<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Argo Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
Argo Bancorp, Inc.
7600 West 63rd Street
Summit, Illinois 60501
(708) 496-6010
June 27, 1998
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders (the
"Special Meeting") of Argo Bancorp, Inc. (the "Company"), the holding company
for Argo Federal Savings Bank, FSB (the "Savings Bank"), Summit, Illinois, and
On-Line Financial Services, Inc. ("On-Line"), Oak Brook, Illinois, which will be
held on July 15, 1998, at 3:00 p.m., at 7600 West 63rd Street, Summit, Illinois
60501.
The attached notice of a Special Meeting and proxy statement describe the
formal business to be transacted at the Special Meeting. Directors and officers
of the Company will be present at the Special Meeting to respond to any
questions from our stockholders.
The only scheduled business of a Special Meeting shall be the approval and
adoption of the Company's Amended and Restated Certificate of Incorporation.
The board of directors of the Company has determined that the matter to be
considered at a Special Meeting is in the best interests of the Company and its
stockholders. For the reasons set forth in the proxy statement, the board of
directors unanimously recommends a vote "FOR" the matter to be considered.
Please sign and return the enclosed proxy card promptly. Your cooperation
is appreciated since a majority of the common stock must be represented, either
in person or by proxy, to constitute a quorum for the conduct of business.
On behalf of the board of directors and all of the employees of the Company
and its subsidiaries, I wish to thank you for your continued support. We
appreciate your interest.
Sincerely yours,
/s/ John G. Yedinak
John G. Yedinak
Chairman of the Board
of Directors
<PAGE>
Argo Bancorp, Inc.
7600 West 63rd Street
Summit, Illinois 60501
(708) 496-6010
-----------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On July 15, 1998
-----------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Special
Meeting") of Argo Bancorp, Inc. (the "Company") will be held on July 15, 1998 at
3:00 p.m., at 7600 West 63rd Street, Summit, Illinois 60501
The Special Meeting is for the purpose of considering and voting upon the
following matters:
1. The adoption and approval of the Company's Amended and Restated
Certificate of Incorporation;
2. Such other matters as may properly come before the Special
Meeting or any adjournments thereof.
The board of directors has established June 15, 1998, as the record date
for the determination of stockholders entitled to notice of and to vote at the
Special Meeting and any adjournments thereof. Only record holders of the common
stock of the Company as of the close of business on that date will be entitled
to vote at the Special Meeting or any adjournments thereof. In the event there
are not sufficient votes for a quorum or to approve or ratify any of the
foregoing proposals at the time of the Special Meeting, the Special Meeting may
be adjourned in order to permit further solicitation of proxies by the Company.
A list of stockholders entitled to vote at the Special Meeting will be
available at Argo Federal Savings Bank, FSB, 7600 West 63rd Street, Summit,
Illinois, 60501, for a period of ten days prior to the Special Meeting and will
also be available at the meeting itself.
By Order of the Board of Directors
/s/ Frances M. Pitts
Frances M. Pitts
Secretary
Summit, Illinois
June 27, 1998
<PAGE>
ARGO BANCORP, INC.
------------------
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
July 15, 1998
------------------
Solicitation and Voting of Proxies
This proxy statement is being furnished to stockholders of Argo Bancorp,
Inc. ("Argo" or the "Company") in connection with the solicitation by the board
of directors of the Company (the "Board of Directors" or "Board") of proxies to
be used at the Special Meeting of Stockholders (the "Special Meeting") to be
held on July 15, 1998, at 3:00 p.m., at 7600 West 63rd Street, Summit, Illinois
60501, and at any adjournments thereof. This proxy statement is first being
mailed to stockholders on or about June 27, 1998.
Regardless of the number of shares of common stock owned, it is important
that recordholders of a majority of the shares be represented by proxy or
present in person at the Special Meeting. Stockholders are requested to vote by
completing the enclosed proxy card and returning it signed and dated in the
enclosed postage-paid envelope. Stockholders are urged to indicate their vote
in the spaces provided on the proxy card. Proxies solicited by the Board of
Directors of Argo will be voted in accordance with the directions given therein.
Where no instructions are indicated, signed proxies will be voted "FOR" the
adoption and approval of the Company's Amended and Restated Certificate of
Incorporation.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Special Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Special Meeting or any adjournments
thereof.
A proxy may be revoked at any time prior to its exercise by the filing of a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
Special Meeting and voting in person. However, if you are a stockholder whose
shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Special Meeting.
The cost of solicitation of proxies on behalf of management will be borne
by the Company. In addition to the solicitation of proxies by mail, proxies
may also be solicited personally or by telephone by directors, officers and
regular employees of the Company, Argo Federal Savings Bank, FSB (the "Savings
Bank") and On-Line Financial Services, Inc. ("On-Line"), without additional
compensation therefor. Argo will also request persons, firms
<PAGE>
and corporations holding shares in their names, or in the name of their
nominees, which are beneficially owned by others, to send proxy material to and
obtain proxies from such beneficial owners, and will reimburse such holders for
their reasonable expenses in doing so.
Voting Securities
The securities which may be voted at the Special Meeting consist of shares
of common stock of Argo ("Common Stock"), with each share entitling its owner to
one vote on all matters to be voted on at the Special Meeting except as
described below.
The close of business on June 15, 1998, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Special Meeting
and any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 497,644 shares.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Special Meeting. In the event there are not
sufficient votes for a quorum or to approve or ratify any proposal at the time
of the Special Meeting, the Special Meeting may be adjourned in order to permit
the further solicitation of proxies.
As to the adoption and approval of the Company's Amended and Restated
Certificate of Incorporation, by checking the appropriate box, a stockholder
may: (i) vote "FOR" the item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN"
from voting on such item. As provided under the Company's current certificate
of incorporation, an affirmative vote of the holders of at least seventy (70%)
percent of the shares of Common Stock outstanding and entitled to vote on the
Proposal is required to constitute stockholder approval of the Proposal. Shares
as to which the "ABSTAIN" box has been selected on the proxy card with respect
to the Proposal will be counted as present and entitled to vote and shall have
the effect of a vote against the matter for which the "ABSTAIN" box has been
selected. In contrast, shares underlying broker non-votes are not counted as
present and entitled to vote on the Proposal and have no effect on the vote on
the Proposal.
Proxies solicited hereby will be returned to the Company, and will be
tabulated by inspectors of election designated by the Board, who will neither be
employed by nor be a director of the Company or any of its affiliates.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information as to those persons
believed by management to be beneficial owners of more than 5% of the
outstanding shares of Common Stock on the Record Date, as disclosed in certain
reports regarding such ownership filed with the Company and with the Securities
and Exchange Commission (the "SEC"), in accordance with Sections 13(d) or 13(g)
of the securities Exchange Act of 1934, as amended ("Exchange Act") by such
persons and groups. Other than those persons listed below, the Company is not
aware of
2
<PAGE>
any person or group, as such term is defined in the Exchange Act, that owns more
than 5% of the Common Stock as of the Record Date.
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial Percent of
Title of Class Beneficial Owner Ownership Class
- ------------------------------- ------------------------- ------------- -----------
<S> <C> <C> <C>
Common Stock John G. Yedinak 244,762(1) 46.92%
1300 Hawthorne Lane
Hinsdale, Illinois 60521
Common Stock The Deltec Banking 124,411(2) 25.00%
Corporation, Limited
Deltec House
Lyford Cay
Nassau, Bahamas
Common Stock Sergio Martinucci 68,919(1) 13.59%
5440 N. Paris
Chicago, Illinois 60656
Common Stock Frances M. Pitts 26,838(1) 5.25%
6624 Greene Road
Woodridge, Illinois 60517
</TABLE>
- --------------------
(1) Includes shares set forth below under "Security Ownership of Management."
(2) On December 31, 1996, the Company entered into a Stock Purchase Agreement
(the "Purchase Agreement") with The Deltec Banking Corporation Limited, a
banking corporation organized under the laws of the Commonwealth of the
Bahamas ("Deltec") whereby Deltec acquired 25% of the issued and
outstanding shares of the Company as of that date at $38.00 per share for
an aggregate purchase price of $4.2 million. The Purchase Agreement was
entered into following the submission by Deltec of a Rebuttal of Control
to the Office of Thrift Supervision ("OTS") and the execution by Deltec
International, S.A., the parent of Deltec, of a Rebuttal Agreement with the
OTS. Pursuant to the Purchase Agreement, the Company, Deltec and John G.
Yedinak also entered into a stockholder agreement (the "Stockholder
Agreement"). The Stockholder Agreement stipulates that any time that the
Company proposes to issue and sell any additional shares of its Common
Stock, it shall notify Deltec and shall offer to sell to Deltec
concurrently with the issuance and sale of additional shares (including
fractional shares) such number of shares so that Deltec will continue to
own 25% of the outstanding shares of the Company's Common Stock.
Generally, the additional shares offered and sold to Deltec pursuant to the
Stockholder Agreement will be at a similar price and upon substantially the
same terms and conditions as the other additional shares sold.
Additionally, in the event that the Company purchases or otherwise acquires
any of its outstanding shares of Common Stock, it shall offer to purchase
from Deltec such number of shares that, after the purchase, Deltec will
continue to own 25% of the outstanding shares of the Company's Common
Stock. During the term of the Stockholder Agreement, and for so long as
Deltec holds at least 15% of the Company's Common Stock, Deltec has the
right to nominate one director to the Company's Board of Directors. The
Stockholder Agreement also grants Deltec registration rights in respect of
any shares of Common Stock that Deltec decides to sell. Furthermore, John
G. Yedinak, the President and Chief Executive Officer of the Company has
agreed that, during this time period, he will vote all shares of the
Company's Common Stock owned by him for the nominee designated by Deltec.
Finally, during the term of the Stockholder Agreement, Deltec has agreed to
remain in compliance with the Rebuttal Agreement between Deltec and the
OTS.
3
<PAGE>
Security Ownership of Management
The following table sets forth, as of the Record Date, the amount of
Common Stock and the percent thereof beneficially owned by each director and the
Named Executive Officers and all directors and executive officers as a group as
of the Record Date.
<TABLE>
<CAPTION>
Amount
and Nature Ownership
of Beneficial at Percent
Name Title(1) Ownership(2) of Class
---- -------- ------------ -----------
<S> <C> <C> <C>
John G. Yedinak Chairman of the Board, President
and Chief Executive Officer of the 244,762(3) 46.92%
Company, Vice Chairman and Chief
Executive Officer of the Savings
Bank
Sergio Martinucci Vice President and Director of the 68,919(4) 13.59%
Company, and Chairman of the Board
of the Savings Bank
Donald G. Wittmer Director 7,001(4) 1.39%
Arthur E. Byrnes Director 124,411(5) 25.00%
Frances M. Pitts Director, Executive Vice President 26,838(3) 5.25%
and Secretary of the Company;
Senior Vice President, General
Counsel and Secretary of the
Savings Bank
Stock ownership of all directors and - 473,507(6) 85.99%
executive officers as a group (9
persons)(5)
</TABLE>
____________
(1) All directors, except Ms. Pitts and Mr. Byrnes, are directors of On-Line.
All directors, except Ms. Pitts and Messrs. Wittmer and Byrnes.
(2) Each person or relative of such person whose shares are included herein,
exercises sole (or shared with spouse, relative or affiliate) voting or
dispositive power as to the shares reported
(3) Includes 23,996 and 13,500 shares subject to options which are currently
exercisable and which may be acquired by Mr. Yedinak and Ms. Pitts,
respectively.
(4) Includes 9,500 and 6,000 shares subject to options which are currently
exercisable and may be acquired by Mr. Martinucci and Mr. Wittmer,
respectively.
(5) See "Security Ownership of Certain Beneficial Owners" for a further
discussion of the ownership of Deltec.
(6) Includes 52,996 shares which are currently exercisable and 240 shares
allocated to executive officers under the Company's Management and
Recognition Plan ("MRP").
4
<PAGE>
Directors' Compensation
Directors' Fees. Directors of the Company are paid $700 monthly for
attendance at meetings and for services rendered to the Company. Directors of
the Savings Bank are paid $700 for attendance at monthly meetings of the Board,
and are also compensated for service to and attendance at meetings of the
committees of the Board on which they serve at the rate of $400 ($450 for the
Chairman) for each committee meeting. The Chairman of each Board and each
committee is compensated at a higher rate for attendance at monthly meetings and
for duties performed during the month and the Secretary of each Board and of
each committee also receives compensation for services, at the rate of $400.
Directors of On-Line are paid $700 for attendance at monthly meetings of the
Board.
1998 Incentive Stock Option Plan. Each member of the Board of Directors
who is not an officer or employee of the Savings Bank or the Company, is
eligible to receive non-statutory stock options to purchase shares of Common
Stock under the Company's 1998 Incentive Stock Option Plan ("Incentive Stock
Option Plan "). As of the Record Date no options had been granted under the
Incentive Stock Option Plan.
Executive Compensation
Summary Compensation Table. The following table shows for the fiscal years
ending December 31, 1997, 1996 and 1995, the cash compensation paid by the
Company and its subsidiaries, the Savings Bank and On-Line, as well as certain
other compensation paid or accrued for those years, to the Chief Executive
Officer and to the other executive officers of the Company who received total
salary and bonus in excess of $100,000 in 1997 (the "Named Executive Officers").
5
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------- -----------------------------------
Awards Payouts
------------------------ ---------
Other Restricted Securities
Annual Stock Under- LTIP All Other
Compen- Award(s) lying Payouts Compensation
Name and Salary Bonus sation ($) Options/ ($)(5) ($)
Principal Officer Year ($)(1)(2) ($)(3) ($)(4) SARs(#)
- ----------------------- -------- ----------- -------- -------- ------------ --------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John G. Yedinak 1997 $359,804 $176,000 $-- $ -- -- None $ 24,816(6)
President and Chief 1996 320,336 200,998 -- -- -- None 58,451
Executive Officer of 1995 299,149 125,434 -- 13,755 -- None 23,369
the Company and
President and Chief
Executive Officer of
the Savings Bank
Frances M. Pitts 1997 $144,615 $ 70,500 $-- $ -- -- None $ 23,482(6)
Executive Vice 1996 126,368 82,989 -- -- -- None 21,453
President and 1995 117,348 46,201 -- 5,000 -- None 9,945
Secretary of the
Company and Senior
Vice President,
General Counsel and
Secretary of the
Savings Bank
</TABLE>
- --------------------
(1) Includes amounts of salary deferred pursuant to the Savings Bank 401(k)
Plan. Under the plan, participants may elect to have up to the lesser of
12% or $9,500 of annual compensation deferred for the plan year.
(2) Includes directors' fees received from the Company, the Savings Bank and
On-Line with respect to Mr. Yedinak; and directors' fees and Secretary's
fees received from the Company and the Savings Bank with respect to Ms.
Pitts.
(3) Includes deferred bonus amounts as described under the "Employment
Agreements" with respect to Mr. Yedinak and Ms. Pitts. Such bonuses were
based upon the financial results of the Company for 1996 and 1995. No
bonuses were paid for 1997.
(4) For 1997, 1996 and 1995, there were no (a) perquisites over the lesser of
$50,000 or 10% of the individual's total salary and bonus for the years;
(b) payments of above market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long term incentive
plans prior to settlement or maturation; (d) tax payment reimbursements; or
(e) preferential discounts on stock.
(5) The Company does not maintain a long-term incentive plan and therefore,
there were no payouts or awards under such plan.
(6) Includes $4,750 and $4,750 contributed by the Savings Bank pursuant to the
401(k) Plan for the account of Mr. Yedinak and Ms. Pitts, for the year
ended December 31, 1997. Excludes $83,219 and $10,797 which represents the
market value of premiums paid on supplemental policies covering life (with
proceeds to be paid to the Company and the Bank) and long-term disability
for Mr. Yedinak and Ms. Pitts for the year ended December 31, 1997.
Includes $20,066 and $18,632, the market value of the allocations of shares
made under the Employee Stock Ownership Plan for 1997.
6
<PAGE>
Employment Agreements. The Company and the Savings Bank (collectively the
"Employer") entered into employment agreements ("Agreements") with each of Mr.
Yedinak and Ms. Pitts (the "Executives"), effective November 1, 1996. The
Savings Bank employment agreements provide for a three year term and, commencing
on the first anniversary date and continuing each anniversary date thereafter,
the Board of Directors may extend the agreements for an additional year so that
the remaining term shall be three years after conducting a performance
evaluation of the Executives. In 1997, the Savings Bank Agreements were not
extended and will expire, if not otherwise extended, on November 1, 1999. The
Company Agreements provide for a five year term and shall be extended on a daily
basis unless written notice of non-renewal is given by the Board of the Company.
By notice dated December 22, 1997, the Executives were advised that the
evergreen provision of the Agreements was terminated, and the Agreements will
expire, if not otherwise extended, on December 22, 2002. Under the Agreements
with each of the Executives, base compensation of $150,000 and $173,800 with
respect to Mr. Yedinak, and $98,000 and $33,415 with respect to Ms. Pitts will
be paid by each of the Savings Bank and the Company, respectively. The salary
amounts under the Agreements may be increased at the discretion of the Board of
Directors, or authorized committee of the Board, of each of the Company and the
Savings Bank. The salary may not be decreased during the term of the Agreements
without the prior written consent of the executive officer.
Pursuant to the Agreements, in addition to the Executive's base
compensation, an amount equal to 2% for Mr. Yedinak and 1% for Ms. Pitts of
gross profits of each of the Company and Savings Bank shall be credited as
additional compensation to the executive to be paid on the earlier of
termination for other than cause, death or disability, the expiration of the
Agreements, or annually on the anniversary date of the Agreements. The deferred
amounts will be forfeited if the Executive is terminated prior to the
anniversary date of the Agreements for any reason other than death or
disability. No amounts were paid under this provision for 1997. The Agree-
ments also provide for, among other things, participation in stock benefits
plans and other fringe benefits applicable to executive personnel. The
Agreements provide for termination by the Savings Bank or the Company for cause
as defined in the Agreements at any time.
In the event the Savings Bank or the Company chooses to terminate the
Executive's employment for reasons other than for cause, or in the event of the
Executive's resignation from the Savings Bank and the Company upon: (i)
termination of employment other than for disability, retirement or cause or (ii)
the Executive's resignation upon: (a) a failure to re-elect the Executive or his
current offices or failure to nominate or renominate the Executive to the board;
(b) a material demotive change in the Executive's functions, duties or
responsibilities; (c) a relocation of the Executive's principal place of
employment by more than 30 miles; (d) a material reduction in benefits or
perquisites being provided to the Executive under the Agreements; (e)
liquidation or dissolution of the Savings Bank or the Company; or (f) a breach
of the Agreements by the Savings Bank or the Company, the Executive or, in the
event of death, his beneficiary would be entitled to receive an amount equal to
the base salary increased annually by four percent (4.0%) due to the Executive
for the remaining term of the Agreements and the contributions that would have
been made on the Executive's behalf to any employee benefit plans of the Savings
Bank or the Company during the remaining term of the Agreements. The Savings
7
<PAGE>
Bank and the Company would also continue and pay for the Executive's life,
health and disability coverage for the remaining term of the Agreements.
Under the Agreements, if voluntary or involuntary termination follows a
change in control of the Savings Bank or the Company (as defined in the
Agreements), the Executive or, in the event of the Executive's death, his
beneficiary, would be entitled under the Company Agreements to a severance
payment equal to five times the average of the three preceding taxable years'
annual compensation. Under the Savings Bank Agreements, the Executive would be
entitled to a severance payment equal to three times the Executive's average
annual compensation for the five most recent taxable years. The Savings Bank
and the Company would also continue the Executive's life, health, and disability
coverage for sixty months. Notwithstanding that both the Savings Bank and the
Company Agreements provide for a severance payment in the event of a change in
control, the Executive would only be entitled to receive a severance payment
under one agreement. Any excise taxes due as a result of an "excess parachute
payment" under the Company Agreements will be reimbursed under the Agreements.
Based solely on the Salary and Bonus reported in the Summary Compensation Table
for 1997 assuming all compensation was paid under the Company Agreements, and
excluding any benefits under any employee plan which may be payable, following a
change in control and termination of employment, Mr. Yedinak and Ms. Pitts would
be entitled to severance payments of approximately $2,469,535 and $980,035,
respectively.
Payments to the Executive under the Savings Bank Agreements will be
guaranteed by the Company in the event that payments or benefits are not paid by
the Savings Bank. Payment under the Company Agreements would be made by the
Company. The Agreements also provide that the Savings Bank and Company shall
indemnify the Executive to the fullest extent allowable under federal and
Delaware law, respectively.
Management Recognition Plan and Trust. The MRP provides stock awards to
officers and key employees. Awards made after June 1, 1995 are subject to
performance goals and vest at a rate of 16.66% on the last day of each six month
period following the date of grant.
Stock Option Plans. On May 20, 1998 the Stockholders of the Company
approved the Incentive Stock Option Plan. The Incentive Stock Option Plan
provides for discretionary awards of options to purchase Common Stock to
officers and key employees as determined by a committee of disinterested
directors. As of the Record Date no options had been granted under the
Incentive Stock Option Plan. All outstanding options to purchase common stock
held by employees were granted under the Argo Bancorp, Inc. 1991 Employee Stock
Option and Incentive Plan (the "1991 Stock Option Plan"). The following table
provides certain information with respect to option exercises in the previous
fiscal year by Named Executive Officers and the number of shares of Common Stock
represented by outstanding stock options held by the Named Executive Officers as
of December 31, 1997. Also reported are the values for "in-the-money" options
which represent the positive spread between the exercise price of any such
existing stock options and the year-end price of the Common Stock.
8
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES
Number of Securities Value of
Underlying Unexercised In-the-Money
Unexercised Options Options/SARs
at Fiscal Year End at Fiscal Year-End
(#)(1)(2)(3)(4) ($)(5)
Shares
Acquired on ----------------------------------------------------------------
Name Exercise Value realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------ ------------- ---------------- ------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John G. Yedinak 23,997 $271,365 23,996(6) -- $449,325 --
Frances M. Pitts -- --- 13,500(7) -- 265,687 --
</TABLE>
________________________
(1) All options become 100% exercisable upon death, disability, retirement or a
change in control, as defined generally under the 1991 Stock Option Plan.
In addition, vesting of non-statutory options may be accelerated by a
committee consisting of outside directors.
(2) The purchase price may be made in whole or in part through the surrender of
previously held shares of common stock.
(3) Under limited circumstances, such as death, disability or normal retirement
of an employee, the employee (or his beneficiary) may request that the
Company, in exchange for the employee's surrender of an option, pay to the
employee (or beneficiary) the amount by which the fair market value of the
Common Stock exceeds the exercise price of the option on the date of the
employee's termination of employment. It is within the company's
discretion to accept or reject such a request.
(4) Options are subject to limited (SAR) rights pursuant to which the options,
to the extent outstanding for at least six months, may be exercised in the
event of a change in control of the Company. Upon the exercise of a
limited right, the optionee would receive a cash payment equal to the
difference between the exercise price of the related option on the date of
grant and the fair market value of the underlying shares of Common Stock on
the date the limited right is exercised.
(5) The price of the Common Stock on December 31, 1997 was $34.125.
(6) The exercise price for 23,996 options is $15.40. The exercise price
includes a 10% premium applicable to controlling shareholders.
(7) The exercise price for 12,500 options is $14.00 and the exercise price for
1,000 options is $20.00.
Indebtedness of Management and Transactions with Certain Related Persons
The Savings Bank has adopted a policy which requires that all loans or
extensions of credit to executive officers and directors must be made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with the general public and
must not involve more than the normal risk of repayment or present other
unfavorable features.
PROPOSAL: ADOPTION AND APPROVAL OF THE COMPANY'S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
The Board of Directors unanimously has determined that certain amendments
to the Company's Certificate of Incorporation and Bylaws are advisable and has
unanimously voted to recommend them to the Company's stockholders for adoption
and approval at the Special
9
<PAGE>
Meeting. In light of the number of amendments, the Board of Directors has
decided to adopt and recommend for stockholder approval an Amended and Restated
Certificate of Incorporation incorporating all of the amendments. Stockholders
are being asked to approve the Amended and Restated Certificate of Incorporation
as a whole. The purposes and effects of the amendments are set forth below,
followed by a more detailed description of each amendment and how it would
operate.
The text of the Amended and Restated Certificate of Incorporation is
attached to this Proxy Statement as Exhibit A. The statements made in this
proxy statement with respect to the Amended and Restated Certificate of
Incorporation should be read in conjunction with and are qualified in their
entirety by reference to Exhibit A.
Purposes and Effects
The amendments, as discussed below, may have certain antitakeover effects.
The following section discusses the general consequences to stockholders of
these amendments and should be read in conjunction with the individual
discussions with respect to each amendment.
The Company is amending its Certificate of Incorporation in contemplation
of declaring a stock split and undertaking a proposed offering of common stock
and a dividend of preferred stock. The terms of such actions have yet to be
finalized and there can be no assurance that any or all of these transactions
will take place. Further, the Company believes it has sufficient number of
authorized shares to be able to effectuate these transactions, without a stock-
split, regardless of whether the proposed amendments are approved. Therefore,
the amendments are being proposed to provide the Company with greater
flexibility in the future with respect to stock splits, stock dividends
financing transactions and other general corporate actions.
The amendments, if approved, will: (i) increase the number of authorized
shares of Common Stock from 4,500,000 to 9,000,000 and the number of authorized
shares of Preferred Stock from 500,000 to 1,000,000, as well as remove the four
distinct classes of common stock to create one class of common stock ; (ii)
move from the Certificate of Incorporation to the Bylaws the notice provisions
for stockholder nominations and proposals at annual or special meetings of
stockholders and revise to provide for ninety days prior notice and to eliminate
stockholder proposals of business at special meetings; (iii) provide that the
size of the Board of Directors may be set solely by a two-thirds majority of the
Board of Directors and eliminate maximum and minimum numbers of directors; (iv)
provide that members of the Board of Directors may be removed by the
stockholders only for cause; (v) increase the vote requirement for approval of
certain business combinations to 70% of the voting power of all of the then-
outstanding shares of Common Stock; and (vi) permit the Board of Directors to
consider the broader interests of the Company and of certain stakeholders in the
Company beyond the holders of Common Stock in evaluating a proposed tender
offer, merger proposal or sale of substantially all of the assets or properties
of the Company.
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The amendments to the Certificate of Incorporation are not in response to
any effort, of which the Company is aware, to accumulate shares of Common Stock
or to obtain control of the Company. The Board of Directors has observed the
relatively common use of certain coercive takeover tactics in recent years,
including the accumulation of substantial common stock positions as a prelude to
a threatened takeover or corporate restructuring, proxy fights and partial
tender offers and the related use of "two-tiered" pricing. In addition, persons
who do not intend to gain control of companies use the threat of takeover bids
to force the companies to repurchase their shares at a premium or temporarily
drive up the market price of their stock. The Board of Directors believes that
the use of these tactics can place undue pressure on a corporation's board of
directors and stockholders to act hastily and on incomplete information and,
therefore, can be highly disruptive to a corporation as well as divert valuable
corporate resources and result in unfair differences in treatment of
stockholders who act immediately in response to announcement of takeover
activity and those who choose to act later, if at all. The amendments are
intended to encourage persons seeking to acquire control of the Company to
initiate such an acquisition through arm's-length negotiations with the Board of
Directors.
While the amendments, individually and collectively, give added protection
to the Company's stockholders and may help the Company obtain the best price in
a potential transaction, they may also have the effect of making more difficult
and discouraging a merger, tender offer or proxy contest, even if such a
transaction or event may be favorable to the interests of some or all of the
Company's stockholders. The amendments may also delay the assumption of control
by a holder of a large block of shares and the removal of incumbent management,
even if such removal might be beneficial to some or all of the stockholders.
Furthermore, the amendments may have the effect of deterring or frustrating
certain types of future takeover attempts that may not be approved by the
incumbent Board of Directors, but that the holders of a majority of the Common
Stock may deem to be in their best interests or in which some or all of the
stockholders may receive a substantial premium over prevailing market prices for
their Common Stock. By discouraging takeover attempts, the amendments also
could have the incidental effect of inhibiting certain changes in management
(some or all of the members of which might be replaced in the course of a change
of control) and also the temporary fluctuations in the market price of Common
Stock that often result from actual or rumored takeover attempts.
The Board of Directors recognizes that a takeover might, in some
circumstances, be beneficial to some or all of the Company's stockholders, but
nevertheless believes that the stockholders as a whole will benefit from the
adoption of the amendments. The Board of Directors further believes that it is
preferable to act on the proposed amendments when they can be considered
carefully rather than hastily during an unsolicited bid for control. Pursuant
to the provisions of the Certificate of Incorporation, the adoption of the
Amended and Restated Certificate of Incorporation must be approved by the
affirmative vote of the holders of not less than 70% of the outstanding shares
of Common Stock entitled to vote thereon. All of the proposed amendments are
permitted by Delaware law.
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If the stockholders approve the Amended and Restated Certificate of
Incorporation, the Company will file with the Secretary of State of the State of
Delaware the Amended and Restated Certificate of Incorporation in substantially
the form attached hereto. The Amended and Restated Certificate of Incorporation
will become effective upon the filing with the Secretary of State.
Stockholders are urged to read carefully the following descriptions and
discussions of each of the proposed amendments before voting on the Proposal.
Existing Defenses
The following represent the existing provisions of the Company's
Certificate of Incorporation and Bylaws which could have an antitakeover effect
against persons seeking to take control of the Company and that are not proposed
to be amended at the Special Meeting. Other than these provisions and the
proposed amendments, no other antitakeover provisions are currently contemplated
by the Board of Directors.
The Board of Directors is currently divided into three classes, with each
class serving terms of three years in staggered succession. The staggered terms
prevent the stockholders from voting on the election of more than one class of
directors at each annual meeting and thus may delay a change in control of the
Company or deter a bid for control of the Company. The effect of the classified
board is that it could take two as opposed to one annual meeting of stockholders
for persons seeking a takeover of the Company to achieve majority control of the
members of the Board of Directors.
The Company's Certificate of Incorporation does not provide for cumulative
voting. As a result, in order to be assured of representation on the Company's
Board of Directors, a stockholder must control the votes of a majority of the
votes present and voting at a stockholder meeting at which a quorum is present.
The absence of cumulative voting requires a person seeking a takeover to acquire
a substantially greater number of shares to be assured of representation on the
Board of Directors than would be necessary were cumulative voting available.
The Company's Certificate of Incorporation provides that actions required
or permitted to be taken at any annual or special meeting of the stockholders
may be taken only upon the vote of the stockholders at a meeting duly called and
may not be taken by written consent of the stockholders. This provision ensures
that all stockholders would have advance notice of any attempted major corporate
action by stockholders, and that all stockholders would have an equal
opportunity to participate at the meeting of stockholders where such action was
being considered. The provision encourages a potential acquiror to negotiate
directly with the Board of Directors. Such a provision could be characterized
as increasing management's and the Board of Directors' ability to retain their
positions with the Company and to resist a transaction which may be
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deemed advantageous by even a majority of the stockholders. Persons attempting a
takeover bid could be delayed or deterred by not being able to propose a
transaction at a time advantageous for them.
Amendment to Increase the Number of Authorized Shares
As of the Record Date, 1998, there were 497,644 shares of Common Stock
outstanding. In addition, 52,996 shares were reserved for issuance upon the
exercise of outstanding options under the Company's stock option plans, which
leaves a total of 3,949,360 shares of authorized Common Stock available for
other corporate purposes. None of the 500,000 shares of Preferred Stock
authorized by the Certificate of Incorporation are outstanding. The Board of
Directors is proposing to amend the Certificate of Incorporation to increase the
number of authorized shares of Common Stock to 9,000,000 and the number of
authorized shares of Preferred Stock to 1,000,000. Additionally, classes B, C
and D of the Common Stock, none of which have outstanding shares, will be
removed and there will be only one class of Common Stock.
The additional 4.5 million shares of Common Stock would be part of the
existing class of Common Stock and, if and when issued, would have the same
rights and privileges as the shares of Common Stock currently outstanding. If
the Amended and Restated Certificate of Incorporation is approved, the Board of
Directors will be empowered, without the necessity of further action or
authorization by the stockholders (unless otherwise required by applicable law
or regulations) to cause the Company to issue, from time to time, the 4.5
million additional shares of Common Stock on such terms as it may determine.
The holders of the Common Stock have no preemptive rights to purchase or
otherwise acquire any shares of Common Stock or Preferred Stock that may be
issued in the future.
The increase in the number of shares of Common Stock is intended to ensure
that there will be a sufficient number of authorized but unissued shares
available in the future for general corporate purposes, including for issuance
by the Company in connection with any financing transactions.
The issuance of shares of Preferred Stock or shares of Common Stock under
some circumstances could be disadvantageous to current stockholders, because to
do so would dilute their percentage ownership interest in the Company. In
addition, the issuance of the shares of Preferred Stock or Common Stock could be
used by incumbent management to impede, and thereby discourage, an attempt to
acquire control of the Company, even though some or all of the stockholders of
the Company may deem such an acquisition to be desirable. For example, the
shares could be placed with purchasers who might support the Board of Directors
in opposing a hostile takeover bid. The Delaware General Corporation Law
("DGCL") permits the issuance of classes of shares with voting rights under
which a majority vote of the holders of each class, voting separately, is
required to approve a merger. Shares of Preferred Stock could be issued with
such rights which could make approval of a merger more difficult. The issuance
of new
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shares of Common Stock could also be used to dilute the stock ownership
and voting power of a third party seeking to effect a merger, sale of assets or
similar transaction. In the event and to the extent the proposed amendment
facilitates such actions, it could serve to perpetuate incumbent management and
the Board of Directors.
Amendment to Move Notice Provisions for Stockholder Meetings to Bylaws
The Certificate of Incorporation currently provides that nominations for
the election of directors and proposals for any new business to be taken up at
any annual or special meeting of stockholders may be made by the Board of
Directors or by any stockholder of the Company entitled to vote generally in the
election of directors who complies with the procedure outlined therein. A
stockholder must provide notice of such nominations and/or proposals not less
than thirty nor more than sixty days prior to such meeting; provided, however,
that if less than thirty-one days notice of the meeting is given to
stockholders, such nominations and/or proposals must be submitted no later than
the tenth day following the day on which notice of the meeting was mailed to
stockholders.
The Board of Directors has proposed to eliminate this provision from the
Certificate of Incorporation and to adopt a substantially similar provision in
the Bylaws. The period for notice in the Bylaw provision would be increased
from no less than thirty days nor more than sixty days prior to the meeting to
no less than ninety days prior to the meeting; provided, however, that if less
than one hundred days notice of the meeting is given to stockholders, such
notice of nominations and/or proposals must be submitted no later than the tenth
day following such notice.
Additionally, the proposed Bylaw provision would eliminate the ability of a
stockholder to propose business for consideration at a special meeting of
stockholders.
While this amendment does not give the Board of Directors any power to
approve or disapprove of a stockholder nomination or proposal of new business,
it will preclude a stockholder nomination and/or proposal from the floor or by
other means at a special meeting if the proper procedures are not followed.
Accordingly, the amendment could prevent stockholder nominations or proposals
which may be favored by a majority of stockholders. Although the Board of
Directors does not believe that the amendment will have a significant impact on
nay attempt by a third party to obtain control of the Company, it is possible
that the amendment may deter a third party from conducting a solicitation of
proxies to elect its own slate of directors or from raising proposals that
attempt to obtain control of the Company or effect a change in the Company's
management, irrespective of whether such actions would be beneficial to
stockholders generally. Additionally, the elimination of the ability of
stockholders to propose business at a special meeting may serve to deter third
parties from making proposals in opposition to the business proposed by
management or the Board of Directors to be considered at a special meeting.
Finally, by moving the notice provisions to the Bylaws, the Board of
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Directors will be empowered to amend such provisions without stockholder
approval, and thus it is possible that the Board of Directors would, in the
future, determine to amend such provisions in such a manner that would impair
the ability of a third party to seek to obtain control of the Company or effect
a change in the Company's management.
Amendment to Permit Board of Directors to Fix the Number of Directors
The Certificate of Incorporation currently provides that number of
directors composing the Board of Directors shall be a minimum of five and a
maximum of twenty-five, as set by a vote of at least two-thirds of the directors
then in office. The amendment will remove the minimum and maximum, leaving the
number of directors to the sole discretion of the Board of Directors.
This amendment will permit the Board of Directors to increase the size of
the Board to above twenty-five members or to reduce it to below five members.
While the Board of Directors does not currently anticipate changing the size of
the Board to fall outside those limits, having such an ability will help promote
the continuity of management that the classified Board of Directors provides and
thereby may enhance the ability of the Company to carry out long-range plans and
goals for its benefit and the benefit of its stockholders. Persons attempting a
takeover bid could be delayed or deterred by not being able to procedurally
obtain control of the Board of Directors due to the elimination of open seats or
due to the creation of additional directorships by the Board of Directors, which
could also serve to perpetuate current management.
Amendment to Provide that Directors Be Removable by the Stockholders Only For
Cause
Once a company has a classified board of directors, as the Company does,
the DGCL prohibits stockholders from removing members of a classified board of
directors without cause before the expiration of their respective terms unless
the Certificate of Incorporation specifies otherwise. Currently, the
Certificate of Incorporation provides that any Director, or the entire Board of
Directors, may be removed, at any time, by the affirmative vote of the holders
of at least 70% of the outstanding shares of Common Stock entitled to vote
generally in the election of directors cast at meeting of the stockholders
called for that purpose. The proposed amendment generally would provide that
any Director, or the entire Board of Directors, may be removed from office at
any time, but only for cause and only by the affirmative vote of the holders of
at least 70% of the voting power of all of the then-outstanding shares of Common
Stock entitled to vote generally in the election of Directors.
In conjunction with the Company's presently existing classified Board of
Directors, the proposed amendment should render more difficult an attempt to
acquire control of the Company without the approval of the Company's management.
The amendment would make it impossible for someone who acquires voting control
of the Company to remove immediately the incumbent directors who may oppose such
person and to replace them with more friendly directors, and will
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instead require such person to replace incumbent directors as their terms expire
over a period of up to three years, unless cause exists for such removal. This
amendment would protect the continuity of the Board of Directors and thereby
enhance the ability of the Company to carry out long-range plans and goals for
its benefit and the benefit of its stockholders.
Stockholders should recognize, however, that the amendment will also make
more difficult the removal of a director in circumstances which do not
constitute a takeover attempt and where, in the opinion of the holders of 70% of
the Company's outstanding Common Stock, such removal is appropriate, but where
no cause exists. Moreover, the proposed amendment may have the effect of
delaying an ultimate change in existing management which might be desired by a
majority of the stockholders.
The inability to remove directors other than for cause may have the effect
of discouraging potential unfriendly bids for the Common Stock of the Company
because of the delay it could cause in replacing board members.
Amendment to Increase the Vote Requirement for Approval of Certain Business
Combinations
Currently, the Certificate of Incorporation requires the approval of at
least 51% of the outstanding shares entitled to vote thereon, and a majority of
the outstanding shares entitled to vote thereon, not including shares held by a
"Related Person," as defined therein, to approve certain "Business Combinations"
with a Related Person. Under Delaware law, absent this provision, business
combinations, including mergers, consolidations and sales of all or
substantially all of the assets of a corporation must, subject to certain
exceptions, be approved by the vote of the holders of only a majority of the
outstanding shares of the corporation. Under the Certificate of Incorporation,
the approval outlined above is required unless the Business Combination is
approved by a majority of those members of the Company's Board of Directors who
are unaffiliated with the Related Person and were Directors prior to the time
when the Related Person became a Related Person. In such a case, only the
affirmative vote of a majority of the outstanding shares is required.
The Board of Directors is proposing to amend this provision to increase the
required approval to 70% of the outstanding shares entitled to vote thereon to
approve a "Business Combination" with an "Interested Stockholder," as defined in
the Amended and Restated Certificate of Incorporation. Additionally, the
amendment would require only the affirmative vote of a majority of the
outstanding shares if the proposed transaction meets certain conditions set
forth therein which are designed to afford the stockholders a fair price in
consideration for their shares. A Related Person and an Interested Stockholder
are generally defined to be a person or an affiliate of a person who owns 10% or
more of the Company's Common Stock.
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This provision should encourage persons interested in acquiring the Company
to negotiate in advance with the Board of Directors since the higher stockholder
voting requirements imposed would not be invoked if such person, prior to
acquiring 10% of the Company's Common Stock, obtains the approval of the Board
of Directors for such stock acquisition or the proposed business combination
transaction. In the event of a proposed acquisition of the Company, the Board
of Directors believes that the interests of the Company's stockholders will be
served by a transaction that results from negotiations based upon careful
consideration of the proposed terms, such as the availability of the benefits of
the transaction to all stockholders, the price to be paid to stockholders
(including minority stockholders), the form of consideration paid and the tax
effects of the transaction.
In addition, this provision should tend to prevent certain of the potential
inequities of business combinations which are part of a "two-tier" transaction.
Any merger, consolidation, or similar transaction following a partial tender
offer not approved by the Board of Directors would have to be approved by 70% of
the remaining shares of Common Stock.
This provision may have the effect of preventing changes in management of
the Company and could make it more difficult to accomplish transactions which
the Company's stockholders may otherwise deem to be in their best interests.
Directors and executive officers of the Company currently have the potential to
control approximately 85.44% of the Company's Common Stock, thereby enabling
them to prevent the approval of transactions requiring the approval of at least
70% of the Company's outstanding shares of voting stock outlined above.
Amendment to Permit Board of Directors to Consider Broader Interests in
Evaluating Offers
The Board of Directors has proposed adding a provision to the Certificate
of Incorporation that will permit the Board of Directors, when evaluating any
offer of another person to (i) make a tender or exchange offer for any equity
security of the Company, (ii) merge or consolidate the Company with another
corporation or entity or (iii) purchase or otherwise acquire all or
substantially all of the properties or assets of the Company, may, in connection
with the exercise of its judgment in determining what is in the best interests
of the Company, its subsidiaries and stockholders, give due consideration to all
relevant factors, including, without limitation, the social and economic effects
of acceptance of such offer on the Company's customers and the Bank's present
and future account holders, borrowers and employees; on the communities in which
the Company and the Bank operate or are located; and on the ability of the
Company to fulfill its corporate objectives as a savings and loan holding
company and on the ability of the Bank to fulfill the objectives of a federally
chartered savings bank under applicable law and regulations. However, no
assurances can be given that a court applying Delaware law would enforce the
foregoing provision in the Certificate of Incorporation.
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By having these standards in the Certificate of Incorporation of the
Company, the Board of Directors may be in a stronger position to oppose such a
transaction if the Board of Directors concludes that the transaction would not
be in the best interests of the Company, even if the price offered is
significantly greater than the then-market price of any equity security of the
Company. This may have the effect of discouraging a future takeover attempt
which is not approved by the Board of Directors but which individual
stockholders may deem to be in their best interests or in which stockholders may
receive a substantial premium for their shares over then current market prices.
As a result, stockholders who might desire to participate in such a transaction
may not have the opportunity to do so. Such a provision may also render the
removal of the current Board of Directors or management more difficult.
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Amendments Without Antitakeover Effect
In addition to the amendments discussed above, the Board of Directors has
recommended several amendments to the Certificate of Incorporation that do not
have antitakeover effects. These amendments are discussed below.
Amendment to Indemnification Provisions. The Company's Certificate of
Incorporation currently provides that Directors, Officers and employees may be
indemnified against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company--a "derivative action"), if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the Company and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard of care is applicable in the case of
derivative actions, except that indemnification extends only to expenses
(including attorneys' fees) incurred in connection with defense or settlement of
such an action. The Company is authorized to advance expenses to Directors,
Officers or employees upon the Company's receipt of an undertaking by such
person to repay the advance in the event of a specific determination that such
person was not entitled to indemnification.
The Certificate of Incorporation requires court approval before there may
be any indemnification where the person seeking indemnification has been found
liable to the Company in a derivative action by reason of the fact that he is or
was a Director, Officer or employee of the Company. However, the termination of
any proceeding (other than a derivative action) by judgment, order, settlement,
conviction or upon a plea of nolo contendere does not create a presumption
adverse to the Director, Officer or other person.
While the provisions of the Certificate of Incorporation currently provide
indemnification to the fullest extent permissible under Delaware law, the Board
of Directors has determined that it is in the best interests of the Company for
the Certificate of Incorporation to specifically incorporate Delaware law, and
to provide that in the event of any future amendment to Delaware law on
indemnification, the right to indemnification shall be adjusted to the extent
that such
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amendment permits the Company to provide broader indemnification rights than
prior to such amendment. The amendment to the Certificate of Incorporation also
provides that if the Company does not pay a proper claim for indemnification in
full within 30 days after a written claim for such indemnification is received
by the Company, the amendment authorizes the claimant to bring a suit against
the Company and prescribes what does and does not constitute a defense to such
action.
Although the indemnification provisions contained in the Amended and
Restated Certificate of Incorporation are not specifically intended to provide
indemnification of officers and directors for violations of the Securities Act
of 1933, as amended, it is conceivable that such a claim for indemnification
could be asserted thereunder. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
The indemnification provisions in the Amended and Restated Certificate of
Incorporation have been included in recognition of the need to protect Directors
and Officers of the Company so as to attract and retain the best personnel
available. In light of the complexities and pressures placed on directors of
publicly-held corporations, and especially companies involved in the complex and
rapidly-changing financial services industry, the Board of Directors believes
that the time, efforts and talent of Officers and Directors of the Company and
its subsidiaries should be directed toward managing the Company's business,
rather than being forced to act defensively out of concern over costly personal
litigation. By including these indemnification provisions, and ensuring that
they provide the maximum protection available under Delaware law, Directors and
Officers of the Company will have the assurance that they will be indemnified
for actions taken in good faith and in a manner believed to be in the best
interests of the Company.
Technical Amendments. The Board of Directors is also recommending several
amendments to remove provisions of the Certificate of Incorporation that are
outdated or are obsolete. These amendments will not materially affect the
rights of stockholders. These amendments include removing the name and address
of the incorporator of the Company, removing the provision relating to
repurchase of stock and removing the provision setting a five year prohibition
on the acquisition of 10% or more of the Company's Common Stock, which five-year
period has expired. All of the technical amendments are permissible under
Delaware law, and have been deemed by the Board of Directors to be in the best
interests of stockholders.
Unless marked to the contrary, the shares represented by the enclosed proxy
card, if executed and returned, will be voted "FOR" the approval and adoption of
the Company's Amended and Restated Certificate of Incorporation.
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
ADDITIONAL INFORMATION
Stockholder Proposals
To be considered for inclusion in the proxy statement and proxy relating to
the Annual Meeting of Stockholders to be held in 1999, a stockholder proposal
must be received by the Secretary of the Company at the address set forth on the
Notice of Special Meeting of Stockholders, not later than December 5, 1998. Any
such proposal will be subject to 17 C.F.R. (S) 240.14a-8 of the Rules and
Regulations under the Exchange Act.
Notice of Business to be Conducted at a Special or Annual Meeting
The Bylaws of the Company provide an advance notice procedure for certain
business to be brought before a meeting of stockholders. In order for a
stockholder to properly bring business before a special or annual meeting, the
stockholder must give written notice to the Secretary of the Company not less
than thirty (30) days nor more than sixty (60) days prior to such annual
meeting, provided, however, that if less than thirty-one days' notice of the
special or annual meeting is given to stockholders, notice by the stockholder
shall be delivered to the Secretary of the Company not later than the close of
the tenth (10) day following the day on which notice of the special or annual
meeting was mailed to stockholders. The notice must include the stockholder's
name and address, as it appears on the Company's record of stockholders, a brief
description of the proposed business, the reason for conducting such business at
the special or annual meeting, the class and number of shares of the Company's
capital stock that are beneficially owned by such stockholder and any material
interest of such stockholder in the proposed business. In the case of
nominations to the Board, certain information regarding the nominee must be
provided. Nothing in this paragraph shall be deemed to require the Company to
include in its proxy statement and proxy relating to a special or annual meeting
any stockholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no business which will be presented for
consideration at the Special Meeting other than as stated in the Notice of
Special Meeting of Stockholders. If, however, other matters are properly
brought before the Special Meeting, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
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Whether or not you intend to be present at the Special Meeting, you are
urged to return your proxy promptly. If you are present at the Special Meeting
and wish to vote your shares in person, your proxy may be revoked by voting at
the Special Meeting.
By Order of the Board of Directors
/s/ Frances M. Pitts
Frances M. Pitts
Secretary
Summit, Illinois
June 27, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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[FRONT SIDE]
REVOCABLE PROXY
ARGO BANCORP, INC.
SPECIAL MEETING OF STOCKHOLDERS
July 15, 1998
3:00 p.m. Central Time
The undersigned hereby appoints the official proxy committee of the Board
of Directors of Argo Bancorp, Inc. (the "Company"), each with full power of
substitution, to act as attorneys and proxies for the undersigned, and to vote
all shares of Common Stock of the Company which the undersigned is entitled to
vote only at the Special Meeting of Stockholders, to be held on July 15, 1998 at
3:00 p.m. Central Time, at 7600 West 63rd Street, Summit, Illinois, and at any
and all adjournments thereof, as follows:
I. The adoption and approval of the Company's Amended and Restated
Certificate of Incorporation.
FOR AGAINST ABSTAIN
--- ------- -------
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE LISTED PROPOSAL.
<PAGE>
[BACK SIDE]
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL LISTED.
IF ANY OTHER BUSINESS IS PRESENTED AT THE SPECIAL MEETING, INCLUDING WHETHER OR
NOT TO ADJOURN THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE SPECIAL MEETING.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Special Meeting of Stockholders and of a
Proxy Statement dated relating to this meeting.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
Dated:______________________________
______________________________
SIGNATURE OF STOCKHOLDER
______________________________
SIGNATURE OF STOCKHOLDER
------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE
<PAGE>
Exhibit A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ARGO BANCORP, INC.
ARTICLE I
Name
The name of the corporation is ARGO BANCORP, INC. (herein the
"Corporation").
ARTICLE II
Registered Office
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, Corporation Trust Center, in the City of Wilmington,
County of New Castle. The name of the Corporation's registered agent at such
address is The Corporation Trust Company.
ARTICLE III
Powers
The purpose for which the Corporation is organized is to act as a holding
company and to transact all other lawful business for which corporations may be
incorporated pursuant to the laws of the State of Delaware. The Corporation
shall have all the powers of a corporation organized under said Act.
ARTICLE IV
Term
The Corporation is to have perpetual existence.
<PAGE>
ARTICLE V
Capital Stock
The aggregate number of shares of all classes of capital stock which the
Corporation has authority to issue is 10,000,000 of which 9,000,000 are to be
shares of common stock, $.01 par value per share, and of which 1,000,000 are to
be shares of serial preferred stock, $.01 par value per share. The shares may be
issued by the Corporation without the approval of stockholders except as
otherwise provided in this Article V or the rules of a national securities
exchange, if applicable. The consideration for the issuance of the shares shall
be paid to or received by the Corporation in full before their issuance and
shall not be less than the par value per share. The consideration for the
issuance of the shares shall be cash, services rendered, personal property
(tangible or intangible), real property, leases of real property or any
combination of the foregoing. In the absence of actual fraud in the transaction,
the judgment of the board of directors as to the value of such consideration
shall be conclusive. Upon payment of such consideration such shares shall be
deemed to be fully paid and nonassessable. In the case of a stock dividend the
part of the surplus of the Corporation which is transferred to stated capital
upon the issuance of shares as a stock dividend shall be deemed to be the
consideration for their issuance.
A description of the different classes and series (if any) of the
Corporation's capital stock and a statement of the relative powers,
designations, preferences and rights of the shares of each class and series (if
any) of capital stock, and the qualifications, limitations or restrictions
thereof, are as follows:
A. Common Stock. Except as provided in this Certificate, the holders of
------------
the common stock shall exclusively possess all voting power.
Each holder of the common stock shall be entitled to one vote for each
share held by such holders.
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Whenever there shall have been paid, or declared and set aside for payment,
to the holders of the outstanding shares of any class of stock having preference
over the common stock as to the payment of dividends, the full amount of
dividends and sinking fund or retirement fund or other retirement payments, if
any, to which such holders are respectively entitled in preference to the common
stock, then dividends may be paid on the common stock, and on any class or
series of stock entitled to participate therewith as to dividends, out of any
assets legally available for the payment of dividends, but only when as declared
by the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, after there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class having preference
over the common stock in any event, the full preferential amounts to which they
are respectively entitled, the holders of the common stock and of any class or
series of stock entitled to participate therewith, in whole or in part, as to
distribution of assets shall be entitled, after payment or provision for payment
of all debts and liabilities of the Corporation, to receive the remaining assets
of the Corporation available for distribution, in cash or in kind.
Each share of common stock shall have the same relative powers, preferences
and rights as, and shall be identical in all respects with, all the other shares
of common stock of the Corporation.
B. Serial Preferred Stock. Except as provided in this Certificate, the
----------------------
board of directors of the Corporation is authorized, by resolution or
resolutions from time to time adopted, to provide for the issuance of serial
preferred stock in series and to fix and state the powers, designations,
preferences and relative, participating, optional or other special rights of the
shares of such series, and the qualifications, limitations or restrictions
thereof, including, but not limited to determination of any of the following:
1. the distinctive serial designation and the number of shares constituting
such series; and
2. the dividend rates or the amount of dividends to be paid on the shares of
such series, whether dividends shall be cumulative and, if so, from which date
or dates, the payment date or dates for dividends and the participating or other
serial rights, if any, with respect to dividends; and
3. the voting powers, full or limited, if any, of the shares of such series;
and
4. whether the shares of such series shall be redeemable and, if so, the price
or prices at which, and the terms and conditions upon which such shares may
be redeemed; and
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<PAGE>
5. the amount or amounts payable upon the shares of such series in the event
of voluntary or involuntary liquidation, dissolutions or winding up of the
Corporation; and
6. whether the shares of such series shall be entitled to the benefits of a
sinking or retirement fund to be applied to the purchase or redemption of such
shares, and, if so entitled, the amount of such fund and the manner of its
application, including the price or prices at which such shares may be redeemed
or purchased through the application of such funds; and
7. whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or any other series of
the same or any other class or classes of stock of the corporation and, if so
convertible or exchangeable, the conversion price or prices, or the rate or
rates of exchange, and the adjustments thereof, if any, at which such conversion
or exchange may be made, and any other terms and conditions of such conversion
or exchange; and
8. the subscription or purchase price and form of consideration for which
the shares of such series shall be issued; and
9. whether the shares of such series which are redeemed or converted shall
have the status of authorized but unissued shares of serial preferred stock and
whether such shares may be reissued as shares of the same or any other series of
serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of the Corporation of the same series.
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<PAGE>
ARTICLE VI
Preemptive Rights
No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series of
stock or of other securities of the Corporation shall have any preemptive right
to purchase or subscribe for any unissued stock of any class or series, or any
unissued bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock of any class or series or carrying
any right to purchase stock of any class or series; but any such unissued stock,
bonds, certificates of indebtedness, debentures or other securities convertible
into or exchangeable for stock or carrying any right to purchase stock may be
issued pursuant to resolution of the board of directors of the Corporation to
such persons, firms, corporations, or associations, whether or not holders
thereof, and upon such terms as may be deemed advisable by the board of
directors in the exercise of its sole discretion.
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<PAGE>
ARTICLE VII
Meetings of Stockholders; Cumulative Voting
A. Notwithstanding any other provision of this Certificate or the
Bylaws of the Corporation, no action required to be taken or which may be taken
at any annual or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing, without
a meeting, to the taking of any action is specifically denied.
B. Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time by the board of directors of the
Corporation, or by a committee of the board of directors which has been duly
designated by the board of directors and whose powers and authorities, as
provided in a resolution of the board of directors or in the Bylaws of the
Corporation, include the power and authority to call such meetings, but such
special meetings may not be called by any other person or persons.
C. There shall be no cumulative voting by stockholders of any class
or series in the election of directors of the Corporation.
D. Meetings of stockholders may be held within or without the State
of Delaware, as the Bylaws may provide.
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<PAGE>
ARTICLE VIII
Directors
A. Number; Vacancies. The number of directors of the Corporation
-----------------
shall be fixed from time to time exclusively by the Board of Directors pursuant
to a resolution adopted by a majority of the Whole Board (the term "Whole Board"
shall mean the total number of authorized directorships, whether or not there
exist any vacancies in previously authorized directorships at the time any such
resolution is presented to the board of directors for adoption), provided that
no decrease in the number of directors shall have the effect of shortening the
term of any incumbent director, and provided further that no action shall be
taken to decrease or increase the number of directors from time to time unless
at least two-thirds of the directors then in office shall concur in said action.
Vacancies in the board of directors of the Corporation, however caused, and
newly created directorships shall be filled by a vote of two-thirds of the
directors then in office, whether or not a quorum and any director so chosen
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of the class to which the director has been chosen expires and
when the director's successor is elected and qualified.
B. Classified Board. The board of directors of the Corporation shall
----------------
be divided into three classes of directors which shall be designated Class I,
Class II and Class III. The members of each class shall be elected for a term of
three years and until their successors are elected and qualified. Such classes
shall be as nearly equal in number as the then total number of directors
constituting the entire board of directors shall permit, with the terms of
office of all members of one class expiring each year. At the first annual
meeting of stockholders, directors in Class I shall be elected to hold office
for a term expiring at the third succeeding annual meeting thereafter. At the
second annual meeting of stockholders, directors of Class II shall be elected to
hold office for a term expiring at the third succeeding meeting thereafter. At
the third annual meeting of stockholders, directors of Class III shall be
elected to hold office for a term expiring at the third succeeding annual
meeting thereafter. Thereafter, at each succeeding annual meeting, directors
whose term shall expire at any annual meeting shall continue to serve until such
time as his successor shall have been duly elected and shall have qualified
unless his position on the board of directors shall have been abolished by
action taken to reduce the size of the board of directors prior to said meeting.
Should the number of directors of the Corporation be reduced, the
directorship(s) eliminated shall be allocated among classes as appropriate so
that the number of directors in each class is as specified in the immediately
preceding paragraph. The board of directors shall designate, by the name of the
incumbent(s), the position(s) to be abolished. Notwithstanding the foregoing,
no decrease in the number of directors shall have the effect of shortening the
term of any incumbent director. Should the number of directors of the
Corporation be increased, the additional directorships shall be allocated among
classes as appropriate so that the number of directors in each class is as
specified in the immediately preceding paragraph.
Whenever the holders of any one or more series of preferred stock of the
Corporation shall have the right, voting separately as a class, to elect one or
more directors of the Corporation, the board of directors shall consist of said
directors so elected in addition to the number of directors fixed as provided
above in this Article VIII . Notwithstanding the foregoing, and except as
otherwise may be required by law, whenever the holders of any one or more series
of preferred stock of the Corporation shall have the right, voting separately as
a class, to elect one or more directors of the Corporation, the terms of the
director or directors elected by such holders shall expire at the next
succeeding annual meeting of stockholders.
ARTICLE IX
Removal of Directors
Notwithstanding any other provision of this Certificate or the Bylaws of the
Corporation, any director or the entire board of directors of the Corporation
may be removed, at any time, but only for cause and only by the affirmative vote
of the holders of at least 70% of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (considered
for this purpose as one class) cast at a meeting of the stockholders called for
that purpose. Notwithstanding the foregoing, whenever the holders of any one or
more series of preferred stock of the Corporation shall have the right, voting
separately as a class, to elect one or more directors of the Corporation, the
preceding provisions of this Article IX shall not apply with respect to the
director or directors elected by such holders of preferred stock.
A-6
<PAGE>
ARTICLE X
Approval of Certain Business Combinations
A. In addition to any affirmative vote required by law or this
Certificate, and except as otherwise expressly provided in this Article X:
1. any merger or consolidation of the Corporation or any Subsidiary (as
hereinafter defined) with: (i) any Interested Stockholder (as hereinafter
defined); or (ii) any other corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation would be, an
Affiliate (as hereinafter defined) of an Interested Stockholder; or
2. any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Stockholder, or any Affiliate of any Interested Stockholder, of any
assets of the Corporation or any Subsidiary having an aggregate Fair Market
Value (as hereinafter defined) equaling or exceeding 25% or more of the combined
assets of the Corporation and its Subsidiaries; or
3. the issuance or transfer by the Corporation or any Subsidiary (in one
transaction or a series of transactions) of any securities of the Corporation or
any Subsidiary to any Interested Stockholder or any Affiliate of any Interested
Stockholder in exchange for cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value (as hereinafter defined) equaling
or exceeding 25% of the combined Fair Market Value of the outstanding common
stock of the Corporation and its Subsidiaries, except for any issuance or
transfer pursuant to an employee benefit plan of the Corporation or any
Subsidiary thereof; or
4. the adoption of any plan or proposal for the liquidation or dissolution
of the Corporation proposed by or on behalf of an Interested Stockholder or any
Affiliate of any Interested Stockholder; or
5. any reclassification of securities (including any reverse stock split),
or recapitalization of the Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other transaction (whether or
not with or into or otherwise involving an Interested Stockholder) which has the
effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by any
Interested Stockholder or any Affiliate of any Interested Stockholder;
A-7
<PAGE>
shall require the affirmative vote of the holders of at least 70% of the
voting power of the then-outstanding shares of stock of the Corporation entitled
to vote in the election of Directors (the "Voting Stock"), voting together as a
single class. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage may be specified, by
law or by any other provisions of this Certificate or any Preferred Stock
Designation in any agreement with any national securities exchange or otherwise.
The term "Business Combination" as used in this Article X shall mean any
transaction which is referred to in any one or more of paragraphs 1 through 5 of
Section A of this Article X.
B. The provisions of Section A of this Article X shall not be applicable
to any particular Business Combination, and such Business Combination shall
require only the affirmative vote of the majority of the outstanding shares of
capital stock entitled to vote, or such vote (if any), as is required by law or
by this Certificate, if, in the case of any Business Combination that does not
involve any cash or other consideration being received by the stockholders of
the Corporation solely in their capacity as stockholders of the Corporation, the
condition specified in the following paragraph 1 is met or, in the case of any
other Business Combination, all of the conditions specified in either of the
following paragraphs 1 or 2 are met:
1. The Business Combination shall have been approved by a majority of the
Disinterested Directors (as hereinafter defined).
2. All of the following conditions shall have been met:
a. The aggregate amount of the cash and the Fair Market Value as of the
date of the consummation of the Business Combination of consideration other than
cash to be received per share by the holders of Common Stock in such Business
Combination shall at least be equal to the higher of the following:
(1) (if applicable) the Highest Per Share Price (as hereinafter
defined), including any brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Stockholder or any of its Affiliates for
any shares of Common Stock acquired by it: (i) within the two-year period
immediately prior to the first public announcement of the proposal of the
Business Combination (the "Announcement Date"); or (ii) in the transaction in
which it became an Interested Stockholder, whichever is higher; or
(2) the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested Stockholder became an
Interested Stockholder (such latter date is referred to in this Article X as the
"Determination Date"), whichever is higher.
A-8
<PAGE>
b. The aggregate amount of the cash and the Fair Market Value as of the
date of the consummation of the Business Combination of consideration other than
cash to be received per share by holders of shares of any class of outstanding
Voting Stock other than Common Stock shall be at least equal to the highest of
the following (it being intended that the requirements of this subparagraph (b)
shall be required to be met with respect to every such class of outstanding
Voting Stock, whether or not the Interested Stockholder has previously acquired
any shares of a particular class of Voting Stock):
(1) (if applicable) the Highest Per Share Price (as hereinafter
defined), including any brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Stockholder for any shares of such class
of Voting Stock acquired by it: (i) within the two-year period immediately
prior to the Announcement Date; or (ii) in the transaction in which it became
an Interested Stockholder, whichever is higher; or
(2) (if applicable) the highest preferential amount per share to
which the holders of shares of such class of Voting Stock are entitled in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation; or
(3) the Fair Market Value per share of such class of Voting Stock on
the Announcement Date or on the Determination Date, whichever is higher.
c. The consideration to be received by holders of a particular class of
outstanding Voting Stock (including Common Stock) shall be in cash or in the
same form as the Interested Stockholder has previously paid for shares of such
class of Voting Stock. If the Interested Stockholder has paid for shares of any
class of Voting Stock with varying forms of consideration, the form of
consideration to be received per share by holders of shares of such class of
Voting Stock shall be either cash or the form used to acquire the largest number
of shares of such class of Voting Stock previously acquired by the Interested
Stockholder. The price determined in accordance with subparagraph B.2 of this
Article X shall be subject to appropriate adjustment in the event of any stock
dividend, stock split, combination of shares or similar event.
d. After such Interested Stockholder has become an Interested Stockholder
and prior to the consummation of such Business Combination: (1) except as
approved by a majority of the Disinterested Directors (as hereinafter defined),
there shall have been no failure to declare and pay at the regular date therefor
any full quarterly dividends (whether or not cumulative) on any outstanding
stock having preference over the Common Stock as to dividends or liquidation;
(2) there shall have been: (i) no reduction in the annual rate of dividends
paid on the Common Stock (except as necessary to reflect any subdivision of the
Common Stock), except as approved by a majority of the Disinterested Directors;
and (ii) an increase in such annual rate of dividends as necessary to reflect
any reclassification (including any reverse stock split), recapitalization,
reorganization or any similar transaction which has the effect of reducing the
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<PAGE>
number of outstanding shares of the Common Stock, unless the failure to so
increase such annual rate is approved by a majority of the Disinterested
Directors, and (3) neither such Interested Stockholder or any of its Affiliates
shall have become the beneficial owner of any additional shares of Voting Stock
except as part of the transaction which results in such Interested Stockholder
becoming an Interested Stockholder.
e. After such Interested Stockholder has become an Interested Stockholder,
such Interested Stockholder shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or other
tax advantages provided, directly or indirectly, by the Corporation, whether in
anticipation of or in connection with such Business Combination or otherwise.
f. A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder (or any subsequent
provisions replacing such Act, and the rules or regulations thereunder) shall be
mailed to stockholders of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such Act or
subsequent provisions).
C. For the purposes of this Article X:
1. A "Person" shall include an individual, a firm, a group acting in
concert, a corporation, a partnership, an association, a joint venture, a pool,
a joint stock company, a trust, an unincorporated organization or similar
company, a syndicate or any other group formed for the purpose of acquiring,
holding or disposing of securities or any other entity.
2. "Interested Stockholder" shall mean any person (other than the
Corporation or any Holding Company or Subsidiary thereof) who or which:
a. is the beneficial owner, directly or indirectly, of more than 10% of
the voting power of the outstanding Voting Stock; or
b. is an Affiliate of the Corporation and at any time within the two-year
period immediately prior to the date in question was the beneficial owner,
directly or indirectly, of 10% or more of the voting power of the then
outstanding Voting Stock; or
c. is an assignee of or has otherwise succeeded to any shares of Voting
Stock which were at any time within the two-year period immediately prior to the
date in question beneficially owned by any Interested Stockholder, if such
assignment or succession shall have occurred in the
A-10
<PAGE>
course of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933, as amended.
3. For purposes of this Article X, "beneficial ownership" shall be
determined pursuant to Rule 13d-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended, (or any successor rule or statutory
provision), or, if said Rule 13d-3 shall be rescinded and there shall be no
successor rule or provision thereto, pursuant to said Rule 13d-3 as in effect on
the date of filing of this Certificate; provided, however, that a person shall,
in any event, also be deemed the "beneficial owner" of any Common Stock:
(1) which such person or any of its affiliates beneficially owns, directly
or indirectly; or
(2) which such person or any of its affiliates has: (i) the right to
acquire (whether such right is exercisable immediately or only after the passage
of time), pursuant to any agreement, arrangement or understanding (but shall not
be deemed to be the beneficial owner of any voting shares solely by reason of an
agreement, contract, or other arrangement with this Corporation to effect any
transaction which is described in any one or more of clauses 1 through 5 of
Section A of this Article X), or upon the exercise of conversion rights,
exchange rights, warrants, or options or otherwise, or (ii) sole or shared
voting or investment power with respect thereto pursuant to any agreement,
arrangement, understanding, relationship or otherwise (but shall not be deemed
to be the beneficial owner of any voting shares solely by reason of a revocable
proxy granted for a particular meeting of stockholders, pursuant to a public
solicitation of proxies for such meeting, with respect to shares of which
neither such person nor any such Affiliate is otherwise deemed the beneficial
owner); or
(3) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its Affiliates acts as a
partnership, limited partnership, syndicate or other group pursuant to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of this Corporation; and
provided further, however, that: (1) no Director or Officer of this
Corporation (or any Affiliate of any such Director or Officer) shall, solely by
reason of any or all of such Directors or Officers acting in their capacities as
such, be deemed, for any purposes hereof, to beneficially own any Common Stock
beneficially owned by any other such Director or Officer (or any Affiliate
thereof); and (2) neither any employee stock ownership or similar plan of this
Corporation or any subsidiary of this Corporation, nor any trustee with respect
thereto or any Affiliate of such trustee (solely by reason of such capacity of
such trustee), shall be deemed, for any purposes hereof, to beneficially own any
Common Stock held under any such plan. For purposes only of computing the
percentage of beneficial ownership of Common Stock of a person, the outstanding
Common Stock shall include shares deemed owned by such person through
application of this subsection but shall not include any other Common Stock
which may be issuable by this Corporation pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise. For all other
purposes, the outstanding Common Stock shall include only Common Stock then
outstanding and shall not include any Common Stock which may be issuable by this
Corporation pursuant to any agreement, or upon the exercise of conversion
rights, warrants or options, or otherwise.
4. "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on the date of filing of this
Certificate.
5. "Subsidiary" means any corporation of which a majority of any class of
equity security is owned, directly or indirectly, by the Corporation; provided,
however, that for the purposes of the definition of Interested Stockholder set
forth in Paragraph 2 of this Section C, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity security is owned,
directly or indirectly, by the Corporation.
6. "Disinterested Director" means any member of the Board of Directors who
is unaffiliated with the Interested Stockholder and was a member of the Board of
Directors prior to the time that the Interested Stockholder became an Interested
Stockholder, and any Director who is thereafter chosen to fill any vacancy of
the Board of Directors or who is elected and who, in either event, is
unaffiliated with the Interested Stockholder and in connection with his or her
initial assumption of office is recommended for appointment or election by a
majority of Disinterested Directors then on the Board of Directors.
7. "Fair Market Value" means:
a. in the case of stock, the highest closing sales price of the stock
during the 30-day period immediately preceding the date in question of a share
of such stock on the National Association of Securities Dealers Automated
Quotation System or any system then in use, or, if such stock is admitted to
trading on a principal United States securities exchange registered under the
Securities Exchange Act of 1934, as amended, Fair Market Value shall be the
highest sale price reported during the 30-day period preceding the date in
question, or, if no such quotations are available, the Fair Market Value on the
date in question of a share of such stock as determined by the Board of
Directors in good faith, in each case with respect to any class of stock,
appropriately adjusted for any dividend or distribution in shares of such stock
or any stock split or reclassification of outstanding shares of such stock into
a greater number of shares of such stock or any combination or reclassification
of outstanding shares of such stock into a smaller number of shares of such
stock; and
b. in the case of property other than cash or stock, the Fair Market Value
of such property on the date in question as determined by the Board of Directors
in good faith.
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8. Reference to "Highest Per Share Price" shall in each case with respect
to any class of stock reflect an appropriate adjustment for any dividend or
distribution in shares of such stock or any stock split or reclassification of
outstanding shares of such stock into a greater number of shares of such stock
or any combination or reclassification of outstanding shares of such stock into
a smaller number of shares of such stock.
9. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as used in
Subparagraphs (a) and (b) of Paragraph 2 of Section B of this Article X shall
include the shares of Common Stock and/or the shares of any other class of
outstanding Voting Stock retained by the holders of such shares.
D. A majority of the Disinterested Directors of the Corporation shall have
the power and duty to determine for the purposes of this Article X, on the basis
of information known to them after reasonable inquiry: (a) whether a person is
an Interested Stockholder; (b) the number of shares of Voting Stock beneficially
owned by any person; (c) whether a person is an Affiliate or Associate of
another; and (d) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the Corporation or any Subsidiary in any Business
Combination has an aggregate Fair Market Value equaling or exceeding 25% of the
combined Fair Market Value of the Common Stock of the Corporation and its
Subsidiaries. A majority of the Disinterested Directors shall have the further
power to interpret all of the terms and provisions of this Article X.
E. Nothing contained in this Article X shall be construed to relieve any
Interested Stockholder from any fiduciary obligation imposed by law.
F. Notwithstanding any other provisions of this Certificate or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class or
series of the Voting Stock required by law, this Certificate or any Preferred
Stock Designation, the affirmative vote of the holders of at least 70 percent of
the voting power of all of the then-outstanding shares of the Voting Stock,
voting together as a single class, shall be required to alter, amend or repeal
this Article X.
ARTICLE XI
Elimination of Directors' Liability
Directors of the Corporation shall have no liability to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this Article XI shall not eliminate liability of a
director (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not made in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which a director derived an improper personal benefit. If the Delaware
General Corporation Law is amended after the effective date of this Certificate
to further eliminate or limit the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE XII
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A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a Director or Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent or in any other capacity while serving as a Director, Officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that, except as provided
in Section C hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
B. The right to indemnification conferred in Section A of this Article XII
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a Director or Officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, services to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article XII shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
Director, Officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article XII is not paid in full
by the Corporation within sixty days after a written claim has been received by
the Corporation, except in the case of a claim for an advancement of expenses,
in which case the applicable period shall be twenty days, the indemnitee may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in
a suit brought by the Corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the indemnitee shall be entitled to be paid also
the expenses of prosecuting or defending such suit. In (i) any suit brought by
the indemnitee to enforce a right to indemnification hereunder (but not in a
suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that, and (ii) in any suit by the Corporation to recover
an advancement of expenses pursuant to the terms of an undertaking the
Corporation shall be entitled to recover such expenses upon a final adjudication
that, the indemnitee has not met any applicable standard for indemnification set
forth in the Delaware General Corporation Law. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of
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conduct or, in the case of such a suit brought by the indemnitee, be a defense
to such suit. In any suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this Article XII or
otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article XII shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Certificate,
Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any Director, Officer, employee or agent of the Corporation or
subsidiary or Affiliate or another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article XII with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
ARTICLE XIII
The Board of Directors of the Corporation, when evaluating any offer
of another Person (as defined in Article X hereof) to: (A) make a tender or
exchange offer for any equity security of the Corporation; (B) merge or
consolidate the Corporation with another corporation or entity; or (C) purchase
or otherwise acquire all or substantially all of the properties and assets of
the Corporation, may, in connection with the exercise of its judgment in
determining what is in the best interest of the Corporation and its
stockholders, give due consideration to all relevant factors, including, without
limitation, those factors that Directors of any subsidiary of the Corporation
may consider in evaluating any action that may result in a change or potential
change in the control of the subsidiary, and the social and economic effect of
acceptance of such offer: on the Corporation's present and future customers and
employees and those of its Subsidiaries (as defined in Article X hereof); on the
communities in which the Corporation and its Subsidiaries operate or are
located; on the ability of the Corporation to fulfill its corporate objective
under applicable laws and regulations; and on the ability of its subsidiary
savings association to fulfill the objectives of stock savings association under
applicable statutes and regulations.
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ARTICLE XIV
Amendment of Bylaws
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the Corporation is expressly authorized to make,
repeal, alter, amend and rescind the Bylaws of the Corporation. Notwithstanding
any other provision of this Certificate or the Bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by law),
the Bylaws shall not be made, repealed, altered, amended or rescinded by the
stockholders of the Corporation except by the vote of the holders of not less
than 70% of the outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors (considered for this purpose as
one class) cast at a meeting of the stockholders called for that purpose
(provided that notice of such proposed adoption, repeal, alteration, amendment
or rescission is included in the notice of such meeting), or, as set forth
above, by the board of directors.
ARTICLE XV
Amendment of Certificate of Incorporation
The Corporation reserves the right to repeal, alter, amend or rescind any
provision contained in this Certificate in the manner now or hereafter
prescribed by law, and all rights conferred on stockholders herein are granted
subject to this reservation. Notwithstanding the foregoing, the provisions set
forth in Articles VII, VIII, IX, X, XI, XII, XIII, XIV and this Article XV
of this Certificate may not be repealed, altered, amended or rescinded in any
respect unless the same is approved by the affirmative vote of the holders of
not less than 70% of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for this
purpose as a single class) cast at a meeting of the stockholders called for that
purpose (provided that notice of such proposed adoption, repeal, alteration, or
rescission is included in the notice of such meeting).
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