Exhibit 3.1
CHARTER FOR
JEFFERSON BANCSHARES, INC.
ARTICLE I
Corporate Name
The name of the corporation is Jefferson Bancshares, Inc. (the
"Corporation").
ARTICLE II
Registered Agent
The street address and zip code of the registered office of the
Corporation are 120 Evans Avenue, Morristown, Tennessee 37814. The registered
office of the Corporation is located in Hamblen County. The name of the initial
registered agent of the Corporation at its registered office is Anderson L.
Smith.
ARTICLE III
Principal Office
The street address and zip code of the principal office of the
Corporation are 120 Evans Avenue, Morristown, Tennessee 37814.
ARTICLE IV
Purpose and Powers
The Corporation is for profit. The purpose or purposes for which the
Corporation is organized are to act as a holding company for a financial
institution or institutions and to engage in any lawful business for which
corporations may be incorporated pursuant to the laws of Tennessee. The
Corporation shall have all the powers of a corporation organized under such
laws.
ARTICLE V
Capital Stock
The total number of shares of all classes of capital stock which the
Corporation has authority to issue is forty million (40,000,000) of which thirty
million (30,000,000) shares shall be common stock, par value $0.01 per share,
and of which 10,000,000 shares shall be preferred stock, par value $0.01 per
share. The shares may be issued from time to time as authorized by the
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Board of Directors without the approval of the Corporation's shareholders except
as otherwise provided in this Article V or the rules of a national securities
exchange or automated quotation system, if applicable. The consideration for the
issuance of the shares shall be paid in full before their issuance and shall not
be less than the par value per share. The adequacy of the consideration for the
shares shall be determined by the Board of Directors in accordance with the
provisions of the Tennessee Business Corporation Act. In the absence of actual
fraud in the transaction, the judgment of the Board of Directors as to the value
of such consideration shall be conclusive. Upon payment of such consideration,
such shares shall be deemed to be fully paid and nonassessable. In the case of a
stock dividend, that part of the surplus of the Corporation which is transferred
to stated capital upon the issuance of shares as a share dividend shall be
deemed to be the consideration for their issuance.
A description of the different classes and series (if any) of the
Corporation's capital stock and a statement of the relative powers,
designations, preferences and rights of the shares of each class of and series
(if any) of capital stock, and the qualifications, limitations or restrictions
thereof, are as follows:
(A) Preferred Stock. The Board of Directors of the Corporation is
authorized to amend this Charter, by adoption of articles of amendment effective
without shareholder approval, to provide for the issuance of serial preferred
stock in series, by filing a certificate pursuant to the applicable law of the
State of Tennessee (such certificate being hereinafter referred to as a
"Preferred Stock Designation"), and to fix the preferences, limitations and
relative rights of each such series, including, but not limited to,
determination of any of the following:
(1) the distinctive designation for each series and the number
of shares constituting such series;
(2) whether or not shares of such class or series shall have
voting rights, in addition to any voting rights provided by law and, if so, the
terms of such voting rights;
(3) whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be redeemable and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates; and whether or not there
shall be any sinking fund or purchase account in respect thereof and, if so, the
terms thereof;
(4) whether or not and, if so, the rates, amounts, and times
at which, and the conditions under which, dividends shall be payable on shares
of such class or series, whether any such dividends shall rank senior or junior
to or on a parity with the dividends payable on any other class or series of
stock, and the status of any such dividends as cumulative, cumulative to a
limited extent or non-cumulative, and as participating or non-participating;
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(5) the rights of the holders of shares of such class or
series upon the liquidation, dissolution, or winding up of the affairs of, or
upon any distribution of the assets of, the Corporation, which rights may vary
depending upon whether such liquidation, dissolution, or winding up is voluntary
or involuntary and, if voluntary, may vary at different dates, and whether such
rights shall rank senior or junior to or on a parity with such rights of any
other class or series of stock;
(6) whether the shares of such series shall be entitled to the
benefit of a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and if so entitled, the amount of such fund and the
manner of its application, including the price(s) at which such shares may be
redeemed or purchased through the application of such fund;
(7) whether the shares of such series shall be convertible
into, or exchangeable for, shares of any other class or classes or of any other
series of the same or any other class or classes of stock of the Corporation
and, if so convertible or exchangeable, the conversion price(s) or the rate(s)
of exchange, and the adjustments thereof, if any, at which such conversion or
exchange may be made, and any other terms and conditions of such conversion or
exchange;
(8) the price or other consideration for which the shares of
such series shall be issued;
(9) whether the shares of such series that are redeemed or
converted shall have the status of authorized but unissued shares of serial
preferred stock and whether such shares may be reissued as shares of the same or
any other series of serial preferred stock; and
(10) any other designations, preferences, limitations or rights
that are now or hereafter permitted by applicable law and are not inconsistent
with the provisions of this Charter.
Each share of each series of serial preferred stock shall have the same
preferences and relative rights as, and be identical in all respects with, all
other shares of the same series.
(B) Common Stock. Subject to all the rights of preferred stock as
expressly provided in this Charter, by law or by the Board of Directors in a
resolution or resolutions pursuant to this Article V, the common stock of the
Corporation shall exclusively possess all voting power and all such rights and
privileges as are afforded to capital stock by Tennessee law in the absence of
any express grant of rights and privileges in the Corporation's Charter,
including, but not limited to, the following:
(1) Holders of common stock shall be entitled to one (1) vote
for each share held by such holder;
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(2) Whenever there shall have been paid, or declared and set
aside for payment, to the holders of the outstanding shares of any class of
stock having preference over the common stock as to the payment of dividends,
the full amount of dividends and of sinking fund, retirement fund or other
retirement payments, if any, to which such holders are respectively entitled in
preference to the common stock, then dividends may be paid on the common stock
and on any class or series of stock entitled to participate therewith as to
dividends out of any assets legally available for the payment of dividends, but
only when and as declared by the Board of Directors.
(3) In the event of any liquidation, dissolution or winding up
of the Corporation, after there shall have been paid, or declared and set aside
for payment, to the holders of the outstanding shares of any class having
preferences over the common stock in any such event the full preferential
amounts to which they are respectively entitled, the holders of the common stock
and of any class or series of stock entitled to participate therewith, in whole
or in part, as to distribution of assets shall be entitled, after payment or
provision for payment of all debts and liabilities of the Corporation, to
receive the remaining assets of the Corporation available for distribution, in
cash or in kind.
(4) Each share of common stock shall have the same relative
powers, preferences and rights as, and shall be identical in all respects with,
all the other shares of common stock of the Corporation.
ARTICLE VI
Preemptive Rights
No shareholder of the Corporation shall have, as a matter of right, the
preemptive right to purchase or subscribe for shares of any class, now or
hereafter authorized, or to purchase or subscribe for securities or other
obligations convertible into or exchangeable for such shares or which by
warrants or otherwise entitled the holders thereof to subscribe for or purchase
any such shares.
ARTICLE VII
Repurchase of Shares
The Corporation may from time to time, pursuant to authorization by the
Board of Directors of the Corporation and without action by the shareholders,
purchase or otherwise acquire shares of any class, bonds, debentures, notes,
scrip, warrants, obligations, evidences of indebtedness or other securities of
the Corporation in such manner, upon such terms, and in such amounts as the
Board of Directors shall determine, subject, however, to such limitations or
restrictions, if any, as are contained in the express terms of any class of
shares of the Corporation outstanding at the time of the purchase or acquisition
in question or as are imposed by law.
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ARTICLE VIII
Directors
The business 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 Charter or the bylaws of the
Corporation, the directors are hereby empowered to exercise all such powers and
do all such things as may be exercised or done by the Corporation.
The number of directors of the Corporation shall be no less than 5 and
not more than 15 (exclusive of directors, if any, to be elected by holders of
preferred stock of the Corporation, voting separately as a class), as shall be
provided from time to time in or in accordance with the bylaws.
At the first meeting of shareholders of the Corporation, the Board of
Directors of the Corporation shall be divided into three classes as nearly equal
in number as the then total number of directors constituting the entire Board of
Directors shall permit, which classes shall be designated Class I, Class II and
Class III. At such meeting of shareholders, directors assigned to Class I shall
be elected to hold office for a term expiring at the first succeeding annual
meeting of shareholders thereafter, directors assigned to Class II shall be
elected to hold office for a term expiring at the second succeeding annual
meeting thereafter, and directors assigned to Class III shall be elected to hold
office for a term expiring at the third succeeding annual meeting thereafter.
Thereafter, at each annual meeting of shareholders of the corporation, directors
of classes the terms of which expire at such annual meeting shall be elected for
terms of three years. Notwithstanding the foregoing, a director whose term shall
expire at any annual meeting shall continue to serve until such time as his
successor shall have been duly elected and shall have been qualified unless his
position on the Board of Directors shall have been abolished by action taken to
reduce the size of the Board of Directors prior to said meeting.
Should the number of directors of the Corporation be reduced, the
directorship(s) eliminated shall be allocated among classes as appropriate so
that the number of directors in each class is as specified in the immediately
preceding paragraph. The Board of Directors shall designate, by the name of the
incumbent(s), the position(s) to be abolished. Notwithstanding the foregoing, no
decrease in the number of directors shall have the effect of shortening the term
of any incumbent director. Should the number of directors of the Corporation be
increased, the additional directorships shall be allocated among classes as
appropriate so that the number of directors in each class is as specified in the
immediately preceding paragraph.
Whenever the holders of any one or more series of preferred stock of
the Corporation shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the Board of Directors shall consist of
said directors so elected in addition to the number of directors fixed as
provided above in this Article VIII. Notwithstanding the foregoing, and except
as otherwise may be required by law, whenever the holders of any one or more
series of preferred
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stock of the Corporation shall have the right, voting separately as a class, to
elect one or more directors of the Corporation, the terms of the director or
directors elected by such holders shall expire at the next succeeding annual
meeting of shareholders.
The names of the initial directors who will serve until their
successors are duly elected and qualified are as follows:
Anderson L. Smith
William T. Hale
John F. McCrary, Jr.
Dr. Terry M. Brimer
H. Scott Reams
Dr. Jack E. Campbell
William F. Young
ARTICLE IX
Removal of Directors
Notwithstanding any other provision of this Charter or the bylaws of
the Corporation, no director of the Corporation may be removed at any time
unless for cause and upon the affirmative vote of the holders of at least 80% of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the shareholders called for that purpose, except as
otherwise required by law.
ARTICLE X
Elimination of Directors' Liability
A director of this Corporation shall not be personally liable to the
Corporation or its shareholders 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 shareholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; or (iii) for unlawful distributions under Section 48-18-304 of
the Tennessee Business Corporation Act. If the Tennessee Business Corporation
Act is amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Tennessee Business Corporation Act, as so amended.
Any repeal or modification of the foregoing paragraph by the
shareholders 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.
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ARTICLE XI
Indemnification
(A) Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a director or an
officer of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan, and (1) he or she conducted himself in
good faith, (2) he or she reasonably believed, (a) in the case of conduct in his
official capacity with the Corporation, that his or her conduct was in the
Corporation's best interest and, (b) in all other cases, that his or her conduct
was at least not opposed to the Corporation's best interest, and (3) in the case
of any criminal proceeding, he or she had no reasonable cause to believe that
his conduct was unlawful (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 Tennessee Business
Corporation Act, 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 XI 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
Tennessee Business Corporation Act requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, services to an employee benefit plan) shall be
made upon (1) 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, (2) delivery to the Corporation, by or on behalf of
such indemnitee, of a written affirmation of his or her good faith belief that
he or she has met the standard of conduct set forth in Section A of this Article
XI, and (3) a determination that the facts would not preclude indemnification
under this Article XI.
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The determination shall be made (a) by the Board of Directors by
majority vote of a quorum consisting of directors not at the time parties to the
proceeding, (b) if a quorum cannot be obtained under the preceding clause, by
majority vote of a committee duly designated by the Board of Directors (in which
designation directors who are parties may participate), consisting solely of two
(2) or more directors not at the time party to the proceeding, (c) by
independent special legal counsel, (i) selected by the Board of Directors or its
committee in the manner described in clause (a) or (b) of this paragraph, (ii)
if a quorum of the board cannot be obtained under clause (a) or (b) of this
paragraph, selected by a majority vote of the full Board of Directors (in which
selection directors who are parties may participate) or; (d) by the
shareholders, but shares owned by or voted under the control of directors who
are at the time parties to the proceeding may not be voted on the determination.
The rights to indemnification and to the advancement of expenses
conferred in Sections (A) and (B) of this Article XI 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 XI is not
paid in full by the Corporation within sixty (60) days after a written claim has
been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be twenty
(20) days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expenses of prosecuting or defending such
suit. In (1) 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
(2) 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 Tennessee Business
Corporation Act. Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the determination
that indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled to select counsel
under clause (c) of the second paragraph of Section (B). 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 XI or otherwise shall be on the Corporation.
(D) The rights to indemnification and to the advancement of expenses
conferred in this Article XI shall not be exclusive of any other right which any
person may have or hereafter
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acquire under any statute, this Charter, bylaws, agreement, vote of shareholders
or Disinterested Directors, as defined in Article XIII of this Charter, or
otherwise.
(E) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or subsidiary or affiliate or another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the Tennessee Business Corporation Act.
(F) The Corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation to the
fullest extent of the provisions of this Article XI with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.
ARTICLE XII
Limitation on Voting Common Stock
(A) Notwithstanding any other provision of this Charter, 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 shareholders entitled to vote on any matter, beneficially owns
in excess of 10% of the then-outstanding shares of common stock (the "Limit"),
be entitled, or permitted to any vote in respect of the shares held in excess of
the Limit. The number of votes which may be cast by any record owner by virtue
of the provisions hereof in respect of common stock beneficially owned by such
person beneficially owning shares in excess of the Limit shall be a number equal
to the total number of votes which a single record owner of all common stock
beneficially owned by such person would be entitled to cast, (subject to the
provisions of this Article XII) multiplied by a fraction, the numerator of which
is the number of shares of such class or series which are both beneficially
owned by such person and owned of record by such record owner and the
denominator of which is the total number of shares of common stock beneficially
owned by such person owning shares in excess of the Limit.
(B) Definitions. The following definitions apply to this Article XII:
(1) "Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, as in effect on the date of filing of this Charter.
(2) "Beneficial ownership" shall be determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, (or any successor rule or statutory provision), or, if said
Rule 13d-3 shall be rescinded and there shall be no successor rule or provision
thereto, pursuant to said Rule 13d-3 as in effect on the date of
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filing of this Charter; provided, however, that a person shall, in any event,
also be deemed the "beneficial owner" of any common stock:
(a) which such person or any of its Affiliates
beneficially owns, directly or indirectly; or
(b) 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 Article XIII of
this Charter, or upon the exercise of conversion rights, exchange rights,
warrants, or options or otherwise, or (ii) sole or shared voting or investment
power with respect thereto pursuant to any agreement, arrangement,
understanding, relationship or otherwise (but shall not be deemed to be the
beneficial owner of any voting shares solely by reason of a revocable proxy
granted for a particular meeting of shareholders, 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
(c) which are beneficially owned, directly or indirectly,
by any other person with which such first mentioned person or any of its
Affiliates acts as a partnership, limited partnership, syndicate or other group
pursuant to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of capital stock of this
Corporation; and provided further, however, that: (i) no director or officer of
this Corporation (or any Affiliate of any such director or officer) shall,
solely by reason of any or all of such directors or officers acting in their
capacities as such, be deemed, for any purposes hereof, to beneficially own any
common stock beneficially owned by any other such director or officer (or any
Affiliate thereof); and (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 (solely by reason of such
capacity of such trustee), shall be deemed, for any purposes hereof, to
beneficially own any common stock held under any such plan. For purposes only of
computing the percentage of beneficial ownership of common stock of a person,
the outstanding common stock shall include shares deemed owned by such person
through application of this subsection but shall not include any other shares of
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 shares of common stock then outstanding and shall not include any shares of
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.
(3) The "Limit" shall mean 10% of the then-outstanding shares
of common stock.
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(4) A "person" shall include an individual, a firm, a group
acting in concert, a corporation, a partnership, an association, a joint
venture, a pool, a joint stock company, a trust, an unincorporated organization
or similar company, a syndicate or any other group formed for the purpose of
acquiring, holding or disposing of securities or any other entity.
(C) The Board of Directors shall have the power to construe and apply
the provisions of this Article 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 the section to the
given facts; or (5) any other matter relating to the applicability or effect of
this Article XII.
(D) The Board of Directors shall have the right to demand that any
person who is reasonably believed to beneficially own shares of common stock in
excess of the Limit (or holds of record common stock beneficially owned by any
person in excess of the Limit) supply the Corporation with complete information
as to: (1) the record owner(s) of all shares beneficially owned by such person
who is reasonably believed to own shares in excess of the Limit; and (2) any
other factual matter relating to the applicability or effect of this Section as
may reasonably be requested of such person.
(E) Except as otherwise provided by law or expressly provided in this
Article XII, the presence, in person or by proxy, of the holders of record of
shares of capital stock of the Corporation entitling the holders thereof to cast
a majority of the votes (after giving effect, if required, to the provisions of
this Article XII) 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 shareholders, and every reference in this Charter to a majority or other
proportion of capital stock (or the holders thereof) for purposes of determining
any quorum requirement or any requirement for shareholder consent or approval
shall be deemed to refer to such majority or other proportion of the votes (or
the holders thereof) then entitled to be cast in respect of such capital stock.
(F) Any constructions, applications, or determinations made by the
Board of Directors pursuant to this Article 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
shareholders.
(G) In the event any provision (or portion thereof) of this Article
shall be found to be invalid, prohibited or unenforceable for any reason, the
remaining provisions (or portions thereof) of this Article shall remain in full
force and effect, and shall be construed as if such invalid, prohibited or
unenforceable provision had been stricken herefrom or otherwise rendered
inapplicable, it being the intent of this Corporation and its shareholders that
each such remaining
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provision (or portion thereof) of this Article XII remain, to the fullest extent
permitted by law, applicable and enforceable as to all shareholders, including
shareholders owning an amount of stock over the Limit, notwithstanding any such
finding.
(H) Exclusion for Underwriters, Employee Benefit Plans and Certain
Proxies. The restrictions contained in this Article XII shall not apply to (1)
any underwriter or member of an underwriting or selling group involving a public
sale or resale of securities of the Corporation or a subsidiary thereof;
provided, however, that upon completion of the sale or resale of such
securities, no such underwriter or member of such selling group is a beneficial
owner of more than 10% of any class of equity security of the Corporation; (2)
any proxy granted to one or more Disinterested Directors, as defined in Article
XIII of this Charter, by a shareholder of the Corporation; (3) any employee
benefit plans of the Corporation or a subsidiary thereof; or (4) any transaction
approved in advance by a majority of such Disinterested Directors. In addition,
the Disinterested Directors, as defined in Article XIII of this Charter, the
officers and employees of the Corporation and its subsidiaries, the directors of
subsidiaries of the Corporation, the employee benefit plans of the Corporation
and its subsidiaries, entities organized or established by the Corporation or
any subsidiary thereof pursuant to the terms of such plans and trustees and
fiduciaries with respect to such plans acting in such capacity shall not be
deemed to be a group with respect to their beneficial ownership of voting stock
of the Corporation solely by virtue of their being directors, officers or
employees of the Corporation or a subsidiary thereof or by virtue of the
Disinterested Directors, as defined in Article XIII of this Charter, the
officers and employees of the Corporation and its subsidiaries and the directors
of subsidiaries of the Corporation being fiduciaries or beneficiaries of an
employee benefit plan of the Corporation or a subsidiary of the Corporation.
Notwithstanding the foregoing, no director, officer or employee of the
Corporation or any of its subsidiaries, or group of any of them, shall be exempt
from the provisions of this Article XII should any such person or group become a
beneficial owner of more than 10% of any class of equity security of the
Corporation.
ARTICLE XIII
Approval of Business Combinations
(A) In addition to any affirmative vote required by law or this
Charter, and except as otherwise expressly provided in this Article XIII:
(1) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with: (a) any
Interested Shareholder (as hereinafter defined); or (b)
any other corporation (whether or not itself an Interested
Shareholder) which is, or after such merger or
consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Shareholder; 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
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Shareholder, or any Affiliate of any Interested
Shareholder, of any assets of the Corporation or any
Subsidiary having an aggregate Fair Market Value (as
hereinafter defined) equaling or exceeding 25% or more of
the combined assets of the Corporation and its
Subsidiaries; or
(3) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Shareholder or any Affiliate
of any Interested Shareholder in exchange for cash,
securities or other property (or a combination thereof)
having an aggregate Fair Market Value (as hereinafter
defined) equaling or exceeding 25% of the combined Fair
Market Value of the outstanding common stock of the
Corporation and its Subsidiaries, except for any issuance
or transfer pursuant to an employee benefit plan of the
Corporation or any Subsidiary thereof; or
(4) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation proposed by or on behalf
of an Interested Shareholder or any Affiliate of any
Interested Shareholder; 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
Shareholder) which has the effect, directly or indirectly,
of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of
the Corporation or any Subsidiary which is directly or
indirectly owned by any Interested Shareholder or any
Affiliate of any Interested Shareholder;
shall require the affirmative vote of the holders of at least 80% of the voting
power of the then-outstanding shares of stock of the Corporation entitled to
vote in the election of directors (the "Voting Stock") (after giving effect to
the provisions of Article XII), 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 Charter or any Preferred Stock Designation, in any agreement
with any national securities exchange or otherwise.
The term "Business Combination" as used in this Article XIII shall mean
any transaction which is referred to in any one or more of paragraphs (1)
through (5) of Section (A) of this Article XIII.
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(B) The provisions of Section (A) of this Article XIII shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only the affirmative vote of the majority of the outstanding
shares of capital stock entitled to vote after giving effect to the provisions
of Article XII, or such vote (if any), as is required by law or by this Charter,
if, in the case of any Business Combination that does not involve any cash or
other consideration being received by the Shareholders of the Corporation solely
in their capacity as Shareholders of the Corporation, the condition specified in
the following paragraph (1) is met or, in the case of any other Business
Combination, all of the conditions specified in either of the following
paragraphs (1) or (2) are met:
(1) The Business Combination shall have been approved by a
majority of the Disinterested Directors (as hereinafter defined).
(2) All of the following conditions shall have been met:
(a) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business Combination of
consideration other than cash to be received per share by the holders of common
stock in such Business Combination shall at least be equal to the higher of the
following:
(i) (if applicable) the Highest Per Share Price (as
hereinafter defined), including any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the Interested Shareholder or any of its
Affiliates for any shares of Common Stock acquired by it: (x) within the
two-year period immediately prior to the first public announcement of the
proposal of the Business Combination (the "Announcement Date"); or (y) in the
transaction in which it became an Interested Shareholder, whichever is higher;
or
(ii) the Fair Market Value per share of Common Stock
on the Announcement Date or on the date on which the Interested Shareholder
became an Interested Shareholder (such latter date is referred to in this
Article XIII as the "Determination Date"), whichever is higher.
(b) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders of shares of
any class of outstanding Voting Stock other than common stock shall be at least
equal to the highest of the following (it being intended that the requirements
of this subparagraph (b) shall be required to be met with respect to every such
class of outstanding Voting Stock, whether or not the Interested Shareholder has
previously acquired any shares of a particular class of Voting Stock):
(i) (if applicable) the Highest Per Share Price (as
hereinafter defined), including any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by
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the Interested Shareholder for any shares of such class of Voting Stock acquired
by it: (x) within the two-year period immediately prior to the Announcement
Date; or (y) in the transaction in which it became an Interested Shareholder,
whichever is higher; or
(ii) (if applicable) the highest preferential amount
per share to which the holders of shares of such class of Voting Stock are
entitled in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation; or
(iii) 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 Shareholder has previously paid for shares of
such class of Voting Stock. If the Interested Shareholder 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
Shareholder. The price determined in accordance with subparagraph (B)(2) of this
Article XIII 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 Shareholder has become an Interested
Shareholder and prior to the consummation of such Business Combination: (i)
except as approved by a majority of the Disinterested Directors (as hereinafter
defined), there shall have been no failure to declare and pay at the regular
date therefor any full quarterly dividends (whether or not cumulative) on any
outstanding stock having preference over the common stock as to dividends or
liquidation; (ii) there shall have been: (x) no reduction in the annual rate of
dividends paid on the common stock (except as necessary to reflect any
subdivision of the common stock), except as approved by a majority of the
Disinterested Directors; and (y) an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which has the effect
of reducing the number of outstanding shares of the Common Stock, unless the
failure to so increase such annual rate is approved by a majority of the
Disinterested Directors, and (iii) neither such Interested Shareholder or any of
its Affiliates shall have become the beneficial owner of any additional shares
of Voting Stock except as part of the transaction which results in such
Interested Shareholder becoming an Interested Shareholder.
(e) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received the benefit,
directly or indirectly (except proportionately as a Shareholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax credits
or other tax advantages provided, directly or indirectly, by the
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Corporation, whether in anticipation of or in connection with such Business
Combination or otherwise.
(f) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (or
any subsequent provisions replacing such Act, and the rules or regulations
thereunder) shall be mailed to shareholders of the Corporation at least thirty
(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 XIII:
(1) A "Person" shall include an individual, a firm, a group
acting in concert, a corporation, a partnership, an association, a joint
venture, a pool, a joint stock company, a trust, an unincorporated organization
or similar company, a syndicate or any other group formed for the purpose of
acquiring, holding or disposing of securities or any other entity.
(2) "Interested Shareholder" 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
Shareholder, if such assignment or succession shall
have occurred in the course of a transaction or
series of transactions not involving a public
offering within the meaning of the Securities Act of
1933, as amended.
(3) For purposes of this Article XIII, "beneficial ownership"
shall be determined in the manner provided in Article XII hereof.
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(4) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on the date
of filing of this Charter.
(5) "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
Interested Shareholder set forth in Paragraph (2) of this Section (C), the term
"Subsidiary" shall mean only a corporation of which a majority of each class of
equity security is owned, directly or indirectly, by the Corporation.
(6) "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Shareholder and was a member
of the Board of Directors prior to the time that the Interested Shareholder
became an Interested Shareholder, 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 Shareholder and in connection with
his or her initial assumption of office is recommended for appointment or
election by a majority of Disinterested Directors then on the Board of
Directors.
(7) "Fair Market Value" means:
(a) in the case of stock, the highest closing sales
price of the stock during the 30-day period
immediately preceding the date in question of a
share of such stock on the National Association of
Securities Dealers Automated Quotation System or any
system then in use, or, if such stock is admitted to
trading on a principal United States securities
exchange registered under the Securities Exchange
Act of 1934, as amended, Fair Market Value shall be
the highest sale price reported during the 30-day
period preceding the date in question, or, if no
such quotations are available, the Fair Market Value
on the date in question of a share of such stock as
determined by the Board of Directors in good faith,
in each case with respect to any class of stock,
appropriately adjusted for any dividend or
distribution in shares of such stock or any stock
split or reclassification of outstanding shares of
such stock into a greater number of shares of such
stock or any combination or reclassification of
outstanding shares of such stock into a smaller
number of shares of such stock; and
(b) in the case of property other than cash or stock,
the Fair Market Value of such property on the date
in question as determined by the Board of Directors
in good faith.
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(8) Reference to "Highest Per Share Price" shall in each case
with respect to any class of stock reflect an appropriate adjustment for any
dividend or distribution in shares of such stock or any stock split or
reclassification of outstanding shares of such stock into a greater number of
shares of such stock or any combination or reclassification of outstanding
shares of such stock into a smaller number of shares of such stock.
(9) In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be received"
as used in Subparagraphs (a) and (b) of paragraph (2) of Section (B) of this
Article XIII 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
XIII, on the basis of information known to them after reasonable inquiry: (1)
whether a person is an Interested Shareholder; (2) the 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 Fair Market Value of the Common Stock of the
Corporation and its Subsidiaries. A majority of the Disinterested Directors
shall have the further power to interpret all of the terms and provisions of
this Article XIII
(E) Nothing contained in this Article XIII shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by law.
ARTICLE XIV
Evaluations of Business Combinations
In connection with the exercise of its judgment in determining what is
in the best interests of the Corporation and of the shareholders, when
evaluating any offer of another Person (as defined in Article XIII 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, the Board of Directors of the Corporation shall, in
addition to considering the adequacy of the amount to be paid in connection with
any such transaction, consider all of the following factors and any other
factors which it deems relevant: (A) the social and economic effects of the
transaction on the Corporation, its subsidiaries, employees, depositors, loan
and other customers and creditors and the other elements of the communities in
which the Corporation and its subsidiaries operate or are located; (B) the
business and financial condition and earnings prospects of the acquiring person
or entity, including, but not limited to, debt
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service and other existing financial obligations, financial obligations to be
incurred in connection with the acquisition and other likely financial
obligations of the acquiring person or entity, and the possible effect of such
conditions upon the Corporation and its subsidiaries and the other elements of
the communities in which the Corporation and its subsidiaries operate or are
located; and (C) the competence, experience and integrity of the acquiring
person or entity and its or their management.
ARTICLE XV
Control Share Acquisitions
"Control share acquisitions," as defined in Section 48-103-302 of the
Tennessee Code, respecting the shares of the Corporation shall be governed by
and subject to the provisions of the Tennessee Control Share Acquisition Act,
and Sections 48-103-308 and 48-103-309 of the Tennessee Control Share
Acquisition Act shall apply to the Corporation.
ARTICLE XVI
Special Meetings of Shareholders
Subject to the rights of the holders of any class or series of
preferred stock of the Corporation, special meetings of the shareholders 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.
ARTICLE XVII
Incorporator
The name, address and zip code of the incorporator of the Corporation
are Anderson L. Smith,120 Evans Avenue, Morristown, Tennessee 37814.
ARTICLE XVIII
Amendment of Bylaws
To the extent permitted by the Tennessee Business Corporation Act, the
Board of Directors of the Corporation is expressly authorized to repeal, alter,
amend or rescind the bylaws of the Corporation by vote of a majority of the
Board of Directors at a legal meeting held in accordance with the bylaws.
Notwithstanding any other provision of this Charter or the bylaws of the
Corporation (and notwithstanding the fact that some lesser percentage may be
specified by law), the bylaws shall be repealed, altered, amended or rescinded
by the shareholders of the Corporation only by vote of at least 80% of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the shareholders called for that purpose (provided
that notice of
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such proposed repeal, alteration, amendment or rescission is included in the
notice of such meeting).
ARTICLE XIX
Amendment of Charter
The Corporation reserves the right to repeal, alter, amend or rescind
any provision contained in this Charter in the manner now or hereafter
prescribed by law, and all rights conferred on shareholders herein are granted
subject to this reservation. Notwithstanding the foregoing, the provisions set
forth in Articles VIII, IX, X, XI, XII, XIII, XIV, XV, XVI and XVIII of this
Charter and this Article XIX may not be repealed, altered, amended or rescinded
in any respect unless the same is approved by the affirmative vote of the
holders at least 80% of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (considered
for this purpose as a single class) cast at a meeting of the shareholders called
for that purpose (provided that notice of such proposed repeal, alteration,
amendment or rescission is included in the notice of such meeting); except that
such repeal, alteration, amendment or rescission may be made by the affirmative
vote of the holders of a majority of the outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as a single class) if the same is first approved by
a majority of the Disinterested Directors, as defined in Article XIII of this
Charter.
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I, THE UNDERSIGNED, being the incorporator, for the purpose of forming
a corporation under the laws of the State of Tennessee, do make, file and record
this Charter and do certify that the facts herein stated are true, and
accordingly, have hereto set my hand this 11/th/ day of March 2003.
/s/ Anderson L. Smith
---------------------
Anderson L. Smith
Incorporator
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