Exhibit 3.1
SHORE BANCSHARES, INC.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
The Articles of Incorporation of SHORE BANCSHARES, INC., a Maryland
corporation (hereinafter called the "Corporation") are hereby amended and
restated in their entirety as follows:
FIRST: The name of the Corporation is:
SHORE BANCSHARES, INC.
SECOND: The purposes for which the Corporation is formed are to engage
in any lawful act or activities permitted by a corporation organized
under the laws of the State of Maryland.
THIRD: The present address of the principal office of the Corporation
in this State is 18 East Dover Street, Easton, Maryland 21601.
FOURTH: The name and address of the resident agent of the Corporation
in this State are W. Moorhead Vermilye, c/o 18 East Dover Street, Easton,
Maryland 21601. Said resident agent is a citizen of the State of Maryland who
resides there.
FIFTH: (a) The total number of shares of stock of all classes which the
Corporation has authority to issue is 35,000,000 shares of capital stock (par
value $.01 per share), amounting in aggregate par value to $350,000.00. All of
such shares are initially classified as "Common Stock". The Board of Directors
may classify and reclassify any unissued shares of capital stock by setting or
changing in any one or more respects the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption of such shares of capital stock. A majority
of the entire Board of Directors, without action by the stockholders, may amend
the Charter to increase or decrease the aggregate number of shares of stock or
the number of shares of stock of any class that the Corporation has authority to
issue.
(b) The following is a description of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Common Stock of the
Corporation:
(1) Each share of Common Stock shall have one vote, and, except
as otherwise provided in respect of any class of stock hereafter
classified or reclassified, the exclusive voting power for all purposes
shall be vested in the holders of the Common Stock. Shares of Common
Stock shall not have cumulative voting rights.
(2) Subject to the provisions of law and any preferences of any
class of stock hereafter classified or reclassified, dividends, including
dividends payable in shares of another class of the Corporation's stock,
may be paid ratably on the Common Stock at such time and in such amounts
as the Board of Directors may deem advisable.
(3) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the holders of the
Common Stock shall be entitled, together with the holders of any other
class of stock hereafter classified or reclassified not having a
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preference on distributions in the liquidation, dissolution or winding up
of the Corporation, to share ratably in the net assets of the Corporation
remaining, after payment or provision for payment of the debts and other
liabilities of the Corporation and the amount to which the holders of any
class of stock hereafter classified or reclassified having a preference
on distributions in the liquidation, dissolution or winding up of the
Corporation shall be entitled.
(c) Subject to the foregoing, the power of the Board of Directors to
classify and reclassify any of the shares of capital stock shall include,
without limitation, subject to the provisions of the Charter, authority to
classify or reclassify any unissued shares of such stock into a class or classes
of preferred stock, preference stock, special stock or other stock, and to
divide and classify shares of any class into one or more series of such class,
by determining, fixing, or altering one or more of the following:
(1) The distinctive designation of such class or series and the
number of shares to constitute such class or series; provided that,
unless otherwise prohibited by the terms of such or any other class or
series, the number of shares of any class or series may be decreased by
the Board of Directors in connection with any classification or
reclassification of unissued shares and the number of shares of such
class or series may be increased by the Board of Directors in connection
with any such classification or reclassification, and any shares of any
class or series which have been redeemed, purchased, otherwise acquired
or converted into shares of Common Stock or any other class or series
shall become part of the authorized capital stock and be subject to
classification and reclassification as provided in this sub-paragraph.
(2) 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.
(3) 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.
(4) Whether or not shares of such class or series shall have
conversion or exchange privileges and, if so, the terms and conditions
thereof, including provision for adjustment of the conversion or exchange
rate in such events or at such times as the Board of Directors shall
determine.
(5) 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.
(6) 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.
(7) Whether or not there shall be any limitations applicable,
while shares of such class or series are outstanding, upon the payment of
dividends or making of distributions on, or the acquisition of, or the
use of moneys for purchase or redemption of, any stock of the
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Corporation, or upon any other action of the Corporation, including
action under this sub-paragraph, and, if so, the terms and conditions
thereof.
(8) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of such
class or series, not inconsistent with law and the Charter of the
Corporation.
(d) For the purposes hereof and of any articles supplementary to the
Charter providing for the classification or reclassification of any shares of
capital stock or of any other Charter document of the Corporation (unless
otherwise provided in any such articles or document), any class or series of
stock of the Corporation shall be deemed to rank:
(1) prior to another class or series either as to dividends or
upon liquidation, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts distributable on
liquidation, dissolution or winding up, as the case may be, in preference
or priority to holders of such other class or series;
(2) on a parity with another class or series either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation price per share
thereof be different from those of such others, if the holders of such
class or series of stock shall be entitled to receipt of dividends or
amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in proportion to their respective dividend rates or
redemption or liquidation prices, without preference or priority over the
holders of such other class or series; and
(3) junior to another class or series either as to dividends or upon
liquidation, if the rights of the holders of such class or series shall be
subject or subordinate to the rights of the holders of such other class or
series in respect of the receipt of dividends or the amounts distributable upon
liquidation, dissolution or winding up, as the case may be.
SIXTH: The number of Directors of the Corporation shall be not less
than three (3) nor more than twenty-five (25). The number of Directors may be
increased or decreased in accordance with the Bylaws of the Corporation. The
Directors shall be divided into three classes with respect to the time for which
they shall hold office. Directors of Class I shall hold office for one year or
until the first annual meeting of stockholders following their election;
Directors of Class II shall hold office for two years or until the second annual
meeting of stockholders following their election; and Directors of Class III
shall hold office for three years or until the third annual meeting of
stockholders following their election; and in each case until their successors
are elected and qualify. At each future annual meeting of stockholders, the
successors to the Class of Directors whose term shall expire at that time shall
be elected to hold office for a term of three years, so that the term of office
of one Class of Directors shall expire in each year. The provisions of this
Article Sixth may not be amended or modified unless such amendment or
modification is authorized by the Board of Directors and approved by holders of
80% of the stock of the Corporation entitled to vote on the matter. As of the
date hereof, the Directors of the Corporation are:
(1) Class I: David L. Pyles, Daniel T. Cannon and Richard C.
Granville;
(2) Class II: David C. Bryan, Ronald N. Fox, Neil R. LeCompte
and Herbert L. Andrew, III; and
(3) Class III: Paul M. Bowman, Lloyd L. Beatty, Jr., B. Vance
Carmean, Jr. and W. Moorhead Vermilye.
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SEVENTH: (a) The following provisions are hereby adopted for the
purpose of defining, limiting, and regulating the powers of the Corporation and
of the directors and the stockholders:
(1) The Board of Directors is hereby empowered to authorize the
issuance from time to time of shares of its stock of any class, whether
now or hereafter authorized, or securities convertible into shares of its
stock of any class or classes, whether now or hereafter authorized, for
such consideration as may be deemed advisable by the Board of Directors
and without any action by the stockholders.
(2) No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any
preemptive right to subscribe for or purchase any stock or any other
securities of the Corporation other than such, if any, as the Board of
Directors, in its sole discretion, may determine and at such price or
prices and upon such other terms as the Board of Directors, in its sole
discretion, may fix; and any stock or other securities which the Board of
Directors may determine to offer for subscription may, as the Board of
Directors in its sole discretion shall determine, be offered to the
holders of any class, series or type of stock or other securities at the
time outstanding to the exclusion of the holders of any or all other
classes, series or types of stock or other securities at the time
outstanding.
(3) The Board of Directors of the Corporation shall, consistent
with applicable law, have power in its sole discretion to determine from
time to time in accordance with sound accounting practice or other
reasonable valuation methods what constitutes annual or other net
profits, earnings, surplus or net assets in excess of capital; to fix and
vary from time to time the amount to be reserved as working capital, or
determine that retained earnings or surplus shall remain in the hands of
the Corporation; to set apart out of any funds of the Corporation such
reserve or reserves in such amount or amounts and for such proper purpose
or purposes as it shall determine and to abolish any such reserve or any
part thereof; to redeem or purchase its stock or to distribute and pay
distributions or dividends in stock, cash or other securities or
property, out of surplus or any other funds or amounts legally available
therefor, at such times and to the stockholders of record on such dates
as it may, from time to time, determine; to determine the amount,
purpose, time of creation, increase or decrease, alteration or
cancellation of any reserves or charges and the propriety thereof
(whether or not any obligation or liability for which such reserves or
charges shall have been created shall have been paid or discharged); and
to determine the fair value and any matters relating to the acquisition,
holding and disposition of any assets by the Corporation.
(4) Notwithstanding any provision of law requiring the
authorization of any action by a greater proportion than a majority of
the total number of shares of all classes of capital stock or of the
total number of shares of any class of capital stock, such action shall
be valid and effective if authorized by the affirmative vote of the
holders of a majority of the total number of shares of all classes
outstanding and entitled to vote thereon, except as otherwise provided in
the Charter.
(5) The Corporation shall indemnify (A) its directors and
officers, whether serving the Corporation or at its request any other
entity, to the full extent required or permitted by the General Laws of
the State of Maryland now or hereafter in force, including the advance of
expenses under the procedures and to the full extent permitted by law and
(B) other employees and agents to such extent as shall be authorized by
the Board of Directors or the Corporation's By-Laws and be permitted by
law. The foregoing rights of indemnification shall not be exclusive of
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any other rights to which those seeking indemnification may be entitled.
The Board of Directors may take such action as is necessary to carry out
these indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such by-laws, resolutions or
contracts implementing such provisions or such further indemnification
arrangements as may be permitted by law. No amendment of the Charter of
the Corporation or repeal of any of its provisions shall limit or
eliminate the right to indemnification provided hereunder with respect to
acts or omissions occurring prior to such amendment or repeal.
(6) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no director or officer of the
Corporation shall be personally liable to the Corporation or its
stockholders for money damages. No amendment of the Charter of the
Corporation or repeal of any of its provisions shall limit or eliminate
the limitation on liability provided to directors and officers hereunder
with respect to any act or omission occurring prior to such amendment or
repeal.
(7) For any stockholder proposal to be presented in connection
with an annual or special meeting of stockholders of the Corporation,
including any proposal relating to the nomination of a director to be
elected to the Board of Directors of the Corporation, the stockholders
must have given timely written notice thereof in writing to the Secretary
of the Corporation in the manner and containing the information required
by the By-Laws. Stockholder proposals to be presented in connection with
a special meeting of stockholders, including any proposal relating to the
nomination of a director to be elected to the Board of Directors of the
Corporation, will be presented by the Corporation only to the extent
required by Section 2-502 of the Maryland General Corporation Law and the
By-Laws.
(8) Notwithstanding any other provision in the charter or
by-laws, each vacancy on the board of directors resulting from (a) an
increase in the size of the board of directors or (b) the death,
resignation or removal of a director may be filled only by the
affirmative vote of a majority of the remaining directors in office,
even if the remaining directors do not constitute a quorum, provided
however, that until September 30, 2005 such directors shall be elected
from the directors of the same financial institution subsidiary in which
the vacating director served. Any director elected to fill a vacancy
shall hold office for the remainder of the full term of the class of
directors in which the vacancy occurred and until a successor is elected
and qualifies.
(9) The Directors of the Corporation shall consider all factors
they deem relevant in evaluating any proposed offer for the Corporation
or any of its stock, any proposed merger or consolidation of the
Corporation or subsidiary of the Corporation with or into another
entity, any proposal to purchase or otherwise acquire all or
substantially all the assets of the Corporation or any subsidiary of the
Corporation, and any other business combination (as such term is defined
in the Maryland General Corporation Law). The Directors shall evaluate
whether the proposal is in the best interests of the Corporation and its
subsidiaries by considering the best interests of the stockholders and
other factors the Directors determine to be relevant, including the
social, legal and economic effects on employees, customers, depositors,
and communities served by the Corporation and any subsidiary of the
Corporation. The Directors shall evaluate the consideration being
offered to the stockholders in relation to the then current market value
of the Corporation and its subsidiaries, the then current market value
of the stock of the Corporation or any subsidiary in a freely negotiated
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transaction, and the Directors' judgment as to the future value of the
stock of the Corporation as an independent entity.
(10) Until September 30, 2005, without the approval of at lease
two-thirds of the entire Board of Directors of the Corporation, the
Corporation may not (i) merge or consolidate with, transfer all or
substantially all of its assets to, or engage in a share exchange with
another entity, (ii) may not cause any subsidiary bank of the Corporation
to merge or consolidate with, to transfer of all or substantially all of
its assets to, or engage in a share exchange with another entity, or
(iii) sell or otherwise dispose of any stock of any subsidiary bank.
(11) The Corporation reserves the right from time to time to
make any amendments of the Charter which may now or hereafter be
authorized by law, including any amendments changing the terms or
contract rights, as expressly set forth in the Charter, of any of its
outstanding stock by classification, reclassification or otherwise and
any objecting stockholder whose rights may or shall be thereby
substantially adversely affected shall not be entitled to demand and
receive payment of the fair value of his stock; provided, however, that
any amendment to, repeal of or adoption of any provision inconsistent
with Article SIXTH or with sub-paragraphs (5), (6) (7), (8), or (10) of
this paragraph (a) of this Article SEVENTH or with this sub-paragraph
(11) of this paragraph (a) of this Article SEVENTH must be authorized by
not less than 80% of the aggregate votes entitled to be cast thereon
(considered for this purpose as a single class), by vote at a meeting or
in writing with or without a meeting.
(b) The enumeration and definition of particular powers of the
Board of Directors included in the foregoing shall in no way be limited
or restricted by reference to or inference from the terms of any other
clause of this or any other Article of the Charter of the Corporation, or
construed as or deemed by inference or otherwise in any manner to exclude
or limit any powers conferred upon the Board of Directors under the
General Laws of the State of Maryland now or hereafter in force.
EIGHTH: The duration of the Corporation shall be perpetual.
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