Notice To Members 95-101

Mail Vote—NASD Solicits Member Vote On Amendments To The NASD By-Laws To Reconfigure The NASD Board And Establish A National Nominating Committee;

Published Date:

Last Voting Date: January 12, 1996

SUGGESTED ROUTING

Senior Management
Legal & Compliance

Executive Summary

The NASD® invites members to vote to approve amendments to Articles VII and X and to delete Article V of the NASD By-Laws. The last voting date is January 12, 1996. The text of the proposed amendments follows this Notice.

Background

The proposed amendments to Articles VII and X and the deletion of Article V of the NASD By-Laws will permit the NASD to begin the restructuring necessary to implement the principles articulated in the report of The Select Committee on Structure and Governance (the Select Committee). The NASD, Inc., Board of Governors has adopted the Select Committee proposal that the NASD, Inc., create a new subsidiary responsible for regulation and the provision of member and constituent services, with the NASD, Inc., retaining responsibility for general oversight over the effectiveness of the self-regulatory and business operations of the NASD and its major subsidiaries, The Nasdaq Stock MarketSM and NASD Regulation, Inc. (NASDR), and final policymaking authority for the Association as a whole. The Board also adopted Select Committee proposals to restructure and reduce the size of the NASD, Inc., Board, and implement policies that will ensure a balance of non-industry and industry representation on The Nasdaq Stock Market and NASDR Boards. The governing board of the NASD, Inc., is proposed to be restructured to have a majority of non-industry members.

Briefly, the changes to the By-Laws, which are described in more detail below, will:

  • Create a national nominating committee comprising the Chief Executive Officer (CEO) of the NASD, Inc., and an equal number of industry and non-industry persons. This committee will identify and nominate, for election by the NASD, Inc., Board, industry and non-industry persons to serve on the NASD, Inc., Board. The committee will also nominate industry and non-industry persons to serve on the subsidiary boards, to provide adequate representation of the various constituencies served by the Association.

  • Reconstitute the Board as a majority non-industry board comprising the CEO and "Industry" and "Non-Industry" Governors, and reduces the minimum size of the Board from 25 to 5. The term "Industry Governors" means persons associated with an NASD, Inc., member. The term "Non-Industry Governors" means persons representing investors, issuers, and other constituents, pursuant to criteria that will be adopted by the NASD, Inc., Board. The implementation plan adopted by the Board at its November 1995 meeting specified a 1996 NASD, Inc., board of nine persons— the CEO, three Industry, and five Non-Industry Governors.

  • Delete Article V to remove an unnecessary reference to the affiliation of other Registered Securities Associations with the NASD. Such affiliations remain authorized by Section 15A of the Securities Exchange Act of 1934.

  • Amend Article X to replace the term "President" with the term "Chief Executive Officer," to make clear that this person is the most-senior executive of the Association. Additional changes clarify the procedures for the resignation, removal, and replacement of officers.

Article VII Amendments

The following is a description of the proposed amendments to Article VII of the By-Laws:

Section 1—Powers And Authority Of Board Of Governors

There are numerous references, beginning in this section, to the "restated" Certificate of Incorporation. The NASD's Certificate of Incorporation will be amended to be consistent with the changes proposed for the By-Laws.

Section 2—Authority To Suspend For Failure To Submit Required Information

There are numerous references to the "Chief Executive Officer." This term replaces the term "President," to make clear that this person is the most senior executive of the Association.

Section 3—Authority To Take Action Under Emergency Or Extraordinary Market Conditions

These changes eliminate the special, small committee that has authority to take action in case of emergencies or extraordinary market conditions, when the Board is not available. This special committee is necessary today, when the NASD Board and the Executive Committee are large and, under emergency conditions, difficult to assemble. The new, smaller Board and the correspondingly small Executive Committee will make this special committee unnecessary.

Section 4—Composition And Qualifications Of The Board

These changes reconstitute the NASD Board as a smaller, majority Non-Industry Board, comprising the CEO, Industry, and Non-Industry Governors. The Board shall have at least five persons and will have the flexibility to determine the size that is most efficient, but must maintain a Non-Industry majority.

Section 5—Term Of Office Of Governors

These changes alter the Governors' term of office from a three-year fixed term to a term not to exceed three years. This change will enhance the effectiveness of the Board by providing the flexibility to attract the services of individuals able to make a valuable contribution to the Association, who may not be able to commit to a three-year term but who may be able to commit to a fixed term of one or two years. Successive terms will be permitted.

Section 6—Filling Of Vacancies

At present, the By-Laws provide that, in case of an in-term vacancy, a Governor elected from a District will be replaced by a successor from that District. This newly named section provides that all vacancies occurring during a term of office will be filled by a vote of the remaining Governors. This change is necessary because, under the amended By-Laws, Governors of the NASD, Inc., will not be elected from NASD administrative Districts. Pursuant to the implementation plan adopted by the Board, the NASDR Board will include representatives of member firms elected by NASD Districts.

Section 7—Election Of Board Members

This section establishes a National Nominating Committee of seven or more persons, comprising the CEO, at least three persons associated with NASD members, and an equal number of non-industry persons. New Governors will be selected by the Board from among persons nominated by this committee. This will ensure that the nominating process includes a balance of industry and public interest. This committee is also empowered to nominate persons to serve as directors of The Nasdaq Stock Market, Inc., and NASDR Boards.

Section 8—Meeting Of Board; Quorum; Required Vote, And Section 9—Action By Written Consent Of Governors

The amendments to these sections clarify that the Board and any Committee may act when a majority is present at a meeting, and that a meeting includes any event at which persons may interact, including telephone and video conferences. Committee or Board action may be taken in the absence of a meeting only by unanimous consent.

Section 10—Offices Of The Corporation

This section is being deleted as unnecessary. It restates what is true by operation of law.

Request For Vote

The NASD Board of Governors believes the proposed amendments will facilitate implementation of the Select Committee's recommendations. Please mark the attached ballot according to your convictions and mail it in the enclosed, stamped envelope to The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware, 19801. Ballots must be postmarked no later than January 12, 1996.

Questions about this Notice may be directed to Phillip A. Rosen, Associate General Counsel, at (202) 728-8446.

Text Of Amendments To The NASD By-Laws

(Note: New text is underlined; deletions are bracketed.)

Only those provisions containing proposed amendments are printed below. The full text of the NASD By-Laws appear in the NASD Manual at pp. 1001–1695.

Additional note: The following Article entitled "Affiliates" is proposed to be deleted in its entirety.

[ARTICLE V

AFFILIATES

Qualifications for Affiliation

Sec. 1. Any association of brokers or dealers, registered with the Commission as an affiliated securities association under the provisions of Section 15A of the Act, may become an affiliate of the Corporation as hereinafter provided in this Article.

Application for Admission as Affiliate

Sec. 2. Application for admission as an affiliate shall be made to the Board of Governors in writing, in such form as the Board of Governors may prescribe, and shall contain a certified copy of the application to the Commission for registration as an affiliated securities association, a certified copy of the order of the Commission granting such registration, and such other reasonable information as the Board of Governors may require.

Agreement of Affiliate

Sec. 3. No applicant may become an affiliate of the Corporation unless it agrees:

(a) That it will classify its members, for purposes of levying dues and assessments, on the same basis as that applicable to members of the Corporation and that the amount of dues or assessments payable by each of its members for any given period, based on such classification, shall not be lower than that payable by a member of the Corporation in the same class for the comparable period; provided, however, that if by reason of the special type of business conducted by members of an applicant, the foregoing agreement is impracticable of application to such applicant, such applicant shall agree that it will fix and levy dues or assessments payable by its members on some other basis to be agreed upon by the applicant and the Board of Governors of the Corporation, which shall be fair and equitable in view of the dues and assessments payable by members of the Corporation.
(b) That it will pay the Corporation annually, in the form of dues or otherwise, for services to be rendered by the Corporation to the applicant, the amount to be agreed upon by the applicant and the Board of Governors of the Corporation annually in advance, and that should the applicant and the Corporation be unable to reach an agreement as to an appropriate amount, the applicant will consent to the submission of the controversy to the Commission for arbitration, and that if submitted, it will abide by the Commission's decision thereon;
(c) That, after affiliation, it will at all times keep its charter, by-laws, and other rules so integrated with the corresponding Charter, By-Laws, and other rules of the Corporation as not to conflict in any way therewith; and
(d) That the Board of Governors, in accordance with the provisions of Section 6 of this Article, may at any time suspend or cancel its affiliation with the Corporation.

Conditions of Affiliation

Sec. 4. No applicant may become an affiliate of the Corporation unless it appears to the Board of Governors:

(a) That such applicant is so organized and is of such a character as to be able to comply with and carry out its purposes, and those of the Corporation and of the Act; and
(b) That the charter, by-laws, and other rules of the applicant are so integrated with the corresponding Charter, By-Laws, and other rules of the Corporation as not to conflict in any way therewith.

Approval of Admission as an Affiliate

Sec. 5. If it appears to the Board of Governors that the foregoing requirements of this Article are met by the applicant, it shall approve such applicant's admission as an affiliate; otherwise, after appropriate notice and opportunity for hearing, it shall disapprove such application in writing and shall set forth therein the specific grounds upon which such disapproval is based.

Suspension or Cancellation of Affiliation

Sec. 6. The Board of Governors may at any time suspend or cancel the affiliation of an affiliate with the Corporation if the Board of Governors finds that the affiliate has ceased to be of such character as to be able to or has failed to carry out its purposes or the purposes of the Act, or has failed to carry out any of the conditions of affiliation. In any proceeding, however, under this Section to determine whether the affiliation of an affiliate should be suspended or canceled, specific charges shall be brought; such affiliate shall be notified of, and be given an opportunity to defend against such charges; a record shall be kept; and any determination that the affiliation of an affiliate shall be suspended or canceled shall be in writing and shall set forth therein the specific grounds upon which such determination is based. Such suspension or expulsion shall take effect upon the 60th day after the filing with the Commission of notice thereof and a copy of the record of the proceedings before the Board of Governors, unless within thirty days after such filing such suspensions or cancellation is disapproved by the Commission.

Exclusion of Territory Covered by Affiliated Association

Sec. 7. The Board of Governors shall, if it deems such action to be in the interest of efficient and economical administration and desirable in carrying out the purposes of the Act, recommend appropriate changes in the By-Laws to exclude the territory covered by an affiliate association from the geographical area covered by the Corporation.]

ARTICLE VII

BOARD OF GOVERNORS

Powers and Authority of Board of Governors

Sec. 1.

(a) The Board of Governors shall be the governing body of the Corporation and, except as otherwise provided by applicable law, the Restated Certificate of Incorporation or these By-Laws, shall be vested with all powers necessary for the management and administration of the affairs of the Corporation and the promotion of the Corporation's welfare, objects and purposes. In the exercise of such powers, the Board of Governors[,] shall have the authority to:

Sec. 1(a)(1) through Sec. 1(a)(9). No change.

(10) engage in any activities or con-duct necessary or appropriate to carry out the Corporation's purposes under its Restated Certificate of Incorporation and the federal securities laws.

Sec. 1(b). No change.

Authority to Suspend for Failure to Submit Required Information

Sec. 2.

(a). No change.
(b) The Board of Governors is authorized to delegate the authority herein above granted to the [President] Chief Executive Officer of the Corporation; provided, however, that the Executive Committee of the Board of Governors shall be notified in writing of any such contemplated action by the [President] Chief Executive Officer.

Authority to Take Action Under Emergency or Extraordinary Market Conditions

Sec. 3.

[(a)] The Board of Governors, [or between meetings of the Board, a Committee consisting of the Chairman of the Board (or in his absence, a Vice Chairman of the board), the President of the Corporation, and a member of the Executive Committee,] in the event of an emergency or extraordinary market conditions, shall have the authority to take any action regarding (1) the trading in or operation of the over-the-counter securities market, the operation of any automated system owned or operated by the Corporation or any subsidiary thereof, and the participation in any such system of any or all persons or the trading therein of any or all securities and (2) the operation of any or all member firms' offices or systems, if, in the opinion of the Board [of the Committee hereby constituted,] such action is necessary or appropriate for the protection of investors or the public interest or for the orderly operation of the marketplace or the system.
[(b) The authority provided in Subsection (a) shall be exercised by the Committee only if the President, in his discretion, concludes that it is not practical or appropriate to convene a meeting of the Board of Governors or executive Committee to consider the contemplated action.]
[(c) The President shall immediately report any action taken by the Committee pursuant to this Section to the Executive Committee and to the Board of Governors.]

Composition and Qualifications of the Board

Sec. 4.

(a) The management and administration of the affairs of the Corporation shall be vested in a Board of Governors [composed of from twenty-five to twenty-nine Governors as determined from time to time by the Board. The Board shall consist of:
(1) at least thirteen but not more than fifteen Governors to be elected by the members of the various districts] . Governors shall be elected by the Board in accordance with the provisions of [subsection (b) hereof; (2) at least eleven but not more than thirteen Governors to be elected by the Board] Section 7 of this Article. A person shall be qualified to serve on the Board if such person is: (1) the Chief Executive Officer of the Corporation;
(2) associated with a member of the Corporation (an "Industry Governor"); or (3) satisfies the criteria adopted from time to time by the Board (a "Non-Industry Governor").
(b) The Board of Governors shall consist of five or more members, the number thereof to be determined from time to time by resolution of the Board of Governors, and shall include at all times: (1) the Chief Executive Officer; (2) one or more Non-Industry Governors representative of issuers and investors and not associated with a member of the Corporation; (3) one or more Industry Governors; and (4) a majority of Non-Industry Governors, unless (A) there shall be a vacancy in the position of a Non-Industry Governor, in which case such vacancy shall be filled by a person satisfying the criteria for a Non-Industry Governor in accordance with the provisions of Section 6 of this Article or (B) a Governor elected as a Non-Industry Governor becomes an Industry Governor and his remaining term of office is six months or less. If a Governor elected as a Non-Industry Governor becomes an Industry Governor and his remaining term of office is more than six months, or a Governor elected as an Industry Governor becomes a Non-Industry Governor and his remaining term of office is more than six months, he shall be automatically removed from office unless the Board determines otherwise.
[subsection (c) hereof; (3) the President of the Corporation to be selected by the Board in accordance with the provisions of Article X, Section 2 of the By-Laws. The Board, in exercising its power to determine its size and composition under this subsection (a), shall be required to select its members in a manner such that when all vacancies, if any, are filled, the number of Governors elected by the members of the various districts in accordance with subsection (b) hereof shall exceed the number of Governors (including the President) not so elected.]
[(b) The several districts shall be represented on the Board. Each district shall elect at least one Governor. The Board shall determine from time to time which districts, if any, shall elect more than one Governor, so as to provide fair representation of the Corporation's members and of its various districts on the Board. The determination of which districts shall elect more than one Governor need not be submitted to the membership for approval and shall become effective at such time as the Board may prescribe. The Board shall, from time to time, consider the fairness of the representation of members and of the various districts on the Board. Whenever the Board finds any unfairness in such representation to exist, it shall make appropriate changes in the number of boundaries of the districts or the number of Governors elected by each district to provide fair representation of members and districts.]
[(c) The Board shall elect (1) at least three Governors representative of investors, none of whom are associated with a member or any broker or dealer; (2) at least three Governors representative of issuers, at least one of whom is not associated with a member or any broker or dealer; (3) at least three Governors chosen from members; (4) at least one Governor representative of the principal underwriters of investment company shares or affiliated members; and (5) at least one Governor representative of insurance companies or insurance company affiliated members.]

Term of Office of Governors

Sec. 5. Each Governor, except as otherwise provided by [these By-Laws or the] the Restated Certificate of Incorporation or these By-Laws, shall hold office for a term of [three years, and] not more than three years, such term to be fixed by the Board at the time of the election of such Governor, or until his successor is elected and qualified, or until his death, resignation [or removal. The President], disqualification or removal. Governors may be elected to successive terms of office. The Chief Executive Officer of the Corporation shall serve as a member of the Board until his successor is selected and qualified, or until his death, resignation [or removal.], disqualification or removal.

[Succession to Office] Filling of Vacancies

Sec. 6.

(a) [The office of a retiring Governor elected under subsection (b) of] Any vacancy in the office of a Governor, whether occurring by reason of death, disability, disqualification, removal, or resignation, other than a vacancy occurring by reason of an increase in the size of the Board, shall be filled by majority vote of the remaining Governors then in office and any person elected to fill such vacancy shall satisfy the qualifications and criteria for the governorship being filled as provided in Section 4 of this Article [shall be filled by the election of a Governor from the same district as that of the retiring Governor. The office of a retiring Governor elected under subsection (c) of Section 4 of this Article shall be filled by election by the Board as provided in subsection (c) of Section 4 of this Article].
[(b) Notwithstanding subsection (a) of this Section 6, the Board shall prescribe the succession of office in cases affected by a change in the number of Governors constituting the Board, the composition of the Board, the number or boundaries of districts, or the number of Governors elected by a district.]
(b) Any vacancy in the office of a Governor occurring by reason of an increase in the size of the Board shall be filled by majority vote of the Board and any person elected to fill such vacancy shall satisfy the criteria for such newly created governorship as shall be established by resolution of the Board, provided that the filing of any such vacancy shall not be inconsistent with any other provision of these By-Laws.

Election of Board Members

Sec. 7. The Governors elected by the Board under [subsection (b) of] Section 4 of this Article shall be [chosen as follows:] nominated by the Nominating Committee as provided in this Section 7.

[Procedure for Nominations by Nominating Committees]

The Nominating Committee

[(a) Before June 1 of each year, the Secretary of the Corporation shall notify in writing the Chairman of the respective District Committees of the expiration of the term of office of any member of the Board elected under subsection (b) of Section 4 of this Article which will expire during the next calendar year. The said Chairman shall thereupon notify]
(a) The Nominating Committee shall consist of seven or more persons, the number thereof to be determined from time to time by resolution of the Board of Governors. Members of the Nominating Committee [elected for such District pursuant to the provisions of Section 3 of Article IX of the By-Laws and such] shall be elected by the Board from time to time. The Nominating Committee shall [proceed to nominate a candidate from such District for the office of each such member of the Board whose term is to expire. Nominating Committees in nominating candidates for the office of Governor shall endeavor, as nearly as practicable, to secure appropriate and fair representation on the Board of all classes and types of members engaged in the investment banking and securities business. No Nominating Committee shall nominate an incumbent member of the Board to succeed himself unless it first takes appropriate action by a written ballot sent to the entire membership within the District to ascertain that such nomination is acceptable to] consist of: (1) the Chief Executive Officer of the Corporation; (2) at least three persons associated with members of the Corporation ("Industry Members"); and (3) a number of non-industry representatives who satisfy the criteria adopted from time to time by the Board equal in amount to the number of Industry Members serving on the Nominating Committee. Members of the Nominating Committee need not be Governors. Members of the Nominating Committee may be removed, with or without cause, by vote of a majority of the members of [voting on such ballot in the District except where the incumbent member of the Board is serving pursuant to the provisions of Section 8(a) of this Article. Before October 1 of each year, each candidate nominated by the Nominating Committees shall be certified to the respective District Committee. Within five (5) days after certification, a copy of such certification shall be sent by the District Committee to each member of the Corporation eligible to vote in the District. Such candidate shall be designated the "regular candidate."]

[Nomination of Additional Candidates]

[(b) An additional candidate or candidates may be nominated for the office of any member elected under Section 4(b) of this Article, and whose term is to expire, if written notice of the nomination, signed by at least ten percent of the members of the Corporation eligible to vote in the district, is filed with the District Committee within thirty (30) days from the date of the notice of the action taken by the Nominating Committee. If no additional candidate or candidates are nominated within such thirty-day period, the candidate or candidates nominated by the Nominating Committee shall be considered duly elected, and the District Committee shall certify the election to] the Board of Governors.

[Contested Elections]

Procedure for Nomination of Governors

[(c) If any additional candidate or candidates are nominated, as provided in subsection (b) of this Section, the District Committee shall forthwith cause the names of the regular candidate and of all other duly nominated candidates for each office to be placed upon a ballot, which shall be sent to all members of the Corporation eligible to vote in the district. Each member of the Corporation having its principal place of business in the district shall be entitled to one vote, and each member having one or more registered branch offices in the district shall be entitled to vote as provided in Section 9 of Article III. The District Committee shall fix a date before which ballots must be returned to be counted. All ballots shall be opened and counted by such officer or employee of the Corporation as the Chairman of the District Committee may designate and in the presence of a representative of each of the candidates if such representation is requested in writing by any candidate named on the ballot. The candidate for each office to be filled receiving the largest number of votes cast shall be declared elected to membership on the Board of Governors, and certification thereof shall be made forthwith to the Board of Governors. In the event of a tie, there shall be a run-off election. In all elections held under this subsection voting shall be made by secret ballot, the procedure for which shall be prescribed by the Board of Governors.]
(b) The Nominating Committee shall propose a nominee for each governorship up for election (a "Nominee") and shall provide the name, qualifications and such other information regarding each such Nominee as the Nominating Committee deems pertinent. The Nominating Committee may also propose nominees for boards of directors of any wholly owned subsidiary of the Corporation.

[Transitional Procedures]

[(d) Notwithstanding subsections (a),
(b) and (c) of this Section 7, the Board shall prescribe the nomination and election procedures in cases affected by a change in the number of Governors constituting the Board, the composition of the Board, the number or boundaries of districts, or the number of Governors elected by a district.]

[Filling of Vacancies on Board]

[Sec. 8. All vacancies in the Board other than those caused by the expiration of a Governor's term of office, shall be filled as follows:]

[(a) If the unexpired term of a Governor elected under subsection
(b) of Section 4 of this Article is for less than twelve months, such vacancy shall be filled by appointment by the District Nominating Committee of a representative of a member of the Corporation eligible to vote in the same district.]
[(b) If the unexpired term of a governor elected under subsection (b) of Section 4 of this Article is for twelve months or more, such vacancy shall be filled by election, which shall be conducted as nearly as practicable in accordance with the provisions of Section 7 of this Article.]
[(c) If the unexpired term is that of a Governor elected by the Board such vacancy shall be filled in accordance with the provisions of subsections (c)(1) through (c)(5) of Section 4 of this Article as the case may be.]

Meetings of Board; Quorum; Required Vote

[Sec. 9.] Sec. 8. Meetings of the Board of Governors shall be held at such times and places, upon such notice, and in accordance with such procedure as the Board of Governors in its discretion may determine. A quorum of the Board of Governors shall consist of a majority of the [members] total number of Governors of the Corporation, and any action taken by a majority vote at any meeting at which a quorum is present, except as otherwise provided in the Restated Certificate of Incorporation or these By-Laws, shall constitute the action of the Board. [Meetings] Members of the Board of Governors [may be held by mail, telephone or telegraph, in which case any action taken by a majority vote of] , or any committee designated by the Board of Governors [shall constitute the action of the Board. Any action taken by telephonic vote shall be confirmed in writing at a regular meeting of the Board of Governors] or any other committee of the Corporation, may participate in a meeting thereof by means of communications facilities that ensure all persons participating in the meeting can hear and speak to each other, and participation in a meeting pursuant to this By-Law shall constitute presence in person at such meeting. No member of the Board of Governors shall vote by proxy at any meeting of the Board.

[Offices of Corporation] Action by Written Consent of Governors

[Sec. 10. The Corporation shall maintain such offices as]

Sec. 9. Unless otherwise restricted by the Restated Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Governors [may from time to time deem necessary or appropriate], or of any committee of the Board or any committee of the Corporation, may be taken without a meeting if all members of the Board of Governors or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Governors or such committee.

ARTICLE X

OFFICERS AND EMPLOYEES

Election of Officers of the Board

Sec. 1. No change.

Officers of the Corporation

Sec. 2. The Board of Governors shall select a [chief executive officer, to be designated President of the Corporation] Chief Executive Officer, who shall be responsible for the management and administration of its affairs and shall be the official representative of the Corporation in all public matters and who shall have such powers and duties in the management of the Corporation as may be prescribed in a resolution by the Board of Governors. The Chief Executive Officer shall be ex-officio a member of any committee authorized by the Board of Governors. The Board may provide for such other executive or administrative officers as it shall deem necessary or advisable, including, but not limited to, President, Executive Vice-President, Senior Vice-President, Vice-President, General Counsel, Secretary and Treasurer of the Corporation. All such officers shall have such titles, such powers and duties and shall be entitled to such compensation as shall be determined from time to time by the Board of Governors.

[The terms of office of such officers shall be at the pleasure of the Board of Governors, which by affirmative vote of a majority of the members, may remove any such] Each such officer shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Any officer may resign at any time upon written notice to the corporation. The Board of Governors may remove any officer, with or without cause, at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation. Any number of offices may be held by the same person. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Governors at any meeting.

Absence of Chief Executive Officer [President]

Sec. 3. In the case of the absence or inability to act of the [President] Chief Executive Officer of the Corporation, or in case of a vacancy in such office, the Board of Governors may appoint its Chairman or such other person as it may designate to act as such officer pro tem, who shall assume all the functions and discharge all the duties of the [President] Chief Executive Officer.

Sec. 4 through Sec. 6. No change.

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