Approval of the Amended and Restated Articles of Incorporation
(Item 3 on Proxy Card)
Introduction
The Board of Directors of the Corporation has approved and
recommends adoption of a proposal to amend and restate the
Corporation's Articles of Incorporation as set forth in the
Articles of Amendment and Restatement, a copy of which is attached
to this Proxy Statement as Exhibit A (the "Restated Articles").
The Restated Articles would amend the existing Articles of
Incorporation in the following respects: (1) to increase the
authorized common stock of the Corporation from 10,000,000 to
30,000,000 shares; (2) to delete from the Articles of Incorporation
the initial series of preferred stock designated as Cumulative,
Adjustable Rate Preferred Stock, Series A; (3) to provide for a
classified Board of Directors with staggered three-year terms, as
currently authorized by the Corporation's By-Laws; (4) to delete
the 20% quorum requirement in the Articles of Incorporation. As
set forth below, the Board of Directors believes that the best
interests of the Corporation and its shareholders will be served by
adopting these amendments and restating the Articles of
Incorporation, as indicated. Under Vermont law, the affirmative
vote of at least the majority of the outstanding shares of common
stock of a Corporation is required for approval of the Restated
Articles. The Restated Articles have been approved by the
Corporation's Board of Directors, which unanimously recommends a
vote in favor of the proposal. If approved by the stockholders at
the annual meeting, the Restated Articles will become effective
upon filing with the Vermont Secretary of State.
Explanation of the Proposed Amendments
A discussion of the principal reasons that the Board of Directors
has recommended each of the proposed amendments is set forth below.
1. Increase in Authorized Common Stock. Under the Restated
Articles, the authorized common stock of the Corporation
would be increased from 10,000,000 to 30,000,000 shares.
At February 1, 1994, there were 6,220,458
shares of the Corporation's common stock issued and
outstanding. The proposed increase would give the
Corporation flexibility to issue additional shares of
common stock, when considered by the Board of Directors to
be in the Corporation's best interests.
2. Deletion of Series A Preferred Stock. Under the existing
Articles of Incorporation, the Corporation has the
authority to issue 200,000 shares of preferred stock, and
the Board of Directors is authorized to divide the
preferred stock into series and , within the limitations
provided by law, to fix and determine by resolution the
designation, the number of shares, and the relative rights
and preferences of any series so established. On December
21, 1983, following approval by the Board of Directors, the
Corporation filed a Statement and Resolution with the
Vermont Secretary of State establishing an initial series
of preferred stock designated as the Cumulative Adjustable
Rate Preferred Stock, Series A (the "Series A Preferred
Stock"). The Corporation subsequently issued 60,000 shares
of the Series A Preferred Stock, but all of the Series A
Preferred Stock has since been redeemed and canceled on the
books of the Corporation. Because none of the Series A
preferred Stock remains outstanding, and the Corporation
has no intention of issuing additional shares of Series A
Preferred Stock, the Board of Directors desires to simplify
the Restated Articles by deleting reference to the Series
A Preferred Stock in the Articles of Incorporation.
3. Staggered Board of Directors. On January 16, 1985, the
Board of Directors adopted amendments to the Corporation's
By-Laws authorizing a classified Board of Directors with
staggered three-year terms. As a result of these By-Law
Amendments, since the annual meeting of the Corporation in
1985 the Board of Directors has been divided into three
categories: Category 1 consisting of four Directors;
Category 2 consisting of four Directors; and Category 3
consisting of five Directors. Directors in all three
categories are elected to hold office for terms of three
years, or until his or her successor is elected and
qualified or until his or her earlier death, resignation
or removal, and only one category of Directors stands for
election at each annual meeting of the stockholders.
The classified Board of Directors authorized by the
Corporation's By-Laws makes it more difficult for any
stockholders, including those holding a majority of the
stock, to force an immediate change in the composition of
a majority of the Board of Directors. Since the terms of
only approximately one-third of the incumbent Directors
expire each year, it requires at least two annual elections
for the stockholders to change a majority of the Directors.
This may have the effect of discouraging an unsolicited
tender offer for the Corporation's stock or other
unsolicited takeover bids which, in the opinion of the
Board of Directors, might not be in the best interests of
the Corporation and its stockholders. In the alternative,
it may encourage persons desiring to take over or control
the Corporation to initiate such action through
negotiations with the then-existing Board of Directors.
Although the Corporation has not encountered difficulties
in the past due to lack of continuity of management, the
Board of Directors believes that the staggered election of
Directors tends to promote such continuity in the future,
because only about one-third of the Board of Directors is
subject to election each year. Staggered terms guarantee
that approximately two-thirds of the Directors, or more,
at any one time, have had at least one year's experience
as Directors of the Corporation. Staggered terms for
members of the Board of Directors also moderate the pace
of changes in the Board of Directors by extending the time
required to elect a majority of Directors from one to two
years.
Under the Vermont Business Corporation Act (the "Vermont
Act"), which became effective January 1, 1994, the
Corporation believes that a continuation of the classified
Board of Directors will require an amendment to the
Corporation's Articles of Incorporation. The Board of
Directors believes that such an amendment is in the best
interests of the Corporation and its stockholders. The
staggered election of Directors will continue to promote
the continuity of management and the stability of the
Corporation's traditional policies. The Board also
believes that continued authorization of the staggered
election of Directors will enhance the Corporation's
present ability to attract competent and qualified officers
and employees to carry out its long-term plans.
4. Deletion of 20% Quorum Requirement. The existing Articles
of Incorporation provide that not less than 20% of the
outstanding shares of the stock of the Corporation shall
constitute a quorum for taking action at regular and
special meetings of the stockholders. Under the Vermont
Act, however, at least a majority of the outstanding shares
of the Corporation's common stock are required to
constitute a quorum for action at a regular or special
meeting. The proposed amendment is intended to conform to
the requirements of the Vermont Act, which became effective
January 1, 1994.
Vote Required for the Proposal
Approval of the proposed Amended and Restated Articles will require
the affirmative vote of holders of at least 50% of the outstanding
shares of the Corporation's common stock.
Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF
THE PROPOSAL TO AMEND AND RESTATE THE ARTICLES OF INCORPORATION.
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Deadline for Stockholder Proposals
In order to be included in the Corporation's proxy statement and
proxy card for the 1995 annual meeting, proposals which
stockholders intend to present at that meeting must be submitted in
writing to the Secretary of the Corporation on or before November
11, 1994.
Other Business
The Board of Directors of the Corporation knows of no other matters
which may come before the meeting. However, if any other business
should properly come before the meeting, the proxies relating to
such meeting will be voted with respect thereto in accordance with
the best judgment of the Board of Directors.
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<PAGE> Exhibit A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
of
CHITTENDEN CORPORATION
ARTICLE I. NAME
The name of the Corporation is Chittenden Corporation
ARTICLE II. REGISTERED OFFICE AND AGENT
The Registered Office of the Corporation is located at Two
Burlington Square, Burlington, Vermont 05401, and the Registered
Agent at that office is the Secretary.
ARTICLE III. PERIOD OF DURATION
The period of duration of the Corporation shall be perpetual.
ARTICLE IV. PURPOSES
The Corporation is organized for the purposes of (i) buying,
selling, investing in, holding and dealing in property of every
nature and description, real and personal, tangible and intangible;
(ii) acquiring, investing in or holding stock of any subsidiary
enterprise permitted under the Bank Holding Company Act of 1956,
and subsequent amendments thereto; and (iii) otherwise engaging in
any other business which may be lawfully carried on by a
corporation organized under the laws of the State of Vermont.
ARTICLE V. QUORUM REQUIREMENT FOR STOCKHOLDER MEETINGS
Not less than 50% of the outstanding shares of the stock of the
Corporation shall constitute a quorum for the transaction of
business at any regular or special meeting of the stockholders of
the Corporation.
ARTICLE VI. AUTHORIZED CAPITAL
The aggregate number of shares which the Corporation shall have
authority to issue is 200,000 shares, preferred, with a par value
of $100, and 30,000,000 shares, common, with a par value of $1.00.
The Board of Directors of the Corporation is hereby expressly
authorized to divide the preferred stock into series, and, within
the limitations provided by law, to fix and determine by resolution
the designation, the number of shares, and the relative rights and
preferences of any series so established.
ARTICLE VII. NUMBER AND TERM OF DIRECTORS
The authorized number of directors of the Corporation (exclusive of
directors, if any, to be elected by holders of preferred stock of
the Corporation) shall be determined by resolution duly adopted by
the Board of Directors, and may be increased or decreased, within
the limitations specified herein, from time to time by resolution,
duly adopted by the Board of Directors; provided, however, that no
decrease in the number of directors shall have the effect of
shortening the term of any incumbent director. The President of
the Corporation shall serve ex officio as a director.
The Board of Directors shall be divided into three categories,
designated Category I, Category II, and Category III, as nearly
equal in number as possible, and the term of office of directors of
one category shall expire at each annual meeting of the
stockholders, and in all cases as to each director, until a
successor shall be elected and shall qualify, or until an earlier
resignation, removal from office, death or incapacity.
Notwithstanding the foregoing, the President shall serve as a
director during his term of office as President and shall not be
assigned to any category of directors. Additional directors
resulting from an increase in the number of directors shall be
apportioned among the categories as equally as possible. At each
annual meeting of stockholders following the adoption of this
provision, the number of directors equal to the number of directors
of the category whose terms expire at the time of such meeting (or,
if less, the number of directors properly nominated and qualified
for election) shall be elected to hold office until the third
succeeding annual meeting of stockholders after their election.
ARTICLE VIII. BUSINESS COMBINATIONS
Section 1. The affirmative vote of at least two-thirds (66 2/3%)
of the Continuing Directors, together with the affirmative vote of
the holders of at least two-thirds (66 2/3%) of the outstanding
shares entitled to vote thereon (as well as the affirmative vote of
the holders of at least two-thirds (66 2/3%) of the shares of any
class or series of shares entitled to vote thereon as a class),
shall be required for any of the following Business Combinations:
(a) any merger or consolidation of the Corporation or any
Subsidiary into or with a Related Person or its
Affiliate, or any other corporation which, after such
merger or consolidation, would be an Affiliate of a
Related Person, or
(b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition by the Corporation, in one or a series
of transactions, to or with any Related Person or its
Affiliate of all, or substantially all, of the assets of
the Corporation or any Subsidiary, or
(c) the issuance or transfer by the Corporation or any
subsidiary, in one or a series of transactions, of a
majority of its voting shares to a Related Person or its
Affiliate, or
(d) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(e) any reclassification of securities, recapitalization,
reorganization, merger or consolidation of the
Corporation with any of its Subsidiaries or any
transaction that has the effect, directly or indirectly,
of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities
of the Corporation or any Subsidiary that is directly or
indirectly owned by any Related Person.
Section 2. The two-thirds (66 2/3%) vote of the Continuing
Directors required by Section 1 of this Article shall not be
applicable to any Business Combination not with or involving any
Related Person or its Affiliate, in which event such Business
Combination shall require only such affirmative vote as is required
by law and any other provision of the Articles of Incorporation and
the By-Laws of the Corporation.
Section 3. A majority of the Continuing Directors of the
Corporation, on the basis of information known to them, shall have
the power and duty to determine for the purposes of this Article
all questions arising hereunder, including whether a Person is a
Related Person or an Affiliate or Associate of another, the number
of voting shares beneficially owned by any Person, the fair market
value of consideration per share offered holders of the
Corporation's Common Stock and the aggregate value of the
securities or assets of the Corporation or any Subsidiary. The
calculation of a minimum price per share to be received by
stockholders shall require appropriate adjustments for capital
changes, including without imitation, stock splits, stock dividends
and reverse stock splits.
Section 4. Nothing contained in this Article shall be construed
to relieve any Related Person of any fiduciary obligation imposed
by law.
Section 5. For the purpose of this Article and other articles
using similar terminology, the following definitions shall apply:
(a) "Person" means any individual, firm, partnership,
corporation or other entity, or any combination of them
acting together.
(b) "Related Person:, in respect of any Business Combination,
means any Person (other than the Corporation or any
Subsidiary) which, together with its Affiliates or
Associates, owns of record or beneficially, directly or
indirectly, more than fifteen percent (15%) of the
outstanding voting stock of the Corporation, or is an
Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question
was the owner, of record or beneficially, directly or
indirectly, of more than fifteen percent (15%) of the
outstanding voting stock of the Corporation.
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<PAGE> For the purpose of determining whether a Person is a Related
Person, "beneficial ownership" of voting stock shall include (i)
all shares of stock which such Person has the capability to control
or influence the voting power thereof and (ii) all shares of stock
which such Person has the immediate or future right to acquire,
pursuant to any agreement or understanding, or upon the exercise of
conversion rights, exchange rights, warrants, options or otherwise.
(c) "Affiliate" means any Person that directly or indirectly
controls, or is controlled by, or is under common control
with another Person.
(d) "Associate" means any officer, trustee, partner or
director, or beneficial owner of more than fifteen
percent (15%) of any class of equity security, of a
Related Person or its Affiliates.
(e) "Continuing Director" means a member of the Board of
Directors who was either elected prior to the date a
Related Person became a Related Person, or was
recommended to succeed a Continuing Director by a
majority of the then Continuing Directors.
(f) "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or
indirectly, by the Corporation, provided, however, that
for the purposes of the definition of "Related Person"
set forth in subsection (b) of this Section 5, the term
"Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned,
directly or indirectly, by the Corporation.
Section 6. Unless an affirmative vote of at least 80% of the
outstanding shares entitled to vote thereon, exclusive of the
shares owned by any Related Person, determine otherwise,
notwithstanding any approval received for a proposed Business
Combination under the provisions of ARTICLE VIII, the Corporation
shall not enter into any Business Combination with a Related Person
or its Affiliates or Associates, unless the following condition
shall be met:
The aggregate amount of cash and the fair market value of
consideration other than cash (as of the date of a binding
agreement for the consummation of said Business Combination)
to be received per share by holders of Common Stock of the
Corporation shall be at least equal to the higher of:
(i) the highest per share price (including brokerage
commissions, transfer taxes and soliciting dealers' fees)
paid by the Related Person or its Affiliates or
Associates in purchasing any of the Corporation's Common
Stock (a) within the two-year period immediately prior to
the date of the proposal of the Business Combination (the
"Proposal Date") or (b) in the transaction in which it
became a Related Person, whichever is higher; OR
(ii) the fair market value per share of the Corporation's
Common Stock on the Proposal Date.
Section 7. Any amendment, alteration or repeal of ARTICLE VIII, of
these Articles of Incorporation shall require the affirmative vote
of at least two-thirds (66 2/3% of the Continuing Directors,
together with the affirmative vote of the holders of at least two-
thirds (66 2/3%) of the outstanding shares entitled to vote thereon
(as well as the affirmative vote of the holders of at least two-
thirds (66 2/3%) of the shares of any class or series of shares
entitled to vote thereon as a class).
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A copy of the Corporation's Annual Report for 1993 (on form 10-K),
as filed with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, will be
furnished free of charge to beneficial owners of the
Corporation's stock upon written request to:
F. Sheldon Prentice
Chittenden Corporation
P.O. Box 820
Burlington, Vermont 05402
Any person requesting a copy of the report must set forth in
his/her written request a good faith representation that he/she was
in fact a beneficial owner of stock of the Corporation on the
record date for the annual meeting.
It takes one minute to fill out the Proxy Card. Please help assure
that there will be a quorum at the Annual Meeting by returning your
proxy.
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