Registration No. 333-
As filed with the Securities and Exchange Commission on November 4, 2003
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under The Securities Act of 1933
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CENTRAL FEDERAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 34-1877137
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
601 MAIN STREET, WELLSVILLE, OHIO 43968
330.532.1517
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Eloise L. Mackus
Senior Vice President, General Counsel and Secretary
Central Federal Corporation
2841 Riviera Drive, Suite 300, Fairlawn, Ohio 44333-3413
330.666.7979
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Stanley E. Everett
Brouse McDowell
500 First National Tower
Akron, Ohio 44114
330.535.5711
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this registration statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.[X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ] ________________
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for he same offering.[ ] _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
CALCULATION OF REGISTRATION FEE
Title of Security Amount Proposed Maximum Proposed Maximum Amount of
To Be Registered To Be Registered Offering Price Aggregate Offering Registration
Per Share (1) Price (1) Fee (1)
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Common Stock, par value $0.01 312,649 shares $13.85 $4,330,188.65 $350.31
per share
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(1) The proposed maximum offering price per share has been determined pursuant
to Rule 457(c) as the average of the bid and asked prices quoted for Common
Stock on the Nasdaq Small Cap Market on October 30, 2003, and the proposed
maximum aggregate offering price and the amount of registration fee have
been calculated using that average price.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Company shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act or until the registration statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
section 8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES, IN ANY STATE IN WHICH THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
312,649 SHARES
CENTRAL FEDERAL CORPORATION
COMMON STOCK
OFFERED BY THE SELLING STOCKHOLDERS
This prospectus covers resales by the Selling Stockholders (the "Selling
Stockholders") of an aggregate of 312,649 shares of the common stock ("Common
Stock") of Central Federal Corporation (the "Company"). The Company will not
receive any proceeds from the sale of Common Stock by the Selling Stockholders.
The Selling Stockholders may sell Common Stock at any time at market prices or
at privately negotiated prices. Such sales may be made directly to purchasers or
through underwriters, broker-dealers or agents, who may receive compensation in
the form of discounts, concessions or commissions.
The Common Stock is quoted on the Nasdaq Small Cap Market under the symbol
"GCFC." The last reported sale price for Common Stock on the Nasdaq Small Cap
Market was $13.99 per share on October 29, 2003.
The mailing address of the Company's principal executive offices is Central
Federal Corporation, 601 Main Street, Wellsville, Ohio 43968; the general
telephone number at that address is 330.532.1517.
AS A PROSPECTIVE PURCHASER OF SHARES OF COMMON STOCK, YOU SHOULD CONSIDER
CAREFULLY THE INFORMATION PROVIDED UNDER THE CAPTION "RISK FACTORS" ON PAGES 2
AND 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SHARES OF COMMON STOCK TO BE
DISTRIBUTED UNDER THIS PROSPECTUS OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is November ___, 2003
TABLE OF CONTENTS
Summary Information
Risk Factors
Caution Regarding Forward-looking Statements
Use of Proceeds
Price Range of Common Stock
Description of Capital Stock
Limitations on Acquiring the Company
Selling Stockholders
Plan of Distribution
Legal Matters
Experts
Incorporation of Certain Documents by Reference
Where You Can Find Additional Information
Commission Position on Indemnification for Securities Act Liabilities
ANNEX I Certain Provisions of the Company's Certificate of Incorporation
ANNEX II Certain Provisions of the Company's Bylaws
ANNEX III Certain Provisions of Delaware Law
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS. YOU
SHOULD NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER
TO SELL OR BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO DO
SO. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF THE DATE ON ITS COVER
PAGE.
SUMMARY INFORMATION
THE ISSUER
Central Federal Corporation (the "Company") was organized as a Delaware
corporation in September 1998, under the name Grand Central Financial Corp., as
the holding company for Central Federal Savings and Loan Association (the
"Association") in connection with the Association's conversion from a mutual to
stock form of organization. On March 27, 2003, the Association changed its name
to Central Federal Bank (the "Bank"), and, on April 23, 2003, Grand Central
Financial Corp. changed its name to Central Federal Corporation. As a savings
and loan holding company, the Company is subject to regulation by the Office of
Thrift Supervision (the "OTS"). Currently, the Company does not transact any
material business other than through the Bank. At June 30, 2003, the Company had
total assets of $111,747,412 and stockholders' equity of $21,162,581.
The Bank is a community-oriented savings institution which was originally
organized in 1892. Its principal business consists of attracting deposits from
the general public in its primary market area and investing those deposits and
other funds generated from operations and Federal Home Loan Bank of Cincinnati
("FHLB") advances, primarily in conventional mortgage loans secured by
single-family residences. The Bank also invests in consumer loans, primarily
indirect automobile loans and loans originated directly or on the Bank's behalf
by automobile dealers at the time of sale. To a lesser extent, the Bank invests
in home equity, multi-family, commercial real estate and business, construction
and land loans. The Bank also invests in mortgage-backed securities, primarily
those guaranteed or insured by government agencies such as Ginnie Mae, Fannie
Mae and Freddie Mac, and other investment grade securities. The Bank's revenues
are derived principally from the generation of interest and fees on loans
originated and, to a lesser extent, from interest and dividends on investment
securities. The Bank's primary sources of funds are retail savings deposits and,
to a lesser extent, principal and interest payments on loans and investment
securities, FHLB advances and proceeds from the sale of loans. The Bank operates
through its home office located in Wellsville, Ohio, a full service office in
Calcutta, Ohio and an office in Fairlawn, Ohio. The Bank expects to open an
additional office in Columbus, Ohio in 2003.
THE OFFERING
Up to 312,649 shares of Common Stock are being offered pursuant to this
prospectus by stockholders who purchased the shares in a private offering that
commenced on April 23, 2003 and ended on August 31, 2003, at prices ranging from
$9.95 per share to $12.29 per share. Approximately 78% of the shares were sold
at the price of $9.95 per share, which was equal to the book value per share on
March 31, 2003, just prior to the commencement of the offering; however,
pursuant to Nasdaq rules, officers and directors who purchased shares in the
private offering paid higher prices ranging from $12.12 to $12.29 per share, in
each case based upon the closing bid price on the date of purchase. The Company
will not receive any proceeds from the sales of shares pursuant to this
offering.
RISK FACTORS
In deciding whether to invest in shares of Common Stock, you should consider
carefully the risk factors discussed in the next section, and you should review
the information incorporated in the discussion of risk factors by reference to
the Company's Form 10-KSB for its fiscal year ended December 31, 2002.
Information on obtaining a copy of the Company's Form 10-KSB is set forth on
page 12 of this prospectus under the caption "Where You Can Find Additional
Information."
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RISK FACTORS
An investment in shares of Common Stock involves significant risk. You should
carefully consider the following risk factors and the other information set
forth in this prospectus before deciding to purchase any shares of Common Stock.
THE PRICE OF COMMON STOCK MAY BE VOLATILE, WHICH MAY RESULT IN LOSSES FOR
INVESTORS.
The market price for shares of Common Stock has been volatile in the past, and
several factors could cause the price to fluctuate substantially in the future.
These factors include:
- announcements of developments related to the business of the Company or
the Bank;
- fluctuations in the Company's results of operations;
- sales of substantial amounts of the Company's securities into the
marketplace;
- general conditions in the Company's banking niche or the worldwide
economy;
- a shortfall in revenues or earnings compared to securities analysts'
expectations;
- lack of an active trading market for the Common Stock;
- changes in analysts' recommendations or projections; and
- announcements of new acquisitions or other projects by the Company or
the Bank.
The market price of Common Stock may fluctuate significantly in the future, and
these fluctuations may be unrelated to the performance of the Company. General
market price declines or market volatility in the future could adversely affect
the price of Common Stock, and the current market price may not be indicative of
future market prices.
THERE IS NO ACTIVE TRADING MARKET FOR THE COMPANY'S CAPITAL STOCK, AND THUS YOUR
ABILITY TO SELL SHARES OR PURCHASE ADDITIONAL SHARES OF COMMON STOCK WILL BE
LIMITED AND THE MARKET PRICE MAY NOT REFLECT TRUE VALUE.
Your ability to sell shares of Common Stock or purchase additional shares
largely depends upon the existence of an active market for the Common Stock.
Although the Common Stock is quoted on Nasdaq, the volume of trades on any given
day is extremely light. Until an active trading market develops for the Common
Stock, you may be unable to find a buyer for shares you wish to sell or a seller
of additional shares you wish to purchase. In addition, a fair valuation of the
purchase or sales price of a share of Common Stock also depends upon active
trading, and thus the price you receive for a thinly traded stock, such as the
Common Stock, may not reflect its true value.
FUTURE SALES OR ADDITIONAL ISSUANCES OF THE COMPANY'S CAPITAL STOCK MAY DEPRESS
PRICES OF SHARES OF COMMON STOCK.
Sales of a substantial amount of the Company's capital stock in the public
market, or the appearance that a substantial amount is available for sale, or
the issuance of a significant number of shares could adversely affect the market
price for shares of Common Stock. As of October 1, 2003, the Company was
authorized to issue up to 6,000,000 shares of Common Stock, of which 1,973,538
shares were outstanding, 245,755 shares were reserved for issuance pursuant to
options granted under the Company's stock option plans and an additional 24,864
shares were available for granting options or shares of restricted stock under
these plans. The Company also was authorized to issue up to 1,000,000 shares of
Preferred Stock, none of which was outstanding or reserved for issuance.
Accordingly, the Company may issue up to 3,755,843 additional shares of Common
Stock (including those reserved for issuance) and up to 1,000,000 shares of
Preferred Stock without further stockholder approval. Dilution to the value of a
stockholder's investment also would occur if any of the available shares were
issued at a price less than the average price per share paid by such
stockholder.
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THE COMPANY'S CHARTER DOCUMENTS, DELAWARE LAW AND FEDERAL REGULATIONS MAY
INHIBIT A TAKEOVER OR LIMIT THE COMPANY'S GROWTH OPPORTUNITIES, WHICH COULD
CAUSE THE MARKET PRICE OF COMMON STOCK TO DECLINE.
Certain provisions of the Company's charter documents, Delaware law and federal
regulations could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from attempting to acquire, control
of the Company. See "Limitations on Acquiring the Company," on pages 5 through
9. In addition, the Company must obtain approval from the OTS before acquiring
control of any other SAIF-insured savings institution. No person may acquire
control of a federally insured savings institution without providing at least 60
days written notice to the OTS and giving the OTS an opportunity to disapprove
the proposed acquisition.
THE COMPANY AND THE BANK OPERATE IN A HIGHLY REGULATED ENVIRONMENT, AND CHANGES
IN LAWS AND REGULATIONS TO WHICH THE COMPANY OR THE BANK IS SUBJECT MAY
ADVERSELY AFFECT THE COMPANY'S RESULTS OF OPERATIONS.
The Company and the Bank operate in a highly regulated environment and are
subject to supervision by various governmental regulatory agencies, including
the OTS and the Federal Deposit Insurance Corporation ("FDIC"). Laws and
regulations currently applicable to the Company and the Bank may change, and
there is no assurance that such changes will not adversely affect the business
of the Company and the Bank. Therefore, the Company is unable to determine the
extent to which legislation, if enacted, would affect its business. For more
detailed information regarding the risks attendant to regulation and
supervision, see the discussion in the Company's Form 10-KSB for the fiscal year
ended December 31, 2002, in Part I, Item 1, Description of Business, under the
captions "Federal Savings Institution Regulation," "Federal Home Loan Bank
System," and "Federal Reserve System" and "Holding Company Regulation." See
"Where You Can Find Additional Information" at page 12 to learn how to secure a
copy of the Form 10-KSB.
THE COMPANY OPERATES IN AN EXTREMELY COMPETITIVE MARKET, AND ITS BUSINESS WILL
SUFFER IF IT IS UNABLE TO COMPETE EFFECTIVELY.
In the conduct of certain aspects of its banking business, the Bank encounters
significant competition form other commercial banks, savings and loan
associations, credit unions, mortgage banking firms, consumer finance companies,
securities brokerage firms, insurance companies, money market mutual funds, and
other financial institutions. Many of the Bank's competitors have substantially
greater resources and lending limits than the Bank.
THE LOSS OF KEY MEMBERS OF THE COMPANY'S SENIOR MANAGEMENT TEAM COULD ADVERSELY
AFFECT ITS BUSINESS.
The Company's success depends largely on the efforts and abilities of current
senior management of the Company and the Bank. Their experience and industry
contacts significantly benefit the Company. If the benefit of their experience
and contacts were to be lost, the business of the Bank and the Company could be
adversely affected.
IF THE COMPANY DOES NOT EXPERIENCE ANTICIPATED GROWTH, THE COSTS ASSOCIATED WITH
RECENT EXPANSION WOULD HAVE A MATERIAL ADVERSE IMPACT ON EARNINGS.
The Company recently has expanded to new locations and restructured its
personnel in anticipation of growth. If the Company does not experience expected
growth, the costs associated with this expansion and restructuring would have a
material adverse impact on the Company's earnings.
CHANGES IN ECONOMIC AND POLITICAL CONDITIONS COULD ADVERSELY AFFECT THE COMPANY.
The success of the Company and the Bank depend, to a certain extent, upon
economic and political conditions, local and national, as well as governmental
monetary policies. Conditions such as inflation, recession, unemployment,
changes in interest rates, short money supply and other factors beyond the
control of the Company and the Bank may adversely affect the Bank's asset
quality, deposit levels and loan demand and, therefore, the earnings of the Bank
and the Company.
CHANGES IN INTEREST RATES COULD ADVERSELY AFFECT THE COMPANY'S RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
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The Company's earnings depend substantially on "rate differentials," which are
the differences between the rates it earns on loans, securities and other
earning assets, and the interest rates it pays on deposits and other borrowings.
These rates are highly sensitive to many factors which are beyond the Company's
control, including general economic conditions and the policies of various
governmental and regulatory authorities. Frequently the maturities of assets and
liabilities are not balanced, and an increase or decrease in interest rates
could have a material adverse affect the Company's net interest margin, results
of operations and financial condition.
THE COMPANY MAY NOT BE ABLE TO PAY DIVIDENDS IN THE FUTURE IN ACCORDANCE WITH
PAST PRACTICE.
The Company is dependent primarily upon the Bank for its earnings and funds to
pay dividends on the Company's Common Stock. The payment of dividends by the
Company and the Bank also is subject to legal and regulatory restrictions. Any
payment of dividends by the Company in the future will depend, in large part, on
the Bank's earnings, capital requirements, financial condition and other factors
considered relevant by the Board of Directors (the "Board").
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that reflect the Company's
views regarding future events. These forward-looking statements are subject to
risks and uncertainties and include statements regarding position, business
strategy and other plans and objectives for future operations and statements
that are not historical facts. Although the Company believes such statements are
based on reasonable assumptions, these forward-looking statements are subject to
numerous factors, risks and uncertainties that could cause actual outcomes and
results to be materially different from those projected, including, but not
limited to, those statements found in this prospectus under the caption "Risk
Factors" and in other documents filed by the Company with the Securities and
Exchange Commission and incorporated in this prospectus. Readers are cautioned
not to place undue reliance on forward-looking statements which speak only as of
their dates. Except for its ongoing obligation to disclose material information
as required by the federal securities laws and Nasdaq rules, the Company does
not have any intention to update forward-looking statements after the
distribution of this prospectus. Actual results may differ materially from those
suggested by the forward-looking statements for various reasons, including those
discussed under "Risk Factors" in this prospectus.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock by the
Selling Stockholders.
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PRICE RANGE OF COMMON STOCK
Common Stock is quoted on the Nasdaq Small Cap Market under the symbol "GCFC."
Set forth below are the high and low sales prices of Common Stock for the
periods indicated as reported on the Nasdaq Small Cap Market.
HIGH LOW
FISCAL QUARTER ENDED SEPTEMBER 30, 2003 $14.000 $11.350
FISCAL QUARTER ENDED JUNE 30, 2003 $13.040 $10.400
FISCAL QUARTER ENDED MARCH 31, 2003 10.850 9.100
FISCAL YEAR ENDED DECEMBER 31, 2002
First Quarter 11.000 9.900
Second Quarter 11.360 10.400
Third Quarter 10.790 9.030
Fourth Quarter 10.000 9.100
FISCAL YEAR ENDED DECEMBER 31, 2001
First Quarter 14.500 9.000
Second Quarter 10.500 8.900
Third Quarter 9.870 8.510
Fourth Quarter 10.250 8.510
FISCAL YEAR ENDED DECEMBER 31, 2000
First Quarter 16.000 8.125
Second Quarter 10.125 8.063
Third Quarter 10.250 9.000
Fourth Quarter 11.375 8.875
On October 29, 2003, the last reported sales price of the Company's Common Stock
on the Nasdaq Small Cap Market was $13.99 per share.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company, a Delaware corporation, has authorized capital stock consisting of
6,000,000 shares of Common Stock, par value $0.01 per share, and 1,000,000
shares of preferred stock, par value $0.01 per share (the "Preferred Stock").
At October 13, 2003, 2,018,471 shares of Common Stock were issued and
outstanding and held by approximately 630 holders of record and individual
participants in security position listings. No shares of Preferred Stock were
outstanding on that date or are outstanding on the date of this prospectus. The
Common Stock is listed on the Nasdaq Small Cap Market under the ticker symbol
"GCFC." Each share of Common Stock is entitled to one vote on all matters
presented to stockholders. No shares of Preferred Stock are issued and
outstanding as of the date of this prospectus.
The Common Stock represents non-withdrawable capital, is not an account of an
insurable type, and is not insured by the FDIC or any governmental agency.
COMMON STOCK
Dividends. The Company can pay dividends out of statutory surplus or from
certain net profits if, as and when declared by its Board. The payment of
dividends by the Company may be subject to limitations imposed by law and
applicable regulation. The holders of Common Stock are entitled to receive and
share equally in such dividends as may be declared by the Board out of funds
legally available therefore. If the Company issues Preferred Stock, the holders
of shares of Preferred Stock may have a priority over the holders of shares of
Common Stock with respect to the receipt of dividends.
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Voting Rights. The holders of Common Stock possess exclusive voting rights in
the Company. They elect the Board and act on such other maters as are required
to be presented to them under Delaware law or the Company's Certificate of
Incorporation, as well as any other matter that properly comes before the
stockholders. Each share of Common Stock is entitled to one vote; there is no
right to cumulate votes in the election of directors. If the Company hereafter
issues Preferred Stock, holders of shares of Preferred Stock may also possess
voting rights.
Liquidation. In the event of any liquidation, dissolution or winding up of the
Bank, the Company, as holder of the Bank's capital stock, would be entitled to
receive, after payment or provision for payment of all debts and liabilities of
the Bank (including all deposit accounts and accrued interest thereon and any
remaining rights under the liquidation account established in connection with
the Bank's conversion from mutual to stock form in 1998), all assets of the Bank
available for distribution. In the event of any liquidation, dissolution or
winding up of the Company, the holders of its Common Stock would be entitled to
receive, after payment or provision for payment of all its debts and
liabilities, all assets of the Company available for distribution. If Preferred
Stock is issued, the holders of Preferred Stock may have a priority over the
holders of Common Stock in the event of liquidation, dissolution or winding up.
Preemptive Rights. Holders of Common Stock are not entitled to preemptive rights
with respect to any shares that may be issued. Common Stock is not subject to
redemption.
PREFERRED STOCK
None of the shares of the Company's authorized Preferred Stock are issued and
outstanding. However, shares of Preferred Stock may be issued with such
preferences and designations as the Board may from time to time determine. The
Board can, without stockholder approval, issue Preferred Stock with voting,
dividend, liquidation and conversion rights, which could dilute the voting
strength of the holders of Common Stock and may assist management in impeding a
takeover or attempted change in control of the Company.
LIMITATIONS ON ACQUIRING THE COMPANY
Several provisions of the Company's charter documents, the laws of Delaware and
federal regulations limit the ability of any person to acquire a controlling
interest in the Company and thus may be deemed to have an anti-takeover effect.
The following discussion is a general summary of those provisions. The relevant
provisions of the Company's Certificate of Incorporation ("Certificate of
Incorporation") and ("Bylaws") and Delaware law are appended to this prospectus
as Annexes I, II and III, respectively, and reference is made in each case to
the relevant Annex for a more complete understanding of the provision.
LIMITATION ON VOTING RIGHTS
The Certificate of Incorporation of the Company provides that in no event shall
any record beneficial owner of any outstanding Common Stock in excess of 10% of
the then outstanding shares of the Common Stock (the "Limit") be entitled or
permitted to any vote in respect of the shares held in excess of the Limit.
Beneficial ownership is determined pursuant to Rule 13d-3 of the General Rules
and Regulations promulgated pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act"), and includes (i) shares beneficially owned by such person or
any affiliate (as defined in Exchange Act Rule 12b-2), (ii) shares which such
person or his affiliates have the right to acquire pursuant to any agreement or
understanding, including without limitation upon the exercise of conversion
rights or options and (iv) shares as to which such person or his affiliates are
deemed to have beneficial ownership through any partnership, syndicate or group
acting for the purpose of acquiring, holding, voting or disposing of shares of
Common Stock. Notwithstanding the foregoing, shares with respect to which a
revocable proxy has been granted in connection with a meeting of stockholders
and shares beneficially owned by any Company benefit plan are not subject to the
limitation, and no director or officer of the Company (or any affiliate) will be
deemed to beneficially own shares of Common Stock of any other director or
officer of the Company (or any affiliate) solely by reason of service as a
director or officer of the Company.
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CLASSIFIED BOARD OF DIRECTORS
The Board is divided into three classes, each of which contains one-third of the
whole number of members of the Board. Each class serves a staggered term, with
one-third of the total number of directors being elected each year. The
Certificate of Incorporation provides that the size of the Board is fixed from
time to time by a majority of the directors. The Certificate of Incorporation
provides that any vacancy occurring in the Board, including a vacancy resulting
from death, resignation, retirement, disqualification, removal from office or
other cause, may be filled for the remainder of the unexpired term exclusively
by a majority vote of the directors then in office. The classified Board is
intended to provide for continuity of the Board and to make it more difficult
and time consuming for a stockholder group to fully use its voting power to gain
control of the Board without the consent of the incumbent Board of the Company.
A stockholder may nominate any person to serve as a director, but notice of such
nomination generally must be provided to the Company not later than 90 days
prior to the meeting date. The Certificate of Incorporation of the Company
provides that a director may be removed from the Board prior to the expiration
of his term only for cause, upon the vote of 80% of the outstanding shares of
voting stock. In the absence of these provisions, the vote of the holders of a
majority of the shares could remove the entire Board, with or without cause, and
replace it with persons of the stockholders' choice.
CUMULATIVE VOTING, SPECIAL MEETINGS AND ACTION BY WRITTEN CONSENT
The Certificate of Incorporation does not provide for cumulative voting for any
purpose. Moreover, special meetings of stockholders of the Company may be called
only by the Board. The Certificate of Incorporation also provides that any
action required or permitted to be taken by the stockholders of the Company may
be taken only at an annual or special meeting and prohibits stockholder action
by written consent in lieu of a meeting.
AUTHORIZED SHARES
The Certificate of Incorporation authorizes the issuance of 6,000,000 shares of
Common Stock and 1,000,000 shares of Preferred Stock. The authorization of these
shares gives the Board flexibility to effect, among other transactions,
financings, acquisitions, stock dividends, stock splits and employee stock
options. However, these additional authorized shares may also be used by the
Board consistent with its fiduciary duty to deter future attempts to gain
control of the Company. The Board also has sole authority to determine the terms
of any one or more series of Preferred Stock, including voting rights,
conversion rates, and liquidation preferences. As a result of the ability to fix
voting rights for a series of Preferred Stock, the Board has the power, to the
extent consistent with its fiduciary duty, to issue a series of Preferred Stock
to persons friendly to management in order to attempt to block a post-tender
offer merger or other transaction by which a third party seeks control, and
thereby assist management to retain its position.
STOCKHOLDER VOTE REQUIRED TO APPROVE BUSINESS COMBINATIONS WITH PRINCIPAL
STOCKHOLDERS
The Certificate of Incorporation requires the approval of the holders of at
least 80% of the Company's outstanding shares of voting stock to approve certain
"Business Combinations," as defined therein, and related transactions. 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 Common Stock of the
Company and any other affected class of stock. Under the Certificate of
Incorporation, at least 80% approval of stockholders is required in connection
with any transaction involving an Interested Stockholder (as defined below)
except (i) in cases where the proposed transaction has been approved in advance
by a majority of those members of the Board who are unaffiliated with the
Interested Stockholder and were directors prior to the time when the Interested
Stockholder became an Interested Stockholder or (ii) 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 in which case, if a
stockholder vote is required, approval of only a majority of the outstanding
shares of voting stock would be sufficient. The term "Interested Stockholder" is
defined to include any individual, corporation, partnership or other entity
(other than the Company or its subsidiary) which owns beneficially or controls,
directly or indirectly, 15% or more of the outstanding shares of voting stock of
the Company. This provision of the Certificate of Incorporation applies to any
"Business Combination," which is defined to include (i) any merger or
consolidation of the Company or any of its subsidiaries with or into any
Interested Stockholder or Affiliate (as defined in the Certificate of
Incorporation) of an Interested Stockholder; (ii) any sale, lease, exchange,
mortgage, pledge, transfer, or other disposition to or with any Interested
Stockholder or Affiliate of 10% or more of the assets of the Company or combined
assets of the Company and its subsidiary; (iii) the issuance or transfer to any
Interested Stockholder or its
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Affiliate by the Company (or any subsidiary) of any securities of the Company in
exchange for any assets, cash or securities the value of which equals or exceeds
10% of the fair market value of the Common Stock of the Company; (iv) the
adoption of any plan for the liquidation or dissolution of the Company proposed
by or on behalf of any Interested Stockholder or Affiliate thereof and (v) any
reclassification of securities, recapitalization, merger or consolidation of the
Company which has the effect of increasing the proportionate share of Common
Stock or any class of equity or convertible securities of the Company owned
directly or indirectly by an Interested Stockholder or Affiliate thereof.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
Amendment of the Company's Certificate of Incorporation must be approved by a
majority vote of its Board or by the affirmative vote of at least 80% of the
outstanding shares of the Company's voting stock entitled to vote (after giving
effect to the provision limiting voting rights) in order to amend or repeal
certain provisions of the Certificate of Incorporation, including the provisions
relating to voting rights (Article Fourth, Part C), management of the business
and conduct of the affairs of the Company and calling special meetings (Article
Fifth), the number and classification of directors and nominations (Article
Sixth), amendment of the Bylaws (Article Seventh), approval of certain business
combinations (Article Eighth), director and officer indemnification by the
Company (Article Tenth) and amendment of the Company's Certificate of
Incorporation (Article Twelfth).
The Bylaws may be amended by the Board, or by the vote of at least 80% of the
total votes eligible to be voted in the election of directors.
CERTAIN PROVISIONS OF THE BYLAWS
Article Sixth of the Certificate of Incorporation incorporates by reference
Article I, Section 6 of the Bylaws, as it pertains to stockholder nominations
for director. As noted above, a stockholder who intends to nominate a candidate
for election to the Board must give at least 90 days advance notice to the
Secretary of the Company. Article I, Section 6 of the Bylaws also requires a
stockholder to give 90 days prior notice with respect to any new business; the
stockholder also must provide certain information to the Company concerning the
nature of the new business, the stockholder and the stockholder's interest in
the business matter. Similarly, a stockholder wishing to nominate any person for
election as a director must provide the Company with certain information
concerning the nominee and the proposing stockholder.
Article I, Section 9 of the Bylaws provides that any action to be taken by the
stockholders must be taken at a special or annual meeting and may not be taken
by written consent of the stockholders.
Article VIII of the Bylaws specifies that the Bylaws may be amended by a
majority of the members of the Board or by the affirmative vote of stockholders
holding at least 80% of the outstanding shares of Common Stock.
REGULATORY RESTRICTIONS
A federal regulation prohibits any person prior to the completion of a
conversion from transferring, or entering into any agreement or understanding to
transfer, the legal or beneficial ownership of the subscription rights issued
under a plan of conversion or the stock to be issued upon their exercise. This
regulation also prohibits any person prior to the completion of a conversion
from offering, or making an announcement of an offer or intent to make an offer,
to purchase such subscription rights or stock. For three years following
conversion, OTS regulations prohibit any person, without the prior approval of
the OTS, from acquiring or making an offer to acquire more than 10% of the stock
of any converted savings institution if such person is, or after consummation of
such acquisition would be, the beneficial owner of more than 10% of such stock.
In the event that any person, directly or indirectly, violates this regulation,
the securities beneficially owned by such person in excess of 10% shall not be
counted as shares entitled to vote and shall not be voted by any person or
counted as voting shares in connection with any matter submitted to a vote of
stockholders.
Federal law provides that no company, "directly or indirectly or acting in
concert with one or more persons, or through one or more subsidiaries, or
through one or more transactions," may acquire "control" of a savings
association at any time without the prior approval of the OTS. In addition, any
company that acquires such control becomes a "savings and loan holding company"
subject to registration, examination and regulation as a savings and loan
holding company. Control in this context means ownership of, control of, or
holding proxies representing ore than 25% of the voting shares
8
of a savings association or the power to control in any manner the election of a
majority of the directors of such institution.
Federal law also provides that no "person," acting directly or indirectly or
through or in concert with one or more other persons, may acquire control of a
savings association unless at least 60 days prior written notice has been given
to the OTS and the OTS has not objected to the proposed acquisition. Control is
defined for this purpose as the power, directly or indirectly, to direct the
management or policies of a savings association or to vote more than 25% of any
class of voting securities of a savings association. Under federal law (as well
as the regulations referred to below) the term "savings association" includes
state-chartered and federally chartered SAIF-insured institutions, federally
chartered savings and loans and savings banks whose accounts are insured by the
FDIC and holding companies thereof.
Federal regulations require that, prior to obtaining control of an insured
institution, a person, other than a company, must give 60 days notice to the OTS
and have received no OTS objection to such acquisition of control, and a company
must apply for and receive OTS approval of the acquisition. Control, involves a
25% voting stock test, control in any manner of the election of a majority of
the institution's directors, or a determination by the OTS that the acquiror has
the power to direct, or directly or indirectly to exercise a controlling
influence over, the management or policies of the institution. Acquisition of
more than 10% of an institution's voting stock, if the acquiror also is subject
to any one of either "control factors," constitutes a rebuttable determination
of control under the regulations. The determination of control may be rebutted
by submission to the OTS, prior to the acquisition of stock or the occurrence of
any other circumstances giving rise to such determination, of a statement
setting forth facts and circumstances which would support a finding that no
control relationship will exist and containing certain undertakings. The
regulations provide that persons or companies which acquire beneficial ownership
exceeding 10% or more of any class of a savings association's stock after the
effective date of the regulations must file with the OTS a certification that
the holder is not in control of such institution, is not subject to a rebuttable
determination of control and will take no action which would result in a
determination or rebuttable determination of control without prior notice to or
approval of the OTS, as applicable.
DELAWARE CORPORATE LAW
Delaware law provides additional protection against hostile takeovers. The
Delaware takeover statute, which is codified in Section 203 of the Delaware
General Corporation law ("Section 203"), is intended to discourage certain
takeover practices by impeding the ability of a hostile acquiror to engage in
certain transactions with the target company.
In general, Section 203 provides that a "Person" (as defined therein) who owns
15% or more of the outstanding voting stock of a Delaware corporation (an
"Interested Stockholder") may not consummate a merger or other business
combination transaction with such corporation at any time during the three-year
period following the date such "Person" became an Interested Stockholder. The
term "business combination" is defined broadly to cover a wide range of
corporate transactions including mergers, sales of assets, issuances of stock,
transactions with subsidiaries and the receipt of disproportionate financial
benefits.
The statute exempts the following transactions from the requirements of Section
203: (i) any business combination if, prior to the date a person became an
Interested Stockholder, the Board approved either the business combination or
the transaction which resulted in the stockholder becoming an Interested
Stockholder; (ii) any business combination involving a person who acquired at
least 85% of the outstanding voting stock in the transaction in which he became
an Interested Stockholder, with the number of shares outstanding calculated
without regard to those shares owned by the corporation's directors who are also
officers and by certain employee stock plans; (iii) any business combination
with an Interested Stockholder that is approved by the Board and by a two-thirds
vote of the outstanding voting stock not owned by the Interested Stockholder;
and (iv) certain business combinations that are proposed after the corporation
had received other acquisition proposals and which are approved or not opposed
by a majority of certain continuing members of the Board. A corporation may
exempt itself from the requirements of the statute by adopting an amendment to
its Certificate of Incorporation or Bylaws electing not to be governed by
Section 203.
9
SELLING STOCKHOLDERS
The following table sets forth the name of each beneficial owner of Common Stock
who is participating in this Offering as a Selling Stockholder, as well as (i)
any position such person now holds with the Company or the Bank, (ii) the number
of shares and percentage of the outstanding shares of Common Stock the person
held immediately prior to this Offering, (iii) the number of shares offered by
such Selling Stockholder in this Offering and (iv) the number of shares and
percentage of the outstanding shares of Common Stock such Selling Stockholder
will hold immediately after this offering, if all the shares offered are sold.
Name Position with the Pre-Offering Shares Post-Offering
Of Beneficial Owner Company or Bank Holdings Offered Holdings
-------------------------------------------------------------------------------------------------------
Shares % Shares %
-------------------------------------------------------------------------------------------------------
Ronald C. Allan 5,000 0.22 5,000 0 0.00
Hamilton Amer 1,500 0.07 1,500 0 0.00
Jerry Apple 5,000 0.22 5,000 0 0.00
Edward L. Baumgardner Regional President 2,000 0.09 2,000 0 0.00
Belden Brick Company, The 45,000 2.01 45,000 0 0.00
Paul B. Belden Trust 4,000 0.18 4,000 0 0.00
Bob Burnstine 4,000 0.18 4,000 0 0.00
Gary Clark 10,000 0.45 10,000 0 0.00
Robert B. Cooper 4,000 0.18 4,000 0 0.00
John Paul Davis 2,500 0.11 2,500 0 0.00
Ty Diehl 1,000 0.04 1,000 0 0.00
W. Gary Diehl 6,000 0.27 6,000 0 0.00
W. R. Downing* Director 16,192 0.72 16,192 0 0.00
William W. Eaton 5,025 0.22 5,025 0 0.00
Ernest R. Estep Trust 5,025 0.22 5,025 0 0.00
Daniel P. Finkelman 2,000 0.09 2,000 0 0.00
George Geissbuhler 40,000 1.78 15,000 25,000 1.30
Nicholas T. George 5,000 0.22 5,000 0 0.00
Scott Brian Gross 2,500 0.11 2,500 0 0.00
Victor S. Gross 2,500 0.11 2,500 0 0.00
William R. Hamilton III 2,000 0.09 2,000 0 0.00
Raymond E. Heh Regional President 4,000 0.18 1,000 3,000 0.14
John Herwick 4,000 0.18 4,000 0 0.00
Charles A. Isroff 15,000 0.67 15,000 0 0.00
Gary Jacob 4,000 0.18 4,000 0 0.00
Julia F. Johnson 1,000 0.04 1,000 0 0.00
Paul P. Koenderman 5,000 0.22 5,000 0 0.00
Mark C. Leeson 12,500 0.56 12,500 0 0.00
Kevin P. Leibowitz 4,000 0.18 4,000 0 0.00
Martin A. Leibowitz 5,026 0.22 5,026 0 0.00
Michael H. Lobalzo 10,000 0.45 10,000 0 0.00
Amy W. MacDonell 1,100 0.05 1,100 0 0.00
R. Parker MacDonell Regional President 59,999 2.70 16,419 43,500 1.96
John L. Mead 2,000 0.09 2,000 0 0.00
John A. Mogen 5,000 0.22 5,000 0 0.00
Herbert Newman 12,262 0.55 12,262 0 0.00
Louis A. Nobile Jr. 1,000 0.04 1,000 0 0.00
Patrick L. O'Neil 1,000 0.04 1,000 0 0.00
Brian T. Parsell 2,000 0.09 2,000 0 0.00
Robert Parsons 100 < 0.01 100 0 0.00
J. Joseph Payton 5,025 0.22 5,025 0 0.00
Susan R. Payton 5,025 0.22 5,025 0 0.00
Jean B. Preston 2,000 0.09 2,000 0 0.00
Donald D. Rinaldi 2,000 0.09 2,000 0 0.00
10
Name Position with the Pre-Offering Shares Post-Offering
Of Beneficial Owner Company or Bank Holdings Offered Holdings
-------------------------------------------------------------------------------------------------------
Shares % Shares %
-------------------------------------------------------------------------------------------------------
Ron Rowland 1,000 0.04 1,000 0 0.00
Richard A. Schrader 2,500 0.11 2,500 0 0.00
Martha M. Shepard 900 0.04 900 0 0.00
Randall T. Shepard 900 0.04 900 0 0.00
Michael L. Stacey 4,000 0.18 4,000 0 0.00
Anthony E. Szambecki 4,000 0.18 4,000 0 0.00
Gail E. Thomas 4,000 0.18 4,000 0 0.00
Edward J. Toth 2,000 0.09 2,000 0 0.00
M. Catherine Vernon 412 0.02 412 0 0.00
WJC & Associates 7,500 0.33 7,500 0 0.00
Kimberly Rice Wilson 150 0.01 150 0 0.00
Edward S. & Marilyn A. 12,563 0.56 12,563 0 0.00
Zahurak
Robert A. Zenobi & Angela 5,025 0.22 5,025 0 0.00
E. Zenobi Trust
Robert A. Zenobi, Jr. & 6,000 0.27 6,000 0 0.00
Jennifer L. Zenobi
TOTAL 384,149 312,649 71,500
* Stock is held in the name of R. H. Downing Inc.
PLAN OF DISTRIBUTION
The Selling Stockholders may sell Common Stock directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the form
of discounts, concessions or commissions from the Selling Stockholders or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved. Common Stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at prices related to the prevailing market prices, at varying prices determined
at the time of sale or at negotiated prices. These sales may be effected in
transactions that involve crosses or block transactions:
- on any national securities exchange or U.S. inter-dealer system of a
registered national securities association on which Common Stock may be
listed or quoted at the time of sale;
- in the over-the-counter market;
- in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
- through the writing of options, whether the options are listed on an
options exchange or otherwise; or
- through the settlement of short sales.
In connection with the sale of Common Stock, the Selling Stockholders may enter
into hedging transactions with broker-dealers or other financial institutions,
which may in turn engage in short sales of Common Stock in the course of hedging
the positions assumed. The Selling Stockholders may also sell Common Stock short
and deliver these securities to close out short positions, or loan or pledge
Common Stock to broker-dealers that in turn may sell the securities. The
aggregate proceeds to the Selling Stockholders from the sale of Common Stock
will be the purchase price of the shares of Common Stock less discounts and
commissions, if any. Each Selling Stockholder reserves the right to accept and,
together with his or her agents from time to time, to reject, in whole or in
part, any proposed purchase of Common Stock to be made directly or through
agents. The Company will not receive any of the proceeds of this offering.
Common Stock is quoted on the Nasdaq Small Cap Market under the trading symbol
"GCFC." In order to comply with the securities laws of some states, if
applicable, Common Stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states shares of
Common Stock may not be sold unless they have been registered or qualified for
sale or an exemption from registration or qualification requirements is
available and is complied with by the Selling Stockholder and any underwriter,
broker-dealer or agent that participates in the sale of
11
Common Stock. Any of the foregoing may be an "underwriter" within the meaning of
Section 2(11) of the Securities Act. Any discounts, commissions, concessions or
profit earned on any resale of the shares may be underwriting discounts and
commissions under the Securities Act. Selling Stockholders who are
"underwriters" within the meaning of Section 2(11) of the Securities Act will be
subject to the prospectus delivery requirements of the Securities Act. The
Selling Stockholders have acknowledged that they understand their obligations to
comply with the provisions of the Exchange Act and the rules thereunder relating
to stock manipulation, particularly Regulation M.
LEGAL MATTERS
The legality of Common Stock has been passed on for the Company by Brouse
McDowell, A Legal Professional Association, Akron, Ohio.
EXPERTS
The consolidated financial statements appearing in the Company's Annual Report
(Form 10-KSB) for the fiscal year ended December 31, 2002 have been audited by
Crowe Chizek and Company LLC, independent auditors, as set forth in their report
thereon, included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission (the "Commission") allows the Company to
incorporate into this prospectus information that it files with the Commission
in other documents. This means that the Company can disclose important
information to you by referring to other documents that contain that
information. The information incorporated by reference is considered to be part
of this prospectus. Information contained in this prospectus and information
that the Company files with the Commission in the future and incorporates by
reference in this prospectus automatically updates and supersedes previously
filed information. The Company incorporates by reference the documents listed
below: (a) its Annual Report on Form 10-KSB for the fiscal year ended December
31, 2002; (b) its Forms 10-QSB for the fiscal quarters ended March 31, 2003 and
June 30, 2003; (c) the description of its capital stock contained in its
registration statement on Form 8-A filed with the Commission on November 6,
1998, including any amendments or reports filed for the purpose of updating that
description; and (d) all its other filings with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
subsequent to the date of this prospectus and prior to the termination of the
offering.
Upon written or oral request, you may obtain without charge copies of any or all
of these documents, including exhibits, by request to Eloise L. Mackus, Senior
Vice President, General Counsel and Secretary, Central Federal Corporation, 2841
Riviera Drive, Suite 300, Fairlawn, Ohio 44333-3413; telephone 330.666.7979.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Exchange Act,
and, accordingly, files reports, proxy statements and other information with the
Commission. You may read and copy any document the Company has filed at the
Commission's Public Reference Room, Judiciary Plaza Building, 450 Fifth Street,
N.W., Washington, D.C. 20549. You should call 1-800-SEC-0330 for more
information on the Public Reference Room. The Commission maintains an Internet
site that contains reports, proxy and information statements and other
information about issuers that file electronically with the Commission. The
address of the Commission's Internet site is http://www.sec.gov. This prospectus
is part of a registration statement that the Company filed with the Commission.
The registration statement contains more information than this prospectus
regarding the Company and the Company's capital stock, including certain
exhibits and schedules. You can obtain a copy of the registration statement from
the Commission at the address listed above or from the Commission's Internet
site.
12
COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Sections 102(b)(7) and 145 of the Delaware General Corporation Law authorize the
indemnification of officers and directors in defense of any civil, criminal,
administrative or investigative proceeding. Articles Tenth and Eleventh of the
Company's Certificate of Incorporation provide for indemnification in terms
consistent with the statutory authority, and the Company maintains insurance
covering certain liabilities of the directors and elected and appointed officers
of the Company and its subsidiaries, including liabilities under the Securities
Act of 1933 (the "Securities Act").
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions of the Company's Certificate of Incorporation, or
otherwise, the Company has been advised 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.
13
ANNEX I
CERTAIN PROVISIONS OF THE COMPANY'S
CERTIFICATE OF INCORPORATION
FOURTH:
C. 1. Notwithstanding any other provision of this Certificate of
Incorporation, in no event shall any record owner of any outstanding
Common Stock which is beneficially owned, directly or indirectly, by a
person who, as of any record date for the determination of stockholders
entitled to vote on any matter, beneficially owns in excess of 10% of
the then-outstanding shares of Common Stock (the "Limit"), be entitled,
or permitted to any vote in respect of the shares held in excess of the
Limit. The number of votes which may be cast by any record owner by
virtue of the provisions hereof in respect of Common Stock beneficially
owned by such person beneficially owning shares in excess of the Limit
shall be a number equal to the total number of votes which a single
record owner of all Common Stock beneficially owned by such person
would be entitled to cast, (subject to the provisions of this Article
FOURTH) multiplied by a fraction, the numerator of which is the number
of shares of such class or series which are both beneficially owned by
such person and owned of record by such record owner and the
denominator of which is the total number of shares of Common Stock
beneficially owned by such person owning shares in excess of the Limit.
2. The following definitions shall apply to this Section C of this Article
FOURTH:
a. "Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, as in effect on the date of filing of
this Certificate of Incorporation.
b. "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 1 3d-3 as in effect on the date of filing of this Certificate
of Incorporation; 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 Article
EIGHTH of this Certificate of Incorporation ("Article
EIGHTH")), 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
ANNEX I - 1
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.
c. The "Limit" shall mean 10% of the then-outstanding shares of
Common Stock.
d. 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.
3. The Board of Directors shall have the power to construe and apply
the provisions of this section and to make all determinations
necessary or desirable to implement such provisions, including but
not limited to matters with respect to: (i) the number of shares
of Common Stock beneficially owned by any person; (ii) whether a
person is an affiliate of another; (iii) whether a person has an
agreement, arrangement, or understanding with another as to the
matters referred to in the definition of beneficial ownership;
(iv) the application of any other definition or operative
provision of die section to the given facts; or (v) any other
matter relating to the applicability or effect of this section.
4. The Board of Directors shall have the right to demand that any
person who is reasonably believed to beneficially own Common Stock
in excess of the Limit (or holds of record Common Stock
beneficially owned by any person in excess of the Limit) supply
the Corporation with complete information as to: (i) the record
owner(s) of all shares beneficially owned by such person who is
reasonably believed to own shares in excess of the Limit and (ii)
any other factual matter relating to the applicability or effect
of this section as may reasonably be requested of such person.
5. Except as otherwise provided by law or expressly provided in this
Section C, the presence, in person or by proxy, of the holders of
record of shares of capital stock of the Corporation entitling the
holders thereof to cast a majority of the votes (after giving
effect, if required, to the provisions of this Section C) entitled
to be cast by the holders of shares of capital stock of the
Corporation entitled to vote shall constitute a quorum at all
meetings of the stockholders, and every reference in this
Certificate of Incorporation to a majority or other proportion of
capital stock (or the holders thereof) for purposes of determining
any quorum requirement or any requirement for stockholder consent
or approval shall be deemed to refer to such majority or other
proportion of the votes (or the holders thereof) then entitled to
be cast in respect of such capital stock.
6. Any constructions, applications, or determinations made by the
Board of Directors pursuant to this section in good faith and on
the basis of such information and assistance as was then
reasonably available for such purpose shall be conclusive and
binding upon the Corporation and its stockholders.
ANNEX I - 2
7. In the event any provision (or portion thereof) of this Section C
shall be found to be invalid, prohibited or unenforceable for any
reason, the remaining provisions (or portions thereof) of this
Section shall remain in full force and effect, and shall be
construed as if such invalid, prohibited or unenforceable
provision had been stricken herefrom or otherwise rendered
inapplicable, it being the intent of this Corporation and its
stockholders that each such remaining provision (or portion
thereof) of this Section C remain, to the fullest extent permitted
by law, applicable and enforceable as to all stockholders,
including stockholders owning an amount of stock over the Limit,
notwithstanding any such finding.
FIFTH:
The following provisions are inserted for the management of the business and the
conduct of the affairs of the Corporation, and for further definition,
limitation and regulation of the powers of the Corporation and of its Directors
and stockholders:
A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the
powers and authority expressly conferred upon them by statute or by
this Certificate of Incorporation or the Bylaws of the Corporation, the
Directors are hereby empowered to exercise all such powers and do all
such acts and things as may be exercised or done by the Corporation.
B. The Directors of the Corporation need not be elected by written ballot
unless the Bylaws so provide.
C. Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting
of stockholders of the Corporation and may not be effected by any
consent in writing by such stockholders.
D. Special meetings of stockholders of the Corporation may be called only
by the Board of Directors pursuant to a resolution adopted by a
majority of the Whole Board or as otherwise provided in the Bylaws. 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 for adoption).
SIXTH:
A. The number of Directors 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 Directors shall be divided into three classes,
as nearly equal in number as reasonably possible, with the term of
office of the first class to expire at the first annual meeting of
stockholders, the term of office of the second class to expire at the
annual meeting of stockholders one year thereafter and the term of
office of the third class to expire at the annual meeting of
stockholders two years thereafter with each Director to hold office
until his or her successor shall have been duly elected and qualified.
At each annual meeting of stockholders following such initial
classification and election, Directors elected to succeed those
Directors whose terms expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after
their election with each Director to hold office until his or her
successor shall have been duly elected and qualified.
B. Subject to the rights of holders of any series of Preferred Stock
outstanding, the newly created directorships resulting from any
increase in the authorized number of Directors or any vacancies in the
Board of Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause may be filled only
by a majority vote of the Directors then in office, though less than a
quorum, and Directors so chosen shall hold office for a term expiring
at the annual meeting of stockholders at which the term of office of
the class to which they have been chosen expires. No decrease in the
number of Directors constituting the Board of Directors shall shorten
the term of any incumbent Director.
C. Advance notice of stockholder nominations for the election of Directors
and of business to be brought by stockholders before any meeting of the
stockholders of the Corporation shall be given in the manner provided
in the Bylaws of the Corporation.
ANNEX I - 3
D. Subject to the rights of holders of any series of Preferred Stock then
outstanding, 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 80 percent of the voting
power of all of the then-outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of Directors
(after giving effect to the provisions of Article FOURTH of this
Certificate of Incorporation ("Article FOURTH")), voting together as a
single class.
SEVENTH:
The Board of Directors is expressly empowered to adopt, amend or repeal Bylaws
of the Corporation. Any adoption, amendment or repeal of the Bylaws of the
Corporation by the Board of Directors shall require the approval of a majority
of the Whole Board. The stockholders shall also have power to adopt, amend or
repeal the Bylaws of the Corporation; provided, however, that, in addition to
any vote of the holders of any class or series of stock of this Corporation
required by law or by this Certificate of Incorporation, the affirmative vote of
the holders of at least 80 percent of the voting power of all of the
then-outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of Directors (after giving effect to the provisions of
Article FOURTH), voting together as a single class, shall be required to adopt,
amend or repeal any provisions of the Bylaws of the Corporation.
EIGHTH:
A. In addition to any affirmative vote required by law or this Certificate
of Incorporation, and except as otherwise expressly provided in this
Article EIGHTH:
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;
shall require the affirmative vote of the holders of at least 80% 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") (after
ANNEX I - 4
giving effect to the provisions of Article FOURTH'), 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 of
Incorporation or any Preferred Stock Designation in any agreement with
any national securities exchange or otherwise.
The term "Business Combination" as used in this Article EIGHTH shall mean any
transaction which is referred to in any one or more of paragraphs I through 5 of
Section A of this Article EIGHTH.
B. The provisions of Section A of this Article EIGHTH 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 after giving
effect to the provisions of Article FOURTH, or such vote (if any), as
is required by law or by this Certificate of Incorporation, 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
EIGHTH as the "Determination Date"),
whichever is higher.
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
ANNEX I - 5
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
EIGHTH 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 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 EIGHTH:
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:
ANNEX I - 6
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 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 EIGHTH, "beneficial ownership"
shall be determined in the manner provided in Section C of
Article FOURTH hereof.
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 of
Incorporation.
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 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.
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 suck
ANNEX I - 7
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 EIGHTH 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
EIGHTH, on the basis of information known to them alter 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 EIGHTH.
E. Nothing contained in this Article EIGHTH shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by
law.
F. Notwithstanding any other provisions of this Certificate of
Incorporation 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 of Incorporation or any Preferred Stock
Designation, the affirmative vote of the holders of at least 80 percent
of the voting power of all of the then-outstanding shares of the Voting
Stock (after giving effect to the provisions of Article FOURTH), voting
together as a single class, shall be required to alter, amend or repeal
this Article EIGHTH.
TENTH:
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 an 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, Office;
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, ERIISA 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
TENTH 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
ANNEX I - 8
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
TENTH 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 hefts, executors and
administrators.
C. If a claim under Section A or B of this Article TENTH 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 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 TENTH or otherwise shall be on the Corporation.
ANNEX I - 9
D. The rights to indemnification and to the advancement of expenses
conferred in this Article TENTH shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
the Corporation's Certificate of Incorporation, 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 TENTH with
respect to the indemnification and advancement of expenses of Directors
and Officers of the Corporation.
ELEVENTH:
A Director of this Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except for liability: (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv)
for any transaction from which the Director derived an improper personal
benefit. If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting 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.
TWELFTH:
The Corporation reserves the right to amend or repeal any provision contained in
this Certificate of Incorporation in the manner prescribed by the laws of the
State of Delaware and all rights conferred upon stockholders are granted subject
to this reservation provided, however, that, notwithstanding any other provision
of this Certificate of Incorporation or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any vote of the
holders of any class or series of the stock of this Corporation required by law
or by this Certificate of Incorporation, the affirmative vote of the holders of
at least 80 percent of the voting power of all of the then-outstanding shares of
the capital stock of the Corporation entitled to vote generally in the election
of Directors (after giving effect to the provisions of Article FOURTH), voting
together as a single class, shall be required to amend or repeal this Article
TWELFTH, Section C of Article FOURTH, Sections C or D of Article FIFTH, Article
SIXTH, Article SEVENTH, Article EIGHTH or Article TENTH.
ANNEX I - 10
ANNEX II
CERTAIN PROVISIONS OF THE COMPANY'S BYLAWS
ARTICLE I - STOCKHOLDERS
Section 6. Conduct of Business.
(a) The chairman of any meeting of stockholders shall determine the order of
business and the procedures at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him in order. The date
and time of the opening and closing of the polls for each matter upon which the
stockholders will vote at the meeting shall be announced at the meeting.
(b) At any annual meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting: (i) by or at the
direction of the Board of Directors or (ii) by any stockholder of the
Corporation who is entitled to vote with respect thereto and who complies with
the notice procedures set forth in this Section 6(b). For business to be
properly brought before an annual meeting by a stockholder, the business must
relate to a proper subject matter for stockholder action and the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered or mailed to
and received at the principal executive offices of the Corporation not less than
ninety (90) days prior to the date of the annual meeting; provided, however,
that in the event that less than one hundred (100) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received not later than the close of
business on the 10th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter such
stockholder proposes to bring before the annual meeting: (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting; (ii) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
business; (iii) the class and number of shares of the Corporation's capital
stock that are beneficially owned by such stockholder; and (iv) any material
interest of such stockholder in such business. Notwithstanding anything in these
Bylaws to the contrary, no business shall be brought before or conducted at an
annual meeting except in accordance with the provisions of this Section 6(b).
The Officer of the Corporation or other person presiding over the annual meeting
shall, if the facts so warrant, determine and declare to the meeting that
business was not properly brought before the meeting in accordance with the
provisions of this Section 6(b) and, if he should so determine, he shall so
declare to the meeting and any such business so determined to be not properly
brought before the meeting shall not be transacted.
At any special meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting by or at the direction
of the Board of Directors.
(c) Only persons who are nominated in accordance with the procedures set forth
in these Bylaws shall be eligible for election as Directors. Nominations of
persons for election to the Board of Directors of the Corporation may be made at
a meeting of stockholders at which directors are to be elected only: (i) by or
at the direction of the Board of Directors; or (ii) by any stockholder of the
Corporation entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth in this Section 6(c). Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made by timely notice in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice shall be delivered or mailed
to and received at the principal executive offices of the Corporation not less
than ninety (90) days prior to the date of the meeting; provided, however, that
in the event that less than one hundred (100) days' notice or prior disclosure
of the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth: (i) as to each person whom such stockholder proposes to
nominate for election or re-election as a Director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
such person's written consent to being named in the proxy statement as a nominee
and to serving
ANNEX II - 1
as a director if elected); and (ii) as to the stockholder giving the notice (x)
the name and address, as they appear on the Corporation's books, of such
stockholder and (y) the class and number of shares of the Corporation's capital
stock that are beneficially owned by such stockholder. At the request of the
Board of Directors, any person nominated by the Board of Directors for election
as a Director shall furnish to the Secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee. No person shall be eligible for election as a Director of the
Corporation unless nominated in accordance with the provisions of this Section
6(c). The Officer of the Corporation or other person presiding at the meeting
shall, if the facts so warrant, determine that a nomination was not made in
accordance with such provisions and, if he or she shall so determine, he or she
shall so declare to the meeting and the defective nomination shall be
disregarded.
Section 9. Consent of Stockholders in Lieu of Meeting.
Subject to the rights of the holders of any class or series of preferred stock
of the Corporation, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or special meeting
of stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders.
ARTICLE VIII - AMENDMENTS
The Board of Directors may amend, alter or repeal these Bylaws at any meeting of
the Board, provided notice of the proposed change was given not less than two
(2) days prior to the meeting. The stockholders shall also have power to amend,
alter or repeal these Bylaws at any meeting of stockholders provided notice of
the proposed change was given in the notice of the meeting; provided, however,
that, notwithstanding any other provisions of the Bylaws 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, the Certificate of Incorporation, any Preferred Stock
Designation or these Bylaws, the affirmative votes of the holders of at least
80% of the voting power of all the then-outstanding shares of the Voting Stock,
voting together as a single class, shall be required to alter, amend or repeal
any provisions of these Bylaws.
ANNEX II - 2
ANNEX III
CERTAIN PROVISIONS OF DELAWARE LAW
SECTION 102. CONTENTS OF CERTIFICATE OF INCORPORATION.
(b) In addition to the matters required to be set forth in the certificate of
incorporation by subsection (a) of this section, the certificate of
incorporation may also contain any or all of the following matters:
(7) A provision eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such provision shall not eliminate or limit
the 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
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of this title; or (iv) for any transaction from
which the director derived an improper personal benefit. No such provision shall
eliminate or limit the liability of a director for any act or omission occurring
prior to the date when such provision becomes effective. All references in this
paragraph to a director shall also be deemed to refer (x) to a member of the
governing body of a corporation which is not authorized to issue capital stock,
and (y) to such other person or persons, if any, who, pursuant to a provision of
the certificate of incorporation in accordance with Section 141(a) of this
title, exercise or perform any of the powers or duties otherwise conferred or
imposed upon the board of directors by this title.
SECTION 145. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE.
(a) A corporation shall have power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that the person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by the person in
connection with the defense or settlement of such action or suit if the person
acted in good faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of this section, or in defense
of any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the present or former
ANNEX III - 1
director, officer, employee or agent is proper in the circumstances because the
person has met the applicable standard of conduct set forth in subsections (a)
and (b) of this section. Such determination shall be made, with respect to a
person who is a director or officer at the time of such determination, (1) by a
majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) by a committee of such
directors designated by majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (4) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director in
defending any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the corporation
as authorized in this section. Such expenses (including attorneys' fees)
incurred by former directors and officers or other employees and agents may be
so paid upon such terms and conditions, if any, as the corporation deems
appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall include,
in addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear
and determine all actions for advancement of expenses or indemnification brought
under this section or under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees.
SECTION 203. BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS.
ANNEX III - 2
(a) Notwithstanding any other provisions of this chapter, a corporation shall
not engage in any business combination with any interested stockholder for a
period of 3 years following the time that such stockholder became an interested
stockholder, unless:
(1) Prior to such time the board of directors of the corporation approved either
the business combination or the transaction which resulted in the stockholder
becoming an interested stockholder;
(2) Upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the voting stock
outstanding (but not the outstanding voting stock owned by the interested
stockholder) those shares owned (i) by persons who are directors and also
officers and (ii) employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or
(3) At or subsequent to such time the business combination is approved by the
board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least
662/3% of the outstanding voting stock which is not owned by the interested
stockholder.
(b) The restrictions contained in this section shall not apply if:
(1) The corporation's original certificate of incorporation contains a provision
expressly electing not to be governed by this section;
(2) The corporation, by action of its board of directors, adopts an amendment to
its bylaws within 90 days of February 2, 1988, expressly electing not to be
governed by this section, which amendment shall not be further amended by the
board of directors;
(3) The corporation, by action of its stockholders, adopts an amendment to its
certificate of incorporation or bylaws expressly electing not to be governed by
this section; provided that, in addition to any other vote required by law, such
amendment to the certificate of incorporation or bylaws must be approved by the
affirmative vote of a majority of the shares entitled to vote. An amendment
adopted pursuant to this paragraph shall be effective immediately in the case of
a corporation that both (i) has never had a class of voting stock that falls
within any of the 3 categories set out in subsection (b)(4) hereof, and (ii) has
not elected by a provision in its original certificate of incorporation or any
amendment thereto to be governed by this section. In all other cases, an
amendment adopted pursuant to this paragraph shall not be effective until 12
months after the adoption of such amendment and shall not apply to any business
combination between such corporation and any person who became an interested
stockholder of such corporation on or prior to such adoption. A bylaw amendment
adopted pursuant to this paragraph shall not be further amended by the board of
directors;
(4) The corporation does not have a class of voting stock that is: (i) Listed on
a national securities exchange; (ii) authorized for quotation on The NASDAQ
Stock Market; or (iii) held of record by more than 2,000 stockholders, unless
any of the foregoing results from action taken, directly or indirectly, by an
interested stockholder or from a transaction in which a person becomes an
interested stockholder;
(5) A stockholder becomes an interested stockholder inadvertently and (i) as
soon as practicable divests itself of ownership of sufficient shares so that the
stockholder ceases to be an interested stockholder; and (ii) would not, at any
time within the 3-year period immediately prior to a business combination
between the corporation and such stockholder, have been an interested
stockholder but for the inadvertent acquisition of ownership;
(6) The business combination is proposed prior to the consummation or
abandonment of and subsequent to the earlier of the public announcement or the
notice required hereunder of a proposed transaction which (i) constitutes one of
the transactions described in the 2nd sentence of this paragraph; (ii) is with
or by a person who either was not an interested stockholder during the previous
3 years or who became an interested stockholder with the approval of the
corporation's board of directors or during the period described in paragraph (7)
of this subsection (b); and (iii) is approved or not opposed by a majority of
the members of the board of directors then in office (but not less than 1) who
were directors prior to any person becoming an interested stockholder during the
previous 3 years or were recommended for election or
ANNEX III - 3
elected to succeed such directors by a majority of such directors. The proposed
transactions referred to in the preceding sentence are limited to (x) a merger
or consolidation of the corporation (except for a merger in respect of which,
pursuant to Section 251(f) of this title, no vote of the stockholders of the
corporation is required); (y) a sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in 1 transaction or a series of transactions),
whether as part of a dissolution or otherwise, of assets of the corporation or
of any direct or indirect majority-owned subsidiary of the corporation (other
than to any direct or indirect wholly-owned subsidiary or to the corporation)
having an aggregate market value equal to 50% or more of either that aggregate
market value of all of the assets of the corporation determined on a
consolidated basis or the aggregate market value of all the outstanding stock of
the corporation; or (z) a proposed tender or exchange offer for 50% or more of
the outstanding voting stock of the corporation. The corporation shall give not
less than 20 days' notice to all interested stockholders prior to the
consummation of any of the transactions described in clause (x) or (y) of the
2nd sentence of this paragraph; or
(7) The business combination is with an interested stockholder who became an
interested stockholder at a time when the restrictions contained in this section
did not apply by reason of any of paragraphs (1) through (4) of this subsection
(b), provided, however, that this paragraph (7) shall not apply if, at the time
such interested stockholder became an interested stockholder, the corporation's
certificate of incorporation contained a provision authorized by the last
sentence of this subsection (b).
Notwithstanding paragraphs (1), (2), (3) and (4) of this subsection, a
corporation may elect by a provision of its original certificate of
incorporation or any amendment thereto to be governed by this section; provided
that any such amendment to the certificate of incorporation shall not apply to
restrict a business combination between the corporation and an interested
stockholder of the corporation if the interested stockholder became such prior
to the effective date of the amendment.
(c) As used in this section only, the term:
(1) "Affiliate" means a person that directly, or indirectly through 1 or more
intermediaries, controls, or is controlled by, or is under common control with,
another person.
(2) "Associate," when used to indicate a relationship with any person, means:
(i) Any corporation, partnership, unincorporated association or other entity of
which such person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting stock; (ii) any
trust or other estate in which such person has at least a 20% beneficial
interest or as to which such person serves as trustee or in a similar fiduciary
capacity; and (iii) any relative or spouse of such person, or any relative of
such spouse, who has the same residence as such person.
(3) "Business combination," when used in reference to any corporation and any
interested stockholder of such corporation, means:
(i) Any merger or consolidation of the corporation or any direct or indirect
majority-owned subsidiary of the corporation with (A) the interested
stockholder, or (B) with any other corporation, partnership, unincorporated
association or other entity if the merger or consolidation is caused by the
interested stockholder and as a result of such merger or consolidation
subsection (a) of this section is not applicable to the surviving entity;
(ii) Any sale, lease, exchange, mortgage, pledge, transfer or other disposition
(in 1 transaction or a series of transactions), except proportionately as a
stockholder of such corporation, to or with the interested stockholder, whether
as part of a dissolution or otherwise, of assets of the corporation or of any
direct or indirect majority-owned subsidiary of the corporation which assets
have an aggregate market value equal to 10% or more of either the aggregate
market value of all the assets of the corporation determined on a consolidated
basis or the aggregate market value of all the outstanding stock of the
corporation;
(iii) Any transaction which results in the issuance or transfer by the
corporation or by any direct or indirect majority-owned subsidiary of the
corporation of any stock of the corporation or of such subsidiary to the
interested stockholder, except: (A) Pursuant to the exercise, exchange or
conversion of securities exercisable for, exchangeable for or convertible into
stock of such corporation or any such subsidiary which securities were
outstanding prior to the time that the interested stockholder became such; (B)
pursuant to a merger under Section 251(g) of this title; (C) pursuant to a
dividend
ANNEX III - 4
or distribution paid or made, or the exercise, exchange or conversion of
securities exercisable for, exchangeable for or convertible into stock of such
corporation or any such subsidiary which security is distributed, pro rata to
all holders of a class or series of stock of such corporation subsequent to the
time the interested stockholder became such; (D) pursuant to an exchange offer
by the corporation to purchase stock made on the same terms to all holders of
said stock; or (E) any issuance or transfer of stock by the corporation;
provided however, that in no case under items (C)-(E) of this subparagraph shall
there be an increase in the interested stockholder's proportionate share of the
stock of any class or series of the corporation or of the voting stock of the
corporation;
(iv) Any transaction involving the corporation or any direct or indirect
majority-owned subsidiary of the corporation which has the effect, directly or
indirectly, of increasing the proportionate share of the stock of any class or
series, or securities convertible into the stock of any class or series, of the
corporation or of any such subsidiary which is owned by the interested
stockholder, except as a result of immaterial changes due to fractional share
adjustments or as a result of any purchase or redemption of any shares of stock
not caused, directly or indirectly, by the interested stockholder; or
(v) Any receipt by the interested stockholder of the benefit, directly or
indirectly (except proportionately as a stockholder of such corporation), of any
loans, advances, guarantees, pledges or other financial benefits (other than
those expressly permitted in subparagraphs (i)-(iv) of this paragraph) provided
by or through the corporation or any direct or indirect majority-owned
subsidiary.
(4) "Control," including the terms "controlling," "controlled by" and "under
common control with," means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting stock, by contract or otherwise. A
person who is the owner of 20% or more of the outstanding voting stock of any
corporation, partnership, unincorporated association or other entity shall be
presumed to have control of such entity, in the absence of proof by a
preponderance of the evidence to the contrary; Notwithstanding the foregoing, a
presumption of control shall not apply where such person holds voting stock, in
good faith and not for the purpose of circumventing this section, as an agent,
bank, broker, nominee, custodian or trustee for 1 or more owners who do not
individually or as a group have control of such entity.
(5) "Interested stockholder" means any person (other than the corporation and
any direct or indirect majority-owned subsidiary of the corporation) that (i) is
the owner of 15% or more of the outstanding voting stock of the corporation, or
(ii) is an affiliate or associate of the corporation and was the owner of 15% or
more of the outstanding voting stock of the corporation at any time within the
3-year period immediately prior to the date on which it is sought to be
determined whether such person is an interested stockholder; and the affiliates
and associates of such person; provided, however, that the term "interested
stockholder" shall not include (x) any person who (A) owned shares in excess of
the 15% limitation set forth herein as of, or acquired such shares pursuant to a
tender offer commenced prior to, December 23, 1987, or pursuant to an exchange
offer announced prior to the aforesaid date and commenced within 90 days
thereafter and either (I) continued to own shares in excess of such 15%
limitation or would have but for action by the corporation or (II) is an
affiliate or associate of the corporation and so continued (or so would have
continued but for action by the corporation) to be the owner of 15% or more of
the outstanding voting stock of the corporation at any time within the 3-year
period immediately prior to the date on which it is sought to be determined
whether such a person is an interested stockholder or (B) acquired said shares
from a person described in item (A) of this paragraph by gift, inheritance or in
a transaction in which no consideration was exchanged; or (y) any person whose
ownership of shares in excess of the 15% limitation set forth herein is the
result of action taken solely by the corporation; provided that such person
shall be an interested stockholder if thereafter such person acquires additional
shares of voting stock of the corporation, except as a result of further
corporate action not caused, directly or indirectly, by such person. For the
purpose of determining whether a person is an interested stockholder, the voting
stock of the corporation deemed to be outstanding shall include stock deemed to
be owned by the person through application of paragraph (9) of this subsection
but shall not include any other unissued stock of such corporation which may be
issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
(6) "Person" means any individual, corporation, partnership, unincorporated
association or other entity.
(7) "Stock" means, with respect to any corporation, capital stock and, with
respect to any other entity, any equity interest.
ANNEX III - 5
(8) "Voting stock" means, with respect to any corporation, stock of any class or
series entitled to vote generally in the election of directors and, with respect
to any entity that is not a corporation, any equity interest entitled to vote
generally in the election of the governing body of such entity. Every reference
to a percentage of voting stock shall refer to such percentage of the votes of
such voting stock.
(9) "Owner," including the terms "own" and "owned," when used with respect to
any stock, means a person that individually or with or through any of its
affiliates or associates:
(i) Beneficially owns such stock, directly or indirectly; or
(ii) Has (A) the right to acquire such stock (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise; provided, however, that a
person shall not be deemed the owner of stock tendered pursuant to a tender or
exchange offer made by such person or any of such person's affiliates or
associates until such tendered stock is accepted for purchase or exchange; or
(B) the right to vote such stock pursuant to any agreement, arrangement or
understanding; provided, however, that a person shall not be deemed the owner of
any stock because of such person's right to vote such stock if the agreement,
arrangement or understanding to vote such stock arises solely from a revocable
proxy or consent given in response to a proxy or consent solicitation made to 10
or more persons; or (iii) Has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting (except voting pursuant to a revocable
proxy or consent as described in item (B) of subparagraph (ii) of this
paragraph), or disposing of such stock with any other person that beneficially
owns, or whose affiliates or associates beneficially own, directly or
indirectly, such stock.
(d) No provision of a certificate of incorporation or bylaw shall require, for
any vote of stockholders required by this section, a greater vote of
stockholders than that specified in this section.
(e) The Court of Chancery is hereby vested with exclusive jurisdiction to hear
and determine all matters with respect to this section.
ANNEX III - 6
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses payable by the registrant
in connection with the issuance and distribution of Common Stock. All the
amounts shown are estimates.
Securities and Exchange Commission registration fee........... $ 549
Nasdaq Additional Listing Fee................................. 3,287
Accounting fees and expenses.................................. 6,000
Printing fees and expenses.................................... 2,500
Legal fees and expenses ...................................... 25,000
Miscellaneous................................................. 1,000
--------
Total.................................................... $ 38,336
========
Item 15. Indemnification of Directors And Officers.
General Corporation Law
The Company is incorporated under the laws of the State of Delaware. Section 145
("Section 145") of the General Corporation Law of the State of Delaware
("Delaware Law"), inter alia, provides that a Delaware corporation:
(i) may indemnify any person who was, is or is threatened to be made, a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by
reason of the fact that such person is or was an officer, director,
employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent
of another corporation or enterprise. The indemnity may include
expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, with respect to
any criminal action or proceeding, if he had no reasonable cause to
believe that his conduct was illegal; and
(ii) may indemnify any person who is, was or is threatened to be made, a
party to any threatened, pending or completed action or suit by or in
the right of the corporation by reason of the fact that such person
was a director, officer, employee or agent of such corporation, or is
or was serving at the request of such corporation as a director,
officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees) actually
and reasonably incurred by any such person in connection with the
defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and that no
indemnification is permitted without judicial approval if the officer,
director, employee or agent is adjudged to be liable to the
corporation.
Where an officer, director, employee or agent is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against expenses (including attorneys' fees) actually and
reasonably incurred in connection therewith.
The determination that indemnity is proper in the circumstances, because the
director or officer has met the applicable standard of conduct, shall be made in
each specific case by a majority of the directors who are not parties to the
action, by a committee of directors designated by a majority of such non-party
directors, by independent legal counsel in a written opinion (if there are no
non-party directors or at the request of a majority of the non-party directors)
or by a majority vote of the outstanding shares of Common Stock.
The indemnification and advancement of expenses authorized by Section 145 is not
exclusive of other such rights under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, and a corporation is expressly
authorized to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise, against any liability asserted
against him and incurred by him in any such capacity,
arising out of his status as such, whether or not the corporation would
otherwise have the power to indemnify him under Section 145.
Section 102(b)(7) of Delaware Law enables a corporation, by provision in its
Certificate of Incorporation, to limit or eliminate the personal liability of a
director to the corporation and its stockholders for breach of fiduciary duty,
except with respect to (i) any breach of the duty of loyalty to the Company or
its stockholders, (ii) any act or omission not in good faith or which involved
intentional misconduct or a knowing violation of law, (iii) certain transactions
under Section 174 of Delaware Law, which concerns unlawful payments of
dividends, stock purchases or redemptions or (iv) any transaction from which the
director a personal benefit in money, property or services to which the director
is not legally entitled.
Certificate of Incorporation
As permitted by Section 145, Article Tenth of the Company's Certificate of
Incorporation, as amended (the "Charter"), provides that any director or officer
of the Company or any person who is or was serving, at the request of the
Company, as a director, officer, employee or agent of another corporation or
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan, shall be indemnified and held harmless by
the Company to the fullest extent permitted by Delaware 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 Company to provide broader
indemnification rights that Delaware Law permitted the Company to provide prior
to amendment).
Such indemnification extends to any expense, liability or loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by the indemnified person.
Article Tenth also provides for the advancement of expenses to be incurred in
connection with the defense of any claim; provided, however, that if Delaware
Law so requires, an advancement of expenses in connection with a claim made with
respect to service as a director or officer will be provided only if the
indemnified director or officer undertakes in writing to repay all amounts
advanced if it is ultimately determined by final judicial decision that he is
not entitled to be indemnified for such expenses.
The right to indemnification under Article Tenth is not exclusive of any other
right the indemnified person may have or acquire under any statute, agreement,
vote of stockholders or otherwise, to the extent permitted by Delaware Law.
Finally, Article Tenth provides that the Company may grant to any employee or
agent to the fullest extent permitted by Delaware Law the rights of
indemnification and advancement of expenses available to directors and officers
under Article Tenth.
As permitted by Section 102(b)(7), Article Eleventh of the Charter provides that
no director of the Company shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty except with
respect to (i) any breach of the duty of loyalty to the Company or its
stockholders, (ii) any act or omission not in good faith or which involved
intentional misconduct or a knowing violation of law, (iii) certain transactions
under Section 174 of Delaware Law, which concerns unlawful payments of
dividends, stock purchases or redemptions or (iv) any transaction from which the
director derived an improper personal benefit.
Insurance
The Company also maintains insurance covering certain liabilities of the
directors and the elected and appointed officers of the Company and its
subsidiaries, including liabilities under the Securities Act.
Item 16. Exhibits.
See the Exhibit Index at page E-1 of this Registration Statement.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range May be reflected in the form of
prospectus filed with the Commission pursuant to 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement.
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Security Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 May be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person of the registrant in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in Akron, Ohio, as of the 4th day of November, 2003.
CENTRAL FEDERAL CORPORATION
By: /s/ Eloise L. Mackus
------------------------------
Eloise L. Mackus, Secretary
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on November 4, 2003.
SIGNATURE TITLE
/s/ David C. Vernon Chairman, President and Chief Executive Officer
------------------- (principal executive officer)
David C. Vernon
/s/ Kelley L. Nanna Treasurer (principal financial officer and principal
------------------- accounting officer)
Kelley L. Nanna
/s/ Jeffrey W. Aldrich Director
----------------------
Jeffrey W. Aldrich
/s/ Thomas P. Ash Director
-----------------
Thomas P. Ash
/s/ W. R. Downing Director
-----------------
W. R. Downing
/s/ Gerry W. Grace Director
------------------
Gerry W. Grace
/s/ Jerry F. Whitmer Director
--------------------
Jerry F. Whitmer
CENTRAL FEDERAL CORPORATION
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT NAME
5 Opinion of Brouse McDowell, A Legal Professional Association, as to
the validity of Common Stock
23.1 Consent of Independent Auditors
23.2 Consent of Brouse McDowell (included in Exhibit 5.1)
24 Power of Attorney
E-1