<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 018261
COMMUNITY FINANCIAL CORPORATION
(Exact name of small business issuer as specified in its charter)
DELAWARE 54-1532044
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
38 North Central Ave., Staunton, Va. 24401
(Address of principal executive offices zip code)
(540) 886-0796
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Number of shares of Common Stock, par value per share, $.01, outstanding at
the close of business on September 30, 1995: 1,269,698.
Transitional Small Business Disclosure Format (Check one)
Yes No X
<PAGE>
<PAGE>
COMMUNITY FINANCIAL CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements
Consolidated Statements of Financial Condition
at September 30, 1995 (unaudited) and
March 31, 1995 (audited).......................................1
Consolidated Statements of Income for the
Three Months Ended September 30, 1995 and 1994
and for the Six Months Ended September 30, 1995
and 1994 (unaudited)...........................................2
Consolidated Statements of Cash Flows for the
Six Months Ended September 30, 1995 and
1994 (unaudited)...............................................3
Notes to Unaudited Interim Consolidated
Financial Statements...........................................4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................6
PART II. OTHER INFORMATION - II-1
<PAGE>
<PAGE>
COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
September 30, March 31,
1995 1995
------------ -------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash (including interest bearing
deposits of approximately
$1,225,000 and $2,166,000) $ 4,071,125 $ 4,582,983
Securities
Held to maturity 4,774,897 4,268,530
Available for sale 532,508 524,790
Investment in Federal Home Loan
Bank stock, at cost 1,250,000 1,250,000
Loans receivable, net 139,836,629 134,515,658
Real estate owned 350,308 350,308
Property and equipment, net 3,761,453 3,846,007
Accrued interest receivable
Loans 787,237 671,753
Investments 132,719 97,266
Prepaid expenses and other assets 334,405 325,660
$155,831,281 $150,432,955
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $109,509,869 $105,013,566
Advances from Federal Home Loan
Bank 25,000,000 25,000,000
Advance payments by borrowers for
taxes and insurance 133,470 152,197
Other liabilities 736,873 714,758
Total Liabilities 135,380,212 130,880,521
Stockholders' Equity
Preferred stock $.01 par value,
authorized 1,000,000 shares,
none outstanding
Common stock, $.01 par value,
authorized 3,000,000 shares,
1,269,698 and 1,241,878 shares
outstanding 12,697 12,419
Additional paid in capital 4,651,634 4,540,632
Retained earnings 15,506,558 14,723,799
Net unrealized gain on securities
available for sale 280,180 275,584
Total Stockholders' Equity 20,451,069 19,552,434
$155,831,281 $150,432,955
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six MonthsEnded
September 30, September 30,
------------------ -----------------
1995 1994 1995 1994
-------- ------ ------ ------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $2,955,785 $2,346,267 $5,795,316 $4,563,487
Investment securities 111,995 75,790 209,178 134,212
Other 27,500 31,045 63,793 93,681
Total interest income 3,095,280 2,453,102 6,068,287 4,791,380
INTEREST EXPENSE
Deposits 1,259,144 959,099 2,422,986 1,924,878
Borrowed money 378,212 230,982 766,202 422,494
Total interest expense 1,637,356 1,190,081 3,189,188 2,347,372
NET INTEREST INCOME 1,457,924 1,263,021 2,879,099 2,444,008
PROVISION FOR LOAN LOSSES 42,500 25,000 67,500 51,237
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,415,424 1,238,021 2,811,599 2,392,771
NONINTEREST INCOME
Service charges, fees
and commissions 107,870 93,320 210,883 179,764
Miscellaneous 7,246 6,413 13,019 13,574
Total noninterest
income 115,116 99,733 223,902 193,338
NONINTEREST EXPENSE
Compensation & benefits 288,143 259,534 564,920 545,255
Occupancy 94,494 94,460 184,587 178,956
Data processing 77,527 60,173 155,165 127,767
Federal insurance premium 58,986 58,918 119,793 117,620
Miscellaneous 167,051 153,158 357,888 303,512
Total noninterest
expense 686,201 626,243 1,382,353 1,273,110
INCOME BEFORE TAXES 844,339 711,511 1,653,148 1,312,999
INCOME TAXES 316,596 269,061 620,622 497,108
NET INCOME $ 527,743 $ 442,450 $1,032,526 $ 815,891
EARNINGS PER SHARE $ 0.42 $ 0.36 $ 0.83 $ 0.67
DIVIDENDS PER SHARE $ 0.10 $ 0.085 $ 0.20 $ 0.17
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
September 30,
-------------------------
1995 1994
----------- -----------
(Unaudited)
<S> <C>> <C>
OPERATING ACTIVITIES
Net income $1,032,526 $ 815,891
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for loan losses 67,500 51,237
Depreciation 106,703 108,296
Amortization of premium and accretion
of discount on securities, net (6,783) (14,448)
(Decrease) in net deferred
loan fees (49,897) (53,860)
(Increase) in deferred income taxes (67,521) (69,253)
(Increase) in other assets (159,682) (50,273)
Increase (decrease) in other liabilities 70,909 (56,686)
Gain on sale of assets (1,245) (2,561)
Net cash provided by operating activities 992,510 728,343
INVESTING ACTIVITIES
Proceeds from maturities of
investment securities 1,750,000 1,250,000
Purchases of investment securities (2,249,570) (4,534,419)
Net increase in loans (5,340,466) (4,535,786)
Purchases of property and equipment (22,149) (418,205)
Proceeds from sale of loans 415,000 854,000
Loans originated for resale (415,000) -
Net cash provided (absorbed) by
investing activities (5,862,185) (7,384,410)
FINANCING ACTIVITIES
Dividends paid (249,766) (207,773)
Net increase (decrease) in deposits 4,496,303 830,433
Proceeds from advances and other
borrowed money 73,000,000 20,000,000
Repayments of advances and other
borrowed money (73,000,000)(18,000,000)
Proceeds from issuance of common stock 111,280 55,640
Net cash provided (absorbed) by
financing activities 4,357,817 2,678,300
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (511,858) (3,977,767)
CASH AND CASH EQUIVALENT-beginning of period 4,582,983 9,388,430
CASH AND CASH EQUIVALENTS-end of period $4,071,125 $5,410,663
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COMMUNITY FINANCIAL CORPORATION
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
NOTE 1. - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
The accompanying consolidated financial statements include the accounts of
Community Financial Corporation and its wholly-owned subsidiary, Community
Federal Savings Bank. All significant intercompany balances and transactions
have been eliminated in consolidation.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentation have been included.
Operating results for the three and six months ended September 30, 1995, are
not necessarily indicative of the results that may be expected for the year
ending March 31, 1996.
NOTE 2. - EARNINGS PER SHARE
Earnings per share is computed based on the weighted average number of shares
of common stock outstanding during each period including the assumed exercise
of dilutive stock options, and is retroactively adjusted for stock dividends
and stock splits. Earnings per share for the three months ended September 30,
1995 and 1994 have been determined by dividing net income by the weighted
number of shares of common stock outstanding during these periods (1,250,950
and 1,222,194). Earnings per share for the six months ended September 30, l995
and 1994 have been determined by dividing net income by the weighted number of
shares of common stock outstanding during these periods (1,246,439 and
1,220,066).
NOTE 3. - STOCKHOLDERS' EQUITY
The following table presents the Savings Bank's capital levels at September
30, 1995, relative to the federal regulatory requirements at that date:
<TABLE>
<CAPTION>
Amount Percent Actual Actual Excess
Required Required Amount Percent Amount
-------- -------- --------- ------- ---------
<S> <C> <C> <C> <C> <C>
Tangible Capital $2,327,000 1.50% $17,005,000 10.96% $14,768,000
Core Capital 4,655,000 3.00 17,005,000 10.96 12,350,000
Risk-based Capital 7,690,000 8.00 17,780,000 18.50 10,090,000
</TABLE>
<PAGE>
<PAGE>
NOTE 3. - STOCKHOLDERS' EQUITY (cont.)
Capital distributions by the Savings Bank are limited by federal regulations
("Capital Distribution Regulation"). Capital distributions are defined to
include, in part, dividends, stock repurchases and cash-out mergers. The
Capital Distribution Regulation permits a "Tier 1" association to make capital
distributions during a calendar year up to 100% of its net income to date plus
the amount that would reduce by one-half its surplus capital ratio at the
beginning of the calendar year. Any distributions in excess of that amount
require prior notice to the Office of Thrift Supervision ("OTS") with the
opportunity for the OTS to object to the distribution. A Tier 1 association is
defined as an association that has, on a pro forma basis after the proposed
distribution, capital equal to or greater than the OTS fully phased-in capital
requirement and has not been deemed by the OTS to be "in need of more than
normal supervision". The Savings Bank is currently classified as a Tier 1
institution for these purposes. The Capital Distribution Regulation requires
that associations provide the applicable OTS District Director with a 30-day
advance written notice of all proposed capital distributions whether or not
advance approval is required by the regulation.
NOTE 4. - SUPPLEMENTAL INFORMATION - STATEMENT OF CASH FLOWS
Total interest paid for the three months ended September 30, 1995 and 1994 was
$1,585,662 and $1,177,152. Total interest paid for the six months ended
September 30, 1995 and 1994 was $3,178,344 and $2,340,739. Total income taxes
paid for the three months ended September 30, 1995 and 1994 was $549,220 and
$404,516. Total income taxes paid for the six months ended September 30, 1995
and 1994 was $619,220 and $464,516.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
FINANCIAL CONDITION
The Company's total assets increased $5.4 million to $155.8 million at
September 30, 1995, due primarily to an increase in loans receivable of $5.3
million. The increase in loans receivable was due primarily to the
origination of variable rate mortgage loans. Deposits increased $4.5 million
to $109.5 million at September 30, 1995, from $105.0 million at March 3l,
l995. The increase in deposits was used to fund the increase in loans.
Stockholders' equity increased to $20.5 million at September 30, 1995, from
$19.6 million at March 31, 1995, due primarily to earnings for the six month
period ended September 30, 1995, which was partially offset by two payments of
$0.10 per share each in cash dividends. At September 30, 1995, the Bank's
non-performing assets totalled $639,000 or 0.41% of assets. This compares to
non-performing assets of $350,000 or 0.23% of total assets as of March 31,
1995. The non- performing assets consisted of a 9-unit apartment complex in
Harrisonburg, Virginia which is the real estate owned of $350,000, two 1-4
family mortgage loans in the amount of $103,000, three rental properties to a
single borrower in the amount of $160,000 and seven consumer loans totalling
$26,000.
<PAGE>
<PAGE>
Historically, the Bank has maintained its liquid assets above the minimum
requirements imposed by federal regulations and at a level believed adequate
to meet requirements of normal daily activities, repayment of maturing debt
and potential deposit outflows. Cash flow projections are regularly reviewed
and updated to assure that adequate liquidity is provided. As of September
30, 1995, the Bank's liquidity ratio (liquid assets as a percentage of net
withdrawable savings and current borrowings) was 5.91%, which exceeds the
regulatory requirement.
The deposits of savings associations, such as the Savings Bank, are
presently insured by the SAIF, which together with the BIF, are the two
insurance funds administered by the FDIC. Financial institutions which are
members of the BIF are experiencing substantially lower deposit insurance
premiums because the BIF has achieved its required level of reserves while the
SAIF has not yet achieved its required reserves. A recapitalization plan for
the SAIF under consideration by Congress reportedly provides for a special
assessment of 0.85% to 0.90% of deposits to be imposed on all SAIF insured
institutions to enable the SAIF to achieve its required level of reserves. If
the proposed assessment of 0.85% to 0.90% was effected based on deposits as of
March 31, 1995 (as proposed), the Savings Bank's special assessment would
amount to approximately $893,000 to $945,000, before taxes, respectively.
Accordingly, if imposed, this special assessment would reduce earnings.
Conversely, assuming the insurance premium levels for BIF and SAIF members are
again equalized, future deposit insurance premiums are expected to decrease
significantly, to as low as 0.04% from the 0.23% of deposits currently paid by
the Savings Bank, which would reduce annual non-interest expense for future
periods by approximately $200,000, before taxes, based on deposits at March
31, 1995.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1995 and 1994.
- ----------------------------------------------
General. Net income for the three months ended September 30, 1995 was
$527,743 compared to $442,450 for the three months ended September 30, 1994,
due primarily to an increase in net interest income which was offset in part
by an increase in noninterest expense. Income before taxes increased to
$844,339 for the three months ended September 30, 1995 from $711,511 for the
three months ended September 30, 1994.
Interest Income. Total interest income increased to $3,095,280 for the three
months ended September 30, 1995, from $2,453,102 for the three months ended
September 30, 1994, due primarily to an increase in the yield earned on loans
and investments from 7.06% for the three months ended September 30, l994, to
8.33% for the period ended September 30, l995.
Interest Expense. Total interest expense increased to $1,637,356 for the
quarter ended September 30, 1995, from $1,190,081 for the quarter ended
September 30, 1994. Interest on deposits increased to $1,259,144 for the
quarter ended September 30, 1995 from $959,099 for the quarter ended September
30, 1994 due primarily to an increase in the average cost of deposits from
3.81% at September 30, 1994 compared to 4.62% at September 30, 1995. Interest
expense on borrowed money increased to $378,212 for the quarter ended
September 30, 1995, from $230,982 for the quarter ended September 30, 1994,
due to an increase in the cost of borrowing.
<PAGE>
Provision for Loan Losses. The provision for loan losses increased to $42,500
for the three months ended September 30, 1995 from $25,000 for the three
months ended September 30, 1994. The increase in the provision for loan losses
is attributable primarily to the loss on a single consumer loan. Due to the
growth in the loan portfolio and the economic uncertainty presently existing,
management feels it is prudent to monitor the unallocated reserves and make
additions as appropriate to provide for possible unforseen losses.
Noninterest Income. Noninterest income increased to $115,116 for the three
months ended September 30, 1995, from $99,733 for the three months ended
September 30, 1994. NOW account charges increased as a result of increased
account volume.
Noninterest Expense. Noninterest expense increased to $686,201 for the three
months ended September 30, 1995, from $626,243 for the three months ended
September 30, 1994. Miscellaneous expenses increased primarily due to the
growth in NOW accounts while other noninterest expenses increased commensurate
with the growth of the Bank.
Taxes. Taxes increased to $316,596 for the three months ended September 30,
l995, from $269,061 for the three months ended September 30,1994, due to the
increase in income before taxes.
Six Months Ended September 30, 1995 and 1994
- --------------------------------------------
General. Net income for the six months ended September 30, 1995 was
$1,032,526 compared to $815,891 for the six months ended September 30, l994.
Interest Income. Total interest income increased to $6,068,287 for the six
months ended September 30, 1995, from $4,791,380 for the six months ended
September 30, 1994, due primarily to an increase in the yield earned on loans
and investments.
Interest Expense. Total interest expense increased to $3,189,188 for the six
months ended September 30, 1995, from $2,347,372 for the six months ended
September 30, 1994. Interest on deposits increased to $2,422,986 for the six
months ended September 30, 1995, from $1,924,878 for the same period last year
due primarily to a higher cost of savings for the six months ended September
30, 1994. Interest expense on borrowed money increased to $766,202 for the six
months ended September 30, 1995, from $422,494 for the six months ended
September 30, 1994, due to higher rates on such borrowings and increased
average borrowings from the Federal Home Loan Bank of Atlanta in order to fund
the Bank's loan volume.
Provision for Loan Losses. The provision for loan losses increased to $67,500
for the six months ended September 30, 1995, from $51,237 for the same period
last year. Due to the growth in the loan portfolio and the economic
uncertainty presently existing, management feels it is prudent to monitor
unallocated reserves and make additions as appropriate to provide for
possible unforseen losses.
Noninterest Income. Noninterest income increased to $223,902 for the six
months ended September 30, 1995, from $193,338 for the six months ended
September 30, 1994, due to an increase in the fees and service charges on
checking accounts as the volume of accounts increased.
Noninterest Expenses. Noninterest expenses increased to $1,382,353 for the
six months ended September 30, 1995, from $1,273,110 for the same period last
year. The increase is related generally to the growth of the institution and
increased checking account volume.
<PAGE>
Taxes. Taxes increased to $620,622 for the six months ended September 30,
1994, from $497,108 for the six months ended September 30, 1994, due to an
increase in income before taxes for the six months ended September 30, 1995.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
(a) On July 26, 1995, Community Financial Corporation held
its Annual Meeting of Stockholders ("Meeting").
(b) At the Meeting, Jane C. Hickok, Dale C. Smith and Richard E. Bonin,
were elected as directors of the Corporation. All other directors continue as
directors of the Corporation.
(c) Stockholders of the Corporation voted on the following matters at
the Meeting.
<TABLE>
<CAPTION>
Votes Votes Absten- Broker
For Against tions Non-votes
------ ------- ------- ---------
<S> <C> <C> <C> <C>
Adoption of an 840,535 223,877 11,978 73,431
amendment to the
Company's Certificate
of Incorporation to
remove cumulative
voting.
Adoption of an 820,570 229,392 28,428 71,431
amendment to the
Company's Certificate
of Incorporation to
limit the ability to
call special meetings
of stockholders.
Ratification of the 1,138,093 100 12,628 -0-
appointment of BDO
Seidman as auditors
for the Company for
the fiscal year
ending March 31, 1996.
</TABLE>
<PAGE>
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
--------
The listed exhibits are being filed herewith:
3(i) Amended and Restated Certificate
of Incorporation Page
----
3(ii) Amended and Restated Bylaws Page
----
Form 8-K
--------
A report on Form 8-K was filed by the Company on September 22, 1995
to report certain changes in management.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMUNITY FINANCIAL CORPORATION
Date:
By: (s)
-------------------------------
R. Jerry Giles
Chief Financial Officer
(Duly Authorized Officer)
<PAGE>
STATE OF DELAWARE
RESTATED CERTIFICATE OF INCORPORATION
OF
COMMUNITY FINANCIAL CORPORATION,
a corporation organized and existing under the laws of the State of
Delaware, hereby certifies as follows:
1. The name of the Corporation is Community Financial
Corporation. The date of filing of its original Certificate of
Incorporation with the Secretary of State was May 19, 1989.
2. This Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation of
this corporation by:
(a) amending Section 10 to reinstate cumulative voting;
(b) designating Section 10 C as Section 11 to reinstate
the limitation on calling special meetings by
stockholders;
(c) designating Section 11 as Section 12;
(d) designating Section 12 as Section 13; and
(e) designating Section 13 as Section 14.
3. The text of the Certificate of Incorporation as amended
or supplemented heretofore is further amended to read as herein set
forth in full:
<PAGE>
SECTION 1. Corporate Title. The name of the Corporation
is Community Financial Corporation.
SECTION 2. Duration. The duration of the Corporation is
perpetual.
SECTION 3. Powers. The purpose or purposes for which the
Corporation is organized are to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of Delaware.
SECTION 4. Capital Stock. The total number of shares of
capital stock which the Corporation has authority to issue is
4,000,000, of which 3,000,000 shall be common stock, par value $.01
per share, and 1,000,000 of which shall be serial preferred stock,
par value $.01 per share, with rights and preferences to be
determined by the board of directors upon issuance. The authorized
shares may be issued by the Corporation from time to time as
approved by its board of directors without the approval of its
stockholders, except to the extent that such approval is required
by governing law, rule or regulation. The consideration for the
issuance of the shares shall be paid in full before their issuance
and shall not be less than the par value per share. Except as
permitted by Delaware law, neither promissory notes nor future
services shall constitute payment or part payment for the issuance
of the shares of the Corporation. The consideration for the shares
shall be cash, tangible or intangible property, labor or services
actually performed for the Corporation or any combination of the
foregoing. In the absence of actual fraud in the transaction, the
value of such property, labor or services, as determined by the
board of directors of the Corporation, shall be conclusive. Upon
payment of such consideration such shares shall be deemed to be
fully paid and non-assessable. In the case of a stock dividend,
that part of the surplus of the Corporation which is transferred to
stated capital upon the issuance of shares as a share dividend
shall be deemed to be the consideration for their issuance.
SECTION 5. Preemptive Rights. Holders of the capital stock
of the Corporation shall not be entitled to preemptive rights with
respect to any shares of other securities of the Corporation which
may be issued.
SECTION 6. Internal Affairs.
Paragraph 1.
The Corporation shall be under the direction of a board
of directors. The number of directors shall be as stated in
the Corporation's Bylaws, as may be amended from time to
time. The directors shall be divided into three classes as
nearly equal in number as possible. The members of each
class shall be elected for a term of three years and until
their successors are elected and qualified. One class shall
be elected by ballot annually.
<PAGE>
At a meeting of stockholders called expressly for that
purpose, any director may be removed for cause by a vote of
the holders of a majority of the shares entitled to vote at
an election of directors. If less than the entire board is
to be removed, no one of the directors may be removed if the
votes cast against the removal would be sufficient to elect
a director if then cumulatively voted at an election of the
class of directors of which such director is a part.
Whenever the holders of the shares of any class are entitled
to elect one or more directors by the provisions of this
Certificate of Incorporation or supplemental sections hereto,
the provisions of this section shall apply, in respect to the
removal of a director or directors so elected, to the vote of
the holders of the outstanding shares of that class and not
to the vote of the outstanding shares as a whole.
Paragraph 2.
The term of office of directors initially elected by the
stockholders shall be as follows: the term of office of
directors of the first class shall expire at the first annual
meeting of stockholders after their election; the term of
office of directors of the second class shall expire at the
second annual meeting of stockholders after their election
and the term of office of directors of the third class shall
expire at the third annual meeting of stockholders after
their election; and, as to directors of each class, when
their respective successors are elected and qualified. At
each subsequent annual meeting of stockholders, directors
elected to succeed those whose terms are expiring shall be
elected for a term of office to expire at the third
succeeding annual meeting of stockholders and when their
respective successors are elected and qualified.
SECTION 7. Registered Office. The street address of the
Corporation's registered office in the State of Delaware is 1209
Orange Street, in the City of Wilmington, County of New Castle, and
the name of its registered agent at such address is The Corporation
Trust Company.
SECTION 8. Indemnification.
Paragraph 1. Power to Indemnify in Actions, Suits or
Proceedings Other Than Those By or In the
Right of the Corporation.
Subject to Paragraph 3 of this Section 8, the Corporation
shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the Corporation), by reason of the fact that he
is or was a director, officer, employee or agent of the
Corporation or a wholly-owned direct or indirect subsidiary of
the Corporation, or is or was serving at the request of the
<PAGE>
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with
such action, suit or proceeding 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 or proceeding, had no reasonable cause to
believe his 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 which he
reasonably believed to be in or not opposed to the best
interest of the Corporation, and, with respect of any criminal
action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
Paragraph 2. Power to Indemnify in Actions, Suits or
Proceedings By or In the Right of the
Corporation.
Subject to Paragraph 3 of this Section 8, the Corporation
shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or
agent of the Corporation or a wholly-owned direct or indirect
subsidiary of the Corporation, or 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 expenses (including
attorneys' fees), actually and reasonably incurred by him in
connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the
Corporation; except that 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 only to the extent that the Court of Chancery or
the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability but in view of all of the circumstances of the
case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
Paragraph 3. Authorization of Indemnification.
Any indemnification under this Section 8 (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
<PAGE>
is proper in the circumstances because he has met the
applicable standard of conduct set forth in Paragraph 1 or
Paragraph 2 of this Section 8, as the case may be. Such
determination shall be made (i) by the board of directors by
a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or (ii) if
such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the
stockholders. To the extent, however, that a director,
officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any
action, suit or proceeding described above, or in defense of
any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith, without
the necessity of authorization in the specific case. No
director, officer, employee or agent of the Corporation shall
be entitled to indemnification in connection with any action,
suit or proceeding voluntarily initiated by such person
unless the action, suit or proceeding was authorized by a
majority of the Entire Board of Directors.
Paragraph 4. Good Faith Defined.
For purposes of any determination under Paragraph 3 of
this Section 8, a person shall be deemed to have acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interest of the Corporation, or, with
respect to any criminal action or proceeding, to have had no
reasonable cause to believe his conduct was unlawful, if his
action is based on the records or books of account of the
Corporation or another enterprise or on information supplied
to him by the officers of the Corporation or another
enterprise in the course of their duties, or on the advice of
legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the
Corporation or another enterprise by an independent certified
public accountant or by an appraiser or other expert selected
with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this
Paragraph 4 shall mean any other corporation or any
partnership, joint venture, trust or other enterprise of
which such person is or was serving at the request of the
Corporation as a director, officer, employee or agent. The
provisions of this Paragraph 4 shall not be deemed to be
exclusive or to limit in any way the circumstances in which
a person may be deemed to have met the applicable standards
of conduct set forth in Paragraphs 1 or 2 of this Section 8,
as the case may be.
Paragraph 5. Indemnification by a Court.
Notwithstanding any contrary determination in the
specific case under Paragraph 3 of this Section 8, and
notwithstanding the absence of any determination thereunder,
any director, officer, employee or agent may apply to any
<PAGE>
court of competent jurisdiction in the State of Delaware for
indemnification to the extent otherwise permissible under
Paragraphs 1 and 2 of this Section 8. The basis of such
indemnification by a court shall be a determination by such
court that indemnification of the director, officer, employee
or agent is proper in the circumstances because he has met
the applicable standards of conduct set forth in Paragraphs
1 or 2 of this Section 8, as the case may be. Notice of any
application for indemnification pursuant to this Paragraph 5
shall be given to the Corporation promptly upon the filing of
such application. Notwithstanding any of the foregoing,
unless otherwise required by law, no director, officer,
employee or agent of the Corporation shall be entitled to
indemnification in connection with any action, suit or
proceeding voluntarily initiated by such person unless the
action, suit or proceeding was authorized by a majority of
the Entire Board of Directors.
Paragraph 6. Expenses Payable in Advance.
Expenses incurred in defending or investigating a
threatened or pending action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director, officer,
employee or agent to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by
the Corporation as authorized in this Section 8.
Paragraph 7. Non-exclusivity and Survival of
Indemnification.
The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this
Section 8 shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of
expenses may be entitled under any agreement, contract, vote
of stockholders or disinterested directors or pursuant to the
direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official
capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that,
subject to the limitation in Paragraph 3 of this Section 8
concerning voluntary initiation of actions, suits or
proceedings, indemnification of the persons specified in
Paragraphs 1 and 2 of this Section 8 shall be made to the
fullest extent permitted by law. The provisions of this
Section 8 shall not be deemed to preclude the indemnification
of any person who is not specified in Paragraphs 1 or 2 of
this Section 8 but whom the Corporation has the power or
obligation to indemnify under the provisions of the General
Corporation Law of the State of Delaware, or otherwise. The
indemnification provided by this Section 8 shall, unless
otherwise provided when authorized or ratified, continue as
to a person who has ceased to be a director, officer,
<PAGE>
employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
Paragraph 8. Insurance.
The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or 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 any liability
asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or
not the Corporation would have the power or the obligation to
indemnify him against such liability under the provisions of
this Section 8.
Paragraph 9. Meaning of "Corporation" for Purposes of
Section 8.
For purposes of this Section 8, references to the
"Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors,
officers and 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, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same
position under the provisions of this Section 8 with respect
to the resulting or surviving corporation as he would have
with respect to such constituent corporation if its separate
existence had continued.
SECTION 9. Limitation on Personal Liability of Directors.
No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty
by such director as a director. Notwithstanding the foregoing
sentence, a director shall be liable to the extent provided by
applicable law (i) for breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit. No amendment to or
repeal of this Section 9 shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation
for or with respect to any acts or omissions of such director
occurring prior to such amendment.
<PAGE>
SECTION 10. Cumulative Voting Limitation. Stockholders shall
not be permitted to cumulate their votes for the election of
directors.
SECTION 11. Call for Special Meetings. Special meetings
of stockholders relating to changes in control of the Corporation
or amendments to its Certificate of Incorporation shall be called
only upon direction of the board of directors.
SECTION 12. Business Combinations. Section 203 of the
General Corporation Law of the State of Delaware shall not govern
the Corporation.
SECTION 13. Incorporator. The name and address of the
Corporation's Incorporator is Jane C. Hickok, 38 North Central
Avenue, Staunton, Virginia 24401.
SECTION 14. Amendment of Certificate of Incorporation. No
amendment, addition, alteration, change, or repeal of any provision
of this Certificate of Incorporation shall be made, unless such is
first proposed by the board of directors of the Corporation, and
thereafter approved by the stockholders of the Corporation by a
majority of the total votes eligible to be cast at a legal meeting.
Any amendment, addition, alteration, change or repeal of any
provision of this Certificate of Incorporation shall be effective
on the date it is duly approved by the stockholders or on such
other date as shall be specified in such approval of stockholders.
<PAGE>
4. This Restated Certificate of Incorporation was duly
adopted by vote of the stockholders in accordance with Sections 242
and 245 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Community Financial Corporation has
caused this Restated Certificate of Incorporation to be signed by
Jane C. Hickok, its President, and attested by Sarah A. Ralston,
its Secretary, this 24th day of July, 1995.
COMMUNITY FINANCIAL CORPORATION
/s/
-------------------------------
Jane C. Hickok
President
ATTEST:
By:/s/
----------------------------
Sarah A. Ralston
Secretary
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
COMMUNITY FINANCIAL CORPORATION
(hereinafter called the "Corporation)
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New
Castle, State of Delaware.
SECTION 2. Other Offices. The Corporation may also have
offices at such other places both within and without the State of
Delaware as the board of directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. Meetings of the stockholders
for the election of directors or for any other purpose shall be
held at such time and place, either within or without the State of
Delaware, as shall be designated from time to time by the board of
directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
SECTION 2. Annual Meetings. The annual meetings of
stockholders shall be held on such date and at such time as shall
be designated from time to time by the board of directors and
stated in the notice of the meeting, at which meetings the
stockholders shall elect by a plurality vote a board of directors
and transact such other business as may properly be brought before
the meeting. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than 10 nor
more than 50 days before the date of the meeting. The notice shall
also set forth the purpose or purposes for which the meeting is
called.
SECTION 3. Special Meetings. Unless otherwise prescribed by
law or by the Certificate of Incorporation, special meetings of
stockholders, for any purpose or purposes, may be called at any
time by the chairman of the board, the president or a majority of
the board of directors, and shall be called by the chairman of the
board, the president, or the secretary upon the written request of
the holders of not less than one-tenth of all the outstanding
capital stock of the Corporation entitled to vote at the meeting.
<PAGE>
Such written request shall state the purpose or purposes of the
meeting and shall be delivered to the home office of the
Corporation addressed to the chairman of the board, the president,
or the secretary.
SECTION 4. Quorum. Except as otherwise provided by law or
by the Certificate of Incorporation, the holders of a majority of
the capital stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the
transaction of business. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. If the
adjournment is for more than 30 days, or if after the adjournment
a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder entitled
to vote at the meeting.
SECTION 5. Voting. Except as otherwise required by law, the
Certificate of Incorporation or these Bylaws, any question brought
before any meeting of stockholders shall be decided by the vote of
the holders of a majority of the stock duly voted on the question.
Each stockholder represented at a meeting of stockholders shall be
entitled to cast one vote for each share of the capital stock
entitled to vote thereat held by such stockholder except as to the
cumulation of votes for the election of directors. Such votes may
be cast in person or by proxy. The board of directors, in its
discretion, or the officer of the Corporation presiding at a
meeting of stockholders, in his discretion, may require that any
votes cast at such meeting shall be cast by written ballot.
SECTION 6. List of Stockholders Entitled to Vote. The
officer of the Corporation who has charge of the stock ledger of
the Corporation shall prepare and make, at least 20 days before
every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a
period of at least 20 days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall
be specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder of
the Corporation who is present.
<PAGE>
SECTION 7. Stock Ledger. The stock ledger of the
Corporation shall be the only evidence as to the stockholders
entitled to examine the stock ledger, the list required by Section
6 of this Article II or the books of the Corporation or to vote in
person or by proxy at any meeting of stockholders.
SECTION 8. Proxies. At all meetings of stockholders, a
stockholder may vote by proxy executed in writing (or as otherwise
permitted under applicable law) by the stockholder or his duly
authorized attorney-in-fact. Proxies solicited on behalf of the
management shall be voted as directed by stockholders or, in the
absence of such direction, as determined by a majority of the board
of directors. No proxy shall be valid after eleven months from the
date of its execution except for a proxy coupled with an interest.
SECTION 9. Voting of Shares in the Name of Two or More
Persons. When ownership stands in the name of two or more persons,
in the absence of written direction to the Corporation to the
contrary, at any meeting of the stockholders of the Corporation any
one or more of such stockholders may cast, in person or by proxy,
all votes to which such ownership is entitled. In the event an
attempt is made to cast conflicting votes, in person or by proxy,
by the several persons in whose names shares of stock stand, the
vote or votes to which those persons are entitled shall be cast as
directed by a majority of those holding such stock and present in
person or by proxy at such meeting, but no votes shall be cast for
such stock if a majority cannot agree.
SECTION 10. Voting of Shares by Certain Holders. Shares
standing in the name of another corporation may be voted by any
officer, agent or proxy as the bylaws of such corporation may
prescribe, or in the absence of such provision, as the board of
directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by
him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may
be voted by him, either in person or by proxy, but no trustee shall
be entitled to vote shares held by him without a transfer of such
shares into his name. Shares standing in the name of a receiver
may be voted by such receiver, and shares held by or under the
control of a receiver may be voted by such receiver without the
transfer into his name if authority so to do is contained in an
appropriate order of the court or other public authority by which
such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the
name of the pledgee, and thereafter the pledgee shall be entitled
to vote the shares so transferred.
<PAGE>
Neither treasury shares of its own stock held by the
Corporation, nor shares held by another corporation, if a majority
of the shares entitled to vote for the election of directors of
such other corporation are held by the Corporation, shall be voted
at any meeting or counted in determining the total number of
outstanding shares at any given time for purposes of any meeting.
SECTION 11. Cumulative Voting. Unless otherwise provided in
the Certificate of Incorporation of the Corporation, every
stockholder entitled to vote at an election for directors shall
have the right to vote, in person or by proxy, the number of shares
owned by the stockholder for as many persons as there are directors
to be elected and for whose election the stockholder has a right to
vote, or to cumulate the votes by giving one candidate as many
votes as the number of such directors to be elected multiplied by
the number of shares owned by such stockholder or by distributing
such votes on the same principle among any number of candidates.
SECTION 12. Inspectors of Election. The Board of Directors
shall, in advance of any meeting of stockholders, appoint one or
more persons as inspectors of election, to act at the meeting or
any adjournment thereof and make a written report thereof, in
accordance with applicable law.
SECTION 13. Conduct of Meetings. Annual and special meetings
shall be conducted in accordance with the most current edition of
Robert's Rules of Order unless otherwise prescribed by law or these
Bylaws. However, the presiding officer may conduct such meetings
in a manner other than as set forth in the most current edition of
Robert's Rules of Order whenever, in general or in a particular
matter or matters, and in his or her sole discretion, the interests
of the Corporation would be served thereby. The board of directors
shall designate, when present, either the chairman of the board or
president to preside at such meetings.
SECTION 14. New Business. At an annual meeting of
stockholders only such new business shall be conducted, and only
such proposals shall be acted upon, as shall have been properly
brought before the meeting. For any new business proposed by
management to be properly brought before the annual meeting, such
new business shall be approved by the board of directors, either
directly or through its approval of proxy solicitation materials
related thereto, and shall be stated in writing and filed with the
secretary of the Corporation at least 20 days before the date of
the annual meeting, and all business so stated, proposed and filed
shall be considered at the annual meeting. Any stockholder may
make any other proposal at the annual meeting and the same may be
discussed and considered, but unless properly brought before the
meeting such proposal shall not be acted upon at the meeting. For
a proposal to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof
in writing to the secretary of the Corporation. To be timely, a
stockholder's notice must be delivered to or received at the
<PAGE>
principal executive offices of the Corporation, not less than 20
days prior to the meeting; provided, however, that in the event
that less than 30 days' notice of the date of the meeting is given
to stockholders (which notice shall be accompanied by a proxy or
information statement which describes each matter proposed by the
board of directors to be acted upon at the meeting), notice by the
stockholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed. A
stockholder's notice to the secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting
(a) a brief description of the proposal desired to be brought
before the annual meeting, (b) the name and address of the
stockholder proposing such business, and (c) the class and number
of shares of the Corporation which are owned of record by the
stockholder. Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted at an annual meeting
except in accordance with the procedures set forth in this Section
14.
<PAGE>
SECTION 15. Informal Action by Stockholders. Any action
required to be taken at a meeting of 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 III
DIRECTORS
SECTION 1. Number and Election of Directors. The number of
directors shall be seven. Directors need not be residents of the
State of Delaware. The directors, other than the first board of
directors, shall be elected at annual meetings of the stockholders.
Changes in the number of directors, within the limits, if any,
specified in the Certificate of Incorporation, may be accomplished
through amendment of these Bylaws.
SECTION 2. Vacancies. The board of directors shall divide
the directors into three classes and, when the number of directors
is changed, shall determine the class or classes to which the
increased or decreased number of directors shall be apportioned;
provided, that each class shall be equal or nearly equal in size as
possible; provided, further, that no decreases in the number of
directors shall affect the term of any director then in office,
except the initial directors. The term of office of directors
elected at the initial annual meeting of stockholders shall be as
follows: the term of office of directors of the first class shall
expire at the first annual meeting of stockholders after their
election; the term of office of directors of the second class shall
expire at the second annual meeting of stockholders after their
election; and the term of office of directors of the third class
shall expire at the third annual meeting of stockholders after
their election; and, as to directors of each class, when their
respective successors are elected and qualified. At each annual
meeting of stockholders subsequent to the initial annual meeting of
stockholders, directors elected to succeed those whose terms are
expiring shall be elected for a term of office to expire at the
third succeeding annual meeting of stockholders and when their
respective successors are elected and qualified.
<PAGE>
Any vacancy occurring on the board of directors may be filled
by the affirmative vote of a majority of the remaining directors
although less than a quorum of the board of directors. A director
elected to fill a vacancy shall be elected to serve until the next
election of directors by the stockholders. Any directorship to be
filled by reason of an increase in the number of directors may be
filled by election by the board of directors for a term of office
continuing only until the next election of directors by the
stockholders.
SECTION 3. Duties and Powers. The business of the
Corporation shall be managed by or under the direction of the board
of directors, which may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation or by these Bylaws directed or
required to be exercised or done by the stockholders. The board of
directors shall annually elect a chairman of the board and a
president from among its members and shall designate, when present,
either the chairman of the board or the president to preside at its
meetings. No member of the Board of Directors may serve for more
than four terms as chairman of the board.
SECTION 4. Meetings. The board of directors of the
Corporation may hold meetings, both regular and special, either
within or without the State of Delaware. The annual regular
meeting of the board of directors shall be held without notice,
other than this Bylaw provision, immediately after, and at the same
place as, the annual meeting of stockholders. Additional regular
meetings of the board of directors may be held without notice at
such time and at such place as may from time to time be determined
by the board of directors. Special meetings of the board of
directors may be called by the chairman, the president or one-third
of the directors then in office. Notice thereof stating the place,
date and hour of the meeting shall be given to each director either
by mail not less than forty-eight hours before the date of the
meeting, or by telephone or telegram on twenty-four hours' notice.
SECTION 5. Quorum. Except as may be otherwise specifically
provided by law, the Certificate of Incorporation or these Bylaws,
at all meetings of the board of directors, a majority of the
directors then in office shall constitute a quorum for the
transaction of business and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act
of the board of directors. If a quorum shall not be present at any
meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
<PAGE>
SECTION 6. Actions of the Board. Unless otherwise provided
by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the board of
directors or of any committee thereof may be taken without a
meeting, if all the members of the board of directors or 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 of
directors or committee.
SECTION 7. Meetings by Means of Conference Telephone.
Unless otherwise provided by the Certificate of Incorporation or
these Bylaws, members of the board of directors of the Corporation,
or any committee designated by the board of directors, may
participate in a meeting of the board of directors or such
committee by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and participation
in a meeting pursuant to this Section 7 shall constitute presence
in person at such meeting.
SECTION 8. Compensation. The directors may be paid their
reasonable expenses, if any, of attendance at each meeting of the
board of directors and may be paid a reasonable fixed sum for
actual attendance at each meeting of the board of directors.
Directors, as such, may receive a stated salary for their services.
No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
SECTION 9. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or
have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present
at or participates in the meeting of the board of directors or
committee thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose, if
(i) the material facts as to his or their relationship or interest
and as to the contract or transaction are disclosed or are known to
the board of directors or the committee, and the board of directors
or committee in good faith authorizes the contract or transaction
by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors may be less than
a quorum; or (ii) the material facts as to his or their
relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved
in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the board of directors, a
committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at
a meeting of the board of directors or of a committee which
authorizes the contract or transaction.
<PAGE>
SECTION 10. Corporate Books. The directors may keep the
books of the Corporation, except such as are required by law to be
kept within the state, outside of the State of Delaware at such
place or places as they may from time to time determine.
SECTION 11. Presumption of Assent. A director of the
Corporation who is present at a meeting of the board of directors
at which action on any Corporation matter is taken shall be
presumed to have assented to the action taken unless his dissent or
abstention shall be entered in the minutes of the meeting or unless
he shall file his written dissent to such action with the person
acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the
secretary of the Corporation within five days after the date he
receives a copy of the minutes of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such
action.
SECTION 12. Resignation. Any director may resign at any time
by sending a written notice of such resignation to the home 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 by the chairman of the board
or the president. More than three consecutive absences from
regular meetings of the board of directors, unless excused by
resolution of the board, shall automatically constitute a
resignation, effective when such resignation is accepted by the
board of directors.
SECTION 13. Nominating Committee. The board of directors
shall act as a nominating committee for selecting the management
nominees for election as directors. Except in the case of a
nominee substituted as a result of the death or other incapacity of
a management nominee, the nominating committee shall deliver
written nominations to the secretary at least 20 days prior to the
date of the annual meeting. Provided such committee makes such
nominations, no nominations for directors except those made by the
nominating committee shall be voted upon at the annual meeting
unless other nominations by stockholders are made in writing and
delivered to the secretary of the Corporation at least 5 days prior
to the date of the annual meeting. Ballots bearing the names of
all the persons nominated by the nominating committee and by
stockholders shall be provided for use at the annual meeting. If
the nominating committee shall fail or refuse to act at least 20
days prior to the annual meeting, nominations for directors may be
made at the annual meeting by any stockholder entitled to vote and
shall be voted upon.
<PAGE>
SECTION 14. Age Limitations. Other than directors serving as
of September 19, 1974, no person shall be eligible for election,
re-election, appointment, or re-appointment to the board of
directors of the Corporation if such person is then more than 70
years of age. Any director subject to this provision, upon
attaining that age, shall automatically cease to be a director and
the board of directors shall fill the vacancy until the next annual
meeting of stockholders.
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
SECTION 1. Appointment. The board of directors, by
resolution adopted by a majority of the full board, may designate
the chief executive officer and two or more of the other directors
to constitute an executive committee. The designation of any
committee pursuant to this Article IV and the delegation of
authority thereto shall not operate to relieve the board of
directors, or any director, of any responsibility imposed by law or
regulation.
SECTION 2. Authority. The executive committee, when the
board of directors is not in session, shall have and may exercise
all the powers and authority of the board of directors 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, except to the extent, if any, that such
powers and authority shall be limited by the resolution appointing
the executive committee; and except also that the executive
committee shall not have the power or authority of the board of
directors with reference to amending the Certificate of
Incorporation; adopting an agreement of merger or consolidation;
recommending to the stockholders the sale, lease or exchange of all
or substantially all of the Corporation's property and assets;
recommending to the stockholders a dissolution of the Corporation
or a revocation of a dissolution; amending the Bylaws of the
Corporation; or approving a transaction in which any member of the
executive committee, directly or indirectly, has any material
beneficial interest; and unless the resolution or these Bylaws
expressly so provide, the executive committee shall not have the
power or authority to declare a dividend or to authorize the
issuance of stock.
SECTION 3. Tenure. Subject to the provisions of Section 8
of this Article IV, each member of the executive committee shall
hold office until the next annual regular meeting of the board of
directors following his designation and until his successor is
designated as a member of the executive committee.
<PAGE>
SECTION 4. Meetings. Regular meetings of the executive
committee may be held without notice at such times and places as
the executive committee may fix from time to time by resolution.
Special meetings of the executive committee may be called by any
member thereof upon not less than one day's notice stating the
place, date and hour of the meeting, which notice may be written or
oral. Any members of the executive committee may waive notice of
any meeting and no notice of any meeting need be given to any
member thereof who attends in person. The notice of a meeting of
the executive committee need not state the business proposed to be
transacted at the meeting.
SECTION 5. Quorum. A majority of the members of the
executive committee shall constitute a quorum for the transaction
of business at any meeting thereof, and action of the executive
committee must be authorized by the affirmative vote of a majority
of the members present at a meeting at which a quorum is present.
SECTION 6. Action Without a Meeting. Any action required or
permitted to be taken by the executive committee at a meeting may
be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the members of the
executive committee.
SECTION 7. Vacancies. Any vacancy in the executive
committee may be filled by a resolution adopted by a majority of
the full board of directors.
SECTION 8. Resignations and Removal. Any member of the
executive committee may be removed at any time with or without
cause by resolution adopted by a majority of the full board of
directors. Any members of the executive committee may resign from
the executive committee at any time by giving written notice to the
president or secretary of the Corporation. Unless otherwise
specified therein, such resignation shall take effect upon receipt.
The acceptance of such resignation shall not be necessary to make
it effective.
SECTION 9. Procedure. The executive committee shall elect
a presiding officer from its members and may fix its own rules of
procedure which shall not be inconsistent with these Bylaws. It
shall keep regular minutes of its proceedings and report the same
to the board of directors for its information at the meeting
thereof held next after the proceedings shall have been taken.
SECTION 10. Other Committees. The board of directors may by
resolution establish an audit committee, a loan committee or other
committees composed of directors as they may determine to be
necessary or appropriate for the conduct of the business of the
Corporation and may prescribe the duties, constitution and
procedures thereof.
<PAGE>
ARTICLE V
OFFICERS
SECTION 1. General. The officers of the Corporation shall
be chosen by the board of directors and shall be a president, a
secretary and a treasurer. The chairman of the board may also be
designated as an officer. The board of directors may designate one
or more vice presidents, assistant secretaries, assistant
treasurers and other officers. The offices of secretary and
treasurer may be held by the same person and a vice president may
also be either the secretary or the treasurer. The officers of the
Corporation need not be either stockholders or directors of the
Corporation.
SECTION 2. Election. The board of directors at its first
meeting held after the annual meeting of stockholders shall elect
annually the officers of the Corporation who shall exercise such
powers and perform such duties as shall be set forth in these
Bylaws and as determined from time to time by the board of
directors; and all officers of the Corporation shall hold office
until their successors are chosen and qualified, or until their
earlier resignation or removal. Any officer elected by the board
of directors may be removed at any time by the affirmative vote of
a majority of the board of directors. Any vacancy occurring in any
office of the Corporation shall be filled by the board of
directors. The salaries of all officers of the Corporation shall
be fixed by the board of directors.
SECTION 3. Removal. Any officer may be removed by the board
of directors whenever in its judgment the best interests of the
Corporation will be served thereby, but such removal, other than
for cause, shall be without prejudice to the contract rights, if
any, of the person so removed.
SECTION 4. Voting Securities Owned by the Corporation.
Powers of attorney, proxies, waivers of notice of meeting, consents
and other instruments relating to securities owned by the
Corporation may be executed in the name of and on behalf of the
Corporation by the president or any vice president, and any such
officer may, in the name of and on behalf of the Corporation, take
all such action as any such officer may deem advisable to vote in
person or by proxy at any meeting of security holders of any
corporation which the Corporation may own securities and at any
such meeting shall possess and may exercise any and all rights and
power incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and
possessed if present. The board of directors may, by resolution,
from time to time confer like powers upon any other person or
persons.
<PAGE>
SECTION 5. President. The president shall be a director of
the Corporation. The president or the chairman of the board, as
designated by the board of directors, shall be the chief executive
officer. The president shall, subject to the control of the board
of directors, have general supervision of the business of the
Corporation and shall see that all orders and resolutions of the
board of directors are carried into effect. He shall execute all
bonds, mortgages, contracts and other instruments of the
Corporation requiring a seal, under the seal of the Corporation,
except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation
may sign and execute documents when so authorized by these Bylaws,
the board of directors or the president. If so designated by the
board of directors, the president shall preside at the annual
meetings and special meetings of the stockholders. The president
shall also perform such other duties and may exercise such other
powers as from time to time assigned to him by these Bylaws or by
the board of directors.
SECTION 6. Vice President. At the request of the president
or in his absence or in the event of his inability or refusal to
act, the vice president or the vice presidents if there is more
than one (in the order designated by the board of directors) shall
perform the duties of the president, and when so acting, shall have
all the powers and be subject to all the restrictions upon the
president. Each vice president shall perform such other duties and
have such other powers as the board of directors from time to time
may prescribe. The board of directors may designate one or more
vice presidents as executive vice president or senior vice
president. If there is no vice president, the board of directors
shall designate the officer of the Corporation who, in the absence
of the president or in the event of the inability or refusal of the
president to act, shall perform the duties of the president, and
when so acting, shall have all the powers of and be subject to all
the restrictions upon the president.
SECTION 7. Secretary. The secretary shall attend all
meetings of the board of directors and all meetings of stockholders
and record all the proceedings thereat in a book or books to be
kept for that purpose; the secretary shall also perform like duties
for the standing committees when required. The secretary shall
give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board
of directors or president, under whose supervision he shall be. If
the secretary shall be unable or shall refuse to cause to be given
notice of all meetings of the stockholders and special meetings of
the board of directors, and if there be no assistant secretary,
then either the board of directors or the president may choose
another officer to cause such notice to be given. The secretary
shall have custody of the seal of the Corporation and the secretary
or any assistant secretary, if there is one, shall have authority
to affix the same to any instrument requiring it and when so
affixed, it may be attested by the signature of the secretary or by
the signature of any such assistant secretary. The board of
directors may give general authority to any other officer to affix
the seal of the Corporation and to attest the affixing by his
signature. The secretary shall see that all books, reports,
statements, certificates and other documents and records required
by law to be kept or filed are properly kept or filed, as the case
may be.
<PAGE>
SECTION 8. Treasurer. The treasurer shall have the custody
of the corporate funds and 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 of directors. The
treasurer shall disburse the funds of the Corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of
directors, at its regular meetings, or when the board of directors
so requires, an account of all his transactions as treasurer and of
the financial condition of the Corporation. If required by the
board of directors, the treasurer shall give the Corporation a bond
in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance
of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control belonging to the Corporation.
SECTION 9. Assistant Secretaries. Except as may be
otherwise provided in these Bylaws, assistant secretaries, if there
is any, shall perform such duties and have such powers as from time
to time may be assigned to them by the board of directors, the
president, any vice president, if there is one, or the secretary,
and in the absence of the secretary or in the event of his
disability or refusal to act, shall perform the duties of the
secretary, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the secretary.
SECTION 10. Assistant Treasurers. Assistant treasurers, if
there is any, shall perform such duties and have such powers as
from time to time may be assigned to them by the board of
directors, the president, any vice president, if there is one, or
the treasurer, and in the absence of the treasurer, and when so
acting, shall have all the powers of and be subject to all the
restrictions upon the treasurer. If required by the board of
directors, an assistant treasurer shall give the Corporation a bond
in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance
of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control belonging to the Corporation.
SECTION 11. Other Officers. Such other officers as the board
of directors may choose shall perform such duties and have such
powers as from time to time may be assigned to them by the board of
directors. The board of directors may delegate to any other
officer of the Corporation the power to choose such other officers
and to prescribe their respective duties and powers.
<PAGE>
ARTICLE VI
STOCK
SECTION 1. Form of Certificates. Every holder of stock in
the Corporation shall be entitled to have a certificate signed, in
the name of the Corporation (i) by the chairman of the board of
directors, the president or a vice president, and (ii) by the
treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the Corporation, certifying the number of
shares owned by him in the Corporation.
SECTION 2. Signatures. Where a certificate is countersigned
by (i) a transfer agent other than the Corporation or its employee,
or (ii) a registrar other than the Corporation or its employee, any
other signature on the certificate may be a facsimile. In case any
officer whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such
certificate is issued it may be issued by the Corporation with the
same effect as if he were such officer at the date of issue.
SECTION 3. Lost Certificates. The board of directors may
direct a new certificate to be issued in place of any certificate
theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate,
the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate, or his legal representative, to
advertise the same in such manner as the board of directors shall
require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
SECTION 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these Bylaws.
Transfers of stock shall be made on the books of the Corporation
only by the person named in the certificate or by his attorney
lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be canceled before a new
certificate shall be issued.
SECTION 5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or entitled to
receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any
other lawful action, the board of directors may fix, in advance, a
record date, which shall not be more than 60 days nor less than 10
days before the date of such meeting, nor more than 60 days prior
to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that
the board of directors may fix a new record date for the adjourned
meeting.
<PAGE>
SECTION 6. Beneficial Owners. The Corporation shall be
entitled to recognize the exclusive right of a person registered on
its books as the owner of shares to receive dividends, and to vote
as such owner, and to hold liable for calls and assessments a
person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
ARTICLE VII
NOTICES
SECTION 1. Notices. Whenever written notice is required by
law, the Certificate of Incorporation or these Bylaws, to be given
to any director, member of a committee or stockholder, such notice
may be given by mail, addressed to such director, member of a
committee or stockholder, at his address as it appears on the
records of the Corporation, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the same shall
be deposited in the United States mail. Written notice may also be
given personally or by telegram, telex or cable.
SECTION 2. Waivers of Notice. Whenever any notice is
required by law, the Certificate of Incorporation or these Bylaws,
to be given to any director, member of a committee or stockholder,
a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
<PAGE>
ARTICLE VIII
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 of directors at
any regular or special meeting, and may be paid in cash, in
property, or in shares of the capital stock.
SECTION 2. Disbursements. 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 of directors
may from time to time designate.
SECTION 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the board of directors.
SECTION 4. Corporate Seal. The corporate seal shall have
been inscribed thereon the name of the Corporation, the year of its
organization 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 IX
AMENDMENTS
SECTION 1. Amendment of Bylaws. These Bylaws may be
altered, amended or repealed, in whole or in part, or new bylaws
may be adopted by the stockholders or by the board of directors,
provided, however, that notice of such alteration, amendment,
repeal or adoption of new bylaws be contained in the notice of such
meeting of stockholders or board of directors as the case may be.
All such amendments must be approved by either the majority vote of
the entire board of directors or by a majority vote of the votes
cast by stockholders of the Corporation at any legal meeting.
SECTION 2. Entire Board of Directors. As used in this
Article IX and in these Bylaws generally, the term "entire board of
directors" means the total number of directors which the
Corporation would have if there were no vacancies.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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