RESTATED
ARTICLES OF INCORPORATION
OF
PACIFIC FINANCIAL CORPORATION
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ARTICLE I
NAME
The name of the corporation is PACIFIC FINANCIAL CORPORATION.
ARTICLE II
MAIN OFFICE
The head office and principal place of business of this corporation is
located in the City of Aberdeen, County of Grays Harbor, State of Washington.
ARTICLE III
CAPITALIZATION
3.1 The total number of shares of stock which the corporation is
authorized to issue is Twenty-Five Million (25,000,000), all of which shares
will be Common Stock with One Dollar ($1.00) par value per share, as permitted
by RCW 23B 10.020(4) in connection with the stock split effected in the form of
a share dividend pursuant hereto. Each share of Common Stock issued and
outstanding immediately prior to the time this amendment becomes effective and
each authorized but unissued share shall be changed into Five shares of Common
Stock, One Dollar ($1.00) par value per share. At the time this amendment
becomes effective, $1.00 shall be transferred from capital surplus to stated
capital with respect to each additional share issued in the stock split.
3.2 The Board of Directors of the corporation will determine the
preferences, limitations and relative rights of any class of shares before
issuance of any shares of that class and may designate one or more series within
a class as well as the number of shares within that series, before the issuance
of any shares within that series.
ARTICLE IV
BOARD OF DIRECTORS
4.1 The Board of Directors will consist of not fewer than five (5) or
more than twenty (20) persons. The exact number within such minimum and maximum
limits will be fixed and determined by resolution of the Board of Directors.
4.2 The Board of Directors will be divided into three classes: Class
1, Class 2, and Class 3. Each such Class will consist, as nearly as possible, of
one-third of the total number of directors constituting the entire Board of
Directors. Each director will serve for a term ending on the date of the third
annual meeting of shareholders following the annual meeting at which such
director was elected; PROVIDED, HOWEVER, that each initial director in Class 1
will
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hold office until the annual meeting of shareholders in 2000; each initial
director in Class 2 will hold office until the annual meeting of shareholders in
2001; and each initial director in Class 3 will hold office until the annual
meeting of shareholders in the year 2002.
4.3 If the number of directors is increased or decreased, (i) each
director then serving as such will nevertheless continue as a director of the
Class in which he or she is a member until the expiration of his or her current
term, or his or her earlier resignation, removal from office or death, and (ii)
the newly created or eliminated directorships resulting from such increase or
decrease will be apportioned by the Board of Directors among the three Classes
of directors so as to maintain such Classes as nearly equal as possible.
4.4 Nominations for election to the Board of Directors may be made by
the Board of Directors or by any stockholder of any outstanding class of stock
of the corporation entitled to vote for the election of directors. Nominations,
other than those made by the Board of Directors, must be made in writing and
delivered or mailed to the Chairman of the corporation not less than fourteen
(14) days nor more than sixty (60) days prior to any meeting of shareholders
called for the election of directors; provided, however, if less than twenty-one
(21) days' notice of the meeting is given to shareholders, such nominations will
be mailed or delivered not later than the close of business on the seventh day
following the day on which the notice of meeting was mailed. Such notification
will contain the following information to the extent known to the notifying
shareholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the total number of shares of
stock of the corporation that will be voted for each proposed nominee; (d) the
name and address of the notifying shareholder; and (e) the number of shares of
common stock of the corporation owned by the notifying shareholder. Any
nomination not made in accordance with these provisions may, at the discretion
of the Chairperson of the meeting, be disregarded.
ARTICLE V
SHAREHOLDER RIGHTS
5.1 Shareholders will not have a preemptive right to acquire unissued
shares of capital stock of the corporation, whether now or hereafter authorized,
or to acquire any obligations issued or sold which are convertible into stock of
the corporation, other than such rights, if any, as the Board of Directors, in
its discretion, may from time to time determine, and at such price as the Board
of Directors may from time to time fix.
5.2 Each share of the capital stock of this corporation will be
entitled to one vote at all meetings of shareholders. Each shareholder entitled
to vote at any election for directors will have the right to vote, in person or
by proxy, the number of shares owned by him for as many persons as there are
directors to be elected and for whose election he has a right to vote, and no
shareholder will be entitled to cumulate his votes.
5.3 At any time, upon the request of any shareholder or shareholders
holding in the aggregate more than 25 percent of the voting power of all
shareholders, it will be the duty of the Secretary to call a special meeting of
the shareholders.
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ARTICLE VI
FAIR PRICE PROVISION
6.1 For purposes of this Article:
(a) An interested shareholder transaction means any transaction
between a corporation, or any subsidiary thereof, and an interested
shareholder of such corporation or an affiliated person to an
interested shareholder, that must be authorized pursuant to applicable
law by a vote of the shareholders.
(b) An interested shareholder:
(i) Includes any person or group of affiliated persons who
beneficially own twenty percent or more of the outstanding voting
shares of a corporation. An affiliated person is any person who
either acts jointly or in concert with, or directly or indirectly
controls, is controlled by, or is under common control with
another person; and
(ii) Excludes any person who, in good faith and not for the
purpose of circumventing this Article, is an agent, custodial
bank, broker, nominee, or trustee for another person, if such
other person is not an interested shareholder under Section
6.1(b)(1) of this Article.
6.2 Except as provided in Section 6.1 of this Article, an interested
shareholder transaction must be approved by the affirmative vote of the holders
of two-thirds of the shares entitled to be counted under this Section 6.2, or if
any class of shares is entitled to vote thereon as a class, then by the
affirmative vote of two-thirds of the shares of each class entitled to be
counted under this Section 6.2 and of the total shares entitled to be counted
under this Section 6.2. All outstanding shares entitled to vote under applicable
law or the Articles of Incorporation will be entitled to be counted under this
Section 6.2, except shares owned by or voted under the control of an interested
shareholder may not be counted to determine whether shareholders have approved a
transaction for purposes of this Section 6.2. The vote of the shares owned by or
voted under the control of an interested shareholder, however, will be counted
in determining whether a transaction is approved under other provisions of
applicable law and for purposes of determining a quorum.
6.3 This Article will not apply to a transaction:
(a) Approved by a majority vote of the board of directors. For
such purpose, the vote of directors whose votes are otherwise entitled
to be counted under the Articles of Incorporation and applicable law
who are directors or officers of, or have a material financial interest
in, an interested shareholder, or who were nominated for election as a
director as a result of an arrangement with an interested shareholder
and first elected as a director within twenty-four months of the
proposed transaction, will not be counted in determining whether the
transaction is approved by such directors; or
(b) In which a majority of directors whose votes are entitled to
be counted under Section 6.3(a) determines that the fair market value
of the consideration to be
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received by noninterested shareholders for shares of any class of which
shares are owned by any interested shareholder is not less than the
highest fair market value of the consideration paid by any interested
shareholder in acquiring shares of the same class within twenty-four
months of the proposed transaction.
6.4 This Article may be amended or repealed only by the affirmative
vote of the holders of two-thirds of the shares entitled to be counted under
this Section 6.4. All outstanding shares entitled to vote under applicable law
or the Articles of Incorporation will be entitled to be counted under this
Section 6.4, except shares owned by or voted under the control of an interested
shareholder may not be counted to determine whether shareholders have voted to
approve the amendment or repeal. The vote of the shares owned by or voted under
the control of an interested shareholder, however, will be counted in
determining whether the amendment or repeal is approved under other provisions
of applicable law and for purposes of determining a quorum.
6.5 The requirements imposed by this Article are to be in addition to,
and not in lieu of, requirements imposed on any transaction by any provision of
applicable law, or any other provision of the Articles of Incorporation, or the
Bylaws or otherwise.
ARTICLE VII
CONSIDERATION OF NON-MONETARY FACTORS
The Board of Directors of the corporation, when evaluating any offer of
another party to (a) make a tender or exchange offer for any equity security of
the corporation, (b) merge or consolidate the corporation with another
corporation, or (c) purchase or otherwise acquire all or substantially all of
the properties and assets of the corporation, will, in connection with the
exercise of its judgment in determining what is in the best interests of the
corporation and its stockholders, give due consideration to all relevant
factors, including without limitation the social and economic effects on the
employees, customers, suppliers, and other constituents of the corporation and
its subsidiaries and on the communities in which the corporation and its
subsidiaries operate or are located.
ARTICLE VIII
DIRECTOR LIABILITY AND INDEMNIFICATION
8.1 DEFINITIONS. As used in this Article:
(a) The term "Egregious Conduct" by a person will mean acts or
omissions that involve intentional misconduct or a knowing violation of
law, conduct violating Section 23B.08.310 of the Revised Code of
Washington, as amended, or participation in any transaction from which
the person will personally receive a benefit in money, property, or
services to which the person is not legally entitled.
(b) The term "Finally Adjudged" will mean stated in a judgment
based upon clear and convincing evidence by a court having
jurisdiction, from which there is no further right to appeal.
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(c) The term "Director" will mean any person who is a director of
the corporation and any person who, while a director of the
corporation, is serving at the request of the corporation as a
director, officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, limited liability company,
partnership, joint venture, trust, or other enterprise, or is a
fiduciary or party in interest in relation to any employee benefit plan
covering any employee of the corporation or of any employer in which it
has an ownership interest; and "conduct as a Director" will include
conduct while a Director is acting in any of such capacities.
(d) The term "Officer-Director" will mean any person who is
simultaneously both an officer and director of the corporation and any
person who, while simultaneously both an officer and director of the
corporation, is serving at the request of the corporation as a
director, officer, manager, partner, trustee, employee, or agent of
another foreign or domestic corporation, limited liability company,
partnership, joint venture, trust, or other enterprise, or is a
fiduciary or party in interest in relation to any employee benefit plan
covering any employee of the corporation or of any employer in which it
has an ownership interest; and "conduct as an Officer-Director" will
include conduct while such a person is acting as an officer of the
corporation or in any of such other capacities.
(e) The term "Subsidiary Corporation" will mean any corporation
or limited liability company at least eighty percent of the voting
interests of which is held beneficially by this corporation.
(f) The term "Subsidiary Outside Director" will mean any person
who, while not principally employed by this corporation or any
Subsidiary Corporation, is a director or manager of a Subsidiary
Corporation and any such person who, while a director or manager of a
Subsidiary Corporation, is serving at the request of such corporation
as a director, officer, manager, partner, trustee, employee, or agent
of another foreign or domestic corporation, limited liability company,
partnership, joint venture, trust, or other enterprise, or is a
fiduciary or party in interest in relation to any employee benefit plan
covering any employee of such corporation or of any employer in which
it has an ownership interest; and "conduct as a Subsidiary Outside
Director" will include conduct while such a person is acting in any of
such capacities.
8.2 LIABILITY OF DIRECTORS. No director, Officer-Director, former
Director or former Officer-Director will be personally liable to the corporation
or its shareholders for monetary damages for conduct as a Director or
Officer-Director occurring after the effective date of this Article unless the
conduct is Finally Adjudged to have been Egregious Conduct.
8.3 LIABILITY OF SUBSIDIARY OUTSIDE DIRECTORS. No Subsidiary Outside
Director or former Subsidiary Outside Director will be personally liable in any
action brought directly by this corporation as a shareholder of the Subsidiary
Corporation or derivatively on behalf of the Subsidiary Corporation (or by any
shareholder of this corporation double-derivatively on behalf of this
corporation and the Subsidiary Corporation) for monetary damages for conduct as
a Subsidiary Outside Director occurring after the effective date of this Article
unless the conduct is Finally Adjudged to have been Egregious Conduct.
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8.4 MANDATORY INDEMNIFICATION OF DIRECTORS. Subject to Sections 8.7
and 8.8 of this Article, the corporation will indemnify any person who is, or is
threatened to be made, a party to any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, and whether formal or
informal, and whether by or in the right of the corporation or its shareholders
or by any other party, by reason of the fact that the person is or was a
Director, Officer-Director, or Subsidiary Outside Director against judgments,
penalties or penalty taxes, fines, settlements (even if paid or payable to the
corporation or its shareholders or to a Subsidiary Corporation) and reasonable
expenses, including attorney fees, actually incurred in connection with such
action, suit or proceeding unless the liability and expenses were on account of
conduct Finally Adjudged to be Egregious Conduct.
8.5 ADVANCING EXPENSES. Except as prohibited by Sections 8.7 and 8.8
of this Article, the reasonable expenses, including attorneys' fees, of a
Director, Officer-Director, Subsidiary Outside Director, or person formerly
serving in any such capacities, incurred in connection with an action, suit or
proceeding in which the individual is entitled to indemnification under Section
8.4 will be paid or reimbursed by the corporation, upon request of such person,
in advance of the final disposition of such action, suit or proceeding upon
receipt by the corporation of a written, unsecured promise by the person to
repay such amount if it will be Finally Adjudged that the person is not eligible
for indemnification. All expenses incurred by such person in connection with
such action, suit or proceeding will be considered reasonable unless Finally
Adjudged to be unreasonable.
8.6 PROCEDURE. Except as required by Sections 8.7 and 8.8 of this
Article, no action by the Board of Directors, the shareholders, independent
counsel, or any other person or persons will be necessary or appropriate to the
determination of the corporation's indemnification obligation under this Article
in any specific case, to the determination of the reasonableness of any expenses
incurred by a person entitled to indemnification under this Article, nor to the
authorization of indemnification in any specific case.
8.7 EXCEPTION FOR INTERNAL CLAIMS. Notwithstanding anything else in
these Articles, the corporation will not be obligated to indemnify any person
for any expenses, including attorneys' fees, incurred to assert any claim
against the corporation (except a claim to enforce rights to indemnification) or
any person related to or associated with it, including any person who would be
entitled hereby to indemnification in connection with the claim.
8.8 EXCEPTION FOR REGULATORY CLAIMS.
(a) REGULATORY PROCEEDINGS GENERALLY. Notwithstanding anything
else in these Articles, indemnification of any Director,
Officer-Director or Subsidiary Outside Director, or any person formerly
serving in any such capacities, and advancement of expenses in
connection with either an administrative proceeding or a civil action
instituted by a federal banking agency ("Regulatory Proceedings") will
be governed by this Section.
(b) BANKING REGULATIONS DEFINED. The term "Banking Regulations"
will mean any state or federal laws or regulations applicable to the
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corporation, or any formal policies adopted by a regulatory agency
having jurisdiction over the corporation.
(c) INDEMNIFICATION IN REGULATORY PROCEEDINGS. The corporation
will provide indemnification and advancement of expenses in connection
with Regulatory Proceedings to the extent permitted, and in the manner
prescribed by Banking Regulations. Insurance and other means to ensure
payment of costs and expenses in Regulatory Proceedings may be obtained
or provided to the extent permitted in and in the manner prescribed by
Banking Regulations.
(d) FEDERAL DEPOSIT INSURANCE CORPORATION. Notwithstanding
anything else in these Articles, the Articles are subject to the
requirements and limitations set forth in state and federal laws,
rules, regulations, and orders regarding indemnification and prepayment
of legal expenses and liabilities, including Section 18(k) of the
Federal Deposit Insurance Act, as amended, and Part 359 of the Federal
Deposit Insurance Corporation's Rules and Regulations or any successor
regulations. To the extent of any conflict between state and federal
law regarding the interpretation and scope of the Articles, federal law
will supersede and control.
8.9 ENFORCEMENT OF RIGHTS. The corporation will indemnify any person
granted indemnification rights under this Article against any reasonable
expenses incurred by the person to enforce such rights.
8.10 SET-OFF OF CLAIMS. Any person granted indemnification rights
herein may directly assert such rights in set-off of any claim raised against
the person by or in the right of the corporation and will be entitled to have
the same tribunal which adjudicates the corporation's claim adjudicate the
person's entitlement to indemnification by the corporation.
8.11 CONTINUATION OF RIGHTS. The indemnification rights provided in
this Article will continue as to a person who has ceased to be a Director,
Officer-Director, or Subsidiary Outside Director and will inure to the benefit
of the heirs, executors, and administrators of such person.
8.12 EFFECT OF AMENDMENT OR REPEAL. Any amendment or repeal of this
Article will not adversely affect any right or protection of a Director,
Officer-Director, or Subsidiary Outside Director or person formerly serving in
any of such capacities existing at the time of such amendment or repeal with
respect to acts or omissions occurring prior to such amendment or repeal.
8.13 SEVERABILITY OF PROVISIONS. Each of the substantive provisions of
this Article is separate and independent of the others, so that if any provision
hereof will be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability will not affect the validity or enforceability of
the other provisions.
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ARTICLE IX
REPURCHASE OF SHARES
To the extent authorized by the Washington Director of Financial
Institutions and the Federal Deposit Insurance Corporation, as applicable, the
corporation may use its unreserved and unrestricted surplus to purchase its own
shares which will be held as authorized but unissued shares.
ARTICLE X
AMENDMENT TO BYLAWS
The Board of Directors will have full power to adopt, alter, amend, or
repeal the Bylaws or adopt new Bylaws; provided nothing herein will deny the
concurrent power of the shareholders to adopt, alter, amend, or repeal the
Bylaws so long as any Bylaw is not inconsistent with law or these Articles.
ARTICLE XI
AMENDMENT TO ARTICLES
This corporation reserves the right to amend all or change or repeal
any provisions contained in its Articles of Incorporation in any manner now or
hereafter prescribed or permitted by law. All rights of shareholders of this
corporation are granted subject to this reservation.
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