CERTIFICATE OF INCORPORATION
OF
HMN FINANCIAL, INC.
As amended April 28, 1998
FIRST:The name of the Corporation is HMN Financial, Inc. (hereinafter sometimes
referred to as the "Corporation").
SECOND:The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent at that
address is The Corporation Trust Company.
THIRD:The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
Delaware.
FOURTH:
A.The total number of shares of all classes of stock which the Corporation
shall have the authority to issue is 11.5 million consisting of:
1. Five hundred thousand shares of Preferred Stock, $.01 par value per share
(the "Preferred Stock"); and
2. Eleven million shares of Common Stock, $.01 par value per share (the "Common
Stock").
B.The Board of Directors is authorized, subject to any limitations presented by
law, to provide for the issuance of the shares of Preferred Stock in series,
and by filing a certificate pursuant to the applicable law of the State of
Delaware (such certificate being hereinafter referred to as a "Preferred Stock
Designation"), to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and any qualifications,
limitations or restrictions thereof. The number of authorized shares of the
Preferred Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the Common Stock, without a vote of the holders of the Preferred
Stock, or of any series thereof, unless a vote of any such holders is required
pursuant to the terms of any Preferred Stock Designation.
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 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 owned by such person would be entitled to cast, multiplied by a
fraction, the numerator of which is the number of shares of such
class or series 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)An "affiliate" of a specified person shall mean a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the person specified.
(b)"Beneficial ownership" shall be determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Securities Exchange Act of 1934 (or any
successor rule or statutory provision), or, if said Rule 13d-3 shall be
rescinded and there shall be no successor rule or statutory provision thereto,
pursuant to said Rule 13d-3 as in effect on the date this Certificate of
Incorporation is filed with the Secretary of State of the State of Delaware
("Filing Date"); 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 the clauses of Section
A of 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 shalt 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 is beneficially owned, directly or indirectly, by any other person
with which such first mentioned person or any of its affiliates acts as a
partnership, limited partnership, syndicate or other group pursuant to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of this Corporation; and
provided further, however, that (i) no director or officer
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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 (ii) 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) shall, solely by reason
of such capacity of such trustee, be deemed, for any purposes hereof, to
beneficially own any Common Stock held under any such plan. For purposes of
computing the percentage of Common Stock beneficially owned by 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)A "person" shall mean any individual, firm, corporation, or other entity
(d)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 (1) the number of shares of Common Stock beneficially owned by
any person, (2) whether a person is an affiliate of another, (3) whether a
person has an agreement, arrangement, or understanding with another as to the
matters referred to in the definition of beneficial ownership, (4) the
application of any other definition or operative provision of this Section to
the given facts, or (5) any other matter relating to the applicability or
effect of this Section.
3.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 (a "Holder in Excess") supply the Corporation with complete information
as to (a) the record owner(s) of all shares beneficially owned by such Holder
in Excess and (b) any other factual matter relating to the applicability or
effect of this section as may reasonably be requested of such Holder in Excess.
The Board of Directors shall further have the right to receive from any Holder
in Excess reimbursement for all expenses incurred by the Board in connection
with its investigation of any matters relating to the applicability or effect
of this section on such Holder in Excess, to the extent such investigation is
deemed appropriate by the Board of Directors as a result of the Holder in
Excess refusing to supply the Corporation with the information described in the
previous sentence.
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4. 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 one
third of the votes (after giving effect, if required, to the provisions of this
Section) 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. Every reference in this Certificate of Incorporation to a
majority or other proportion of outstanding capital stock (or the holders
thereof) or voting power for purposes of determining any quorum requirement or
any requirement for stockholder consent or approval shall be deemed to refer to
such percentage or other proportion of the votes (or the holders thereof) then
entitled to be cast in respect of such capital stock after giving effect to the
provisions of this Section whether or not the holders of capital stock are
present in person or by proxy.
5.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.
6.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 here from 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 By-laws 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 By-laws so provide.
(C)Any action required or permitted to be taken by the stockholders of the
Corporation, subject to the rights of holders of any class or series of
Preferred Stock of the Corporation, must be effected at a duly called annual or
special meeting of stockholders of the
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Corporation and may not be effected by any consent in writing by such
stockholders.
(D)Special meetings of stockholders of the Corporation, subject to the rights
of holders of any class or series of Preferred Stock of the Corporation, may be
called only by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of directors which the Corporation would have if
there were no vacancies on the Board of Directors (whether or not there exist
any vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption) (the "Whole Board").
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, other than those who may be elected by the holders of any
class or series of Preferred Stock, 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 conclusion of the first annual meeting of
stockholders, the term of office of the second class to expire at the
conclusion of the annual meeting of stockholders one year thereafter and the
term of office of the third class to expire at the conclusion of the annual
meeting of stockholders two years thereafter. At each annual meeting of
stockholders, commencing with the first annual meeting, directors elected to
succeed those directors whose terms expire shall be elected for a term of
office to expire at the conclusion of 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 the holders of any series of Preferred Stock then
outstanding, 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 elected expires, and until
such director's successor shall have been duly elected and qualified. No
decrease in the number of authorized 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
By-laws of the Corporation.
D.Subject to the rights of the holders of any series of Preferred Stock then
outstanding, any directors, 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% 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), voting together as a single class.
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SEVENTH:The Board of Directors is expressly empowered to adopt, amend or repeal
the By-laws of the Corporation. Any adoption, amendment or repeal of the By-
laws 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 By-laws of the Corporation. 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% 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 hereof), voting together as a single class, shall be required to adopt,
amend or repeal any provisions of the By-laws 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 Section:
1.any merger or consolidation of the Corporation or any Subsidiary (as
hereinafter deemed) 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
hereafter 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 equaling or
exceeding 25% of the combined assets of the Corporation and its Subsidiaries
except 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 any 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
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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"),
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 or in any
agreement with any national securities exchange or quotation system 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 1 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, or such vote 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, either the condition specified in
the following paragraph 1 is met or all of the conditions specified in the
following; paragraph 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, 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.
(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.
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(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;
(2)(if applicable) the highest preferential amount per share to which the
holders of shares of such class of Voting Stock are entitled in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and
(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, 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
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a majority of the Disinterested Directors, (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 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 nor 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 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, rules or regulations) 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 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.
2."Interested Stockholder" shall mean any Person (other than the Corporation or
any holding company or Subsidiary thereof) who or which:
(a)is the beneficial owner, directly or indirectly, of more than 10% of the
voting power of the outstanding Voting Stock; or
(b)is an Affiliate of the Corporation and at any time within the two-year
period immediately prior to the date in question was the beneficial owner,
directly or indirectly, of 10% or more of the voting power of the then-
outstanding Voting Stock; or
(c)is an assignee of or has otherwise succeeded to any shares of Voting Stock
which were at any time within the two-year period immediately prior to the date
in question beneficially owned by any Interested Stockholder, if such
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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.A Person shall be a beneficial owner of any Voting Stock:
(a)which such Person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as in effect
on the Filing Date; or
(b)which such Person or any of its Affiliates or Associates has (1) the right
to acquire (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, or (2) the right to vote pursuant to any agreement, arrangement
or understanding (but neither such Person nor any such Affiliate or Associate
shall be deemed to be the beneficial owner of any shares of Voting Stock solely
by reason of a revocable proxy granted for a particular meeting of
stockholders, pursuant to a public solicitation of proxies for such meeting,
and with respect to which shares neither such Person nor any such Affiliate or
Associate is otherwise deemed the beneficial owner); or
(c)which are beneficially owned, directly or indirectly within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as in effect
on the Filing Date, by any other Person with which such Person or any of its
Affiliates or Associates has any agreement, arrangement or understanding for
the purposes of acquiring, holding, voting (other than solely by reason of a
revocable proxy as described in Subparagraph (b) of this Paragraph 3) or in
disposing of any shares of Voting Stock;
provided, however, that, in the case of any employee stock ownership or similar
plan of the Corporation or of any Subsidiary in which the beneficiaries thereof
possess the right to vote any shares of Voting Stock held by such plan, no such
plan nor any trustee with respect thereto (nor 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 shares of Voting Stock held under any
such plan.
4.For the purpose of determining whether a Person is an Interested Stockholder
pursuant to Paragraph 2 of this Section C, the number of shares of Voting Stock
deemed to be outstanding shall include shares deemed owned through application
of Paragraph 3 of this Section C but shall not include any other shares of
Voting Stock which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
5."Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the
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Securities Exchange Act of 1934, as amended, as in effect on the Filing Date.
6."Subsidiary" means any corporation of which a majority of any class of equity
security is owned, directly or indirectly, by the Corporation; provided,
however, that for the purposes of the definition of Interested Stockholder set
forth in Paragraph 2 of this Section C, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity security is owned,
directly or indirectly, by the Corporation.
7."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 on 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.
8."Fair Market Value" means: (a) with respect to any class of stock,
appropriately adjusted for any dividend or distribution in shares of such stock
or in any combination or reclassification of outstanding shares of such stock
into a smaller number of shares of such stock, the highest closing sale 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 Quotations ("NASDAQ") 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 prices 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; 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.
9.Reference to "Highest Per Share Price" means with respect to any class of
stock, the highest price per share, 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.
10.In the event of any Business Combination in which the Corporation survives,
the phrase "other consideration 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 after reasonable inquiry, (1) whether a
person is an Interested Stockholder; (2) the
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number of shares of Voting Stock beneficially owned by any person; (3) whether
a person is an Affiliate or Associate of another; and (4) 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 assets 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% of the voting power of all of the then-outstanding shares of the
Voting Stock, voting together as a single class, shall be required to alter,
amend or repeal this Article EIGHTH.
NINTH:The Board of Directors of the Corporation, when evaluating any offer of
another Person (as defined in Article EIGHTH hereof) to (A) make a tender or
exchange offer for any equity security of the Corporation, (B) merge or
consolidate the Corporation with another corporation or entity or (C) purchase
or otherwise acquire all or substantially all of the properties and assets of
the Corporation, may, in connection with the exercise of its judgment in
determining what is in the best interest of the Corporation and its
stockholders, give due consideration to all relevant factors, including,
without limitation, the social and economic effect of acceptance of such offer
on the Corporation's present and future customers and employees and those of
its Subsidiaries (as defined in Article EIGHTH hereof); on the communities in
which the Corporation and its Subsidiaries operate or are located; on the
ability of the Corporation to fulfill its corporate objectives as a financial
institution holding company and on the ability of its subsidiary financial
institution to fulfill the objectives of a federally insured financial
institution under applicable statutes and regulations.
TENTH:
A.Except as set forth in Section B of this Article TENTH, in addition to any
affirmative vote of stockholders required by law or this Certificate of
Incorporation, any direct or indirect purchase or other acquisition by the
Corporation of any Equity Security (as hereinafter defined) of any class from
any Interested Person (as hereinafter defined) shall require the affirmative
vote of the holders of at least 80% of the Voting Stock of the Corporation that
is not beneficially owned (for purposes of this Article TENTH beneficial
ownership shall be determined in accordance with Section C.2(b) of Article
FOURTH hereof) by such Interested Person, 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 or in any agreement with any national securities exchange or
quotation system, or otherwise. Certain defined
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terms used in this Article TENTH are as set forth in Section C below.
B.The provisions of Section A of this Article TENTH shall not be applicable
with respect to:
(1)any purchase or other acquisition of securities made as part of a tender or
exchange offer by the Corporation or a Subsidiary (which term, as used in this
Article TENTH, is as defined in the first clause of Section C.6 of Article
EIGHTH hereof) of the Corporation to purchase securities of the same class made
on the same terms to all holders of such securities and complying with the
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder (or any subsequent provision replacing
such Act, rules or regulations);
(2)any purchase or acquisition made pursuant to an open market purchase program
approved by a majority of the Board of Directors, including a majority of the
Disinterested Directors (which term, as used in this Article TENTH, is as
defined in Article EIGHTH hereof); or
(3)any purchase or acquisition which is approved by a majority of the Board of
Directors, including a majority of the Disinterested Directors, and which is
made at no more than the Market Price (as hereinafter defined), on the date
that the understanding between the Corporation and the Interested Person is
reached with respect to such purchase (whether or not such purchase is made or
a written agreement relating to such purchase is executed on such date), of
shares of the class of Equity Security to be purchased.
C.For the purposes of this Article TENTH:
(i)The term Interested Person shall mean any Person (other than the
Corporation, Subsidiaries of the Corporation, pension, profit sharing, employee
stock ownership or other employee benefit plans of the Corporation and its
Subsidiaries, entities organized or established by the Corporation or any of
its Subsidiaries pursuant to the terms of such plans and trustees and
fiduciaries with respect to any such plan acting in such capacity) that is the
direct or indirect beneficial owner of 5% or more of the Voting Stock of the
Corporation, and any Affiliate or Associate of any such person.
(ii)The Market Price of shares of a class of Equity Security on any day shall
mean the highest sale price of shares of such class of Equity Security on such
day, or, if that day is not a trading day, on the trading day immediately
preceding such day, on the national securities exchange or the NASDAQ System or
any other system then in use on which such class of Equity Security is traded.
(iii)The term Equity Security shall mean any security described in Section
3(a)(11) of the Securities Exchange Act of 1934, as in effect on December 31,
1991, which is traded on a national securities exchange or the NASDAQ System or
any other system then in use.
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(iv)For purposes of this Article TENTH, all references to the term Interested
Stockholder in the definition of Disinterested Director shall be deemed to
refer to the term Interested Person.
ELEVENTH:
A.Each director or officer (or former director or former officer) of the
Corporation 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, officer, employee or agent, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than such law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith; PROVIDED, HOWEVER, that,
except as provided in Section C hereof with respect to proceedings to enforce
rights to indemnification, the Corporation shall indemnify any such indemnitee
in connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.
B.The right to indemnification conferred in Section A of this Article 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, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"),
by or on behalf of such indemnitee, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right to appeal (hereinafter a ''final adjudication"), that such
indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article shall be contract rights
and such rights shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
C.If a claim under Section A or B of this Article is not paid in full by the
Corporation within sixty days after a written claim has been received by the
Corporation, except
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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 also be entitled to be paid
the expense 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 or otherwise shall be on the Corporation.
D.The rights to indemnification and to the advancement of expenses conferred in
this Article 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, By-laws, 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 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 the fullest extent of the provisions of this Article with respect
to the indemnification and advancement of expenses of directors and officers of
the Corporation to any employee or agent or former employee or agent of the
Corporation or any person who is or was serving at the request of the
Corporation as an employee or agent of any other corporation, partnership,
joint venture, trust or other enterprise, including an employee benefit plan.
TWELFTH: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
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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 hereafter amended to further eliminate or limit, or to
authorize corporate action further limiting or eliminating, 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.
THIRTEENTH:
No amendment, addition, alteration, change or repeal of any provision of this
Certificate of Incorporation shall be made, unless such is first proposed by
the Board of Directors of the Corporation, upon the affirmative vote of at
least two-thirds of the directors then in office at a duly constituted meeting
of the Board of Directors called expressly for such purpose, and thereafter
approved by the stockholders by a majority of the total votes eligible to be
cast at a duly constituted meeting of stockholders called expressly for such
purpose; 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% 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
THIRTEENTH, clause C.1. of Article FOURTH, clauses (C) or (D) of Article FIFTH,
Article SIXTH, Article SEVENTH, Article EIGHTH, Article NINTH, Article TENTH,
Article ELEVENTH or Article TWELFTH.
FOURTEENTH:The name and mailing address of the sole incorporator are as
follows:
NAME MAILING ADDRESS
Roger P. Weise 101 N. Broadway
Spring Valley, Minnesota 55975
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I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a
corporation under the laws of the State of Delaware, do make, file and record
this Certificate of Incorporation, do certify that the facts herein stated are
true, and, accordingly, have hereto set my hand this 23RD day of MARCH, l994.
And as amended April 28, 1998.
/s/ Roger P. Weise
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Roger P. Weise, Incorporator
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