EXHIBIT 3(i)
SFB BANCORP, INC.
CHARTER
ARTICLE I - Corporate Name
The name of the corporation is SFB Bancorp, Inc. (the "Corporation").
ARTICLE II - Registered Office and Agent
The street address and zip code of the registered office of the
Corporation are 632 East Elk Avenue, Elizabethton, Tennessee 37643. The
registered office of the Corporation is located in Carter County. The name of
the initial registered agent of the Corporation at its registered office is
Peter W. Hampton.
ARTICLE III - Principal Office
The street address and zip code of the principal office of the Corporation
are 632 East Elk Avenue, Elizabethton, Tennessee 37643.
ARTICLE IV - Purpose and Powers
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. The Corporation is for profit.
ARTICLE V - Capital Stock
The total number of shares of all classes of capital stock which the
Corporation has authority to issue is 5,000,000, of which 4,000,000 shares shall
be common stock, par value $.10 per share, and of which 1,000,000 shares shall
be preferred stock, par value $.10 per share. The shares may be issued from time
to time as authorized by the 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 consideration for the shares, other than cash, 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) Except as provided in this Article V (or in any amendments thereto)
the holders of common stock shall exclusively possess all voting power. Each
holder of shares of common stock shall be entitled to one vote for each share
held by such holder.
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.
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.
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.
(B) 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 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) the voting rights, full, conditional or limited, of shares of
such series;
(3) whether the shares of such series shall be redeemable and, if
so, the price or prices at which, and the terms and conditions upon which,
such shares may be redeemed;
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(4) the dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if so,
from which date(s), the payment date(s) for dividends, and the
participating or other special rights, if any, with respect to dividends;
(5) the amount(s) payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding up
of the Corporation;
(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.
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.
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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.
ARTICLE VIII - Shareholder Meetings; Cumulative Voting
(A) A majority of the outstanding shares of the Corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. Where voting is by voting group, a majority of the votes
entitled to be cast on any matter by each voting group constitutes a quorum of
each such voting group for action on that matter. If less than a majority of
such shares is represented at a meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to constitute less than a quorum.
(B) Special meetings of shareholders may be called at any time, but only
by the board of directors or a committee of the board of directors that has been
duly designated by the board of directors.
(C) There shall be no cumulative voting by shareholders of any class or
series in the election of directors of the Corporation.
ARTICLE IX - Directors
The number of directors of the Corporation shall be such number, 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, provided that no action
shall be taken to decrease or increase the number of directors from time to time
unless at least two-thirds of the directors then in office shall concur in said
action. Vacancies in the board of directors of the Corporation, however caused,
and newly created directorships shall be filled only by a vote of at least
two-thirds of the directors then in office, whether or not a quorum, and any
director so chosen shall hold office for a term expiring at the next meeting of
shareholders at which directors are elected.
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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 IX. Notwithstanding the foregoing, and except as otherwise
may be required by law, 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 terms of the
director or directors elected by such holders shall expire at the next
succeeding annual meeting of shareholders.
ARTICLE X - Notice for Nominations and Proposals
(A) Nominations for the election of directors and proposals for any new
business to be taken up at any annual or special meeting of shareholders may be
made by the board of directors of the Corporation or by any shareholder of the
Corporation entitled to vote generally in the election of directors. In order
for a shareholder of the Corporation to make any such nominations and/or
proposals, he shall give notice thereof in writing, delivered or mailed by first
class United States mail, postage prepaid, to the secretary of the Corporation
not fewer than 30 days nor more than 60 days prior to any such meeting;
provided, however, that if notice or
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public disclosure of the meeting is effected fewer than 40 days before the
meeting, such written notice shall be delivered or mailed, as prescribed, to the
secretary of the Corporation not later than the close of the 10th day following
the day on which notice of the meeting was mailed to shareholders. Each such
notice given by a shareholder with respect to nominations for the election of
directors shall set forth (1) the name, age, business address and, if known,
residence address of each nominee proposed in such notice; (2) the principal
occupation or employment of each such nominee; (3) the number of shares of stock
of the Corporation which are beneficially owned by each such nominee; (4) such
other information as would be required to be included in a proxy statement
soliciting proxies for the election of the proposed nominee pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as amended, including,
without limitation, such person's written consent to being named in the proxy
statement as a nominee and to serving as director, if elected; and, (5) as to
the shareholder giving such notice, (a) his name and address as they appear on
the Corporation's books and (b) the class and number of shares of the
Corporation which are beneficially owned by such shareholder. In addition, the
shareholder making such nomination shall promptly provide any other information
reasonably requested by the Corporation.
(B) Each such notice given by a shareholder to the secretary with respect
to business proposals to bring before a meeting shall set forth in writing as to
each matter: (1) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting;
(2) the name and address, as they appear on the Corporation's books, of the
shareholder proposing such business; (3) the class and number of shares of the
Corporation which are beneficially owned by the shareholder; and (4) any
material interest of the shareholder in such business. Notwithstanding anything
in this Charter to the contrary, no business shall be conducted at the meeting
except in accordance with the procedures set forth in this Article X.
(c) The chairman of the annual or special meeting of shareholders may, if
the facts warrant, determine and declare to such meeting that a nomination or
proposal was not made in accordance with the foregoing procedure, and, if he
should so determine, he shall so declare to the meeting and the defective
nomination or proposal shall be disregarded and laid over for action at the next
succeeding adjourned special or annual meeting of the shareholders taking place
thirty days or more thereafter. This provision shall not require the holding of
any adjourned or special meeting of shareholders for the purpose of considering
such defective nomination or proposal.
ARTICLE XI - 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.
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ARTICLE XII - Elimination of Directors' Liability
Directors of the Corporation shall have no liability to the Corporation or
its shareholders for monetary damages for breach of fiduciary duty as a
director, provided that this Article XII shall not eliminate liability of a
director (A) for any breach of the director's duty of loyalty to the Corporation
or its shareholders; (B) for acts or omissions that are not in good faith or
that involve intentional misconduct or a knowing violation of law; or (C) for
unlawful distributions under Section 48-18-304 of the Tennessee Business
Corporation Act.
If the Tennessee Business Corporation Act is amended to permit further
elimination or limitation of the personal liability of directors, then the
liability of directors 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 this Article XII or applicable Tennessee
law shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
ARTICLE XIII - Indemnification
(A) Except as provided in Section (B) of this Article, the Corporation
shall indemnify a director who is made a party to any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal, administrative,
or investigative ("proceeding"), because he is or was a director against
liability incurred in such proceeding if (1) he conducted himself in good faith;
(2) he reasonably believed, (a) in the case of conduct in his official capacity
with the Corporation, that his conduct was in the Corporation's best interest
and, (b) in all other cases, that his conduct was at least not opposed to its
best interests; and, (3) in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
The Corporation shall further indemnify any director and any officer who
is not a director who was wholly successful, on the merits or otherwise, in the
defense of any proceedings to which he was a party because he is or was a
director of the Corporation against reasonable expenses incurred by him in
connection with the proceeding.
(B) The Corporation shall not indemnify a director in connection with a
proceeding by or in the right of the Corporation in which the director was
adjudged liable to the Corporation or in connection with any other proceeding
charging improper personal benefit to him, whether or not involving action in
his official capacity, in which he was adjudged liable on the basis that
personal benefit was improperly received by him.
(C) The Corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of final
disposition of the proceeding if (1) the director furnishes the Corporation a
written affirmation of his good faith belief that he has met the standard of
conduct set forth in Section (A) of this Article; (2) he provides the
Corporation a written undertaking, executed personally or on his behalf, to
repay the advance if it is ultimately determined that he is not entitled to
indemnification; and (3) a determination
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is made that the facts then known to those making the determination would not
preclude indemnification under this Article XIII.
(D) The Corporation may not indemnify a director hereunder unless
authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because he
has met the standard set forth in Section (A) of this Article. The determination
shall be made:
(1) By the board of directors by majority vote of a quorum
consisting of directors not at the time parties to the proceeding;
(2) If a quorum cannot be obtained under Subsection (1) of this
Section, 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 or more directors not at the time
parties to the proceeding;
(3) By independent special legal counsel;
(a) Selected by the board of directors or its committee in
the manner prescribed in Subsections (1) or (2) of this Section;
(b) If a quorum of the board of directors cannot be obtained
under Subsection (1) of this Section and a committee cannot be designated
under Subsection (2) of this Section, selected by majority vote of the
full board of directors (in which selection directors who are parties may
participate); or
(4) 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.
(E) Authorization of indemnification and evaluation that indemnification
is permissible 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 under Subsection (3)
of this Section to select counsel.
(F) The Corporation may indemnify and advance expenses to an officer,
employee or agent of the Corporation who is not a director to the same extent as
a director hereunder.
(G) The Corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee, or agent of the
corporation, or who, while a director, officer, employee, or agent of the
Corporation, is or was serving at the request of the Corporation as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, employee benefit plan or other
enterprise,
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against liability asserted against or incurred by him in that capacity or
arising from his status as a director, officer, employee or agent, whether or
not the Corporation would have power to indemnify him against the same liability
hereunder.
ARTICLE XIV - Acquisition of Capital Stock
(A) Five Year Prohibition. For a period of five years from the effective
date of the completion of the conversion of Security Federal Savings Bank from
mutual to stock form (which entity shall become a wholly owned subsidiary of the
Corporation upon such conversion), no person shall directly or indirectly offer
to acquire or acquire the beneficial ownership of more than 10% of any class of
equity security of the Corporation. In addition, for a period of five years from
the completion of the conversion of Security Federal Savings Bank from mutual to
stock form, and notwithstanding any provision to the contrary in this Charter or
the bylaws of the Corporation, where any person directly or indirectly acquires
beneficial ownership of more than 10% of any class of equity security of the
Corporation in violation of this Article XIV, the securities beneficially owned
in excess of 10% shall not be counted as shares entitled to vote, shall not be
voted by any person or counted as voting shares in connection with any matter
submitted to the shareholders for a vote, and shall not be counted as
outstanding for purposes of determining a quorum or the affirmative vote
necessary to approve any matter submitted to the shareholders for a vote.
(B) Prohibition After Five Years. If, at any time after five years from
the effective date of the completion of the conversion of Security Federal
Savings Bank from mutual to stock form, any person shall acquire the beneficial
ownership of more than 10% of any class of equity security of the Corporation
without the prior approval by a two-thirds vote of the Continuing Directors, as
defined in Article XV of this Charter, then the record holders of voting stock
of the Corporation beneficially owned by such acquiring person shall have only
the voting rights set forth in this Section (B) on any matter requiring their
vote or consent. With respect to each vote in excess of 10% of the voting power
of the outstanding shares of voting stock of the corporation which such record
holders would otherwise be entitled to cast without giving effect to this
Section (b), such record holders in the aggregate shall be entitled to cast only
one-hundredth (1/100) of a vote, and the aggregate voting power of such record
holders, so limited for all shares of voting stock of the Corporation
beneficially owned by such acquiring person, shall be allocated proportionately
among such record holders. For each such record holder, this allocation shall be
accomplished by multiplying the aggregate voting power, as so limited, of the
outstanding shares of voting stock of the Corporation beneficially owned by such
acquiring person by a fraction whose numerator is the number of votes
represented by the shares of voting stock of the Corporation owned of record by
such record holder (and which are beneficially owned by such acquiring person)
and whose denominator is the total number of votes represented by the shares of
voting stock of the Corporation that are beneficially owned by such acquiring
person. A person who is a record owner of shares of voting stock of the
Corporation that are beneficially owned simultaneously by more than one person
shall have, with respect to such shares, the right to cast the least number of
votes that such person would be entitled to cast
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under this Section (b) by virtue of such shares being so beneficially owned by
any of such acquiring persons.
(C) Definitions. The term "person" means an individual, a group acting in
concert, a corporation, a partnership, an association, a joint stock company, a
trust, an unincorporated organization or similar company, a syndicate or any
other group acting in concert formed for the purpose of acquiring, holding or
disposing of securities of the Corporation. The term "acquire" includes every
type of acquisition, whether effected by purchase, exchange, operation of law or
otherwise. The term "offer" includes every offer to buy or otherwise acquire,
solicitation of an offer to sell, tender offer for or request for invitation for
tenders of, a security or interest in a security for value. The term "acting in
concert" includes (1) knowing participation in a joint activity or conscious
parallel action towards a common goal whether or not pursuant to an express
agreement and (2) a combination or pooling of voting or other interests in the
Corporation's outstanding shares for a common purpose pursuant to any contract,
understanding, relationship, agreement or other arrangement, whether written or
otherwise. The term "beneficial ownership" shall have the meaning defined in
Rule 13d-3 of the General Rules and Regulations under the Securities Exchange
Act of 1934.
(D) Exclusion for Underwriters, Employee Benefit Plans and Certain
Proxies. The restrictions contained in this Article XIV 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 Continuing Directors, as defined in Article XV
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 Continuing Directors. In addition, the
Continuing Directors, as defined in Article XV 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
Continuing Directors, as defined in Article XV 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 XIV should any such person or group become a
beneficial owner of more than 10% of any class of equity security of the
Corporation.
(E) Determinations. A majority of the Continuing Directors, as defined in
Article XV of this Charter, shall have the power to construe and apply the
provisions of this Article XIV
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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 beneficially owned by any person; (2) whether a person has an
agreement, arrangement or understanding with another as to the matters referred
to in the definition of beneficial ownership; (3) the application of any other
definition or operative provision of this Article XIV to the given facts; or (4)
any other matter relating to the applicability or effect of this Article XIV.
Any constructions, applications or determinations made by the Continuing
Directors, as defined in Article XV of this Charter, pursuant to this article
XIV 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.
ARTICLE XV - Approval of Business Combinations
The shareholder vote required to approve a Business Combination (as
hereinafter defined) shall be as set forth in this Article XV, in addition to
any other requirements under applicable law.
(A) (1) Except as otherwise expressly provided in this Article XV, the
affirmative vote of the holders of (i) at 80% of the outstanding shares
entitled to vote thereon (and, if any class or series of shares is
entitled to vote thereon separately, the affirmative vote of the holders
of at least two-thirds of the outstanding shares of each such class or
series) and (ii) a majority of the outstanding shares entitled to vote
thereon not including shares deemed beneficially owned by a Related Person
(as hereinafter defined) shall be required in order to authorize any of
the following:
(a) any merger, share exchange or consolidation of the
Corporation with or into a Related Person;
(b) any sale, lease, exchange, transfer or other disposition,
including without limitation, a mortgage, or any other security
device, of all or any Substantial Part (as hereinafter defined) of
the assets of the Corporation (including without limitation any
voting securities of a subsidiary) or of a subsidiary to a Related
Person;
(c) any merger or consolidation of a Related Person with or
into the Corporation or a subsidiary;
(d) any sale, lease, exchange, transfer or other disposition,
including without limitation, a mortgage, or any other capital
device, of all or any Substantial Part of the assets of a Related
Person to the Corporation or a subsidiary;
(e) the issuance of any securities of the Corporation or a
subsidiary to a Related Person;
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(f) the acquisition by the Corporation or a subsidiary of
any securities of a Related Person;
(g) any reclassification of the common stock of the
Corporation, or any recapitalization involving the common stock of
the Corporation; and
(h) any agreement, contract or other arrangement providing for
any of the transactions described in this Section (A).
(2) Such affirmative vote shall be required notwithstanding any
other provision of this Charter, any provision of law, or any agreement
with any national securities exchange or automated quotation system which
might otherwise permit a lesser vote or no vote.
(3) The term "Business Combination" as used in this Article XV shall
mean any transaction which is referred to in any one or more of
Subsections (1)(a) through (1)(h) of this Section.
(B) The provisions of Section (A) of this Article shall not be applicable
to any particular Business Combination, and such Business Combination shall
require only such affirmative vote as is required by any other provision of this
Charter, any provisions of law or any agreement with any federal regulatory
agency, national securities exchange or automated quotation system, if the
Business Combination shall have been approved by at least two-thirds of the
Continuing Directors (as hereinafter defined); provided, however, that such
approval shall be effective only if obtained at a meeting at which a Continuing
Director Quorum (as hereinafter defined) is present.
(C) For the purpose of this Article XV the following definitions apply:
(1) The term "Related Person" shall mean (a) any individual,
corporation, partnership or other person or entity which together with its
"affiliates" (as that term is defined in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934) "beneficially
owns" (as that term is defined in Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange act of 1934) in the aggregate
10% or more of the outstanding shares of the common stock of the
Corporation; and (b) any "affiliate" (as that term is defined in Rule
12b-2 under the Securities Exchange Act of 1934) of any such individual,
corporation, partnership or other person or entity. Without limitation,
any shares of the common stock of the Corporation which any Related Person
has the right to acquire pursuant to any agreement, upon exercise of
conversion rights, warrants or options or otherwise shall be deemed
"beneficially owned" by such Related Person.
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(2) The term "Substantial Part" shall mean more than 25 percent of
the total assets of the Corporation, as of the end of its most recent
fiscal year ending prior to the time the determination is made.
(3) The term "Continuing Director" shall mean any member of the
board of directors of the Corporation who is unaffiliated with a Related
Person and was a member of the board of directors prior to the time that
the Related Person became a Related Person, and any successor of a
Continuing Director who is recommended to succeed a Continuing Director by
a majority of Continuing Directors then on the board of directors.
(4) The term "Continuing Director Quorum" shall mean at least
two-thirds of the Continuing Directors capable of exercising the powers
conferred on them.
(D) In addition to Sections (A) through (C) of this Article, the Tennessee
Business Combination Act, as amended, shall apply to the Corporation; provided,
however, that Section 48-35-207(1) of the Tennessee Business Combination Act
shall not apply to the Corporation.
ARTICLE XVI - Evaluation 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 a
Business Combination (as defined in Article XV of this Charter) or a tender or
exchange offer, 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 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 XVII - Control Share Acquisitions
"Control share acquisitions," as defined in Section 48-35-302 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 48-35-308 and 48-35-309 of the Tennessee Control Share Acquisition
Act shall apply to the Corporation.
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ARTICLE XVIII - Incorporator
The name, address and zip code of the incorporator of the Corporation are
Peter W. Hampton, 632 East Elk Avenue, Elizabethton, Tennessee 37643.
ARTICLE XIX - 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 such proposed repeal, alteration, amendment or rescission is
included in the notice of such meeting).
ARTICLE XX - 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, XVII and XIX of this Charter and this
Article XX 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 Continuing
Directors, as defined in Article XV of this Charter.
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