outstanding shares of the Series A Preferred Stock have been
declared and paid. As used herein, the phrase "set apart" in respect of the
payment of dividends shall require deposit of any funds in a bank, savings
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association or trust company in a separate deposit account maintained for the
benefit of the holders of the Series A Preferred Stock.
Under the Investment Company Act, Emigrant Securities Corp. is not
permitted to incur indebtedness unless after such incurrence, Emigrant
Securities Corp. has an Asset Coverage (as defined below) of at least 300% of
the aggregate principal balance of indebtedness. Additionally, under the
Investment Company Act, Emigrant Securities Corp. may not declare any dividend
or other distribution upon any class of its capital stock, or purchase any such
capital stock, unless the aggregate indebtedness of Emigrant Securities Corp.
has, at the time of any such purchase, an Asset Coverage of at least 200% after
deducting the amount of such dividend, distribution or purchase price, as the
case may be. "Asset Coverage" means the ratio which the value of the total
assets of Emigrant Securities Corp., less all liabilities and indebtedness not
represented by Senior Securities (as defined below), bears to the aggregate
amount of senior securities representing indebtedness of Emigrant Securities
Corp. plus the aggregate of involuntary liquidation preference of the Preferred
Stock. "Senior Security" means any bond, debenture, note, or similar obligation
or instrument constituting a security and evidencing indebtedness, and any stock
of a class having priority over any other class as to distribution of assets or
payment of dividends including Preferred Stock. While any shares of Preferred
Stock are outstanding, Emigrant Securities Corp. may not declare any cash
dividend or other distribution on its capital stock, unless at the time of such
declaration, (1) all accumulated Preferred Stock dividends have been paid and
(2) the net asset value of Emigrant Securities Corp.'s portfolio (determined by
total assets of Emigrant Securities Corp., less all liabilities and
indebtedness, deducting the amount of such dividend, distribution or purchase
price, as the case may be) is at least 200% of the liquidation value of the
outstanding shares of Preferred Stock (expected to be equal to the original
purchase price per share plus any accumulated and unpaid dividends thereon). In
addition to the limitations imposed by the Investment Company Act as described
in this paragraph, certain lenders may impose additional restrictions on the
payment of dividends or distributions on Emigrant Securities Corp. capital stock
in the event of a default on Emigrant Securities Corp.'s borrowings.
Holders of the Series A Preferred Stock shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of full
dividends for each Dividend Period, as herein provided, on the Series A
Preferred Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any Dividend Payment or Dividend Payments which may be in
arrears. However, if Emigrant Securities Corp. fails to declare or pay dividends
on the Series A Preferred Stock in an amount equal to two full years dividends,
the holders of the Series A Preferred Stock will be entitled to elect the
majority of the Board of Directors and shall continue to be so represented until
all dividends in arrears have been paid or otherwise provided for.
When dividends are not paid in full upon the Series A Preferred Stock
and any Preferred Stock, all dividends declared upon the Series A Preferred
Stock and any Preferred Stock shall be declared PRO RATA so that the amount of
dividends declared per share on the Series A Preferred Stock and any Preferred
Stock shall in all cases bear to each other the same ratio that full dividends,
for the then-current Dividend Period, per share on the Series A Preferred Stock
(which shall not include any accumulation in respect of unpaid dividends for
prior Dividend Periods) and full dividends, including required or permitted
accumulations, if any, on such other series of capital stock bear to each other.
For a discussion of the tax treatment of distributions to stockholders,
SEE "FEDERAL INCOME TAX CONSIDERATIONS -- TAXATION OF STOCKHOLDERS."
REDEMPTION. The Series A Preferred Stock is not redeemable except upon
the occurrence of a Tax Event (as defined below). Emigrant Securities Corp. has
the right, at any time after the occurrence of a Tax Event to redeem the shares
of the Series A Preferred Stock, in whole, but not in part, at a redemption
price of $1,000 per share, plus accrued and unpaid dividends to the date fixed
for redemption. "Tax Event" means the receipt by Emigrant Securities Corp. of an
opinion of Thacher Proffitt & Wood or another nationally recognized law firm
experienced in such matters to the effect that, as a result of (i) any amendment
to, clarification of, or change (including any announced
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prospective change) in the laws or treaties (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein affecting taxation, (ii) any judicial decision, official administrative
pronouncement, published or private ruling, regulatory procedure, notice or
announcement (including any notice or announcement of intent to adopt such
procedures or regulations, an "Administrative Action") or (iii) any amendment
to, clarification of, or change in the official position or interpretation of
such Administrative Action or any interpretation or pronouncement that provides
for a position with respect to such Administrative Action that differs from the
theretofore generally accepted position, in each case, by any legislative body,
court, governmental authority or regulatory body, irrespective of the manner in
which such amendment, clarification or change is made known, which amendment,
clarification or change is effective or such pronouncement or decision is
announced on or after the date of issuance of the shares of the Series A
Preferred Stock, there is more than an insubstantial risk that (a) dividends
paid or to be paid by Emigrant Securities Corp. with respect to the Common Stock
and the Preferred Stock are not, or will not be, fully deductible by Emigrant
Securities Corp. for United States federal income tax purposes, or (b) Emigrant
Securities Corp. is, or will be, subject to more than a DE MINIMIS amount of
other taxes, duties or other governmental charges.
In the event that fewer than all the outstanding shares of the Series A
Preferred Stock are to be redeemed as permitted by the Certificate of
Designations, the number of shares to be redeemed shall be determined by the
Board of Directors or a duly authorized committee thereof, and the shares to be
redeemed shall be determined by lot or PRO RATA as may be determined by the
Board of Directors or such duly authorized committee thereof or by such other
method as may be approved by the Board of Directors or such duly authorized
committee thereof, in its sole discretion to be equitable; PROVIDED, that such
method conforms to any applicable rule or regulation of any stock exchange upon
which the shares of the Series A Preferred Stock may at the time be listed.
In the event that Emigrant Securities Corp. redeems shares of the
Series A Preferred Stock, notice of such redemption specifying the date fixed
for redemption ("Redemption Date") and place of redemption, shall be given by
first class mail to each holder of record of the shares to be redeemed at his or
her address of record, not more than 60 nor less than 30 days prior to the
Redemption Date. Each such notice shall specify: (a) the Redemption Date; (b)
the number of shares of the Series A Preferred Stock to be redeemed; (c) the
redemption price applicable to the shares to be redeemed and that dividends on
shares to be redeemed shall cease to accrue and accumulate on the Redemption
Date; and (d) instructions for the surrender of such certificates for the
redemption price. If less than all the shares owned by such stockholder are then
to be redeemed, the notice shall also specify the number of shares thereof which
are to be redeemed and the fact that a new Certificate or Certificates
representing any unredeemed shares shall be issued without cost to such holder.
After notice of redemption of shares of the Series A Preferred Stock
has been given as provided in the Certificate of Designations, then, unless
Emigrant Securities Corp. has defaulted in providing for the payment of the
redemption price and an amount equal to all accrued and unpaid dividends to the
Redemption Date, dividends shall cease to accrue on the shares of the Series A
Preferred Stock called for redemption at the Redemption Date, all rights of the
holders thereof (except the right to receive the redemption price and all
accrued and unpaid dividends to the Redemption Date) shall cease with respect to
such shares and such shares shall not, after the Redemption Date, be deemed to
be outstanding and shall not have the status of Preferred Stock. In case fewer
than all the shares represented by any Certificate are redeemed, a new
Certificate or Certificates shall be issued representing the unredeemed shares
without cost to the holder thereof.
Any shares of the Series A Preferred Stock which shall at any time have
been redeemed shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series until such
shares are once more designated as part of a particular series by the Board of
Directors.
Notwithstanding the foregoing provisions of the Certificate of
Designations, unless full dividends for the then-current Dividend Period on the
Series A Preferred Stock have been, or contemporaneously are, declared and
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paid, no shares of the Series A Preferred Stock shall be redeemed unless all
outstanding shares of the Series A Preferred Stock are redeemed and Emigrant
Securities Corp. shall not purchase or otherwise acquire any shares of the
Series A Preferred Stock; PROVIDED, HOWEVER, that Emigrant Securities Corp. may
purchase or acquire shares of the Series A Preferred Stock pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
shares of the Series A Preferred Stock.
CONVERSION. The holders of the Series A Preferred Stock shall not have
any rights to convert such shares into shares of any other class or series of
capital stock in Emigrant Securities Corp.
RIGHTS UPON LIQUIDATION. Upon the voluntary or involuntary liquidation,
dissolution or winding up of Emigrant Securities Corp., the holders of the
shares of the Series A Preferred Stock are entitled to receive out of the assets
of Emigrant Securities Corp. available for distribution to stockholders under
applicable law, before any payment or distribution of assets shall be made on
the Common Stock or on any other class or series of stock of Emigrant Securities
Corp. ranking junior to the Series A Preferred Stock upon liquidation, the
amount of $1,000.00 per share ("Liquidation Preference"), plus a sum equal to
all dividends accrued on such shares and unpaid to the date fixed for such
liquidation, dissolution or winding up, subject to PRO RATA distributions in the
event that assets are insufficient to fully fund the Liquidation Preference.
After such payment to the holders of the shares of the Series A Preferred Stock,
the holders of the Series A Preferred Stock shall have no further right or claim
to any of the remaining assets of Emigrant Securities Corp.
In the event the assets of Emigrant Securities Corp. available for
distribution to the holders of Series A Preferred Stock upon any voluntary or
involuntary liquidation, dissolution or winding up of Emigrant Securities Corp.
shall be insufficient to pay in full all amounts to which such holders are
entitled pursuant to the Certificate of Designations, no distribution shall be
made on account of any shares of any Preferred Stock upon such liquidation,
dissolution or winding up unless proportionate amounts shall be paid on account
of the shares of Series A Preferred Stock, ratably, in proportion to the full
amounts to which holders of all such Preferred Stock are respectively entitled
upon such dissolution, liquidation or winding up.
VOTING RIGHTS. Except as required by law, the Series A Preferred Stock
shall not have any voting powers, either general or special, except as described
below and provided in the Certificate of Incorporation and the Certificate of
Designations.
Unless the vote of the holders of a greater number of shares shall then
be required by law, the affirmative vote of the holders of at least a majority
of all of the shares of the Series A Preferred Stock at the time outstanding,
given in person or by proxy, at a meeting called for the purpose, on which
matter the holders of Series A Preferred Stock shall vote together as a separate
class, shall be necessary to authorize, effect or validate any amendment,
alteration or repeal of any of the provisions of the Certificate of
Incorporation or of any certificate, amendatory or supplemental thereto,
including the Certificate of Designations, which amendment, alteration or
repeal, if effected, would, adversely affect the powers, preferences, rights or
privileges of the holders of Series A Preferred Stock other than any such
amendment or alteration subject to the provisions below.
Notwithstanding anything set forth herein to the contrary, the Board of
Directors without the vote of the holders of Series A Preferred Stock may
authorize and issue additional shares of Common Stock and Preferred Stock as to
dividends and upon liquidation with the shares of Series A Preferred Stock. No
class or series of equity securities of Emigrant Securities Corp. may rank
senior to Series A Preferred Stock as to dividends or upon
liquidation.
The Series A Preferred Stock has limited voting rights, as required by
law and in the limited circumstances described herein and in the Certificate of
Incorporation and the Certificate of Designations. Under Section 18 of the
Investment Company Act, the holders of the Series A Preferred Stock shall have
the right to elect two directors at
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all times. If Emigrant Securities Corp. fails to declare or pay dividends on the
Series A Preferred Stock in an amount equal to two full years dividends, the
holders of the Series A Preferred Stock will be entitled to elect the majority
of the Board of Directors and shall continue to be so represented until all
dividends in arrears have been paid or otherwise provided for (for purposes of
this discussion, directors elected by holders of the Series A Preferred Stock
shall be defined as "Preferred Directors"). The holders of the Series A
Preferred Stock must approve, by a majority vote, voting as a class, any plan or
reorganization adversely affecting the rights of the holders of the Series A
Preferred Stock. Pursuant to Section 13(a) of the Investment Company Act, the
holders of the Series A Preferred Stock also must approve certain changes in
investment policies and the classification of Emigrant Securities Corp. In any
matter on which the holders of the Series A Preferred Stock may vote (as
expressly provided in the Certificate of Designations or as may be required by
law), such holders will be entitled to one vote for each share of the Series A
Preferred Stock.
The term of office of all Preferred Directors in office at any time
when the aforesaid voting right is vested in such holders shall terminate upon
the election of their successors at any meeting of stockholders held for the
purpose of electing directors; PROVIDED, HOWEVER, that without further action,
and unless otherwise required by law, any Preferred Director that was elected by
the holders of the Series A Preferred Stock may be removed at any time, either
with or without cause, by the affirmative vote of the holders of record of a
majority of outstanding shares of the Series A Preferred Stock, voting
separately as one class, at a duly held meeting of the holders thereof. Upon the
later of any termination of the aforesaid voting rights in accordance with the
foregoing or the expiration of the minimum term of office required by law, the
term of office of all Preferred Directors then in office terminates thereupon,
without further action, unless otherwise required by law. Upon such termination,
the number of directors constituting the Board of Directors shall, without
further action, be reduced by two, subject always to the increase in the number
of directors pursuant to the provisions of the Certificate of Incorporation and
the Certificate of Designations in the case of the future right of such holders
of the Series A Preferred Stock to elect directors as provided therein.
Unless otherwise required by law, in case of any vacancy occurring
among the Preferred Directors, the remaining Preferred Director may appoint a
successor to hold office for the unexpired term of the Preferred Director whose
place shall be vacant, and if all Preferred Directors so elected cease to serve
as directors before their terms shall expire, the holders of the Series A
Preferred Stock then outstanding may, at a meeting of such holders duly held,
elect successors to hold office for the unexpired terms of such Preferred
Directors. The Preferred Directors elected by the holders of the Series A
Preferred Stock are entitled to one vote per director on any matter and
otherwise to the same rights and privileges as all other directors of Emigrant
Securities Corp.
So long as any shares of the Series A Preferred Stock are outstanding,
the Bylaws of Emigrant Securities Corp. provide that the number of directors of
Emigrant Securities Corp. is subject to the exercise by the holders of the
Series A Preferred Stock of the right to elect directors under the circumstances
provided in the Certificate of Designations, and the Certificate of
Incorporation shall not contravene such right. On any matter on which the
holders of the Series A Preferred Stock are entitled to vote, such holders are
entitled to one vote for each share held. The holders of the Series A Preferred
Stock may vote only as a separate class; their votes shall not be counted
together with the holders of the Common Stock or any other class or series of
Preferred Stock as a single class. At any meeting of stockholders held while
holders of the Series A Preferred Stock have the voting power, the holders of a
majority of the then outstanding shares of the Series A Preferred Stock who are
present in person or by proxy is sufficient to constitute a quorum for the
election of Preferred Directors as provided in the Certificate of Incorporation.
Notwithstanding anything to the contrary in Section 262(b) of the DGCL,
the holders of the Series A Preferred Stock shall be entitled to dissenters'
rights pursuant to, and to the fullest extent permitted by, Section 262(c) of
the DGCL in the event of a merger or consolidation in which Emigrant Securities
Corp. is a constituent corporation or the sale of substantially all of the
assets of Emigrant Securities Corp.
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NO OTHER RIGHTS. The Series A Preferred Stock shall not have any
preferences, preemptive, conversion, voting powers or relative, participating,
optional or other special rights except as set forth in the Certificate of
Incorporation and the Certificate of Designations, as described above or as
otherwise required by law.
RESTRICTIONS ON OWNERSHIP AND TRANSFER. The Certificate of Designations
contains certain provisions restricting any transfer of the Series A Preferred
Stock that would cause Emigrant Securities Corp. to be beneficially owned by
fewer than 100 persons. Such transfer shall be null and void and the intended
transferee will acquire no rights to the stock.
All certificates representing shares of the Series A Preferred Stock
will bear a legend referring to the restrictions described above.
FEDERAL INCOME TAX CONSIDERATIONS
The following summary of material federal income tax considerations
regarding the Offering is based upon current law, is for general information
only and is not tax advice. This summary: (i) does not address all aspects of
taxation that may be relevant in the particular circumstances of each
stockholder or to certain types of stockholders (such as, banks, thrifts, real
estate investment trusts, regulated investment companies, insurance companies,
dealers in securities or currencies, tax-exempt investors or persons that will
hold such stock as a position in a "straddle," as part of a "synthetic security"
or "hedge" or as part of a "conversion transaction" or other integrated
investment); (ii) addresses only the tax consequences to a person that holds
Series A Preferred Stock as a capital asset; (iii) does not include any
description of any alternative minimum tax consequences or the tax laws of any
state or local government or of any foreign government that may apply to Series
A Preferred Stock; and (iv) does not address the tax consequences to any
shareholder, partner or beneficiary of a holder of Series A Preferred Stock.
This summary is addressed only to a U.S. holder, I.E., a beneficial owner of
Series A Preferred Stock that, for U.S. federal income tax purposes, is (or is
treated as) a citizen or individual resident of the United States.
This summary is based on the Code, Treasury regulations thereunder and
the administrative and judicial interpretations thereof, as of the date hereof,
all of which are subject to change, possibly on a retroactive basis. The opinion
of Deloitte & Touche, described below (SEE "TAXATION OF EMIGRANT SECURITIES
CORP. -- GENERAL") is not binding on the Internal Revenue Service ("IRS") or the
courts. No rulings have been or are expected to be sought from the IRS with
respect to any of the matters described herein. We can give no assurance that
the opinion or the conclusions expressed herein will not be challenged by the
IRS or, if challenged, that the challenge will not be successful.
TAXATION OF EMIGRANT SECURITIES CORP. -- GENERAL
Emigrant Securities Corp. will elect on its initial tax return to be
taxed as a RIC under Sections 851 through 855 of the Code and the applicable
Treasury Regulations ("RIC Tax Requirements"). Emigrant Securities Corp.
believes that, commencing with its taxable year ending December 31, 1999, it
will be owned and organized and will operate in such a manner as to qualify for
taxation as a RIC under the Code, and Emigrant Securities Corp. intends to
continue to operate in such a manner, but no assurance can be given that it will
operate in a manner so as to qualify or remain qualified.
The RIC Tax Requirements are technical and complex. The following
discussion sets forth only the material aspects of those requirements. This
summary is qualified in its entirety by the applicable Code provisions, rules
and regulations promulgated thereunder, and administrative and judicial
interpretations thereof.
In the opinion of Deloitte & Touche, special tax advisor to Emigrant
Securities Corp. issued to Emigrant Securities Corp. on August 17, 1999,
Emigrant Securities Corp. should qualify as a RIC within the meaning of ss. 851
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of the Code for its initial tax year ending December 31, 1999, and subsequent
tax years where the requirements in the opinion are satisfied. This opinion is
based on certain factual assumptions relating to the organization and operation
of Emigrant Securities Corp., is conditioned upon certain representations made
by Emigrant Securities Corp., Emigrant Resource Corp. and the Bank as to factual
matters, such as the organization and expected manner of operation of Emigrant
Securities Corp. In addition, this opinion is based upon factual assumptions and
representations of Emigrant Securities Corp. concerning its business and assets.
Moreover, qualification and taxation as a RIC depends upon Emigrant Securities
Corp.'s ability to meet, through actual annual operating results, distribution
levels and diversity of asset ownership, the various qualification tests imposed
under the Code discussed below. No assurance can be given that the actual
results of Emigrant Securities Corp.'s operation for any one taxable year will
satisfy such requirements. See "-- FAILURE TO QUALIFY."
Emigrant Securities Corp. intends to be treated for tax purposes as a
"regulated investment company" or "RIC" within the meaning of Section 851 of the
Code. If Emigrant Securities Corp. qualifies as a RIC and distributes to its
shareholders in a timely manner at least 90% of its "investment company taxable
income," as defined in the Code, each year ("90% Distribution Requirement"), it
will not be subject to federal income tax on the portion of its taxable income
and gains it distributes to shareholders. In addition, if a RIC distributes in a
timely manner (or treats as "deemed distributed") an amount equal to the sum of
98% of its capital gain net income and 98% of its ordinary income for each
calendar year, it will not be subject to the 4% nondeductible federal excise tax
on certain undistributed income of RICs.
Emigrant Securities Corp. generally will endeavor to distribute to
shareholders all of its investment company taxable income and its net capital
gain, if any, for each taxable year so that Emigrant Securities Corp. will not
incur income and excise taxes on its earnings.
In order to qualify as a RIC for federal income tax purposes, Emigrant
Securities Corp. must, among other things: (i) qualify as a registered
investment company under the Investment Company Act for all times during its
taxable year; (ii) derive in each taxable year at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, gains from
the sale of stock or other securities or other income derived with respect to
its business of investing in such stock or securities; and (iii) diversify its
holdings so that at the end of each quarter of the taxable year (a) at least 50%
of the value of Emigrant Securities Corp.'s assets consists of cash, cash items,
government securities, securities of other RICs, and other securities if such
other securities of any one issuer do not represent more than 5% of Emigrant
Securities Corp.'s assets and 10% of the outstanding voting securities of the
issuer, and (b) no more than 25% of the value of Emigrant Securities Corp.'s
assets are invested in securities of one issuer (other than U.S. Government
securities or securities of other RICs), or of two or more issuers that are
controlled by Emigrant Securities Corp. and are engaged in the same or similar
or related trade or businesses.
If Emigrant Securities Corp. fails to satisfy the 90% Distribution
Requirement or otherwise fails to qualify as a RIC in any taxable year, it will
be subject to tax in such year on all of its taxable income, regardless of
whether Emigrant Securities Corp. makes any distribution to its shareholders. In
addition, in that case, all of Emigrant Securities Corp.'s distributions to its
shareholders will be characterized as ordinary income (to the extent of the
Emigrant Securities Corp.'s current and accumulated earnings and profits). In
contrast, as is explained below, if Emigrant Securities Corp. qualifies as a
RIC, a portion of its distributions may be characterized as long-term capital
gain in the hands of shareholders.
ORGANIZATION REQUIREMENTS
INVESTMENT COMPANY ACT. The Code defines a RIC to include a domestic
corporation which at all times during the taxable year is registered under the
Investment Company Act as a management company or unit investment trust and
meets certain other tests, described below, regarding the nature of its income
and assets. An investment company is defined in Section 3(a)(1) of the
Investment Company Act as any issuer which "(A) is or holds
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itself out as being engaged primarily, or proposes to engage primarily, in the
business of investing, reinvesting or trading in securities. . . ." Generally,
if a company invests in securities and issues securities, it will fall within
the definition of an investment company under the Investment Company Act. The
Investment Company Act defines "security" as, INTER ALIA, "any note . . .
evidence of indebtedness, certificate of interest . . . collateral trust
certificate . . . transferable share, investment contract . . . ." The portfolio
that Emigrant Securities Corp. is expected to hold would include instruments
that should qualify as "securities" under the Investment Company Act. In
addition, it is anticipated that Emigrant Securities Corp. will at all times
hold such assets that it will continue to be classified as a management company
for purposes of the Investment Company Act.
Since Emigrant Securities Corp. will not register the Series A
Preferred Stock under the Securities Act, to be considered an investment
company, Emigrant Securities Corp. must have at least 100 beneficial owners at
all times ("One Hundred Persons Test"). Beneficial owners may hold shares of
Common Stock, Preferred Stock or debt securities of Emigrant Securities Corp.
Under the Investment Company Act, directors and executive officers of Emigrant
Securities Corp. will not be considered beneficial owners for purposes of
attaining 100 beneficial owners. In addition, employees of Emigrant Securities
Corp. and employees of any entity that manages the investment activities of
Emigrant Securities Corp., and who have been participating in investment
activities for any entity for at least 12 months, do not count as beneficial
owners.
Emigrant Securities Corp. expects that the Series A Preferred Stock
will be held by not fewer than 100 beneficial owners at all times that such
shares are outstanding. Such ownership of the Series A Preferred Stock would
allow Emigrant Securities Corp. to meet the One Hundred Persons Test. It is
possible that, because they will represent a relatively small percentage of the
equity of Emigrant Securities Corp., the shares of Series A Preferred Stock will
not be treated as beneficial ownership interests in Emigrant Securities Corp.
However, such shares will have a stated value of $1,000 each and dividend rights
that are identical with the rights of other shares of the Preferred Stock that
may be issued by Emigrant Securities Corp. and superior to the rights of the
Common Stock, as well as redemption and liquidation rights that are comparable
to such rights normally adhering to preferred stock. Furthermore, such shares
will be freely transferable except for transfer restrictions that are commonly
placed on stock issued by RICs to ensure compliance with the RIC Tax
Requirements of the Code and the Investment Company Act. So long as the holders
of stock issued by a RIC possess the normal rights of corporate stockholders and
such stock has value, the degree of equity interest represented by such stock,
even though quite small, should not result in a failure to meet the One Hundred
Persons Test.
INCOME TEST. In order to maintain qualification as a RIC, Emigrant
Securities Corp. must annually satisfy a gross income requirement. At least 90%
of Emigrant Securities Corp.'s gross income must be derived from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of stock or securities or foreign currencies, or other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies ("Income Test"). It is anticipated that Emigrant Securities Corp.'s
portfolio will consist of assets such that at least 90% of its gross income at
all times will consist of dividends, interest, currencies or other income to
satisfy the Income Test.
ANNUAL DISTRIBUTION REQUIREMENTS. In order to be treated as a RIC,
Emigrant Securities Corp. is required to distribute dividends (other than
capital gain dividends) to its stockholders in an amount at least equal to (A)
the sum of (i) 90% of Emigrant Securities Corp.'s "investment company taxable
income" (computed without regard to the dividends paid deduction and Emigrant
Securities Corp.'s net capital gain) plus (ii) 90% of its interest income from
certain tax-exempt obligations in excess of certain related expenses. Such
distributions must be paid in the taxable year to which they relate or in the
following taxable year if declared before Emigrant Securities Corp. timely files
its tax return for such year and if paid on or before the first regular dividend
payment after such declaration and within 12 months of the end of such tax year.
To the extent that Emigrant Securities Corp. does not distribute (or is not
treated as having distributed) all of its net capital gain or distributes (or is
treated as having distributed) at least 90%, but less than 100% of its
"investment company taxable income," as adjusted, it will be
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<PAGE>
subject to tax thereon at the highest corporate tax rate. In addition, Emigrant
Securities Corp. may be subject to personal holding company taxes because
Emigrant Securities Corp. may be a personal holding company. The Code permits a
stockholder to elect to be treated for tax purposes as having (i) received a
distribution in the amount specified in the election and (ii) contributed the
amount thereof to the capital of Emigrant Securities Corp. In the event Emigrant
Securities Corp. fails to distribute 100% of its income and capital gains,
Emigrant Resource Corp. may elect to be so treated. In addition, Emigrant
Securities Corp. may elect to retain and be taxed on all or part of its
long-term capital gain but treat such retained gain as having been distributed
to its stockholders, in which case each stockholder must include as long-term
capital gain in such stockholder's income tax return such stockholder's
allocable portion of such retained gain and will receive a tax credit for the
tax imposed on Emigrant Securities Corp. on such portion of the retained gain.
In addition, each stockholder will have an increased basis for the stock of the
RIC if the election is made.
If Emigrant Securities Corp. distributes in a timely manner (or treats
as 'deemed distributed') an amount equal to the sum of 98% of its capital gain
net income and 98% of its ordinary income for each measurement period plus any
undistributed amounts from prior periods, it will not be subject to the 4%
nondeductible federal excise tax on certain undistributed income of RICs.
Generally, "investment company taxable income" is the taxable income of
a RIC, which generally is computed in the same fashion as the taxable income of
any corporation, except that (i) certain deductions are not available, such as
the deduction for dividends received, (ii) Emigrant Securities Corp. may deduct
dividends paid (or deemed paid) during the taxable year, (iii) net capital gain
is excluded, and (iv) certain other adjustments are made. For purposes of clause
(iii), "net capital gain" is the excess of net long-term capital gain over net
short-term capital loss. Although net capital gain is not included in investment
company taxable income and, therefore, is not required to be distributed to
stockholders, such gain will be taxable to Emigrant Securities Corp. to the
extent it is not so distributed (or deemed distributed), and a failure to
distribute a sufficient amount of capital gain may cause Emigrant Securities to
incur the 4% excise discussed in the preceding paragraph.
Under certain circumstances, Emigrant Securities Corp. may be able to
rectify a failure to meet the 90% Distribution Requirement for a year by paying
"deficiency dividends" to stockholders in a later year, which may be included in
Emigrant Securities Corp.'s deduction for dividends paid for the earlier year.
Thus, Emigrant Securities Corp. may be able to avoid being taxed on amounts
distributed as deficiency dividends; however, Emigrant Securities Corp. will be
required to pay interest based upon the amount of any deduction taken for
deficiency dividends.
FAILURE TO QUALIFY
If Emigrant Securities Corp. fails to qualify for taxation as a RIC in
any taxable year and the relief provisions described above do not apply,
Emigrant Securities Corp. will be subject to tax (including any applicable
alternative minimum tax) on its taxable income at regular corporate rates.
Distributions to stockholders in any year in which Emigrant Securities Corp.
fails to qualify will not be deductible by Emigrant Securities Corp. nor will
they be required to be made. In such event, to the extent of current and
accumulated earnings and profits, all distributions to stockholders will be
taxable as ordinary income, and subject to certain limitations of the Code,
corporate distributees may be eligible for the dividends-received deduction.
TAXATION OF STOCKHOLDERS
DISTRIBUTIONS GENERALLY. Distributions of Emigrant Securities Corp. are
generally taxable to shareholders as ordinary income or capital gains.
Shareholders will receive notification from Emigrant Securities Corp. after the
end of the year of the amount and nature of the income or gains distributed (or
deemed distributed) to them for that year.
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<PAGE>
Distributions of the ordinary income and net short-term capital gain of
Emigrant Securities Corp. generally are taxable to shareholders as ordinary
income. The dividends received from the Series A Preferred Stock will not be a
tax preference for purposes of the alternative minimum tax. Distributions of net
capital gains, if any, designated by Emigrant Securities Corp. as capital gains
dividends generally will be taxable to shareholders as long-term capital gain,
regardless of the length of time a shareholder has held the shares. Dividends
declared and payable by Emigrant Securities Corp. to shareholders of record in
October, November or December of a given year that are paid during the following
January will be treated as having been received by shareholders on December 31
of the year of declaration.
Emigrant Securities Corp.'s ordinary income dividends to its corporate
shareholders may, if certain conditions are met, qualify for the dividends
received deduction to the extent that Emigrant Securities Corp. has received
qualifying dividend income during the taxable year. Capital gain dividends
distributed by Emigrant Securities Corp. are not eligible for the dividends
received deduction.
Any gain or loss realized upon a taxable disposition of shares of
Emigrant Securities Corp. or upon receipt of a liquidating distribution will be
treated as capital gain or loss. If gain is realized with respect to shares held
by an individual for more than one year, it will be subject to taxation at a
maximum rate of 20% (10% with respect to taxpayers in the 15% tax bracket). The
gain or loss will be short-term capital gain or loss if the shares have been
held for one year or less. If a shareholder has received any capital gain
dividends with respect to such shares, any loss realized upon a taxable
disposition of shares treated under the Code as having been held for six months
or less, to the extent of such capital gain dividends, will be treated as a
long-term capital loss. All or a portion of any loss realized upon a taxable
disposition of shares of Emigrant Securities Corp. will be disallowed if other
shares of Emigrant Securities Corp. are purchased within 30 days before or after
the disposition.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX
Emigrant Securities Corp. will report to its stockholders and the IRS
the amount of dividends paid or deemed paid during each calendar year, and the
amount of tax withheld, if any. Under certain circumstances, a stockholder of
Series A Preferred Stock may be subject to backup withholding at a rate of 31%
on payments made with respect to, or cash proceeds of a sale or exchange of,
Series A Preferred Stock. Backup withholding will apply only if the holder (i)
fails to furnish the person required to withhold with its Taxpayer
Identification Number ("TIN") which, for an individual, would be his or her
Social Security Number, (ii) furnishes an incorrect TIN, (iii) is notified by
the IRS that it has failed properly to report payments of interest and
dividends, or (iv) under certain circumstances, fails to certify, under penalty
of perjury, that it has furnished a correct TIN and has not been notified by the
IRS that it is subject to backup withholding for failure to report interest and
dividend payments. Backup withholding will not apply with respect to payments
made to certain exempt recipients, such as corporations and tax-exempt
organizations. A stockholder should consult with a tax advisor regarding
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption. Backup withholding is not an additional tax.
Rather, the amount of any backup withholding with respect to a payment to a
stockholder will be allowed as a credit against such stockholder's United States
federal income tax liability and may entitle such stockholder to a refund,
provided that the required information is furnished to the IRS.
OTHER TAX CONSEQUENCES
Emigrant Securities Corp. and its stockholders may be subject to state
or local taxation in various state or local jurisdictions, including those in
which it or they transact business or reside. The state and local tax treatment
of Emigrant Securities Corp. and its stockholders may not conform to the federal
income tax consequences discussed above. Consequently, prospective stockholders
should consult their own tax advisors regarding the effect of state and local
tax laws on an investment in Emigrant Securities Corp.
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PART C - OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
I. Financial Statements
(a) Report of Independent Auditors
(b) Statement of Assets and Liabilities of Emigrant Securities
Corp.
II. Exhibits
(a) Certificate of Incorporation of Emigrant Securities Corp.
(b) Bylaws of Emigrant Securities Corp.
(d) Certificate of Preferences, Designations and Rights of 10%
Series A Preferred Stock of Emigrant Securities Corp.
(n) Consent and Opinion of Deloitte & Touche LLP
Item 25. MARKETING ARRANGEMENTS
Not Applicable
Item 26 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not Applicable
Item 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
No person is controlled by or under common control with Emigrant
Securities Corp.
Item 28. NUMBER OF HOLDERS OF SECURITIES AS OF NOVEMBER 19, 1999
<TABLE>
<CAPTION>
TITLE OF CLASS NUMBER OF RECORD HOLDERS
- -------------- ------------------------
<S> <C>
Common Stock, par value $0.01 per share 1
10% Cumulative Series A Preferred Stock, par value $0.01 per share 126
</TABLE>
Item 29. INDEMNIFICATION
Section 145 of the DGCL gives Delaware corporations broad powers to
indemnify their present and former directors and officers and those of
affiliated corporations against expenses incurred in the defense of any lawsuit
to which they are made parties by reason of being or having been such directors
or officers, subject to specified conditions and exclusions and gives a director
or officer who successfully defends an action the right to be so indemnified.
Such indemnification is not exclusive of any other right to which those
indemnified may be entitled under any bylaw, agreement, vote of stockholders or
otherwise.
With respect to a proceeding by or in the right of the corporation,
such person may be indemnified against expenses (including attorneys' fees),
actually and reasonably incurred, if he or she 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 corporation. The DGCL provides, however, that indemnification
shall not be permitted in such a proceeding if such person is adjudged liable to
the corporation unless, and only to the extent that, the court, upon
application, determines, that he is entitled to
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<PAGE>
indemnification under the circumstances. With respect to proceedings other than
those brought by or in the right of the corporation, notwithstanding the outcome
of such a proceeding, such person may be indemnified against judgments, fines
and amounts paid in settlement, as well as expenses, if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action, had no
reason to believe his conduct was unlawful.
Except with respect to mandatory indemnification of expenses to
successful defendants as described in the preceding paragraph or pursuant to a
court order, the indemnification described in this paragraph may be made only
upon a determination in each specific case (i) by majority vote of the directors
that are not parties to the proceeding, even though less than a quorum, (ii) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (iii) by the stockholders.
The DGCL permits a corporation to advance expenses incurred by a
proposed indemnitee in advance of final disposition of the proceeding, provided
that the indemnitee undertakes to repay such advanced expenses if it is
ultimately determined that such indemnitee is not entitled to indemnification. A
corporation also may purchase insurance on behalf of an indemnitee against any
liability asserted against such person, in his or her designated capacity,
whether or not the corporation itself would be empowered to indemnify him or her
against such liability.
Article IX of the Certificate of Incorporation permits indemnification
of Emigrant Securities Corp.'s directors and officers to the fullest extent
permitted by the DGCL, except as may be expressly prohibited by applicable
law.
Item 30. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Not Applicable
Item 31. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of Emigrant Securities Corp. will be
maintained at the office of Emigrant Savings Bank, 5 East 42nd Street, New York,
New York 10048.
Item 32. MANAGEMENT SERVICES
Emigrant Securities Corp. is internally managed by its officers and
except as described under the caption "Management and Services" is not a party
to any management service related contract.
Item 33 UNDERTAKINGS
Not Applicable
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Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this registration statement to be signed by the
undersigned, thereunto duly authorized, in the City of New York, and State
of New York, on the 19th day of November, 1999.
EMIGRANT SECURITIES CORP.
By:/s/ Gilbert S. Stein
-----------------------------------------
Gilbert S. Stein
President and Chief Executive Officer
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<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------------- --------------------
2.a Certificate of incorporation of Emigrant Securities Corp.
2.b Bylaws of Emigrant Securities Corp.
2.d Certificate of Designations of Emigrant Securities Corp.
2.n (i) Consent of Deloitte & Touche LLP
2.n (ii) Opinion of Deloitte & Touche LLP, dated August 17, 1999
C-1
Exhibit 2.a
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTIFICATE OF INCORPORATION
OF
EMIGRANT SECURITIES CORP.
UNDER SECTION 102 OF
THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTLCLE I
NAME..............................................................................................................1
ARTICLE II
REGISTERED OFFICE AND AGENT.......................................................................................1
ARTICLE III
PURPOSE...........................................................................................................1
ARTICLE IV
CAPITAL STOCK.....................................................................................................1
Section 1. Shares, Classes and Series Authorized..................................................1
Section 2. Designations, Powers, Preferences, Rights, Qualifications,
Limitations and Restrictions Relating to the Capital Stock.............................2
ARTICLE V
BOARD OF DIRECTORS................................................................................................3
ARTICLE VI
INFORMAL ACTION BY STOCKHOLDERS...................................................................................4
ARTICLE VII
BYLAWS............................................................................................................4
ARTICLE VIII
LIMITATION OF LIABILITY OF DIRECTORS..............................................................................4
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<PAGE>
ARTICLE IX
INDEMNIFICATION...................................................................................................4
Section 1. Actions, Suits or Proceedings other than by or in the
Right of the Corporation...............................................................4
Section 2. Actions or Suits by or in the Right of the Corporation.................................5
Section 3. Indemnification for Costs, Charges and Expenses of a
Successful Party.......................................................................6
Section 4. Indemnification for Expenses of a Witness..............................................6
Section 5. Determination of Right to Indemnification..............................................6
Section 6. Advancement of Costs, Charges and Expenses.............................................7
Section 7. Procedure for Indemnification..........................................................7
Section 8. Settlement.............................................................................8
Section 9. Other Rights; Continuation of Right to Indemnification;
Individual Contracts...................................................................8
Section 10. Savings Clause.........................................................................8
Section 11. Insurance..............................................................................8
Section 12. Definitions............................................................................9
Section 13. Subsequent Amendment and Subsequent Legislation.......................................10
ARTICLE X
AMENDMENTS.......................................................................................................10
ARTICLE XI
NOTICES..........................................................................................................11
</TABLE>
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<PAGE>
CERTIFICATE OF INCORPORATION
OF
EMIGRANT SECURITIES CORP.
THE UNDERSIGNED, for the purpose of organizing a corporation
pursuant to Section 102 of the General Corporation Law of the State of Delaware
(the "DGCL"), does hereby certify that the Certificate of Incorporation of
Emigrant Securities Corp. was duly adopted in accordance with the provisions of
Section 102 of the DGCL and further certifies as follows:
ARTICLE I
NAME
The name of the corporation is Emigrant Securities Corp. (the
"Corporation").
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the DGCL.
ARTICLE IV
CAPITAL STOCK
Section 1. SHARES, CLASSES AND SERIES AUTHORIZED. The total
number of shares of all classes of capital stock which the Corporation shall
have authority to issue is two thousand, one hundred (2,100) shares, of which
one thousand (1,000) shares shall be shares of preferred stock, par value one
cent ($0.01) per share (the "Preferred Stock"), and one thousand, one hundred
(1,100)
<PAGE>
shares shall be common stock, par value one cent ($0.01) per share (the "Common
Stock"). The Preferred Stock and Common Stock are sometimes hereinafter
collectively referred to as the "Capital Stock."
Section 2. DESIGNATIONS, POWERS, PREFERENCES, RIGHTS,
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS RELATING TO THE CAPITAL STOCK. The
following is a statement of the designations, powers, preferences and rights in
respect of the classes of the Capital Stock, and the qualifications, limitations
and restrictions thereof, and of the authority with respect thereto expressly
vested in the Board of Directors of the Corporation (the "Board of Directors"):
(a) Preferred Stock. The Preferred Stock may be issued from
time to time in one or more series, the number of shares and any designation of
each series and the powers, preferences and rights of the shares of each series,
and the qualifications, limitations and restrictions thereof, to be as stated
and expressed in a resolution or resolutions providing for the issue of such
series adopted by the Board of Directors, subject to the limitations prescribed
by law. The Board of Directors in any such resolution or resolutions is
expressly authorized to state for each such series:
(i) the rights of stockholders in respect of dividends,
if any, including, without limitation, the rate or
rates per annum and the time or times at which (or
the formula or other method pursuant to which such
rate or rates and such time or times may be
determined) and conditions upon which the holders of
stock of such series shall be entitled to receive
dividends and other distributions, and whether any
such dividends shall be cumulative or noncumulative
and, if cumulative, the terms upon which such
dividends shall be cumulative;
(ii) whether the stock of each such series shall be
redeemable by the Corporation at the option of the
Corporation or the holder thereof, and, if
redeemable, the terms and conditions upon which the
stock of such series may be redeemed;
(iii) the amount payable and the rights or preferences, if
any, to which the holders of the stock of such series
shall be entitled upon any voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation;
(iv) the terms, if any, upon which shares of stock of such
series shall be convertible into, or exchangeable
for, shares of stock of any other class or classes or
of any other series of the same or any other class or
classes, including the price or prices or the rate or
rates of conversion or exchange and the terms of
adjustment, if any; and
(v) any other designations, powers, preferences and
relative, participating, optional or other special
rights, and qualifications, limitations or
restrictions thereof, so far as they are not
inconsistent with the provisions of this Certificate
of Incorporation and to the fullest extent now or
hereafter permitted by the laws of the State of
Delaware.
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<PAGE>
All shares of the Preferred Stock of any one series shall be
identical to each other in all respects, except that shares of any one series
issued at different times may differ as to the dates from which dividends
thereon, if cumulative, shall be cumulative. Except as otherwise required by law
and except for such voting powers with respect to the election of directors or
other matters as may be stated in the resolution or resolutions of the Board of
Directors, or duly authorized committee thereof, creating any series of
Preferred Stock, the holders of any such series shall have no voting power
whatsoever.
Subject to any limitations or restrictions stated in the
resolution or resolutions of the Board of Directors originally fixing the number
of shares constituting a series, the Board of Directors may by resolution or
resolutions likewise adopted increase (but not above the total number of
authorized shares of that class) or decrease (but not below the number of shares
of the series then outstanding) the number of shares of the series subsequent to
the issue of shares of that series; and in case the number of shares of any
series shall be so decreased, the shares constituting the decrease shall resume
that status that they had prior to the adoption of the resolution originally
fixing the number of shares constituting such series.
(b) Common Stock. All shares of Common Stock shall be
identical to each other in every respect. The shares of Common Stock shall
entitle the holders thereof to one vote for each share on all matters on which
holders of Common Stock have the right to vote. The holders of Common Stock
shall not be permitted to cumulate their votes for the election of directors.
Subject to the designations, powers, preferences and rights
with respect to each series of Preferred Stock having any priority over the
Common Stock, and the qualifications, limitations and restrictions thereof, the
holders of the Common Stock shall have and possess all rights pertaining to the
Capital Stock.
ARTICLE V
BOARD OF DIRECTORS
Except as otherwise provided by law, the business and affairs
of the Corporation shall be managed by or under the direction of the Board of
Directors of the Corporation. The number of directors who shall constitute the
Board of Directors of the Corporation and the manner of their election shall be
as from time to time fixed by, or in the manner provided in, the Bylaws of the
Corporation, and the Bylaws may provide qualifications for directors. The
directors need not be elected by written ballot unless required by the Bylaws of
the Corporation.
In addition to the powers and authority herein or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject nevertheless to the provisions of the DGCL, this
Certificate of Incorporation, and any Bylaws adopted by the stockholders;
PROVIDED, HOWEVER, that no Bylaws hereafter adopted by the stockholders shall
invalidate any prior act of directors which would have been valid if such Bylaws
had not been adopted.
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<PAGE>
ARTICLE VI
INFORMAL ACTION BY STOCKHOLDERS
Any action required to be taken at a meeting of the
stockholders, or any other action which may be taken at a meeting of
stockholders, may be taken without a meeting if consent in writing, setting
forth the action so taken, shall be given by all of the stockholders entitled to
vote with respect to the subject matter.
ARTICLE VII
BYLAWS
The Board of Directors shall have the power to adopt, amend or
repeal the Bylaws of the Corporation. However, any bylaw so adopted or amended
by the Board of Directors may be repealed, and any bylaw so repealed by the
Board of Directors may be reinstated, by vote of the holders of a majority of
the shares of Capital Stock of the Corporation entitled to vote, in which case
the Board of Directors shall not thereafter take any action with respect to the
Bylaws which is inconsistent with the action so taken by the stockholders.
ARTICLE VIII
LIMITATION OF LIABILITY OF DIRECTORS
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent such exemption from liability
or limitation thereof is expressly prohibited by the DGCL, as the same exists or
may hereafter be amended.
Any amendment, termination or repeal of this Article VIII or
any provision hereof shall not adversely affect or diminish in any way any right
or protection of a director of the Corporation existing with respect to any act
or omission occurring prior to the effectiveness of such amendment, termination
or repeal.
ARTICLE IX
INDEMNIFICATION
Section 1. ACTIONS, SUITS OR PROCEEDINGS OTHER THAN BY OR IN
THE RIGHT OF THE CORPORATION. To the fullest extent permitted by the DGCL, and
except as may be expressly prohibited by applicable law, the Corporation shall
indemnify any person who is or was or has agreed to become a director or officer
of the Corporation who was or is made a party to or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
-4-
<PAGE>
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Corporation) by reason of the fact that he or she is
or was or has agreed to become a director or officer of the Corporation, or is
or was serving or has agreed to serve at the written request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, or by reason of any action alleged to
have been taken or omitted in such capacity, and the Corporation may (but shall
not be required to) indemnify any other person who is or was or has agreed to
become an employee or agent of the Corporation who was or is made a party to or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he or she is or was or has agreed to become an employee or agent of
the Corporation, or is or was serving or has agreed to serve at the written
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action alleged to have been taken or omitted in such capacity, against
costs, charges, expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her or on
his or her behalf in connection with such action, suit or proceeding and any
appeal therefrom, if he or she 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
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner that he or
she reasonably believed to be in, or not opposed to, the best interests of the
Corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
Notwithstanding anything contained in this Article IX, the Corporation shall not
be obligated to indemnify any director, officer, employee or agent in connection
with an action, suit or proceeding, or part thereof, initiated by such person
against the Corporation unless such action, suit or proceeding, or part thereof,
was authorized or consented to by the Board of Directors.
Section 2. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE
CORPORATION. To the fullest extent permitted by the DGCL, and except as may be
expressly prohibited by applicable law, the Corporation shall indemnify any
person who is or was or has agreed to become a director or officer of the
Corporation who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he or
she is or was or has agreed to become a director or officer of the Corporation,
or is or was serving or has agreed to serve at the written request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity, and the
Corporation may indemnify any other person who is or was or has agreed to become
an employee or agent of the Corporation who was or is made a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he or she is or was or has agreed to become an employee
or agent of the Corporation, or is or was serving or has agreed to serve at the
written request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, or
by reason of any action alleged to have been taken or omitted in such capacity,
against costs, charges and expenses (including
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<PAGE>
attorneys' fees) actually and reasonably incurred by him or her or on his or her
behalf in connection with the defense or settlement of such action or suit and
any appeal therefrom, if he or she 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
Corporation, except no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the Corporation unless, and then only to the extent that, the Court of Chancery
of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such costs, charges and expenses that the
Court of Chancery or such other court shall deem proper. Notwithstanding
anything contained in this Article IX, the Corporation shall not be obligated to
indemnify any director, officer, employee or agent in connection with an action
or suit, or part thereof, initiated by such person against the Corporation
unless such action or suit, or part thereof, was authorized or consented to by
the Board of Directors.
Section 3. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF
A SUCCESSFUL PARTY. Notwithstanding any other provision of the Certificate of
Incorporation, to the extent that a director, officer, employee or agent of the
Corporation has been successful, on the merits or otherwise (including, without
limitation, the dismissal of an action without prejudice), in defense of any
action, suit or proceeding referred to in Section 1 or 2 of this Article IX, or
in defense of any claim, issue or matter therein, such person shall be
indemnified against all costs, charges and expenses (including attorneys' fees)
actually and reasonably incurred by such person or on such person's behalf in
connection therewith.
Section 4. INDEMNIFICATION FOR EXPENSES OF A WITNESS. To the
extent that any person who is or was or has agreed to become a director or
officer of the Corporation is made a witness to any action, suit or proceeding
to which he or she is not a party by reason of the fact that he or she was, is
or has agreed to become a director or officer of the Corporation, or is or was
serving or has agreed to serve as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, at
the written request of the Corporation, such person shall be indemnified against
all costs, charges and expenses actually and reasonably incurred by such person
or on such person's behalf in connection therewith.
To the extent that any person who is or was or has agreed to
become an employee or agent of the Corporation is made a witness to any action,
suit or proceeding to which he or she is not a party by reason of the fact that
he or she was, is or has agreed to become an employee or agent of the
Corporation, or is or was serving or has agreed to serve as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, at the written request of the Corporation, such person may be
indemnified against all costs, charges and expenses actually and reasonably
incurred by such person or on such person's behalf in connection therewith.
Section 5. DETERMINATION OF RIGHT TO INDEMNIFICATION. Any
indemnification under Section 1 or 2 of this Article IX (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper under the circumstances because he or she has met the applicable
standard of conduct set forth in Section 1 or 2 of this Article IX. Any
indemnification under Section 4 of this Article IX (unless ordered by a court)
shall be made, if at all, by the Corporation only as
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<PAGE>
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper under the circumstances. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (a) by a majority vote of directors
who were not parties to such action, suit or proceeding, even though less than a
quorum, or (b) by a committee of such directors designated by a majority vote of
such directors, even though less than a quorum, or (c) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (d) by the stockholders of the Corporation. To obtain
indemnification under this Article IX, any person referred to in Section 1, 2, 3
or 4 of this Article IX shall submit to the Corporation a written request,
including therewith such documents as are reasonably available to such person
and are reasonably necessary to determine whether and to what extent such person
is entitled to indemnification.
Section 6. ADVANCEMENT OF COSTS, CHARGES AND EXPENSES. Costs,
charges and expenses (including attorneys' fees) incurred by or on behalf of a
director or officer in defending a civil or criminal action, suit or proceeding
referred to in Section 1 or 2 of this Article IX shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding; PROVIDED, HOWEVER, that the payment of such costs, charges and
expenses incurred by or on behalf of a director or officer in advance of the
final disposition of such action, suit or proceeding shall be made only upon
receipt of a written undertaking by or on behalf of the director or officer to
repay all amounts so advanced to the extent that it shall ultimately be
determined that such director or officer is not entitled to be indemnified by
the Corporation as authorized in this Article IX or by law. No security shall be
required for such undertaking, and such undertaking shall be accepted without
reference to the recipient's financial ability to make repayment. The majority
of the directors who were not parties to such action, suit or proceeding may,
upon approval of such director or officer of the Corporation, authorize the
Corporation's counsel to represent such person, in any action, suit or
proceeding, whether or not the Corporation is a party to such action, suit or
proceeding.
Section 7. PROCEDURE FOR INDEMNIFICATION. Any indemnification
required or agreed to under Section 1, 2, 3 or 4 of this Article IX or
advancement of costs, charges and expenses under Section 6 of this Article IX
shall be made promptly, and in any event within sixty (60) days (except
indemnification to be determined by stockholders, which will be determined at
the next annual meeting of stockholders), upon the written request of the
director, officer, employee or agent. The right to indemnification or
advancement of expenses as granted by this Article IX shall be enforceable by
the director or officer in any court of competent jurisdiction, if the
Corporation denies such request, in whole or in part, or if no disposition of
such request is made within sixty (60) days of the request. Such person's costs,
charges and expenses incurred in connection with successfully establishing his
or her right to indemnification or advancement, to the extent successful, in any
such action shall also be indemnified by the Corporation. It shall be a defense
to any such action (other than an action brought to enforce a claim for the
advancement of costs, charges and expenses under Section 6 of this Article IX
where the required undertaking, if any, has been received by the Corporation)
that the claimant has not met the standard of conduct set forth in Section 1 or
2 of this Article IX, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel and its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Section 1 or 2 of this Article IX,
nor the fact that there has
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<PAGE>
been an actual determination by the Corporation (including its Board of
Directors, its independent legal counsel and its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 8. SETTLEMENT. The Corporation shall not be obligated
to reimburse the costs, charges and expenses of any settlement to which it has
not agreed. If in any action, suit or proceeding (including any appeal) within
the scope of Section 1 or 2 of this Article IX, the person to be indemnified
shall have unreasonably failed to enter into a settlement thereof offered or
assented to by the opposing party or parties in such action, suit or proceeding,
then, notwithstanding any other provision of this Article IX, the
indemnification obligation of the Corporation to such person in connection with
such action, suit or proceeding shall not exceed the total of the amount at
which settlement could have been made and the expenses incurred by or on behalf
of such person prior to the time such settlement could reasonably have been
effected.
Section 9. OTHER RIGHTS; CONTINUATION OF RIGHT TO
INDEMNIFICATION; INDIVIDUAL CONTRACTS. The indemnification and advancement of
costs, charges and expenses provided by or granted pursuant to this Article IX
shall not be deemed exclusive of any other rights to which those persons seeking
indemnification or advancement of costs, charges and expenses may be entitled
under law (common or statutory) or any bylaw, agreement, policy of
indemnification insurance or vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action in
any other capacity while holding office, and shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the legatees, heirs, distributees, executors and administrators of
such person. Nothing contained in this Article IX shall be deemed to prohibit
the Corporation from entering into, and the Corporation is specifically
authorized to enter into, agreements with directors, officers, employees and
agents providing indemnification rights and procedures different from those set
forth herein. All rights to indemnification under this Article IX shall be
deemed to be a contract between the Corporation and each director, officer,
employee or agent of the Corporation who serves or served in such capacity (or
at the request of the Corporation, in the capacity of director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise) at any time while this Article IX is in effect.
Section 10. SAVINGS CLAUSE. If this Article IX or any portion
shall be invalidated on any ground by any court of competent jurisdiction, the
Corporation shall nevertheless indemnify each director or officer, and may (but
shall not be required to) indemnify each employee or agent, of the Corporation
as to any costs, charges, expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (including an action by
or in the right of the Corporation), to the full extent permitted by any
applicable portion of this Article IX that shall not have been invalidated and
to the full extent permitted by applicable law.
Section 11. INSURANCE. The Corporation may purchase and
maintain insurance, at its expense, to protect itself and any person who is or
was a director, officer, employee or agent of the Corporation or who is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against
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<PAGE>
any costs, charges or expenses, liability or loss incurred by such person in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify such person against such costs,
charges or expenses, liability or loss under the Certificate of Incorporation or
applicable law; PROVIDED, HOWEVER, that such insurance is available on
acceptable terms as determined by a vote of a majority of the Board of
Directors. To the extent that any director, officer, employee or agent is
reimbursed by an insurance company under an indemnification insurance policy for
any costs, charges, expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement to the fullest extent permitted by any applicable
portion of this Article IX, the Bylaws, any agreement, the policy of
indemnification insurance or otherwise, the Corporation shall not be obligated
to reimburse the person to be indemnified in connection with such proceeding.
Section 12. DEFINITIONS. For purposes of this Article IX, the
following terms shall have the following meanings:
(a) "The Corporation" shall include any constituent
corporation (including any constituent of a constituent) absorbed by
way of an acquisition, consolidation, merger or otherwise, which, if
its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents so
that any person who is or was a director, officer, employee or agent of
such constituent corporation, or is or was serving at the request of
such constituent corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article
IX with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate
existence had continued;
(b) "Other enterprises" shall include employee benefit plans,
including, but not limited to, any employee benefit plan of the
Corporation;
(c) "Director or officer" of the Corporation shall include any
partner or trustee who is or was or has agreed to serve at the request
of the Corporation as a partner or trustee of another corporation,
partnership, joint venture, trust or other enterprise;
(d) "Serving at the request of the Corporation" shall include
any service that imposes duties on, or involves services by, a
director, officer, employee or agent of the Corporation with respect to
an employee benefit plan, its participants or beneficiaries, including
acting as a fiduciary thereof;
(e) "Fines" shall include any penalties and any excise or
similar taxes assessed on a person with respect to an employee benefit
plan;
(f) A person shall be deemed to have 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 Corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful," if his or her action is based on the records or
books of account of the Corporation or its direct or indirect
subsidiaries, or on information supplied to him or her by the officers
of the Corporation or its direct or indirect subsidiaries in the course
of his
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<PAGE>
or her duties, or on the advice of legal counsel for the Corporation or
its direct or indirect subsidiaries or on information or records given
or reports made to the Corporation or its direct or indirect
subsidiaries by an independent certified public accountant or by an
appraiser or other expert selected with reasonable care by the
Corporation or another enterprise; and
(g) A person shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" with respect to
employee benefit plans, as referred to in Sections 1 and 2 of this
Article IX if such person acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan.
Section 13. SUBSEQUENT AMENDMENT AND SUBSEQUENT LEGISLATION.
Neither the amendment, termination or repeal of this Article IX or of relevant
provisions of the DGCL or any other applicable laws, nor the adoption of any
provision of this Certificate of Incorporation or the Bylaws of the Corporation
or of any statute inconsistent with this Article IX shall eliminate, affect or
diminish in any way the rights of any director, officer, employee or agent of
the Corporation to indemnification under the provisions of this Article IX with
respect to any action, suit or proceeding arising out of, or relating to, any
actions, transactions or facts occurring prior to the effectiveness of such
amendment, termination or repeal.
ARTICLE X
AMENDMENTS
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 statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
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ARTICLE XI
NOTICES
The name and mailing address of the incorporator of this Corporation
is:
Douglas J. McClintock, Esq.
Thacher Proffitt & Wood
Two World Trade Center, 38th Floor
New York, New York 10048
By: /s/ Douglas J. McClintock
-------------------------
Douglas J. McClintock
Incorporator
Dated: August 12, 1999
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Exhibit 2.b
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BYLAWS
OF
EMIGRANT SECURITIES CORP.
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C>
ARTICLE I
OFFICES
Section 1. Registered Office......................................................................1
Section 2. Additional Offices.....................................................................1
ARTICLE II
STOCKHOLDERS
Section 1. Place of Meetings......................................................................1
Section 2. Annual Meetings........................................................................1
Section 3. Special Meetings.......................................................................1
Section 4. Notice of Meetings.....................................................................1
Section 5. Waiver of Notice.......................................................................2
Section 6. Fixing of Record Date..................................................................2
Section 7. Quorum.................................................................................2
Section 8. Conduct of Meetings....................................................................3
Section 9. Voting; Proxies........................................................................3
ARTICLE III
CERTIFICATES OF STOCK
Section 1. Certificates of Stock..................................................................4
Section 2. Transfer Agent and Registrar...........................................................4
Section 3. Registration and Transfer of Shares....................................................4
Section 4. Lost, Destroyed and Mutilated Certificates.............................................5
Section 5. Transfer of Stock......................................................................5
Section 6. Holder of Record.......................................................................5
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Responsibilities; Number of Directors..................................................5
Section 2. Qualifications.........................................................................5
Section 3. Regular and Annual Meetings............................................................6
Section 4. Special Meetings.......................................................................6
Section 5. Quorum and Voting Requirements.........................................................6
Section 6. Notice of Meetings and Waiver of Notice................................................6
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Section 7. Informal Action by Directors...........................................................6
Section 8. Conduct of Meetings....................................................................7
Section 9. Compensation...........................................................................7
Section 10. Removal of Directors...................................................................7
Section 11. Resignation............................................................................7
Section 12. Vacancies..............................................................................7
Section 13. Committees.............................................................................7
ARTICLE V
OFFICERS
Section 1. Number.................................................................................8
Section 2. Term of Office and Removal.............................................................8
Section 3. Chairman of the Board..................................................................8
Section 4. President..............................................................................9
Section 5. Secretary..............................................................................9
Section 6. Vice Presidents........................................................................9
Section 7. Treasurer..............................................................................9
Section 8. Other Officers and Employees...........................................................9
Section 9. Compensation of Officers and Others...................................................10
ARTICLE VI
GENERAL PROVISIONS
Section 1. Dividends.............................................................................10
Section 2. Checks................................................................................10
Section 3. Fiscal Year...........................................................................10
Section 4. Seal..................................................................................10
ARTICLE VII
AMENDMENTS...................................................10
</TABLE>
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BYLAWS
OF
EMIGRANT SECURITIES CORP.
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office of
Emigrant Securities Corp. ("Corporation") in the State of Delaware shall be in
the City of Wilmington, County of New Castle.
Section 2. ADDITIONAL OFFICES. The Corporation also may have
offices and places of business at such other places, within or without the State
of Delaware, as the Board of Directors of the Corporation ("Board") may from
time to time designate or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of stockholders of the
Corporation shall be held at such place, within or without the State of
Delaware, as may be fixed by the Board and designated in the notice of meeting.
If no place is so fixed, they shall be held at the principal administrative
office of the Corporation.
Section 2. ANNUAL MEETINGS. The annual meeting of stockholders
of the Corporation for the election of directors and the transaction of any
other business which may properly come before such meeting shall be held each
year on a date and at a time to be designated by the Board.
Section 3. SPECIAL MEETINGS. Special meetings of stockholders,
for any purpose, may be called at any time only by the Chairman of the Board or
by resolution of at least three-fourths of the entire Board. Special meetings
shall be held on the date and at the time and place as may be designated by the
Board. At a special meeting, no business shall be transacted and no corporate
action shall be taken other than that stated in the notice of meeting.
Section 4. NOTICE OF MEETINGS. Except as otherwise required by
law, written notice stating the place, date and hour of any meeting of
stockholders and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered to each stockholder of record
entitled to vote at such meeting, either personally or by mail not less than ten
(10) nor more than sixty (60) days before the date of such meeting. If mailed,
such notice shall be
<PAGE>
deemed to be delivered when deposited in the U.S. mail, with postage thereon
prepaid, addressed to the stockholder at his or her address as it appears on the
stock transfer books or records of the Corporation as of the record date
prescribed in Section 6 of this Article II, or at such other address as the
stockholder shall have furnished in writing to the Secretary. Notice of any
special meeting shall indicate that the notice is being issued by or at the
direction of the person or persons calling such meeting. When any meeting of
stockholders, either annual or special, is adjourned to another time or place,
no notice of the adjourned meeting need be given, other than an announcement at
the meeting at which such adjournment is taken giving the time and place to
which the meeting is adjourned; PROVIDED, HOWEVER, that if the adjournment is
for more than thirty (30) days, or if after adjournment, the Board fixes a new
record date for the adjourned meeting, notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 5. WAIVER OF NOTICE. Notice of any annual or special
meeting need not be given to any stockholder who submits a signed waiver of
notice of any meeting, in person or by proxy or by his or her duly authorized
attorney-in-fact, whether before or after the meeting. The attendance of any
stockholder at a meeting, in person or by proxy, shall constitute a waiver of
notice by such stockholder, except where a stockholder attends a meeting for the
express purpose of objecting at the beginning of the meeting to the transaction
of any business because the meeting is not lawfully called or convened.
Section 6. FIXING OF 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 stockholders entitled to receive
payment of any dividend or other distribution or the allotment of any rights, or
in order to make a determination of stockholders for any other proper purpose,
the Board shall fix a date as the record date for any such determination of
stockholders, which date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board. Such date in any case shall be
not more than sixty (60) days and, in the case of a meeting of stockholders, not
less than ten (10) days prior to the date on which the particular action
requiring such determination of stockholders is to be taken. When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this Section 6, such determination shall, unless
otherwise provided by the Board, also apply to any adjournment thereof. If no
record date is fixed, (a) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which the notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held, and (b) the record date for determining stockholders
for any other purpose shall be at the close of business on the day on which the
Board adopts the resolution relating thereto.
Section 7. QUORUM. The holders of record of a majority of the
total number of votes eligible to be cast in the election of directors generally
by the holders of the outstanding shares of the capital stock of the Corporation
entitled to vote thereat, represented in person or by proxy, shall constitute a
quorum for the transaction of business at a meeting of stockholders, except as
otherwise provided by law, these Bylaws or the Certificate of Incorporation of
the Corporation. If less than a majority of such total number of votes are
represented at a meeting, a majority of the number of votes so represented may
adjourn the meeting from time to time without further notice; PROVIDED, that if
such adjournment is for more than thirty (30) days, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting. At such
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adjourned meeting at which a quorum is present, any business may be transacted
that might have been transacted at the meeting as originally called. When a
quorum is once present to organize a meeting of stockholders, such quorum is not
broken by the subsequent withdrawal of any stockholders.
Section 8. CONDUCT OF MEETINGS. The Chairman of the Board
shall serve as chairman at all meetings of the stockholders or, if the Chairman
of the Board is absent or otherwise unable to so serve, the President shall
serve as chairman at any meeting of stockholders held in such absence. If both
the Chairman of the Board and the President are absent or otherwise unable to so
serve, such other person as shall be appointed by a majority of the entire Board
shall serve as chairman at any meeting of stockholders held in such absence. The
Secretary or, in his or her absence, such other person as the chairman of the
meeting shall appoint, shall serve as secretary of the meeting. The chairman of
the meeting shall conduct all meetings of the stockholders in accordance with
the best interests of the Corporation and shall have the authority and
discretion to establish reasonable procedural rules for the conduct of such
meetings, including such regulation of the manner of voting and the conduct of
discussion as he or she shall deem appropriate.
Section 9. VOTING; PROXIES. Each stockholder entitled to vote
at any meeting may vote either in person or by proxy. Unless otherwise specified
in the Certificate of Incorporation of the Corporation or in a resolution or
resolutions of the Board providing for the issuance of preferred stock, each
stockholder entitled to vote shall be entitled to one vote for each share of
capital stock registered in his or her name on the transfer books or records of
the Corporation. Each stockholder entitled to vote may authorize another person
or persons to act for him or her by proxy. All proxies shall be by written
instrument, signed by the stockholder or by his or her duly authorized
attorney-in-fact, or by electronic transmission as provided by law; PROVIDED,
that such electronic transmission either sets forth or is submitted with
information from which it can be determined that such electronic transmission
was authorized by such stockholder. All proxies shall be filed with the
Secretary before being voted. No proxy shall be valid after three (3) years from
the date of its execution unless otherwise provided in the proxy. The attendance
at any meeting by a stockholder who shall have previously given a proxy
applicable thereto shall not, as such, have the effect of revoking the proxy.
The Corporation may treat any duly executed proxy as not revoked and in full
force and effect until it receives a duly executed instrument revoking it, or a
duly executed proxy bearing a later date. If ownership of a share of voting
stock of the Corporation stands in the name of two or more persons, in the
absence of written directions to the Corporation to the contrary, any one or
more of such stockholders may cast all votes to which such ownership is
entitled. If an attempt is made to cast conflicting votes by the several persons
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 at such meeting. If such conflicting votes are evenly split on any
particular matter, each faction may vote the securities in question
proportionally, or any person voting the shares, or a beneficiary, if any, may
apply to the Court of Chancery of Delaware or such other court as may have
jurisdiction to appoint an additional person to act with the persons so voting
the shares, which shall then be voted as determined by a majority of such
persons and the person appointed by the Court. Except for the election of
directors or as otherwise provided by law, the Certificate of Incorporation or
these Bylaws, at all meetings of stockholders, all matters shall be determined
by the affirmative vote of the holders of a majority of the number of votes
eligible to be cast by the holders of the outstanding shares of capital stock of
the Corporation present in person or
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by proxy and entitled to vote thereat. Directors shall, except as otherwise
required by law, these Bylaws or the Certificate of Incorporation, be elected by
a plurality of the votes cast by each class or series of shares present and
entitled to vote in the election.
ARTICLE III
CERTIFICATES OF STOCK
Section 1. CERTIFICATES OF STOCK. Certificates representing
shares of stock shall be in such form as shall be determined by the Board. Each
certificate shall state that the Corporation will furnish to any stockholder
upon request and without charge a statement of the designations, powers,
preferences and relative, participating, optional or other special rights of the
shares of each class or series of stock and the qualifications, limitations or
restrictions thereof, or shall set forth such statement on the certificate
itself. The certificates shall be numbered in the order of their issue and
entered in the books of the Corporation or its transfer agent or agents as they
are issued. Each certificate shall state the registered holder's name and the
number and class of shares, and shall be signed by the Chairman of the Board or
the President, and the Secretary or any Assistant Secretary, and may, but need
not, bear the seal of the Corporation or a facsimile thereof. Any or all of the
signatures on the certificates may be facsimiles. In case any officer who shall
have signed any such certificate shall cease to be such officer of the
Corporation, whether because of death, resignation or otherwise, before such
certificate shall have been delivered by the Corporation, such certificate may
nevertheless be adopted by the Corporation and be issued and delivered as though
the person who signed such certificate had not ceased to be such officer of the
Corporation.
Section 2. TRANSFER AGENT AND REGISTRAR. The Board shall have
the power to appoint one or more Transfer Agents and Registrars for the transfer
and registration of certificates of stock of any class, and may require that
stock certificates be countersigned and registered by one or more of such
Transfer Agents and Registrars. In the absence of such appointment, the
Secretary shall have the function of Transfer Agent and Registrar.
Section 3. REGISTRATION AND TRANSFER OF SHARES. Subject to the
provisions of the Certificate of Incorporation of the Corporation, the name of
each person owning a share of the capital stock of the Corporation shall be
entered on the books of the Corporation together with the number of shares held
by him or her, the numbers of the certificates covering such shares and the
dates of issue of such certificates. Subject to the provisions of the
Certificate of Incorporation of the Corporation, the shares of stock of the
Corporation shall be transferable on the books of the Corporation by the holders
thereof in person, or by their duly authorized attorneys or legal
representatives, on surrender and cancellation of certificates for a like number
of shares, accompanied by an assignment or power of transfer endorsed thereon or
attached thereto, duly executed, with such guarantee or proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require and with proper evidence of payment of any applicable transfer taxes.
Subject to the provisions of the Certificate of Incorporation of the
Corporation, a record shall be made of each transfer.
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Section 4. LOST, DESTROYED AND MUTILATED CERTIFICATES. The
holder of any shares of stock of the Corporation shall immediately notify the
Corporation of any loss, theft, destruction or mutilation of the certificates
therefor. The Corporation may issue, or cause to be issued, a new certificate of
stock in the place of any certificate theretofore issued by it alleged to have
been lost, stolen or destroyed upon evidence satisfactory to the Corporation of
the loss, theft or destruction of the certificate, and in the case of
mutilation, the surrender of the mutilated certificate. The Corporation may, in
its discretion, require the owner of the lost, stolen or destroyed certificate,
or his or her legal representatives, 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, destruction or mutilation of any such certificate and the
issuance of such new certificate, or may refer such owner to such remedy or
remedies as he or she may have under the laws of the State of Delaware.
Section 5. TRANSFER OF STOCK. Subject to the provisions of the
Certificate of Incorporation of the Corporation, upon surrender to the
Corporation or the transfer agent of the Corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession, assignation or
authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the persons entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 6. HOLDER OF RECORD. Subject to the provisions of the
Certificate of Incorporation of the Corporation, the Corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder thereof in fact and shall not be bound to recognize any equitable or
other claim to or interest in such shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. RESPONSIBILITIES; NUMBER OF DIRECTORS. The business
and affairs of the Corporation shall be under the direction of the Board. The
Board shall consist of not less than three (3) nor more than nine (9) directors,
subject to the rights of any series of preferred stock upon certain limited
circumstances. Within the foregoing limits, the number of directors shall be
determined only by resolution of the Board, subject to the rights of any series
of preferred stock upon certain limited circumstances. A minimum of two (2)
directors shall be persons other than officers or employees of the Corporation
and shall not have a relationship which, in the opinion of the Board (exclusive
of such persons), could interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. The term of office for each
director shall be one year or until such director's successor is duly elected
and qualified, subject to such director's earlier death, resignation,
disqualification or removal.
Section 2. QUALIFICATIONS. Each director shall be at least
eighteen (18) years of age. Directors need not be stockholders of the
Corporation.
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Section 3. REGULAR AND ANNUAL MEETINGS. An annual meeting of
the Board for the election of officers shall be held, without notice other than
these Bylaws, immediately after, and at the same place as, the annual meeting of
the stockholders, or, with notice, at such other time or place as the Board may
fix by resolution. The Board may provide, by resolution, the time and place,
within or without the State of Delaware, for the holding of regular meetings of
the Board without notice other than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board may
be called for any purpose at any time by or at the request of the Chairman of
the Board or the President. Special meetings of the Board also shall be called
by the Secretary upon the written request, stating the purpose or purposes of
the meeting, of a majority of the directors then in office. The persons
authorized to call special meetings of the Board shall give notice of such
meetings in the manner prescribed by these Bylaws and may fix any place, within
or without the Corporation's regular business area, as the place for holding any
special meeting of the Board called by such persons. No business shall be
conducted at a special meeting other than that specified in the notice of
meeting.
Section 5. QUORUM AND VOTING REQUIREMENTS. A quorum at any
meeting of the Board shall consist of not less than a majority of the directors
then in office or such greater number as shall be required by law, these Bylaws
or the Certificate of Incorporation, but not less than one-third (1/3) of the
total number. If less than a required quorum is present, the majority of those
directors present shall adjourn the meeting to another time and place without
further notice. At such adjourned meeting at which a quorum shall be
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed. Except as otherwise provided by law, the
Certificate of Incorporation or these Bylaws, a majority vote of the directors
present at a meeting, if a quorum is present, shall constitute an act of the
Board.
Section 6. NOTICE OF MEETINGS AND WAIVER OF NOTICE. Except as
otherwise provided in Section 4 of this Article IV, at least twenty-four (24)
hours notice of meetings shall be given to each director if given in person or
by telephone, telegraph, telex, facsimile or other electronic transmission and
at least five (5) days notice of meetings shall be given if given in writing and
delivered by courier or by postage prepaid mail. The purpose of any special
meeting shall be stated in the notice. Such notice shall be deemed given when
sent or given to any mail or courier service or company providing electronic
transmission service. Any director may waive notice of any meeting by submitting
a signed waiver of notice with the Secretary, whether before or after the
meeting. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting at the beginning of the meeting to the transaction
of any business because the meeting is not lawfully called or convened.
Section 7. INFORMAL ACTION BY DIRECTORS. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board or any committee
thereof may be taken without a meeting, if all members of the Board or such
committee, as the case may be, consent thereto in writing and the writing or
writings are filed with the minutes of proceedings of the Board or such
committee.
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Section 8. CONDUCT OF MEETINGS. Meetings of the Board shall be
presided over by the Chairman of the Board or, if the Chairman of the Board is
absent or otherwise unable to so serve, such other person as shall be appointed
by a majority of the entire Board shall serve as chairman at any meeting of the
Board held in such absence. The Secretary or, in his absence, a person appointed
by the Chairman of the Board (or other person presiding), shall act as secretary
of the meeting. The Chairman of the Board (or other person presiding) shall
conduct all meetings of the Board in accordance with the best interests of the
Corporation and shall have the authority and discretion to establish reasonable
procedural rules for the conduct of Board meetings. At the discretion of the
Chairman of the Board, any one or more directors may participate in a meeting of
the Board or a committee of the Board by means of a conference telephone or
similar communications equipment allowing all persons participating in the
meeting to hear each other at the same time. Participation by such means shall
constitute presence in person at any such meeting.
Section 9. COMPENSATION. From time to time, as the Board deems
necessary, the Board shall fix the compensation of directors, and officers of
the Corporation in such one or more forms as the Board may determine.
Section 10. REMOVAL OF DIRECTORS. Unless otherwise restricted
by the Certificate of Incorporation or by law and subject to the rights of any
series of preferred stock upon certain limited circumstances, any director or
the entire Board may be removed, with or without cause, by the holders of a
majority of shares entitled to vote at an election of directors.
Section 11. RESIGNATION. Any director may resign at any time
by sending a written notice of such resignation to the principal office of the
Corporation addressed to the Chairman of the Board or the President. Unless
otherwise specified therein, such resignation shall take effect upon receipt
thereof.
Section 12. VACANCIES. To the extent not inconsistent with the
Certificate of Incorporation and subject to the limitations prescribed by law
and the rights of holders of any series of preferred stock, vacancies in the
office of director, including vacancies created by newly created directorships
resulting from an increase in the number of directors, shall be filled only by a
vote of a majority of the directors then holding office, whether or not a
quorum, at any regular or special meeting of the Board called for that purpose.
Subject to the rights of holders of any series of preferred stock, any director
so elected shall serve for the remainder of the full term of the newly created
directorship or the directorship in which the vacancy occurred and until his or
her successor shall be duly elected and qualified.
Section 13. COMMITTEES. The Board may designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the
place of any such absent or disqualified member.
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Any such committee, to the extent provided by resolution of the Board,
shall have and may exercise all the powers and authority of the Board in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to the following
matters: (i) approving or adopting, or recommending to the stockholders, any
action or matter expressly required by Delaware General Corporation Law to be
submitted to stockholders for approval or (ii) adopting, amending or repealing
any bylaw of the Corporation.
Each committee shall keep regular minutes of its meetings and
report the same to the Board when required.
ARTICLE V
OFFICERS
Section 1. NUMBER. The Board shall, at each annual meeting,
elect a Chairman of the Board, a President, a Secretary and such other officers
as the Board from time to time may deem necessary or the business of the
Corporation may require. Any number of offices may be held by the same person
except that no person may simultaneously hold the offices of President and
Secretary.
The election of all officers shall be by a majority of the
Board. If such election is not held at the meeting held annually for the
election of officers, such officers may be so elected at any subsequent regular
meeting or at a special meeting called for that purpose, in the same manner
above provided. Each person elected shall have such authority, bear such title
and perform such duties as provided in these Bylaws and as the Board may
prescribe from time to time. All officers elected or appointed by the Board
shall assume their duties immediately upon their election and shall hold office
at the pleasure of the Board. Whenever a vacancy occurs among the officers, it
may be filled at any regular or special meeting called for that purpose, in the
same manner as above provided.
Section 2. TERM OF OFFICE AND REMOVAL. Each officer shall
serve until his or her successor is elected and duly qualified, the office is
abolished, or he or she is removed. Except for the Chairman of the Board or the
President, any officer may be removed at any regular meeting of the Board with
or without cause by an affirmative vote of a majority of the entire Board. The
Board may remove the Chairman of the Board or the President at any time, with or
without cause, only by a vote of two-thirds of the non-officer directors then
holding office at any regular or special meeting of the Board called for that
purpose.
Section 3. CHAIRMAN OF THE BOARD. The Chairman of the Board
shall preside at all meetings of the stockholders; preside at all meetings of
the Board and of the Executive Committee; make recommendations to the Board
regarding appointments to all committees; and sign instruments in the name of
the Corporation.
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In the absence or disability of the Chairman of the Board, the
Board shall designate a person who shall exercise the powers and perform the
duties which otherwise would fall upon the Chairman of the Board.
Section 4. PRESIDENT. The President shall be the Chief
Executive Officer of the Corporation and shall, subject to the direction of the
Board, oversee all the major activities of the Corporation and its subsidiaries
and be responsible for assuring that the policy decisions of the Board are
implemented as formulated. The President shall be responsible, in consultation
with such officers and members of the Board as he deems appropriate, for
planning the growth of the Corporation. The President shall be responsible for
stockholder relations and relations with investment bankers or other similar
financial institutions, and shall be empowered to designate officers of the
Corporation and its subsidiaries to assist in such activities. The President,
under authority given to him, shall have the authority to sign instruments in
the name of the Corporation. The President shall have general supervision and
direction of all of the Corporation's officers and personnel, subject to and
consistent with policies enunciated by the Board. The President shall have such
other powers as may be assigned to him by the Board or its committees.
Section 5. SECRETARY. The Secretary shall attend all meetings
of the Board and of the stockholders, and shall record, or cause to be recorded,
all votes and minutes of all proceedings of the Board and of the stockholders in
a book or books to be kept for that purpose. The Secretary shall perform such
executive and administrative duties as may be assigned by the Board, the
Chairman of the Board or the President. The Secretary shall have charge of the
seal of the Corporation, shall submit such reports and statements as may be
required by law or by the Board, shall conduct all correspondence relating to
the Board and its proceedings and shall have such other powers and duties as are
generally incident to the office of Secretary and as may be assigned to him or
her by the Board, the Chairman of the Board or the President.
Section 6. VICE PRESIDENTS. Executive Vice Presidents, Senior
Vice Presidents and Vice Presidents may be appointed by the Board to perform
such duties as may be prescribed by these Bylaws, the Board or the President as
permitted by the Board.
Section 7. TREASURER. The Treasurer shall have the care and
custody of the corporate funds, and other valuable effects, including
securities, and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board. The Treasurer shall
disburse the funds of the Corporation as may be ordered by the Board, taking
proper vouchers for such disbursements, and shall render to the Chief Executive
Officer and the Board, at meetings or whenever they may require it, an account
of all the treasurer's transactions as treasurer and of the financial condition
of the Corporation.
Section 8. OTHER OFFICERS AND EMPLOYEES. Other officers and
employees appointed by the Board shall have such authority and shall perform
such duties as may be assigned to them, from time to time, by the Board or the
President.
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Section 9. COMPENSATION OF OFFICERS AND OTHERS. The
compensation of all officers and employees shall be fixed from time to time by
the Board, or by any committee or officer authorized by the Board to do so, upon
the recommendation and report by the Compensation Committee. The compensation of
agents shall be fixed by the Board, or by any committee or officer authorized by
the Board to do so, upon the recommendation and report of the Compensation
Committee.
ARTICLE VI
GENERAL PROVISIONS
Section 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board pursuant to law. Dividends may be paid in
cash, in property, or in shares of the capital stock subject to the provisions
of the Certificate of Incorporation.
Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserves in the
manner in which they were created.
Section 2. CHECKS. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board may from time to time designate.
Section 3. FISCAL YEAR. The fiscal year of the corporation
shall be fixed by resolution of the Board.
Section 4. SEAL. The Corporate Seal shall have inscribed
thereon the name of the Corporation, and the words, "Corporate Seal, Delaware."
The Seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
ARTICLE VII
AMENDMENTS
These Bylaws may be altered, amended or repealed or new Bylaws
may be adopted by the stockholders or by the Board, when such power is conferred
upon the Board by the Certificate of Incorporation. If the power to adopt, amend
or repeal Bylaws is conferred upon the Board by the Certificate of
Incorporation, it shall not divest or limit the power of the stockholders to
adopt, amend or repeal Bylaws.
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Exhibit 2.d
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
10.0% CUMULATIVE SERIES A PREFERRED STOCK
OF
EMIGRANT SECURITIES CORP.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Francis R. May and, Daniel C. Hickey being the Senior Vice
President and Treasurer and the Senior Vice President and Secretary,
respectively, of Emigrant Securities Corp, a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
in accordance with the provisions of Sections 103 and 151 thereof, DO HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation"), the Board of Directors of the Corporation, at a meeting duly
called and held on August 16, 1999, at which quorum was present and acting
throughout, duly adopted the following resolution creating a series of 1,000
shares of preferred stock, par value $0.01 per share, designated "10.0%
Cumulative Series A Preferred Stock":
RESOLVED, that pursuant to the authority vested in
the Board of Directors of the Corporation by the Certificate
of Incorporation of the Corporation (the "Certificate"), the
Board of Directors does hereby provide for the issuance of a
series of preferred stock, par value $0.01 per share, of the
Corporation, to be designated "10.0% Cumulative Series A
Preferred Stock" (hereinafter referred to as the "Series A
Preferred Stock"), initially consisting of 1,000 shares, and
to the extent that the designations, powers, preferences and
relative and other special rights and the qualifications,
limitations and restrictions of this series are not stated and
expressed in the Certificate, does hereby fix and herein state
and express such designations, powers, preferences and
relative and their special rights and the qualifications,
limitations and restrictions thereof, as follows (all terms
used herein which are defined in the Certificate shall be
deemed to have the meanings provided therein):
Section 1. DESIGNATION AND AMOUNT. This series shall be designated
"10.0% Cumulative Series A Preferred Stock," par value $0.01 per share
(hereinafter called "Series A Preferred Stock") and the number of shares
constituting such series shall be 1,000. Such number of shares may be increased
or decreased by resolution of the Board of Directors of the Corporation ("Board
of
<PAGE>
Directors") or a duly authorized committee thereof; PROVIDED, that no decrease
shall reduce the number of shares of this Series A Preferred Stock to a number
less than the number of shares of the series then outstanding. Shares of this
Series A Preferred Stock will have a liquidation preference of $1,000 per share.
Section 2. DIVIDENDS.
(a) Dividends shall accrue daily on each share of this Series A
Preferred Stock for each dividend payment period at the rate of 10.0% PER ANNUM
(multiplied by the liquidation preference per share) or $100.00 per share PER
ANNUM, from the date of its issuance to and including the last day of the
calendar quarter of such issuance and for each dividend payment period
thereafter, commencing on April 1, July 1, October 1 and January 1, as the case
may be, of each year and ending on and including the day next preceding the
first day of the next such dividend payment period (each a "Dividend Period").
Such dividends shall accrue from the date of original issuance of such shares,
shall be payable when, as and if declared by the Board of Directors and out of
funds of the Corporation legally available for the payment of dividends, on the
15th day of April, July, October and the last business day of December of each
year ("Dividend Payment Dates") for the dividend periods ending December 31,
March 31, June 30 and September 30, and, respectively, commencing October 15,
1999 with respect to the initial Dividend Period and shall cumulate if not paid
on such payment dates, whether or not in any Dividend Period or Periods there
shall be funds of the Corporation legally available for the payment of
dividends. Dividends will accrue from the first day of each Dividend Period,
whether or not declared or paid for the prior Dividend Period. Each such
dividend shall be paid to the holders of record of shares of this Series A
Preferred Stock as they appear on the books of the Corporation on such record
dates, not exceeding 30 days preceding the Dividend Payment Dates thereof, as
shall be fixed by the Board of Directors of the Corporation or by a duly
authorized committee thereof (each a "Dividend Record Date").
(b) The amount of dividends per share of this Series A Preferred Stock
payable for each Dividend Period (other than the initial Dividend Period) shall
be $25.00 (a "Dividend Payment"). The amount of dividends payable for the
initial Dividend Period or any period shorter than a full Dividend Period shall
be computed on A PRO RATA basis, assuming 30-day months and a 360-day year and
using the actual number of days elapsed in the period.
(c) No dividends shall be declared or paid or set apart for payment on
any series of preferred stock ("Preferred Stock") or any class of capital stock
of the Corporation ranking, as to dividends or upon liquidation, on a parity
with or junior to this Series A Preferred Stock for any period (other than
dividends payable in common stock of the Corporation ("Common Stock") or another
stock ranking junior to this Series A Preferred Stock as to dividends and upon
liquidation), nor shall the Corporation make any other distribution on the
Common Stock of the Corporation or on any other stock of the Corporation ranking
junior to or on a parity with this Series A Preferred Stock as to dividends or
upon liquidation, until such time as (i) full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment on the Series A Preferred Stock for all
past Dividend Periods for the Series A Preferred Stock terminating on or prior
to the date of payment of any such dividends on the Common Stock or such other
series of and (ii) sufficient funds have been set apart for payment of dividends
on all outstanding shares of this Series A Preferred Stock for the Dividend
Period during which
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payment is to be made for such current Dividend Period. When full cumulative
dividends for all past and current Dividend Periods are not paid or provided
for, as aforesaid, upon the shares of the Series A Preferred Stock and any other
series of Preferred Stock and any other class of capital stock of the
Corporation ranking, as to dividends, on a parity with the Series A Preferred
Stock (herein referred to as "Dividend Parity Stock"), all dividends declared
upon shares of the Series A Preferred Stock and any other Dividend Parity Stock
shall be declared PRO RATA so that the amount of dividends declared per share on
the Series A Preferred Stock and all other Dividend Parity Stock shall in all
cases bear to each other the same ratio that accrued dividends per share on the
shares of the Series A Preferred Stock and such other Dividend Parity Stock bear
to each other. Holders of shares of the Series A Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of full cumulative dividends, as herein provided, on the Series A Preferred
Stock. As used herein, the phrase "set apart" in respect of the payment of
dividends shall require deposit of any funds in a bank or trust company in a
separate deposit account maintained for the benefit of the holders of the Series
A Preferred Stock.
(d) Unless full cumulative dividends on all outstanding shares of the
Series A Preferred Stock shall have been paid for all past dividend payment
periods or declared and set apart for payment, so long as any shares of the
Series A Preferred Stock are outstanding, no Common Stock or any other stock of
the Corporation ranking junior to or on a parity with the Series A Preferred
Stock as to dividends or upon liquidation and no warrants, calls, options or
other rights to acquire Common Stock, any equity security of the Corporation or
other security exercisable or exchangeable into Common Stock or any such other
stock of the Corporation shall be redeemed, purchased or otherwise acquired or
retired for any consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by the
Corporation or any entity directly or indirectly controlled by the Corporation
(except by conversion into or exchange for stock of the Corporation or such
entity ranking junior to the Series A Preferred Stock as to dividends and upon
liquidation). As used herein, the phrase "set apart" in respect of the payment
of dividends shall require deposit of any funds in a bank, savings association
or trust company in a separate deposit account maintained for the benefit of the
holders of this Series A Preferred Stock.
(e) While any shares of Preferred Stock are outstanding, Emigrant
Securities Corp. may not declare any cash dividend or other distribution on its
capital stock, unless at the time of such declaration, (i) all accumulated
dividends have been paid and (ii) the net asset value of Emigrant Securities
Corp.'s portfolio (determined by total assets of Emigrant Securities Corp., less
all liabilities and indebtedness, deducting the amount of such dividend,
distribution or purchase price, as the case may be) is at least 200% of the
aggregate Liquidation Preference of all of the outstanding shares of Preferred
Stock.
Section 3. REDEMPTION.
(a) The shares of this Series A Preferred Stock are not redeemable,
except upon the occurrence of a Tax Event (as defined in paragraph (b) below).
(b) The Corporation will have the right, at any time upon the
occurrence of a Tax Event to redeem the shares of this Series A Preferred Stock,
in whole, but not in part, at a redemption price of $1,000 per share, plus
accrued and unpaid dividends to the date fixed for redemption. "Tax
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Event" means the receipt by the Corporation of an opinion of Thacher Proffitt &
Wood or another nationally recognized law firm experienced in such matters to
the effect that, as a result of (i) any amendment to, clarification of, or
change (including any announced prospective change) in the laws or treaties (or
any regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, (ii) any judicial
decision, official administrative pronouncement, published or private ruling,
regulatory procedure, notice or announcement (including any notice or
announcement of intent to adopt such procedures or regulations, an
"Administrative Action") or (iii) any amendment to, clarification of, or change
in the official position or interpretation of such Administrative Action or any
interpretation or pronouncement that provides for a position with respect to
such Administrative Action that differs from the theretofore generally accepted
position, in each case, by any legislative body, court, governmental authority
or regulatory body, irrespective of the manner in which such amendment,
clarification or change is made known, which amendment, clarification or change
is effective or such pronouncement or decision is announced on or after the date
of issuance of the shares of this Series A Preferred Stock, there is more than
an insubstantial risk that (1) dividends paid or to be paid by the Corporation
with respect to the Common Stock and Preferred Stock of the Corporation are not,
or will not be, fully deductible by the Corporation for United States federal
income tax purposes, or (2) the Corporation is, or will be, subject to more than
a DE MINIMIS amount of other taxes, duties or other governmental charges.
(c) In the event that fewer than all the outstanding shares of this
Series A Preferred Stock are to be redeemed as permitted by this Section 3, the
number of shares to be redeemed shall be determined by the Board of Directors or
a duly authorized committee thereof, and the shares to be redeemed shall be
determined by lot or PRO RATA as may be determined by the Board of Directors or
such duly authorized committee thereof by such other method as may be approved
by the Board of Directors or such duly authorized committee thereof, in its sole
discretion to be equitable; PROVIDED, that such method conforms to any
applicable rule or regulation of any stock exchange upon which the shares of
this Series A Preferred Stock may at the time be listed.
(d) In the event that the Corporation redeems shares of this Series A
Preferred Stock, notice of such redemption specifying the date fixed for
redemption (herein referred to as the "Redemption Date") and place of
redemption, shall be given by first class mail to each holder of record of the
shares to be redeemed at his address of record, not more than 60 nor less than
30 days prior to the Redemption Date. Each such notice shall specify: (i) the
Redemption Date; (ii) the number of shares of this Series A Preferred Stock to
be redeemed; (iii) the redemption price applicable to the shares to be redeemed
and that dividends on shares to be redeemed shall cease to accrue and accumulate
on the Redemption Date; and (iv) instructions for the surrender of such
certificates for the redemption price. If less than all the shares owned by such
shareholder are then to be redeemed, the notice shall also specify the number of
shares thereof which are to be redeemed and the fact that a new certificate or
certificates representing any unredeemed shares shall be issued without cost to
such holder.
(e) Notice of redemption of shares of this Series A Preferred Stock
having been given as provided in paragraph (d) of this Section 3, then, unless
the Corporation shall have defaulted in providing for the payment of the
redemption price and an amount equal to all accrued and unpaid dividends to the
Redemption Date, dividends shall cease to accrue on the shares of this Series A
Preferred Stock called for redemption at the Redemption Date, all rights of the
holders thereof
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<PAGE>
(except the right to receive the redemption price and all accrued and unpaid
dividends to the Redemption Date) shall cease with respect to such shares and
such shares shall not, after the Redemption Date, be deemed to be outstanding
and shall not have the status of Preferred Stock. In case fewer than all the
shares represented by any certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.
(f) Any shares of this Series A Preferred Stock which shall at any time
have been redeemed shall, after such redemption, have the status of authorized
but unissued shares of Preferred Stock, without designation as to series until
such shares are once more designated as part of a particular series by the Board
of Directors.
(g) Notwithstanding the foregoing provisions of this Section 3, unless
full dividends for the then-current Dividend Period on this Series A Preferred
Stock have been, or contemporaneously are, declared and paid, no shares of this
Series A Preferred Stock shall be redeemed unless all outstanding shares of this
Series A Preferred Stock are redeemed and the Corporation shall not purchase or
otherwise acquire any shares of this Series A Preferred Stock; PROVIDED,
HOWEVER, that the Corporation may purchase or acquire shares of this Series A
Preferred Stock pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding shares of this Series A Preferred Stock.
(h) Shares of this Series A Preferred Stock are not subject or entitled
to the benefit of a sinking fund.
Section 4. CONVERSION. The holders of this Series A Preferred Stock
shall not have any rights to convert such shares into shares of any other class
or capital stock of the Corporation.
Section 5. VOTING. Except as required by law, the shares of this Series
A Preferred Stock shall not have any voting powers, either general or special,
except as provided in this Section 5:
(a) Unless the vote of the holders of a greater number of shares shall
then be required by law, the affirmative vote of the holders of at least 662/3%
of all of the shares of this Series A Preferred Stock the time outstanding,
given in person or by proxy, at a meeting called for the purpose, on which
matter the holders of shares of this Series A Preferred Stock shall vote
together as a separate class, shall be necessary to authorize, effect or
validate any amendment, alteration or repeal of any of the provisions of the
Certificate of Incorporation or of any certificate, amendatory or supplemental
thereto which amendment, alteration or repeal, if effected, would, adversely
affect the powers, preferences, rights or privileges of this Series A Preferred
Stock other than any such amendment or alteration subject to paragraph (b) of
this Section 5.
(b) Notwithstanding anything set forth herein to the contrary, the
Board of Directors without the vote of the holders of shares of this Series A
Preferred Stock may authorize and issue additional shares of Common Stock and
Preferred Stock ranking on a parity as to dividends and upon liquidation with
the shares of this Series A Preferred Stock. No class or series of equity
securities of the Corporation may rank senior to this Series A Preferred Stock
as to dividends or upon liquidation.
-5-
<PAGE>
(c) (i) So long as any shares of this Series A Preferred Stock are
outstanding, the holders of this Series A Preferred Stock shall have the right,
voting together as a class and separately from all other classes and series, to
elect two Directors (the "Preferred Directors") at the annual meeting of
shareholders of the Corporation.
(ii) Each Preferred Director shall comply with the
requirements of Delaware law applicable to directors of a Delaware corporation.
Unless otherwise required by law, the Preferred Directors elected by the holders
of this Series A Preferred Stock shall serve until the next annual meeting or
until their respective successors shall be duly elected and qualified.
(iii) The term of office of all directors elected by the
holders of this Series A Preferred Stock in office at any time when the
aforesaid voting right is vested in such holders shall terminate upon the
election of their successors at any meeting of shareholders held for the purpose
of electing directors; PROVIDED, HOWEVER, that without further action, and
unless otherwise required by law, any Preferred Director that shall have been
elected by holders of this Series A Preferred Stock as provided herein may be
removed at any time, either with or without cause, by the affirmative vote of
the holders of record of a majority of outstanding shares of this Series A
Preferred Stock, voting separately as one class, at a duly held meeting of the
holders thereof.
(iv) Unless otherwise required by law, in case of any vacancy
occurring among the directors so elected by the holders of this Series A
Preferred Stock, the remaining Preferred Director may appoint a successor to
hold office for the unexpired term of the director whose place shall be vacant,
and if all Preferred Directors so elected shall cease to serve as directors
before their terms shall expire, the holders of this Series A Preferred Stock
then outstanding may, at a meeting of such holders duly held, elect successors
to hold office for the unexpired terms of the Preferred Directors whose places
shall be vacant.
(v) The Preferred Directors elected by the holders of this
Series A Preferred Stock in accordance with the provisions of this paragraph (c)
shall be entitled to one vote per director on any matter and otherwise to the
same rights and privileges as all other directors of the Corporation.
(vi) So long as any shares of this Series A Preferred Stock
are outstanding, the number of directors of the Corporation shall be subject to
the exercise by the holders of shares of this Series A Preferred Stock of the
right to elect directors under the circumstances provided in this paragraph (c),
and the Certificate of Incorporation shall not contravene such right.
(vii) On any matter on which the holders of this Series A
Preferred Stock shall be entitled to vote, such holders shall be entitled to one
vote for each share held. The holders of this Series A Preferred Stock shall
vote only as a separate class; their votes shall not be counted together with
the holders of the Common Stock or any other class or series of Preferred Stock
as a single class. At any meeting of shareholders held while holders of this
Series A Preferred Stock have the voting power set forth in this paragraph (c),
the holders of a majority of the then outstanding shares of this Series A
Preferred Stock who are present in person or by proxy shall be sufficient to
constitute a quorum for the election of directors as provided herein.
-6-
<PAGE>
(d) If the Corporation fails to declare or pay dividends on the Series
A Preferred Stock in amount equal to two full years dividends, the holders of
the Series A Preferred Stock will be entitled to elect the majority of the Board
of Directors and shall continue to be so represented until all dividends in
arrears have been paid or otherwise provided for. The holders of Series A
Preferred Stock must approve, by a majority vote, voting as a class, (i) any
plan or reorganization adversely affecting the rights of Series A Preferred
Stockholders and (ii) any changes in investment policy of the Corporation as
described in Section 13(a) of the Investment Company Act of 1940, as amended
("Investment Company Act") and any regulations promulgated thereunder. In any
matter on which the holders of the Series A Preferred Stock may vote (as
expressly provided in the Certificate of Designations or as may be required by
law), such holders will be entitled to one vote for each share of Series A
Preferred Stock.
(e) Notwithstanding anything to the contrary in Section 262(b) of the
General Corporation Law of the State of Delaware, the holders of this Series A
Preferred Stock shall be entitled to dissenters' rights pursuant to, and to the
fullest extent permitted by, Section 262(c) of said General Corporation Law in
the event of a merger or consolidation in which the Corporation is a constituent
corporation or the sale of substantially all of the assets of the Corporation.
Section 6. LIQUIDATION RIGHTS.
(a) Upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of the shares of this Series A
Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to shareholders under applicable law,
before any payment or distribution of assets shall be made on the Common Stock
or on any other class or series of stock of the Corporation ranking junior to
this Series A Preferred Stock upon liquidation, the amount of $1,000 per share
(the "Liquidation Preference"), plus a sum equal to all dividends accrued on
such shares and unpaid to the date fixed for such liquidation, dissolution or
winding up.
(b) After the payment in cash to the holders of the shares of this
Series A Preferred Stock of the full preferential amounts for the shares of this
Series A Preferred Stock, as set forth in paragraph (a) of this Section 6, the
holders of this Series A Preferred Stock shall have no further right or claim to
any of the remaining assets of the Corporation.
(c) In the event the assets of the Corporation available for
distribution to the holders of shares of this Series A Preferred Stock upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to paragraph (a) of this Section 6, no
distribution shall be made on account of any shares of any other series of
Preferred Stock or any other class of stock of the Corporation ranking on a
parity with the shares of this Series A Preferred Stock upon such liquidation,
dissolution or winding up unless proportionate amounts shall be paid on account
of the shares of this Series A Preferred Stock, ratably, in proportion to the
full amounts to which holders of all such shares which are on a parity with the
shares of this Series A Preferred Stock are respectively entitled upon such
dissolution, liquidation or winding up.
-7-
<PAGE>
(d) The sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all the
property and assets of the Corporation shall not be deemed a dissolution,
liquidation or winding up of the Corporation for the purposes of this Section 6,
nor shall the merger or consolidation of the Corporation into or with any other
corporation or association or the merger or consolidation of any other
corporation or association into or with the Corporation, be deemed to be a
dissolution, liquidation or winding up of the Corporation for the purposes of
this Section 6.
Section 7. RANK. The Corporation shall not issue any other series of
Preferred Stock ranking senior to this Series A Preferred Stock as to the
payment of dividends or upon liquidation or any other series of any equity
securities ranking senior to this Series A Preferred Stock as to the payment of
dividends or upon liquidation. The Corporation may issue shares of Common Stock
and any other series of Preferred Stock ranking junior to or on a parity with
this Series A Preferred Stock as to the payment of dividends or upon
liquidation. For purposes of this Certificate of Designations, any stock of any
series or class of the Corporation shall be deemed to rank:
(a) senior to the shares of this Series A Preferred Stock, as to
dividends or upon liquidation, if the holders of such series or class shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in preference or priority to the holders of shares of this Series A Preferred
Stock;
(b) on a parity with shares of this Series A Preferred Stock, as to
dividends or upon liquidation, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of this Series A Preferred Stock, if
the holders of such stock shall be entitled to the receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective dividend
rates or liquidation prices, without preference or priority, one over the other,
as between the holders of such stock and the holders of shares of this Series A
Preferred Stock; and
(c) junior to shares of this Series A Preferred Stock, as to dividends
or upon liquidation, if such stock shall be Common Stock or if the holders of
shares of this Series A Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon dissolution, liquidation or winding
up of the Corporation, as the case may be, in preference or priority to the
holders of shares of such series or class.
Section 8. REPORTS AND NOTICES. So long as any shares of this Series A
Preferred Stock are outstanding, the Corporation shall provide to the holder or
holders of such shares copies of all annual, quarterly and other reports of the
Corporation and copies of all shareholder notices of the Corporation when and as
furnished to the holders of the Common Stock.
Section 9. APPROVAL OF INDEPENDENT DIRECTORS.
(a) As long as any shares of this Series A Preferred Stock are
outstanding, the Corporation may not take the following actions without first
obtaining the approval of a majority of the Independent Directors. "Independent
Director" means any director of the Corporation who is
-8-
<PAGE>
either (A) not a current officer or employee of the Corporation, or (B) a
Preferred Director. The actions which require the prior approval of a majority
of the Independent Directors include (i) the issuance of additional Preferred
Stock ranking on a parity with this Series A Preferred Stock, (ii) the
modification of the general distribution policy of the Corporation or the
declaration of any distribution in respect of Common Stock for any year if,
after taking into account any such proposed distribution, total distributions on
shares of this Series A Preferred Stock and the Common Stock would exceed an
amount equal to the sum of 105% of the Corporation's "investment company taxable
income" (excluding capital gains) for such year plus net capital gains of the
Corporation for that year, (iii) the acquisition of assets other than those
permissible for an operating subsidiary of a New York stock savings bank, (iv)
the redemption of any shares of Common Stock, (v) the determination to revoke
the Corporation's status as a registered investment company under the Investment
Company Act.
(b) In assessing the benefits to the Corporation of any proposed action
requiring their consent, the Independent Directors shall take into account the
interests of holders of shares of both the Common Stock and the Preferred Stock,
including, without limitation, the holders of this Series A Preferred Stock. In
considering the interests of the holders of the Preferred Stock, including,
without limitation, holders of this Series A Preferred Stock, the Independent
Directors shall owe the same duties that the Independent Directors owe to
holders of shares of Common Stock.
Section 10. RESTRICTIONS ON TRANSFER.
(a) The following terms shall have the following meanings for the
purposes of this Section 10:
(i) "Beneficial Ownership" shall mean ownership of shares of
any class or series of Common Stock or Preferred Stock by a person who would be
treated as a beneficial owner of such shares under Section 3(c)(1) of the
Investment Company Act and any rules promulgated thereunder. The terms
"Beneficial Owner," "Beneficially Own" and "Own Beneficially" shall have
correlative meanings.
(ii) "Restriction Termination Date" shall mean the first day
on which the Board of Directors determines that it is no longer in the best
interests of the Corporation to attempt to, or continue to, qualify as a
registered investment company under the Investment Company Act.
(iii) "Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of any shares of Common Stock or
Preferred Stock (including (i) the granting of any option (including, but not
limited to, an option to acquire an option or any series of such options) or
entering into any agreement for the sale, transfer or other disposition of
Common Stock or Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or exchangeable for
Common Stock or Preferred Stock or the exercise of such rights), whether
voluntary or involuntary, whether of record or beneficially, and whether by
merger, operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities which results in a change in the
Beneficial Ownership of shares of Common Stock or Preferred Stock). The terms
"Transfers" and "Transferred" shall have correlative meanings.
-9-
<PAGE>
(b) Prior to the Restriction Termination Date, any Transfer that, if
effective, would result in the outstanding Common Stock and Preferred Stock
being Beneficially Owned by less than 100 persons (determined without reference
to any rules of attribution) shall be void AB INITIO and the intended transferee
shall acquire no rights in such shares of Common Stock or Preferred Stock.
IN WITNESS WHEREOF, Emigrant Securities Corp. has caused this
certificate to be executed by its Senior Vice President and Treasurer, and
attested by its Senior Vice President and Secretary, this 29th day of September,
1999.
EMIGRANT SECURITIES CORP.
By: /s/ Francis R. May
-----------------------------------
Francis R. May
Senior Vice President and Treasurer
Attest:
By: /s/ Daniel C. Hickey
-----------------------------------
Daniel C. Hickey
Senior Vice President and Secretary
-10-
Exhibit 2.n (i)
CONSENT OF DELOITTE & TOUCHE LLP
The Board of Directors
Emigrant Securities Corp.
We hereby consent to the filing of our opinion, dated August 17, 1999,
as an exhibit to the Registration Statement on Form N-2 of Emigrant Securities
Corp. and to all references to our firm under the headings "FAILURE TO QUALIFY
AS A RIC" and "FEDERAL INCOME TAX CONSIDERATIONS" contained in such Registration
Statement.
Deloitte & Touche LLP
/s/ Deloitte & Touche LLP
November 19, 1999
New York, New York
DELOITTE & Exhibit 2.n (ii)
TOUCHE
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[LOGO] DELOITTE & TOUCHE LLP Telephone: (212) 436-2000
Two World Financial Center Facsimile: (212) 436-5000
New York, New York 10281-1414
August 17, 1999
Emigrant Savings Bank
5 East 42nd Street
New York, NY 10017
Attn: Mr. John R. Brinster
First Vice President
Ladies and Gentlemen:
We have acted as special tax advisor to Emigrant Savings Bank (the "Bank") in
connection with certain transactions that involve the establishment of Emigrant
Securities Corp., an indirect subsidiary of the Bank that will be registered as
a closed-end management investment company within the meaning of the Investment
Company Act of 1940, as amended (the "40 Act"). Pursuant to your request, this
letter (the "Memorandum") sets forth our opinion as to certain Federal income
tax consequences regarding Emigrant Securities Corp.'s qualification as a
regulated investment company under Part I of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "IRC").
In rendering this Memorandum, we examined the Private Placement Memorandum (the
"PPM"), to which this opinion is appended, and relied upon the facts and
representations stated therein. Terms referenced herein but not specifically
defined are defined in the PPM.
In rendering the opinion provided herein, we relied upon the IRC, final,
temporary, and proposed Treasury regulations promulgated thereunder, rulings and
pronouncements issued by the Internal Revenue Service (the "IRS"), and
administrative and judicial decisions, all as in effect on the date hereof. Each
and all of these are subject to change (for which we shall have no
responsibility to advise you), and any such change could be given retroactive
effect.
EXCLUDED ITEMS
- --------------
Our opinion, as set forth in its entirety in this Memorandum, is limited to the
conclusions as specifically set forth herein. This Memorandum does not purport
to deal with all the Federal, state and local income tax consequences that may
or may not apply to the transactions described in this
Memorandum.
<PAGE>
Emigrant Savings Bank
August 17, 1999
OPINION AND ANALYSIS
- --------------------
BASIS FOR QUALIFICATION AS A REGULATED INVESTMENT COMPANY
- ---------------------------------------------------------
EMIGRANT SECURITIES CORP. SHOULD QUALIFY AS A REGULATED INVESTMENT COMPANY
WITHIN THE MEANING OF IRC SS. 851 FOR ITS INITIAL TAX YEAR ENDING DECEMBER 31,
1999 AND SUBSEQUENT TAX YEARS WHERE THE REQUIREMENTS DISCUSSED HEREIN ARE
SATISFIED.
A) The Definition
- -----------------------
A "regulated investment company," as defined by IRC ss. 851(a), means any
domestic corporation which, at all times during the taxable year, is registered
under the 40 Act: (i) as a management company or unit investment trust, (ii) has
in effect an election under the 40 Act to be treated as a business development
company, or (iii) which is a common trust fund or similar fund excluded by ss.
80a-3(c)(3) of the 40 Act from the definition of "investment company" and is not
included in the definition of "common trust fund" by IRC ss. 584(a).1 A
corporation is "domestic" for Federal income tax purposes where it is created or
organized in the United States or under the laws of the United States or of any
State.2 Emigrant Securities Corp. is a corporation created and organized under
the laws of the State of Delaware. It will be registered as a management company
under the 40 Act and is anticipated to be registered as such at all times during
its taxable year. As a result, Emigrant Securities Corp. should meet the
definition of a regulated investment company as set forth in IRC ss. 851 (a),
subject also to the qualification tests described below.
B) The Qualification
- --------------------------
In general, a corporation will not be qualified as a regulated investment
company, as defined by IRC ss. 851(a), for any taxable year, unless it:
i) elects to be treated as a regulated investment company,
ii) derives at least ninety percent (90%) of its gross income from certain
specified sources (the "income test"),
iii) satisfies an asset diversification requirement, and
iv) distributes at least ninety percent (90%) of its income (the
"distribution requirement").3
i) THE ELECTION
A corporation perfects an election to be treated as a regulated investment
company by computing its taxable income as a regulated investment company in its
tax return for the first taxable year in which the election is applicable.4 A
company computes its taxable income as a regulated investment company where it
complies with the rules of IRC ss. 852 (discussed in greater detail below).
There
- --------
1 IRC ss. 851(a).
2 IRC ss. 7701(a)(4).
3 IRC ss.ss. 851(b), 852(a).
4 IRC ss. 851(b)(1); and Treas. Reg. ss. 1.851-2(a).
2
<PAGE>
Emigrant Savings Bank
August 17, 1999
is no other way to perfect an election; once made, the election is irrevocable.5
Emigrant Securities Corp. will make the election in its initial tax return for
its tax year ended December 31, 1999.
ii) THE INCOME TEST
In addition to the election requirement, Emigrant Securities Corp. must satisfy
the income test, annually, in order to qualify as a regulated investment company
for Federal income tax purposes. At least ninety percent (90%) of the
corporation's annual gross income6 must constitute:
i) dividends, interest, and payments with respect to securities loans,7
ii) gains from the sale or other disposition of stock, securities,8 or
foreign currencies, or iii) other income9 derived with respect to the
business of investing in such stock, securities, or currencies.10
Losses realized from the disposition of stock or securities do not enter into
the computation (that is, a loss is neither in the numerator nor the denominator
of the fraction).11 It is anticipated that Emigrant Securities Corp.'s portfolio
will consist of assets such that at least ninety percent (90%) of its gross
income will at all times consist of dividends, interest, and other income that
qualifies for purposes of the income test. As a result, income and gain that are
attributable to Emigrant Securities Corp.'s assets (with the possible exception
of real estate and certain real estate-related assets) should qualify for
purposes of the income test.
iii) THE ASSET DIVERSIFICATION REQUIREMENT
The asset diversification requirement consists of two tests:
i) the "50% test," and
ii) the "25% test."12
A regulated investment company must satisfy both tests at the close of every
quarter of the taxable year.13
In order to meet the 50% test, at least half of the value of the regulated
investment company's total assets must consist of:
i) cash and cash items (including receivables),
- --------
5 ID.
6 SEE IRC ss. 61; and Rev. Rul. 85-167, 1985-2 C.B. 178. Amounts otherwise
excludable under IRC ss. 103(a) (iN general, municipal bond interest) are
included in gross income for purposes of the income test. SEE IRC ss. 851(b)
flusH language.
7 IRC ss.ss. 85l(b)(2), and 512(a)(5).
8 As defined in ss. 80a-2(a)(36) of the 40 Act.
9 Including but not limited to gains from options, futures, or forward
contracts.
10 IRC ss. 851(b)(2).
11 Treas. Reg. ss. 1.851-2(b).
12 IRC ss. 85l(b)(3).
13 ID.
3
<PAGE>
Emigrant Savings Bank
August 17, 1999
ii) government securities,
iii) securities of other regulated investment companies, and
iv) other securities.14
Government securities should include certain securities issued by the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA"), and the Federal Home Loan Mortgage Corporation
("FHLMC").15 In order for an investment in the security of an issuer to fit
within the "other securities" category, the investment must constitute no more
than five percent (5%) of the value of the regulated investment company's
assets, and no more than ten percent (10%) of the outstanding voting securities
of such issuer.16 For purposes of the 50% test (and the 25% test discussed
below), the determination of an asset's "value" depends upon whether or not
market quotations are readily available for the asset.17 If a market quotation
is available for a security, then that quotation determines the security's
value.18 If, however, there is no readily available market quotation, then the
regulated investment company's board of directors, acting in good faith,
determines the asset's value.19 In the case of securities of majority owned
subsidiaries that are investment companies, the value of such securities cannot
exceed their market value or the company's asset value, whichever is higher.20
Emigrant Securities Corp.'s assets should satisfy the 50% test as of each
testing date. The testing dates for Emigrant Securities Corp.'s initial, short
taxable year ending December 31, 1999 are: September 30th, and December 31st The
quarterly testing dates for subsequent tax years are: March 31st, June 30th,
September 30th, and December 31st.21
The 25% test prohibits Emigrant Securities Corp. from investing more than twenty
five percent (25%) of the value of its total assets in:
i) any single issuer (excluding Government securities), or
ii) two or more issuers that Emigrant Securities Corp. controls22 and which
are engaged in the same or similar trades or businesses.23
Emigrant Securities Corp. will not invest more than twenty five percent (25%) of
its assets in any single issuer (excluding Government securities).24 Nor will
Emigrant Securities Corp. "control" any
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14 IRC ss. 851(b)(3)(A).
15 SEE Rev. Rul. 92-89, 1992-2 C.B. 154.
16 IRC ss. 85l(b)(3)(A)(ii).
17 IRC ss. 851(c)(4).
18 ID.
19 ID.
20 ID.
21 It is crucial that Emigrant Securities Corp. analyze its assets prior to
the close of each quarterly testing date to determine whether or not it expects
to satisfy the asset diversification requirement on each testing date.
22 The term "control" means ownership in a corporation of at least twenty
percent (20%) of the total combined voting power of all classes of stock
entitled to vote.
23 IRC ss. 85l(b)(3)(B).
24 Government securities should include certain securities issued by GNMA,
FNMA, FHLMC. SEE Rev. Rul. 92-89,
(continued...)
4
<PAGE>
Emigrant Savings Bank
August 17, 1999
two or more issuers engaged in the same or similar trades or businesses. For
purposes of this Memorandum, it is unnecessary to discuss in detail the
applicability of the attribution and aggregation rules of IRC ss. 851(c)(1) and
the contours of the phrase "same or similar trades or businesses" as presented
in Treas. Reg. ss. 1.851-2(b). Therefore, Emigrant Securities Corp.'s assets
should satisfy the 25% test as of each testing date. The testing dates for
Emigrant Securities Corp.'s initial, short taxable year ending December 31, 1999
are: September 30th and December 31st. The quarterly testing dates for
subsequent tax years are: March 31st, June 30th, September 30th and December
31st.25
It is possible that only market forces (or other events) will cause the value of
an investment company's portfolio to fail the asset diversification requirement
at the end of any quarter (following the initial testing quarter26). In this
instance, automatic statutory relief27 prevents the investment company from
losing its special tax status, notwithstanding technical noncompliance with the
asset diversification requirement.28 If, however, the noncompliance (that is, a
value discrepancy) exists immediately after the acquisition of any security or
other property, and the discrepancy is wholly or partly the result of the
acquisition, then there is no automatic statutory relief29 In this instance, the
investment company will not lose its special tax status where it cures the
discrepancy within thirty (30) days after the close of the quarter in which the
discrepancy exists.30 Emigrant Securities Corp. should monitor events that have
potential to create discrepancies carefully, including changes in the identity
of an issuer and changes in the magnitude of an investment in a particular
issuer.
iv) THE DISTRIBUTION REQUIREMENT
In general, a regulated investment company must distribute dividends31 to its
shareholders in an amount that equals or exceeds the sum of:
i) ninety percent (90%) of its modified "investment company taxable
income"32 for the taxable year, and
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24 (...continued)
1992-2 C.B. 154.
25 It is crucial that Emigrant Securities Corp. analyze its assets prior to
the close of each quarterly testing date to determine whether or not it expects
to satisfy the asset diversification requirement on each testing date.
26 The statutory relief discussed herein does not apply to an investment
company's initial quarter testing date. Rev. Rul. 72-83, 1972-1 C.B. 205.
27 That is, the statute provides automatic relief because it prevents the
company from losing its special tax status without any action or election
required by the company.
28 IRC ss. 851(d).
29 ID.
30 ID.
31 SEE IRC ss. 561 regarding the dividends paid deduction, but exclude items
designated as capital gain.
32 IRC ss. 852(b)(2). Investment company taxable income, for purposes of the
distribution test in IRC ss. 852(a), is determined without regard to IRC ss.
852(b)(2)(D) (the dividends paid deduction otherwise allowed in determining the
definition of investment company taxable income under IRC ss. 852(b). IRC ss.
852(a)(l)(A).
5
<PAGE>
Emigrant Savings Bank
August 17, 1999
ii) ninety percent (90%) of the excess of municipal bond interest income
over certain disallowed deductions attributable to that income.33
Investment company taxable income is the regular corporate taxable income34 of
the regulated investment company with the following modifications:
i) exclude net capital gains,
ii) disallow net operating loss deduction of IRC ss. 172,
iii) disallow dividends received deduction as provided in IRCss.ss.241
through 249 (other than IRCss.248),
iv) allow a deduction for dividends paid (as defined in IRC ss. 561) (but
exclude capital gain and exempt-interest dividends), and
v) ignore IRC ss. 443(b) adjustments (that is, taxable income for a period
of less than twelve (12) months shall not be placed on an annual basis
even though such short taxable year results from a change in accounting
period).35
Additionally, either:
a) the regulated investment company tax provisions must have applied to
the investment company for all taxable years ending on or after
November 8, 1983, or
b) as of the close of the taxable year, the investment company cannot have
any earnings and profits accumulated in any taxable year in which the
regulated investment company tax provisions (or corresponding
provisions of prior law) did not apply to it.36
Emigrant Securities Corp. should distribute all of its earnings and profits
according to its distribution policy as described in the PPM. Additionally, the
regulated investment company provisions should apply to Emigrant Securities
Corp.'s first taxable year which is its only post-November 8, 1983 tax year. On
this basis, Emigrant Securities Corp. should satisfy the distribution
requirement.
Therefore, Emigrant Securities Corp. should qualify as a regulated investment
company within the meaning of IRC ss. 851 for its initial tax year ended
December 31, 1999 and subsequent tax years where the requirements discussed
herein are satisfied because it:
i) will be registered as a management company under the 40 Act and
anticipates being registered as such at all times during its taxable
year, thereby meeting the definition of a regulated investment company
under IRC ss. 851 (a),
ii) will make an election to be treated as a regulated investment company
for Federal income tax purposes pursuant to IRC ss. 85l(b)(1) on its
initial Federal income tax return,
- --------
33 IRC ss. 852(a). Specifically, the disallowed deductions refers to IRC
ss.ss. 265, and 171(a)(2).
34 SEE IRC ss. 63(a).
35 IRC ss. 852(b)(2); and Treas. Reg. ss. 1.852-3.
36 IRC ss. 852(a)(2).
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<PAGE>
Emigrant Savings Bank
August 17, 1999
iii) should satisfy the income test of IRC ss. 851(b)(2),
iv) should meet the asset diversification requirement of IRC ss. 851(b)(3),
and
v) should satisfy the distribution requirement of IRC ss. 852(a).
These opinions are based upon:
i) the representations, information, documents, and facts that we have
included or referenced in this opinion letter;
ii) our assumption (without independent verification) that all of the
representations and all of the originals, copies, and signatures of
documents reviewed by us are accurate, true, and authentic;
iii) our assumption (without independent verification) that there has been
timely execution, delivery, and performance as required by the
representations and document;
iv) the understanding that only the specific Federal income tax issues and
tax consequences opined upon herein are covered by this tax opinion,
and no other Federal, state, or local taxes of any kind;
v) the law, regulations, cases, rulings, and other tax authority in effect
as of the date of this letter. If there are any significant changes of
the foregoing tax authorities (for which we shall have no
responsibility to advise you), such changes may result in our opinion
being rendered invalid or necessitate (upon your request) a
reconsideration of the opinion;
vi) your understanding that this opinion is not binding on the IRS or the
courts and should not be considered a representation, warranty, or
guarantee that the IRS or the courts will concur with our opinion; and
vii) your understanding that this opinion letter is solely for your
information and benefit, is limited to the described transaction, and
may not be relied upon, distributed, disclosed, made available to, or
copied by anyone, without prior written consent or as described herein.
Very truly yours,
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
7
