EXHIBIT 3.1
CHARTER
OF
CUMBERLAND MOUNTAIN BANCSHARES, INC.
ARTICLE I
Corporate Name
The name of the corporation is Cumberland Mountain Bancshares, Inc. (the
"Corporation").
ARTICLE II
Registered Office and Agent
The street address and zip code of the Corporation's registered office are
Gresham & Hogan, Andrew Johnson Office Plaza, 912 South Gay Street, Suite 210,
Knoxville, Tennessee 37902. The Corporation's registered office is located in
Knox County. The name of the Corporation's initial registered agent at its
registered office is Howard Hogan.
ARTICLE III
Principal Office
The street address and zip code of the Corporation's principal office are
1431 Cumberland Avenue, Middlesboro, Kentucky 40965.
ARTICLE IV
Purpose and Powers
The purpose or purposes for which the Corporation is organized are 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 10,000,000, of which 8,000,000 shares
shall be common stock, par value $.01 per share, and of which 2,000,000
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shares shall be preferred stock, par value $.01 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. 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;
(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;
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(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 entitle the holders thereof to subscribe for or purchase
any such shares.
ARTICLE VII
Acquisition 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
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, neither
fewer than three nor more than fifteen (exclusive of directors, if any, to be
elected by holders of preferred stock of the Corporation, voting separately as a
class), as shall be set forth 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 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.
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 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
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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 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. Only business within
the purpose or purposes described in the notice of a special meeting may be
conducted at the special meeting. 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 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 a 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 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 or
annual meeting of the shareholders taking place
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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.
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 for: (A) any breach of the director's duty of loyalty to the
Corporation or its shareholders; (B) acts or omissions that are not in good
faith or that involve intentional misconduct or a knowing violation of law; or
(C) unlawful distributions under Section 48-18-304 of the Tennessee Business
Corporation Act.
If the Tennessee Business Corporation Act is amended or other Tennessee law
is enacted 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, or by such other Tennessee law, as so enacted.
Any repeal or modification of this Article XII or subsequent amendment of the
Tennessee Business Corporation Act or enactment of other applicable Tennessee
law shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal, modification, amendment or
enactment.
ARTICLE XIII
Indemnification
(A) (1) Except as provided in Section (B) of this Article XIII, the
Corporation shall indemnify any 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: (a) he conducted himself in
good faith; (b) he reasonably believed, (i) in the case of conduct in his
official capacity with the Corporation, that his conduct was in the
Corporation's best interests and (ii) in all other cases, that his conduct was
at least not opposed to its best interests; and (c) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful.
(2) 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 or officer of the Corporation against reasonable expenses
incurred by him in connection with the proceeding.
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(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 Subsection (A)(1) of this Article XIII; (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 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 under Subsection (A)(1)
of this Article XIII 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 Subsection
(A)(1) of this Article XIII. 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 (D), 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 (D);
(b) If a quorum of the board of directors cannot be obtained
under Subsection (1) of this Section (D) and a committee cannot be
designated under Subsection (2) of this Section (D), 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 under Subsection (A)(1) of this
Article XIII and evaluation that indemnification is permissible under Subsection
(A)(1) of this Article XIII 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 (D)(3) of this Article XIII 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
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or other enterprise, 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.
(H) It is the intention of this Article XIII to provide for indemnification
of directors and officers to the fullest extent permitted by the Tennessee
Business Corporation Act, and this Article XIII shall be interpreted
accordingly. If this Article XIII or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director, officer, employee, and agent of the
Corporation as to costs, charges, and expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement with respect to any proceeding,
including an action by or in the right of the Corporation, to the full extent
permitted by any applicable portion of this Article XIII that shall not have
been invalidated and to the full extent permitted by applicable law. If the
Tennessee Business Corporation Act is amended or other Tennessee law is enacted
to permit further or additional indemnification of a director, officer, employee
or agent of the Corporation, then the indemnification of such director, officer,
employee or agent shall be to the fullest extent permitted by the Tennessee
Business Corporation Act, as so amended, or by such other Tennessee law.
(I) The indemnification and advance payment of expenses provided by this
Article XIII shall not be exclusive of any other rights to which a person may be
entitled by law, bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise.
(J) The indemnification provided by this Article XIII shall be deemed to be
a contract between the Corporation and the persons entitled to indemnification
thereunder, and any repeal or modification of this Article XVII shall not affect
any rights or obligations then existing with respect to any state of facts then
or theretofore existing or any action, suit or proceeding theretofore or
thereafter brought based in whole or in part upon any such state of facts. The
indemnification and advance payment provided by this Article XIII shall continue
as to a person who has ceased to be a director or officer of the Corporation and
shall inure to his heirs, executors and administrators.
ARTICLE XIV
Restrictions on Voting Rights of Certain Holders
(A) Restriction on Voting Rights of Certain Holders. If, at any time after
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the effective date of the completion of the conversion of Cumberland Mountain
Bancshares, M.H.C. 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 (A) 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 (A), such record holders in the aggregate shall be
entitled to cast only one-hundredth (1/100th) 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
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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 under this Section (A) by virtue of such shares being so beneficially
owned by any of such acquiring persons.
(B) Definitions. The term "person" means an individual, a group acting in
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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.
(C) Exclusion for Underwriters, Employee Benefit Plans and Certain Proxies.
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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; or (3) any employee
benefit plans of the Corporation or a subsidiary thereof. 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.
(D) Determinations. A majority of the Continuing Directors, as defined in
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Article XV of this Charter, shall have the power to construe and apply the
provisions of this Article XIV 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.
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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 least 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 or any subsidiary thereof with or into a Related Person;
(b) any sale, lease, exchange, transfer or other disposition of
(including, without limitation, the granting of any mortgage, pledge
or other security interest in) all or any Substantial Part (as
hereinafter defined) of the assets (in one transaction or in a series
of transactions) of the Corporation (including, without limitation,
any voting securities of a subsidiary) or of a subsidiary thereof to a
Related Person or proposed by or on behalf of a Related Person;
(c) any sale, lease, exchange, transfer or other disposition of
including, without limitation, any granting of a mortgage, pledge or
any other security interest in, all or any Substantial Part of the
assets (in one transaction or in a series of transactions) of a
Related Person to the Corporation or a subsidiary thereof;
(d) the issuance or transfer (in one transaction or in a series
of transactions) by the Corporation or any subsidiary thereof of any
securities of the Corporation or of a subsidiary thereof to a Related
Person other than pursuant to a dividend or distribution made pro rata
to all shareholders of the Corporation;
(e) the acquisition by the Corporation or a subsidiary thereof of
any securities of a Related Person or of any securities convertible
into securities of a Related Person;
(f) any transaction proposed by or on behalf of a Related Person
or pursuant to any agreement, arrangement or understanding with a
Related Person which has the effect, directly or indirectly, of
increasing the Related Person's proportionate ownership of voting
securities of the Corporation or of a subsidiary thereof (or of
securities that are convertible to, exchangeable for or carry the
right to acquire such voting securities);
(g) the adoption of any plan or proposal of liquidation or
dissolution of the Corporation, any reincorporation of the Corporation
in another state or jurisdiction, any reclassification of the common
stock of the Corporation, or any recapitalization involving the common
stock of the Corporation proposed by or on behalf of a Related Person;
(h) any loans, advances, guarantees, pledges, financial
assistance, security arrangements, restrictive covenants or any tax
credits or other tax advantages provided by, through
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or to the Corporation or any subsidiary thereof as a result of which a
Related Person receives a benefit, directly or indirectly, other than
proportionately as a shareholder; and
(i) 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)(i) of this Section A.
(B) The provisions of Section (A) of this Article XV 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 either the Business Combination or the transaction in which the Related
Person became a Related Person shall have been approved in advance 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;
(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; or (c) any corporation which would
be an "affiliate" (as that term is defined in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934) of any
such individual, corporation, partnership or other person or entity
following a Business Combination. 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.
(2) The term "Substantial Part" shall mean more than 10 percent of
the total assets of the Corporation or the Related Person, as the case may
be, 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.
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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 may, 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
Incorporator
The name, address and zip code of the Corporation's incorporator are
James J. Shoffner, 1431 Cumberland Avenue, Middlesboro, Kentucky 40965.
ARTICLE XVIII
Initial Directors
The names of the individuals who are to serve as initial directors of
the Corporation until the first meeting of shareholders are James J. Shoffner,
J. Roy Shoffner, Reecie Stagnolia, Jr., Raymond C. Walker and Robert R. Long.
The address of each initial director is 1431 Cumberland Avenue, Middlesboro,
Kentucky 40965.
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).
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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 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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THE UNDERSIGNED, being the incorporator herein before named, for the
purpose of forming a corporation pursuant to the Tennessee Business Corporation
Act, does make this Charter, hereby declaring and certifying that this is his
act and deed and the facts herein stated are true, and accordingly has hereunto
set his hand as of December 11, 1996.
/s/ James J. Shoffner
---------------------------------
James J. Shoffner
Incorporator
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