RESTATED ARTICLES OF INCORPORATION
OF
THE ST. PAUL COMPANIES, INC.
ARTICLE I
The name of the corporation is THE ST. PAUL COMPANIES, INC.
ARTICLE II
The address of the registered office of the
corporation is 385 Washington Street, St. Paul, Minnesota
55102.
ARTICLE III
The aggregate number of shares that the corporation
has authority to issue is two hundred forty-five million
shares which shall consist of five million undesignated
shares and two hundred forty million shares of voting common
stock. All shares of voting common stock shall have equal
rights and preferences. The board of directors of the
corporation is authorized to establish, from the
undesignated shares, one or more classes and series of
shares, to designate each such class and series and to fix
the relative rights and preferences of each such class and
series, provided that in no event shall the board of
directors fix a preference with respect to a distribution in
liquidation in excess of $100 per share plus accrued and
unpaid dividends, if any. No shares shall confer on the
holder any right to cumulate votes in the election of
directors. All shareholders are denied preemptive rights,
unless, with respect to some or all of the undesignated
shares, the board of directors shall grant preemptive
rights. The corporation may, without any new or additional
consideration, issue shares of voting common stock or any
other class or series pro rata to the holders of the same or
one or more other classes or series of shares.
Each share of common stock with a par value of One
Dollar Fifty Cents which is issued and outstanding (and has
not been reacquired by the corporation) as of the effective
date of these Restated Articles of Incorporation is hereby
reclassified into one share of voting common stock and each
certificate representing a share or shares of common stock
with a par value of One Dollar Fifty Cents shall represent
the same number of shares of voting common stock.
ARTICLE IV
An action required or permitted to be taken at a board
meeting may be taken by written action signed by the number
of directors that would be required to act in taking the
same action at a meeting of the board at which all directors
were present.
ARTICLE V
Where shareholder approval, authorization or adoption
is required by Chapter 302A, Minnesota Statutes, for any of
the following transactions, the vote required for such
approval, authorization or adoption shall be the affirmative
vote of the holders of at least two-thirds of the voting
power of all voting shares:
(a) Any plan of merger;
(b) Any plan of exchange;
(c) Any sale, lease, transfer or other disposition of all or
substantially all of the corporation's property and
assets, including its good will, not in the usual and
regular course of its business; or
(d) Any dissolution of the corporation.
The shareholder vote required for approval,
authorization or adoption of an amendment to these Restated
Articles of Incorporation (other than an amendment to this
article) shall be the affirmative vote of the holders of at
least one-half of the voting power of all voting shares. The
shareholder vote required for approval, authorization or
adoption of an amendment to this article shall be the
affirmative vote of the holders of at least two-thirds of
the voting power of all voting shares. The provisions of
this article are not intended either to require that the
holders of the shares of any class or series of shares vote
separately as a class or series or to affect or increase any
class or series vote requirement of Chapter 302A, Minnesota
Statutes.
ARTICLE VI
A director of this Corporation shall have no personal
liability to the Corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director,
to the full extent such immunity is permitted from time to
time under the Minnesota Business Corporation Act.
Any repeal or modification of the foregoing paragraph by the
shareholders of the Corporation shall not adversely affect
any right or protection of a Director of the Corporation
existing at the time of such repeal or modification.
STATEMENT OF THE ST. PAUL COMPANIES, INC.
WITH RESPECT TO
SERIES B CONVERTIBLE PREFERRED STOCK
Pursuant to Section 302A.401, Subd. 3(b)
of Minnesota Statutes
The undersigned officers of The St. Paul Companies,
Inc. (the "Corporation"), being duly authorized by the Board
of Directors of the Corporation, do hereby certify that the
following resolution was duly adopted by the Board of
Directors of the Corporation on January 24, 1990 pursuant to
Minnesota Statutes, Section 302A.401, Subd. 3(a):
RESOLVED, That there is hereby established, out of the
presently available undesignated shares of the Corporation,
a series of Preferred Stock of the Corporation designated as
stated below and having the relative rights and preferences
that are set forth below (the "Series"):
1. Designation and Amount. The Series shall be
designated as "Series B Convertible Preferred Stock" (the
"Series B Preferred"). The number of shares constituting the
Series shall be one million four hundred fifty thousand
(1,450,000), which number may from time to time be decreased
(but not below the number of shares then outstanding) by
action of the Board of Directors of the Corporation (the
"Board of Directors"). Shares of Series B Preferred shall
have a preference upon liquidation, dissolution or winding
up of the Corporation of One Hundred Dollars ($100.00) per
share, which preference amount does not represent a
determination by the Board of Directors for the purpose of
the Corporation's capital accounts.
2. Rank. The Series B Preferred shall, with respect to
dividend rights and rights on liquidation, winding up or
dissolution of the Corporation, rank prior to the
Corporation's Series A Junior Participating Preferred Stock
and to the Corporation's voting common stock (the "Common
Stock") (together, the "Junior Stock") and shall, with
respect to dividend rights and rights on liquidation,
winding up or dissolution of the Corporation, rank junior to
all other classes and series of equity securities of the
Corporation, now or hereafter authorized, issued or
outstanding, other than any classes or series of equity
securities of the Corporation ranking on a parity with the
Series B Preferred as to dividend rights and rights upon
liquidation, winding up or dissolution of the Corporation
(the "Parity Stock").
3. Dividends. (a) Holders of outstanding shares of
Series B Preferred shall be entitled to receive, when, as
and if declared by the Board of Directors, to the extent
permitted by applicable law,
cumulative quarterly cash dividends at the annual rate of
Eleven and 724/1000 Dollars ($11.724) per share, in
preference to and in priority over any dividends with
respect to Junior Stock.
(b) Dividends on the outstanding shares of Series B
Preferred shall begin to accrue and be cumulative
(regardless of whether such dividends shall have been
declared by the Board of Directors) from and including the
date of original issuance of each share of the Series B
Preferred, and shall be payable in arrears on January 17,
April 17, July 17 and October 17 of each year (each of such
dates a "Dividend Payment Date"), commencing April 17, 1990.
Each such dividend shall be payable to the holder or holders
of record as they appear on the stock books of the
Corporation at the close of business on such record dates,
not more than thirty (30) calendar days and not less than
ten (10) calendar days preceding the Dividend Payment Dates
therefor, as are determined by the Board of Directors (each
of such dates a "Record Date"). In any case where the date
fixed for any dividend payment with respect to the Series B
Preferred shall not be a Business Day, then such payment
need not be made on such date but may be made on the next
preceding Business Day with the same force and effect as if
made on the date fixed therefor, without interest.
(c) The amount of any dividends "accumulated" on any
share of Series B Preferred at any Dividend Payment Date
shall be deemed to be the amount of any unpaid dividends
accrued thereon to and excluding such Dividend Payment Date
regardless of whether declared, and the amount of dividends
"accumulated" on any share of Series B Preferred at any date
other than a Dividend Payment Date shall be calculated as
the amount of any unpaid dividends accrued thereon to and
excluding the last preceding Dividend Payment Date
regardless of whether declared, plus an amount calculated on
the basis of the annual dividend rate for the period from
and including such last preceding Dividend Payment Date to
and excluding the date as of which the calculation is made
(regardless of whether declared). The amount of dividends
payable with respect to a full dividend period on
outstanding shares of Series B Preferred shall be computed
by dividing the annual dividend rate by four and the amount
of dividends payable for any period shorter than a full
quarterly dividend period (including the initial dividend
period) shall be computed on the basis of thirty (3O)-day
months, a three hundred sixty (360)-day year and the actual
number of days elapsed in the period.
(d) So long as the shares of Series B Preferred shall
be outstanding, if (i) the Corporation shall be in default
or in arrears with respect to the payment of dividends
(regardless of whether declared) on any outstanding shares
of Series B Preferred or any other classes or series of
equity securities of the Corporation other than Junior Stock
or (ii) the Corporation shall be in default or in arrears
with respect to the mandatory or optional redemption,
purchase or other acquisition, retirement or other
requirement of, or with respect to, any sinking or other
similar fund or agreement for the redemption, purchase
or other acquisition, retirement or other requirement of, or
with respect to, any shares of the Series B Preferred or any
other classes or series of equity securities of the
Corporation other than Junior Stock, then the Corporation
may not (A) declare, pay or set apart for payment any
dividends on any shares of Junior Stock, or (B) make any
payment on account of, or set apart payment for, the
purchase or other acquisition, redemption, retirement or
other requirement of, or with respect to, any sinking or
other similar fund or agreement for the purchase or other
acquisition, redemption, retirement or other requirement of,
or with respect to, any shares of Junior Stock or any
warrants, rights, calls or options exercisable or
exchangeable for or convertible into Junior Stock, other
than with respect to any rights that are now or in the
future may be issued and outstanding under or pursuant to
the Shareholder Protection Rights Agreement dated as of
December 4, 1989 between the Corporation and First Chicago
Trust Company of New York as Rights Agent, as it may be
amended in any respect or extended from time to time or
replaced by a new shareholders' rights plan of any scope or
nature (provided that in any amended or extended plan or in
any replacement plan any redemption of rights feature
permits only nominal redemption payments) (the "Rights
Agreement"), or (C) make any distribution in respect of any
shares of Junior Stock or any warrants, rights, calls or
options exercisable or exchangeable for or convertible into
Junior Stock, whether directly or indirectly, and whether in
cash, obligations, or securities of the Corporation or other
property, other than dividends or distributions of Junior
Stock which is neither convertible into nor exchangeable or
exercisable for any securities of the Corporation other than
Junior Stock or rights, warrants, options or calls
exercisable or exchangeable for or convertible into Junior
Stock or (D) permit any corporation or other entity
controlled directly or indirectly by the Corporation to
purchase or otherwise acquire or redeem any shares of Junior
Stock or any warrants, rights, calls or options exercisable
or exchangeable for or convertible into shares of Junior
Stock.
(e) Dividends in arrears with respect to the
outstanding shares of Series B Preferred may be declared and
paid or set apart for payment at any time and from time to
time, without reference to any regular Dividend Payment
Date, to the holder or holders of record as they appear on
the stock books of the Corporation at the close of business
on the Record Date established with respect to such payment
in arrears. If there shall be outstanding shares of Parity
Stock, and if the payment of dividends on any shares of the
Series B Preferred or the Parity Stock is in arrears, the
Corporation, in making any dividend payment on account of
any shares of the Series B Preferred or Parity Stock, shall
make such payment ratably upon all outstanding shares of the
Series B Preferred and Parity Stock in proportion to the
respective amounts of accumulated dividends in arrears upon
such shares of the Series B Preferred and Parity Stock to
the date of such dividend payment. The Holder or holders of
Series B Preferred shall not be entitled to any dividends,
whether payable in cash, obligations or securities of the
Corporation or other property, in excess of the accumulated
dividends
on shares of Series B Preferred. No interest, or sum of
money in lieu of interest, shall be payable in respect of
any dividend or other payment or payments which may be in
arrears with respect to the Series B Preferred. All
dividends paid with respect to the Series B Preferred shall
be paid pro rata to the holders entitled thereto.
(f) Subject to the foregoing provisions hereof and
applicable law, the Board of Directors (i) may declare and
the Corporation may pay or set apart for payment dividends
on any Junior Stock or Parity Stock, (ii) may make any
payment on account of or set apart payment for a sinking
fund or other similar fund or agreement for the purchase or
other acquisition, redemption, retirement or other
requirement of, or with respect to, any Junior Stock or
Parity Stock or any warrants, rights, calls or options
exercisable or exchangeable for or convertible into any
Junior Stock or Parity Stock, (iii) may make any
distribution in respect to any Junior Stock or Parity Stock
or any warrants, rights, calls or options exercisable or
exchangeable for or convertible into any Junior Stock or
Parity Stock, whether directly or indirectly, and whether in
cash, obligations or securities of the Corporation or other
property and (iv) may purchase or otherwise acquire, redeem
or retire any Junior Stock or Parity Stock or any warrants,
rights, calls or options exercisable or exchangeable for or
convertible into any Junior Stock or Parity Stock, and the
holder or holders of the Series B Preferred shall not be
entitled to share therein.
4. Voting Rights. The holder or holders of Series B
Preferred shall have no right to vote for any purpose,
except as required by applicable law and except as provided
in this Section 4.
(a) So long as any shares of Series B Preferred remain
outstanding, the affirmative vote of the holder or holders
of at least a majority (or such greater number as required
by applicable law) of the votes entitled to be cast with
respect to the then outstanding Series B Preferred, voting
separately as one class, at a meeting duly held for that
purpose, shall be necessary to repeal, amend or otherwise
change any of the provisions of the articles of
incorporation of the Corporation in any manner which
materially and adversely affects the rights or preferences
of the Series B Preferred. For purposes of the preceding
sentence, the increase (including the creation or
authorization) or decrease in the amount of authorized
capital stock of any class or series (excluding the Series B
Preferred) shall not be deemed to be an amendment which
materially and adversely affects the rights or preferences
of the Series B Preferred.
(b) The holder or holders of Series B Preferred shall
be entitled to vote on all matters submitted to a vote of
the holders of Common Stock, voting together with the
holders of Common Stock as if one class. Each share of
Series B Preferred in such case shall be entitled to a
number of votes equal to the number of shares of Common
Stock into which such share of Series B Preferred could have
been converted on the
record date for determining the holders of Common Stock
entitled to vote on a particular matter.
5. Optional Redemption. (a) The Series B Preferred
shall be redeemable, in whole or in part at any time and
from time to time, to the extent permitted by applicable
law, at the option of the Corporation, (i) on or before
December 31, 1994, if (A) there is a change in any statute,
rule or regulation of the United States of America which has
the effect of limiting or making unavailable to the
Corporation all or any of the tax deductions for amounts
paid (including dividends) on the Series B Preferred when
such amounts are used as provided under Section 404(k)(2) of
the Internal Revenue Code of 1986, as amended and in effect
on the date shares of Series B Preferred are initially
issued, or (B) the Plan is not initially determined by the
Internal Revenue Service to be qualified within the meaning
of 401(a) and 4975(e)(7) of the Internal Revenue Code of
1986, as amended, or (C) the Plan is terminated by the Board
of Directors or otherwise, at the greater of (l) $144.30 per
share plus accumulated and unpaid dividends, without
interest, to and excluding the date fixed for redemption, or
(2) the Fair Market Value of the Series B Preferred
redeemed, or (ii) after December 31, 1994, at the following
redemption prices per share if redeemed during the twelve
(12)-month period ending on and including December 31 in
each of the following years:
Redemption Price
Year per Share
---- ----------------
1995 $149.52
1996 148.22
1997 146.92
1998 145.62
1999 and thereafter 144.30
plus accumulated and unpaid dividends, without interest, to
and excluding the date fixed for redemption.
(b) Payment of the redemption price shall be made by
the Corporation in cash or shares of Common Stock, or a
combination thereof, as permitted by paragraph (d) of this
Section 5. On and after the date fixed for redemption,
dividends on shares of Series B Preferred called for
redemption shall cease to accrue, such shares shall no
longer be deemed to be outstanding and all rights in respect
of such shares shall cease, except the right to receive the
redemption price.
(c) Unless otherwise required by law, notice of
redemption shall be sent to the holder or holders of Series
B Preferred at the address shown on the books of the
Corporation by first class mail, postage prepaid, mailed not
less than twenty (20) days nor more than sixty (60) days
prior to the redemption date. Each such notice shall state:
(i) the redemption date; (ii) the total number of shares of
the Series B Preferred to be redeemed and, if fewer than all
the shares are to be redeemed, the number of such shares to
be redeemed;
(iii) the redemption price; (iv) the place or places where
certificates for such shares are to be surrendered for
payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue from and after
such redemption date; and (vi) the conversion rights of the
shares to be redeemed, the period within which conversion
rights may be exercised, and the then current Conversion
Price and number of shares of Common Stock issuable upon
conversion of a share of Series B Preferred at the time.
Upon surrender of the certificates for any shares so called
for redemption and not previously converted (properly
endorsed or assigned for transfer, if the Board of Directors
shall so require and the notice shall so state), such shares
shall be redeemed by the Corporation at the date fixed for
redemption and at the redemption price.
(d) The Corporation, at its option, may make payment of
the redemption price required upon redemption of shares of
Series B Preferred in cash or in shares of Common Stock, or
in a combination of such shares and cash, any such shares to
be valued for such purpose at the average Current Market
Price for the five (5) consecutive trading days ending on
the trading day next preceding the date of redemption.
6. Other Redemption Rights. Shares of Series B
Preferred shall be redeemed by the Corporation at the option
of the holder at any time and from time to time, to the
extent permitted by applicable law, upon notice to the
Corporation accompanied by the properly endorsed certificate
or certificates given not less than five (5) Business Days
prior to the date fixed by the holder in such notice for
such redemption, when and to the extent necessary (a) for
such holder to provide for distributions required to be made
under The St. Paul Companies, Inc. Savings Plus Preferred
Stock Ownership Plan and Trust, an employee stock ownership
plan and trust within the meaning of 4975(e)(7) of the
Internal Revenue Code of 1986, as amended (the "Plan and
Trust"), as the same may be amended, or any successor plans,
or (b) for such holder to make payment of principal or
interest due and payable (whether as scheduled or upon
acceleration) on the 9.40% Note dated January 24, 1990, due
January 31, 2005 made by Norwest Bank Minnesota, National
Association, not individually but solely as Trustee for the
Plan and Trust, payable to the order of St. Paul Fire and
Marine Insurance Company or registered assigns, in the
principal amount of One Hundred Fifty Million Dollars
($150,000,000) or other indebtedness of the Plan and Trust
or if funds otherwise available are not adequate to make a
required payment pursuant to such Note or other
indebtedness, in each case at a redemption price of the
greater of (l) $144.30 per share plus accumulated and unpaid
dividends, without interest, to and excluding the date fixed
for redemption, or (2) the Fair Market Value of the Series B
Preferred redeemed. Upon surrender of the shares to be
redeemed, such shares shall be redeemed by the Corporation
on the date fixed for redemption and at the applicable
redemption price and such price shall be paid within five
(5) Business Days after such date of redemption, without
interest. The terms and provisions of Sections
5(b) and 5(d) are applicable to any redemption under this
Section 6.
7. Liquidation Preference. In the event of any
voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, the holder or holders of outstanding
shares of Series B Preferred shall be entitled to receive
out of the assets of the Corporation available for
distribution to shareholders, before any distribution of
assets shall be made to the holders of shares of Junior
Stock, an amount equal to One Hundred Dollars ($100.00) per
share. If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the amounts
payable with respect to the Series B Preferred and any
Parity Stock are not paid in full, the holder or holders of
the Series B Preferred and of such Parity Stock shall share
ratably in any such distribution of assets of the
Corporation in proportion to the full respective
preferential amounts to which they are entitled. After
payment to the holder or holders of the Series B Preferred
of the full preferential amount provided for in this Section
7 and after the payment of any other preferential amounts to
the holder or holders of other equity securities of the
Corporation, the holder or holders of the Series B Preferred
shall be entitled to share in distributions of any remaining
assets with the holders of Common Stock, pro-rata on an as-
if-converted basis, to the extent of $44.30 per share plus
accumulated and unpaid dividends, without interest, to and
excluding the date fixed for such distribution of assets.
Written notice of any liquidation, dissolution or winding up
of the Corporation shall be given to the holder or holders
of Series B Preferred not less than twenty (20) days prior
to the payment date. Neither the voluntary sale, conveyance,
exchange or transfer (for cash, securities or other
consideration) of all or any part of the property or assets
of the Corporation, nor the consolidation or merger or other
business combination of the Corporation with or into any
other corporation or corporations, shall be deemed to be a
voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, unless such voluntary sale,
conveyance, exchange or transfer shall be in connection with
a plan of liquidation, dissolution or winding up of the
Corporation.
8. Conversion Rights. (a) The holder of any Series B
Preferred shall have the right, at the holder's option, at
any time and from time to time, to convert any or all of
such shares into the number of shares of Common Stock of the
Corporation determined by dividing One Hundred Forty-four
and 30/100 Dollars ($144.30) for each share of Series B
Preferred to be converted by the then effective Conversion
Price per share of Common Stock, except that if any shares
of Series B Preferred are called for redemption by the
Corporation or submitted for redemption by the holder
thereof, according to the terms and provisions of this
Resolution, the conversion rights pertaining to such shares
shall terminate at the close of business on the date fixed
for redemption (unless the Corporation defaults in the
payment of the applicable redemption price). No fractional
shares of Common Stock shall be issued
upon conversion of Series B Preferred, but if such
conversion results in a fraction, an amount shall be paid in
cash by the Corporation to the converting holder equal to
same fraction of the Current Market Price of the Common
Stock on the effective date of the conversion.
(b) The initial conversion price, which is Seventy-two
and 15/100 Dollars ($72.15) per share of Common Stock, shall
be subject to appropriate adjustment from time to time as
follows and such initial conversion price or the latest
adjusted conversion price is referred to in this Resolution
as the "Conversion Price":
(i) In case the Corporation shall, at any time or from
time to time while any of the shares of the Series B
Preferred is outstanding (A) pay a dividend in shares of
Common Stock, (B) subdivide outstanding shares of Common
Stock into a larger number of shares or (C) combine
outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior to
such action shall be adjusted so that the holder of any
shares of the Series B Preferred thereafter surrendered for
conversion shall be entitled to receive the number of shares
of Common Stock of the Corporation which such holder would
have owned or have been entitled to receive immediately
following such action had such shares of the Series B
Preferred been converted immediately prior thereto. An
adjustment made pursuant to this Section 8(b)(i) shall
become effective retroactively to immediately after the
record date for determination of the shareholders entitled
to receive the dividend in the case of a dividend and shall
become effective immediately after the effective date in the
case of a subdivision or combination.
(ii) In case the Corporation shall, at any time or from
time to time while any of the shares of the Series B
Preferred is outstanding, distribute or issue rights,
warrants, options or calls to all holders of shares of
Common Stock entitling them to subscribe for or purchase
shares of Common Stock (or securities convertible into or
exercisable or exchangeable for Common Stock), at a per
share price less than the Current Market Price on the record
date referred to below, the Conversion Price shall be
adjusted so that it shall equal the Conversion Price
determined by multiplying the Conversion Price in effect
immediately prior to the record date of the distribution or
issuance of such rights, warrants, options or calls by a
fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on such record date plus
the number of shares which the aggregate offering price of
the total number of shares of Common Stock so offered would
purchase at such Current Market Price, and the denominator
of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of
additional shares of Common Stock offered for subscription
or purchase. For the purpose of this Section 8(b)(ii), the
distribution or issuance of rights, warrants, options or
calls to subscribe for or purchase securities convertible
into Common Stock shall be deemed to be
the issuance of rights, warrants, options or calls to
purchase the shares of Common Stock into which such
securities are convertible at an aggregate offering price
equal to the aggregate offering price of such securities
plus the minimum aggregate amount (if any) payable upon
conversion of such securities into shares of Common Stock;
provided, however, that if all of the shares of Common Stock
subject to such rights, warrants, options or calls have not
been issued when such rights, warrants, options or calls
expire, then the Conversion Price shall promptly be
readjusted to the Conversion Price which would then be in
effect had the adjustment upon the distribution or issuance
of such rights, warrants, options or calls been made on the
basis of the actual number of shares of Common Stock issued
upon the exercise of such rights, warrants, options or
calls. An adjustment made pursuant to this Section 8(b)(ii)
shall become effective retroactively immediately after the
record date for the determination of shareholders entitled
to receive such rights, warrants, options or calls. This
Section 8(b)(ii) shall be inapplicable with respect to any
rights issued or to be issued pursuant to or governed by the
Rights Agreement.
(iii) In the event the Corporation shall, at any time
or from time to time while any of the shares of Series B
Preferred are outstanding, issue, sell or exchange shares of
Common Stock (other than pursuant to (a) any right or
warrant now or hereafter outstanding to purchase or acquire
shares of Common Stock (including as such a right or warrant
any security convertible into or exchangeable for shares of
Common Stock), (b) any rights issued or to be issued
pursuant to or governed by the Rights Agreement and (c) any
employee, officer or director incentive or benefit plan or
arrangement (including any employment, severance or
consulting agreement) of the Corporation or any subsidiary
of the Corporation heretofore or hereafter adopted) for a
consideration having a Fair Market Value, on the date of
such issuance, sale or exchange, less than the Fair Market
Value of such shares on the date of issuance, sale or
exchange, then, subject to the provisions of Sections
8(b)(v) and (vii), the Conversion Price shall be adjusted by
multiplying such Conversion Price by the fraction the
numerator of which shall be the sum of (x) the Fair Market
Value of all the shares of Common Stock outstanding on the
day immediately preceding the first public announcement of
such issuance, sale or exchange plus (y) the Fair Market
value of the consideration received by the Corporation in
respect of such issuance, sale or exchange of shares of
Common Stock, and the denominator of which shall be the
product of (a) the Fair Market Value of a share of Common
Stock on the day immediately preceding the first public
announcement of such issuance, sale or exchange multiplied
by (b) the sum of the number of shares of Common Stock
outstanding on such day plus the number of shares of Common
Stock so issued, sold or exchanged by the Corporation. In
the event the Corporation shall, at any time or from time to
time while any shares of Series B Preferred are outstanding,
issue, sell or exchange any right or warrant to purchase or
acquire shares of Common Stock (including as such a right or
warrant any security convertible into or exchangeable for
shares of Common Stock), other than any such issuance (a) to
holders of shares of Common Stock
as a dividend or distribution (including by way of a
reclassification of shares or a recapitalization of the
Corporation), (b) pursuant to any employee, officer or
director incentive or benefit plan or arrangement (including
any employment, severance or consulting agreement) of the
Corporation or any subsidiary of the Corporation heretofore
or hereafter adopted, (c) of rights issued or to be issued
pursuant to or governed by the Rights Agreement and (d)
which is covered by the terms and provisions of Section
8(b)(ii) hereof, for a consideration having a Fair Market
Value, on the date of such issuance, sale or exchange, less
than the Non-Dilutive Amount, then, subject to the
provisions of Sections 8(b)(v) and (vii) hereof, the
Conversion Price shall be adjusted by multiplying such
Conversion Price by a fraction the numerator of which shall
be the sum of (I) the Fair Market Value of all the shares of
Common Stock outstanding on the day immediately preceding
the first public announcement of such issuance, sale or
exchange plus (II) the Fair Market Value of the
consideration received by the Corporation in respect of such
issuance, sale or exchange of such right or warrant plus
(III) the Fair Market Value at the time of such issuance of
the consideration which the Corporation would receive upon
exercise in full of all such rights or warrants, and the
denominator of which shall be the product of (x) the Fair
Market Value of a share of Common Stock on the day
immediately preceding the first public announcement of such
issuance, sale or exchange multiplied by (y) the sum of the
number of shares of Common Stock outstanding on such day
plus the maximum number of shares of Common Stock which
could be acquired pursuant to such right or warrant at the
time of the issuance, sale or exchange of such right or
warrant (assuming shares of Common Stock could be acquired
pursuant to such right or warrant at such time).
(iv) In the event the Corporation shall, at any time or
from time to time while any of the shares of Series B
Preferred are outstanding, make an Extraordinary
Distribution in respect of the Common Stock, whether by
dividend, distribution, reclassification of shares or
recapitalization of the Corporation (including a
recapitalization or reclassification effected by a merger
or consolidation to which Section 8(c) hereof does not
apply) or effect a Pro Rata Repurchase of Common Stock, the
Conversion Price in effect immediately prior to such
Extraordinary Distribution or Pro Rata Repurchase shall,
subject to Sections 8(b)(v) and (vii) hereof, be adjusted by
multiplying such Conversion Price by the fraction the
numerator of which is the difference between (a) the product
of (x) the number of shares of Common Stock outstanding
immediately before such Extraordinary Distribution or Pro
Rata Repurchase multiplied by (y) the Fair Market Value of a
share of Common Stock on the day before the ex-dividend date
with respect to an Extraordinary Distribution which is paid
in cash and on the distribution date with respect to an
Extraordinary Distribution which is paid other than in cash,
or on the applicable expiration date (including all
extensions thereof) of any tender offer which is a Pro Rata
Repurchase, or on the date of purchase with respect to any
Pro Rata Repurchase which is not a tender offer, as the case
may be, and
(b) the Fair Market Value of the Extraordinary Distribution
or the aggregate purchase price of the Pro Rata Repurchase,
as the case may be, and the denominator of which shall be
the product of (x) the number of shares of Common Stock
outstanding immediately before such Extraordinary Dividend
or Pro Rata Repurchase minus, in the case of a Pro Rata
Repurchase, the number of shares of Common Stock repurchased
by the Corporation multiplied by (y) the Fair Market Value
of a share of Common Stock on the day before the ex-dividend
date with respect to an Extraordinary Distribution which is
paid in cash and on the distribution date with respect to an
Extraordinary Distribution which is paid other than in cash,
or on the applicable expiration date (including all
extensions thereof) of any tender offer which is a Pro Rata
Repurchase or on the date of purchase with respect to any
Pro Rata Repurchase which is not a tender offer, as the case
may be. The Corporation shall send each holder of Series B
Preferred (i) notice of its intent to make any dividend or
distribution and (ii) notice of any offer by the Corporation
to make a Pro Rata Repurchase, in each case at the same time
as, or as soon as practicable after, such offer is first
communicated (including by announcement of a record date in
accordance with the rules of any stock exchange on which the
Common Stock is listed or admitted to trading) to holders of
Common Stock. Such notice shall indicate the intended record
date and the amount and nature of such dividend or
distribution, or the number of shares subject to such offer
for a Pro Rata Repurchase and the purchase price payable by
the Corporation pursuant to such offer, as well as the
Conversion Price and the number of shares of Common Stock
into which a share of Series B Preferred may be converted at
such time.
(v) If the Corporation shall make any dividend or
distribution on the Common Stock or issue any Common Stock,
other capital stock or other security of the Corporation or
any rights or warrants to purchase or acquire any such
security, which transaction does not result in an adjustment
to the Conversion Price pursuant to this Section 8, the
Board of Directors shall consider whether such action is of
such a nature that an adjustment to the Conversion Price
should equitably be made in respect of such transaction. If
in such case the Board of Directors determines that an
adjustment to the Conversion Price should be made, an
adjustment shall be made effective as of such date, as
determined by the Board of Directors (which adjustment shall
in no event adversely affect the rights or preferences of
the Series B Preferred as set forth herein). The
determination of the Board of Directors as to whether an
adjustment to the Conversion Price should be made pursuant
to the foregoing provisions of this Section 8(b)(v), and, if
so, as to what adjustment should be made and when, shall be
final and binding on the Corporation and all shareholders of
the Corporation.
(vi) In addition to the foregoing adjustments, the
Corporation may, but shall not be required to, make such
adjustments in the Conversion Price as it considers to be
advisable in order that any event treated for federal income
tax purposes as a dividend of stock or
stock rights shall either not be taxable to the recipients
or shall be taxable to the recipients to the minimum extent
reasonable under the circumstances, as determined by the
Board of Directors in its sole discretion.
(vii) In no event shall an adjustment in the Conversion
Price be required unless such adjustment would result in an
increase or decrease of at least one percent (1%) in the
Conversion Price then in effect; provided, however, that any
such adjustments that are not made shall be carried forward
and taken into account in determining whether any subsequent
adjustment is required. In no event shall the Conversion
Price be adjusted to an amount less than any minimum
required by law. Except as set forth in this Section 8, the
Conversion Price shall not be adjusted for the issuance of
Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or carrying
the right or option to purchase or otherwise acquire the
foregoing, in exchange for cash, other property or services.
(viii) Whenever an adjustment in the Conversion Price
is required, the Corporation shall forthwith place on file
with its transfer agent (or if the Corporation performs the
functions of a transfer agent, with the corporate secretary)
a statement signed by its chief executive officer or a vice
president and by its secretary, assistant secretary or
treasurer, stating the adjusted Conversion Price determined
as provided herein. Such statements shall set forth in
reasonable detail such facts as shall be necessary to show
the reason and the manner of computing such adjustment. As
soon as practicable after the adjustment of the Conversion
Price, the Corporation shall mail a notice thereof to each
holder of shares of the Series B Preferred of such
adjustment.
(ix) In the event that at any time, as a result of an
adjustment made pursuant to this Section 8, the holder of
any shares of Series B Preferred hereafter surrendered for
conversion shall be entitled to receive any securities other
than shares of Common Stock, thereafter the amount of such
other securities so receivable upon conversion of any shares
of Series B Preferred shall be subject to adjustment from
time to time in a manner and on terms as nearly as
equivalent as practicable to the provisions with respect to
the Common Stock contained in this Section 8, and the
provisions of this Section 8 with respect to the Common
Stock shall apply on like terms to any such other
securities.
(c) In case of any consolidation or merger of the
Corporation with or into any other corporation (other than a
merger in which the Corporation is the surviving
corporation), or in case of any sale or transfer of
substantially all -the assets of the Corporation, or in case
of reclassification, capital reorganization or change of
outstanding shares of Common Stock (other than combinations
or subdivisions described in Section 8(b)(i) and other than
Extraordinary Distributions described in Section 8(b)(iv)),
there shall be no adjustment to the Conversion Price then in
effect, but appropriate provisions shall be
made so that any holder of Series B Preferred shall be
entitled, after the occurrence (or, if applicable, the
record date) of any such event ("Transaction"), to receive
on conversion the consideration which the holder would have
received had the holder converted such holder's Series B
Preferred to Common Stock immediately prior to the
occurrence of the Transaction and had such holder, if
applicable, elected to receive the consideration in the form
and manner elected by the plurality of the electing holders
of Common Stock. In any such Transaction, effective
provisions shall be made to ensure that the holder or
holders of the Series B Preferred shall receive the
consideration that they are entitled to receive pursuant to
the provisions hereof, and in particular, as a condition to
any consolidation or merger in which the holders of
securities into which the Series B Preferred is then
convertible are entitled to receive equity securities of
another corporation, such other corporation shall expressly
assume the obligation to deliver, upon conversion of the
Series B Preferred, such equity securities as the holder or
holders of the Series B Preferred shall be entitled to
receive pursuant to the provisions hereof. Notwithstanding
the foregoing provisions of this Section 8(c), in the event
the consideration to be received pursuant to the provisions
hereof is not to be constituted solely of employer
securities within the meaning of 409(1) of the Internal
Revenue Code of 1986, as amended, or any successor
provisions of law, and of a cash payment in lieu of any
fractional securities, then the outstanding shares of Series
B Preferred shall be deemed converted by virtue of the
Transaction immediately prior to the consummation thereof
into the number and kind of securities into which such
shares of Series B Preferred could have been voluntarily
converted at such time and such securities shall be entitled
to participate fully in the Transaction as if such
securities had been outstanding on the appropriate record,
exchange or distribution date. In the event the Corporation
shall enter into any agreement providing for any
Transaction, then the Corporation shall as soon as
practicable thereafter (and in any event at least ten (10)
Business Days before consummation of the Transaction) give
notice of such agreement and the material terms thereof to
each holder of Series B Preferred and each such holder shall
have the right, to the extent permitted by applicable law,
to elect, by written notice to the Corporation, to receive,
upon consummation of the Transaction (if and when the
Transaction is consummated), from the Corporation or the
successor of the Corporation, in redemption of such Series B
Preferred, a cash payment per share equal to the amount
determined according to the following table, with the
redemption date to be deemed to be the same date that the
Transaction giving rise to the redemption election is
consummated:
Transaction
Consummated in Year Redemption Price
Ending December 31 per Share
--------------------- ----------------
1990 $156.02
1991 154.72
1992 153.42
1993 152.12
1994 150.82
1995 149.52
1996 148.22
1997 146.92
1998 145.62
1999 and thereafter 144.30
plus accumulated and unpaid dividends, without interest, to
and excluding such deemed redemption date. No such notice of
redemption by the holder of Series B Preferred shall be
effective unless given to the Corporation prior to the close
of business at least two (2) Business Days prior to
consummation of the Transaction.
(d) The holder or holders of Series B Preferred as they
appear on the stock books of the Corporation at the close of
business on a dividend payment Record Date shall be entitled
to receive the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding the
subsequent conversion thereof or the Corporation's default
on payment of the dividend due on such Dividend Payment
Date; provided, however, that the holder or holders of
Series B Preferred subject to redemption on a redemption
date after such Record Date and before such Dividend Payment
Date shall not be entitled under this provision to receive
such dividend on such Dividend Payment Date. However, shares
of Series B Preferred surrendered for conversion during the
period after any dividend payment Record Date and before the
corresponding Dividend Payment Date (except shares subject
to redemption on a redemption date during such period) must
be accompanied by payment of an amount equal to the dividend
payable on such shares on such Dividend Payment Date. The
holder or holders of Series B Preferred as they appear on
the stock books of the Corporation at the close of business
on a dividend payment Record Date who convert shares of
Series B Preferred on a Dividend Payment Date shall be
entitled to receive the dividend payable on such Series B
Preferred by the Corporation on such Dividend Payment Date,
and the converting holders need not include payment in the
amount of such dividend upon surrender of shares of Series B
Preferred for conversion. Except as provided above, the
Corporation shall make no payment or allowance for unpaid
dividends (whether or not accumulated and in arrears) on
converted shares or for dividends on the shares of Common
Stock issuable upon such conversion.
(e) Each conversion of shares of Series B Preferred
into shares of Common Stock shall be effected by the
surrender of the certificate or certificates representing
the shares to be converted, accompanied
by instruments of transfer satisfactory to the Corporation
and sufficient to transfer such shares to the Corporation
free of any adverse claims (the "Converting Shares"), at the
principal executive office of the Corporation (or such other
office or agency of the Corporation as the Corporation may
designate by written notice to the holder or holders of
Series B Preferred) at any time during its respective usual
business hours, together with written notice by the holder
of such Converting Shares, stating that such holder desires
to convert the Converting Shares, or a stated number of the
shares represented by such certificate or certificates, into
such number of shares of Common Stock into which such shares
may be converted (the "Converted Shares"). Such notice shall
also state the name or names (with addresses and federal
taxpayer identification numbers) and denominations in which
the certificate or certificates for the Converted Shares are
to be issued, shall include instructions for the delivery
thereof and shall include such other information as the
Corporation or its agents may reasonably request. Promptly
after such surrender and the receipt of such written notice
and the receipt of any required transfer documents and
payments representing dividends as described above, the
Corporation shall issue and deliver in accordance with the
surrendering holder's instructions the certificate or
certificates evidencing the Converted Shares issuable upon
such conversion, and the Corporation will deliver to the
converting holder (without cost to the holder) a certificate
(which shall contain such legends as were set forth on the
surrendered certificate or certificates) representing any
shares of Series B Preferred which were represented by the
certificate or certificates that were delivered to the
Corporation in connection with such conversion, but which
were not converted.
(f) Such conversion, to the extent permitted by
applicable law, shall be deemed to have been effected at the
close of business on the date on which such certificate or
certificates shall have been surrendered and such notice and
any required transfer documents and payments representing
dividends shall have been received by the Corporation, and
at such time the rights of the holder of the Converting
Shares as such holder shall cease, and the person or persons
in whose name or names the certificate or certificates for
the Converted Shares are to be issued upon such conversion
shall be deemed to have become the holder or holders of
record of the Converted Shares. Upon issuance of shares in
accordance herewith, such Converted Shares shall be deemed
to be fully paid and nonassessable. From and after the
effectiveness of any such conversion, shares of the Series B
Preferred so converted shall, upon compliance with
applicable law, be restored to the status of authorized but
unissued undesignated shares, until such shares are once
more designated as part of a particular series by the Board
of Directors.
(g) Notwithstanding any provision herein to the
contrary, the Corporation shall not be required to record
the conversion of, and no holder of shares shall be entitled
to convert, shares of Series B Preferred into shares of
Common Stock unless such conversion is
permitted under applicable law; provided, however, that the
Corporation shall be entitled to rely without independent
verification upon the representation of any holder that the
conversion of shares by such holder is permitted under
applicable law, and in no event shall the Corporation be
liable to any such holder or any third party arising from
any such conversion whether or not permitted by applicable
law.
(h) The Corporation will pay any and all stamp,
transfer or other similar taxes that may be payable in
respect of the issuance or delivery of Common Stock received
upon conversion of the shares of Series B Preferred, but
shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issuance
or delivery of Common Stock in a name other than that in
which such shares of Series B Preferred were registered and
no such issuance or delivery shall be made unless and until
the person requesting such conversion shall have paid to the
Corporation the amount of any and all such taxes or shall
have established to the satisfaction of the Corporation that
such taxes have been paid in full.
(i) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its
authorized but unissued stock, for the purpose of effecting
the conversion of the shares of the Series B Preferred, such
number of its duly authorized shares of Common Stock or
other securities as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the
Series B Preferred.
(j) Whenever the Corporation shall issue shares of Common
Stock upon conversion of shares of Series B Preferred as
contemplated by this Section 8, the Corporation shall issue
together with each such share of Common Stock one Right (as
defined in the Rights Agreement) pursuant to the terms and
provisions of the Rights Agreement.
9. Transfer Restriction. Shares of Series B Preferred
shall be issued only to the Plan and Trust and the
certificate or certificates representing such shares so
issued may be registered in the name of the Plan and Trust
or in the name of one or more Trustees acting on behalf of
the Plan and Trust (or the nominee name of any such
trustee). In the event the Plan and Trust, acting through
any such trustee or otherwise, should transfer beneficial or
record ownership of one or more shares of Series B Preferred
to any person or entity, the shares of Series B Preferred
so transferred, upon such transfer and without any further
action by the Corporation or the Plan and Trust or anyone
else, shall be automatically converted, as of the time of
such transfer, into shares of Common Stock on the terms
otherwise provided for the voluntary conversion of shares of
Series B Preferred into shares of Common Stock pursuant to
Section 8 hereof and no transferee of such share or shares
shall thereafter have or receive any of the rights and
preferences of the shares of Series B Preferred so
converted. Certificates representing shares of Series B
Preferred shall be legended to
reflect the aforesaid restriction on transfer. Shares of
Series B Preferred may also be subject to restrictions on
transfer which relate to the securities laws of the United
States of America or any state or other jurisdiction
thereof.
10. No other Rights. The shares of Series B Preferred
shall not have any rights or preferences, except as set
forth herein or as otherwise required by applicable law.
11. Rules and Regulations. The Board of Directors shall
have the right and authority from time to time to prescribe
rules and regulations as it may determine to be necessary or
advisable in its sole discretion for the administration of
the Series B Preferred in accordance with the foregoing
provisions and applicable law.
12 . Definitions . For purposes of this Resolution, the
following definitions shall apply:
"Adjustment Period" shall mean the period of five (5)
consecutive trading days preceding the date as of which the
Fair Market Value of a security is to be determined.
"Business Day" shall mean each day that is not a Saturday,
Sunday or a day on which state or federally chartered
banking institutions in New York, New York are not required
to be open.
"Current Market Price" of publicly traded shares of Common
Stock or any other class of capital stock or other security
of the Corporation or any other issuer for any day shall
mean the last reported sales price, regular way, or, in the
event that no sale takes place on such day, the average of
the reported closing bid and asked prices, regular way, in
either case as reported on the New York Stock Exchange
Composite Tape or, if such security is not listed or
admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which such
security is listed or admitted to trading or, if not listed
or admitted to trading on any national securities exchange,
on the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or, if such security is not quoted on such
National Market System, the average of the closing bid and
asked prices on each such day in the over-the-counter market
as reported by NASDAQ or, if bid and asked prices for such
security on each such day shall not have been reported
through NASDAQ, the average of the bid and asked prices for
such day as furnished by any New York Stock Exchange member
firm regularly making a market in such security selected for
such purpose by the Board of Directors or a committee
thereof.
"Extraordinary Distribution" shall mean any dividend or
other distribution to holders of Common Stock (effected
while any of the shares of Series B Preferred are
outstanding) (i) of cash (other than a regularly scheduled
quarterly dividend not exceeding 135% of the average
quarterly dividend for the four quarters immediately
preceding such dividend), where the aggregate amount of such
cash dividend or
distribution together with the amount of all cash dividends
and distributions made during the preceding period of twelve
(12) months, when combined with the aggregate amount of all
Pro Rata Repurchases (for this purpose, including only that
portion of the aggregate purchase price of such Pro Rata
Repurchase which is in excess of the Fair Market Value of
the Common Stock repurchased as determined on the applicable
expiration date (including all extensions thereof) of any
tender offer or exchange offer which is a Pro Rata
Repurchase, or the date of purchase with respect to any
other Pro Rata Repurchase which is not a tender offer or
exchange offer made during such period), exceeds ten percent
(10%) of the aggregate Fair Market Value of all shares of
Common Stock outstanding on the day before the ex-dividend
date with respect to such Extraordinary Distribution which
is paid in cash and on the distribution date with respect to
an Extraordinary Distribution which is paid other than in
cash, and/or (ii) of any shares of capital stock of the
Corporation (other than shares of Common Stock), other
securities of the Corporation (other than securities of the
type referred to in Section 8(b)(ii) or (iii) hereof),
evidences of indebtedness of the Corporation or any other
person or any other property (including shares of any
subsidiary of the Corporation) or any combination thereof.
The Fair Market Value of an Extraordinary Distribution for
purposes of Section 8(b)(iv) hereof shall be equal to the
sum of the Fair Market Value of such Extraordinary
Distribution plus the amount of any cash dividends (other
than regularly scheduled dividends not exceeding 135% of the
aggregate quarterly dividends for the preceding period of
twelve (12) months) which are not Extraordinary
Distributions made during such 12-month period and not
previously included in the calculation of an adjustment
pursuant to Section 8(b)(iv) hereof.
"Fair Market Value" shall mean, as to shares of Common Stock
or any other class of capital stock or securities of the
Corporation or any other issue which are publicly traded,
the average of the Current Market Prices of such shares or
securities for each day of the Adjustment Period. The "Fair
Market Value" of any security which is not publicly traded
or of any other property shall mean the fair value thereof
as determined by an independent investment banking or
appraisal firm experienced in the valuation of such
securities or property selected in good faith by the Board
of Directors or a committee thereof, or, if no such
investment banking or appraisal firm is in the good faith
judgment of the Board of Directors or such committee
available to make such determination, as determined in good
faith by the Board of Directors or such committee. The Fair
Market Value of the Series B Preferred for purposes of
Section 5(a) hereof and for purposes of Section 6 hereof
shall be as determined by an independent appraiser,
appointed by the Corporation in accordance with the
provisions of the Plan and Trust, as of the most recent
Valuation Date, as defined in the Plan and Trust.
"Non-Dilutive Amount" in respect of an issuance, sale or
exchange by the Corporation of any right or warrant to
purchase or acquire shares of Common Stock (including any
security convertible into or exchangeable for shares of
Common Stock) shall mean the difference between (i) the
product of the Fair Market Value of a share of Common Stock
on the day preceding the first public announcement of such
issuance, sale or exchange multiplied by the maximum number
of shares of Common Stock which could be acquired on such
date upon the exercise in full of such rights and warrants
(including upon the conversion or exchange of all such
convertible or exchangeable securities), whether or not
exercisable (or convertible or exchangeable) at such date,
and (ii) the aggregate amount payable pursuant to such
right or warrant to purchase or acquire such maximum number
of shares of Common Stock; provided, however, that in no
event shall the Non-Dilutive Amount be less than zero. For
purposes of the foregoing sentence, in the case of a
security convertible into or exchangeable for shares of
Common Stock, the amount payable pursuant to a right or
warrant to purchase or acquire shares of Common Stock shall
be the Fair Market Value of such security on the date of
the issuance, sale or exchange of such security by the
Corporation.
"Pro Rata Repurchase" shall mean any purchase of shares of
Common Stock by the Corporation or any subsidiary thereof,
whether for cash, shares of capital stock of the
Corporation, other securities of the Corporation, evidences
of indebtedness of the Corporation or any other person or
any other property (including shares of a subsidiary of the
Corporation), or any combination thereof, effected while
any of the shares of Series B Preferred are outstanding,
pursuant to any tender offer or exchange offer subject to
Section 13(e) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any successor provision of
law, or pursuant to any other offer available to
substantially all holders of Common Stock; provided,
however, that no purchase of shares by the Corporation or
any subsidiary thereof made in open market transactions
shall be deemed a Pro Rata Repurchase. For purposes of this
definition, shares shall be deemed to have been purchased
by the Corporation or any subsidiary thereof "in open
market transactions" if they have been purchased
substantially in accordance with the requirements of Rule
10b-18, as in effect under the Exchange Act, on the date
shares of Series B Preferred are initially issued by the
Corporation or on such other terms and conditions as the
Board of Directors or a committee thereof shall have
determined are reasonably designed to prevent such
purchases from having a material effect on the trading
market for the Common Stock.
CERTIFICATE OF DESIGNATION
OF
THE ST. PAUL COMPANIES, INC.
Series C Cumulative Convertible Preferred Stock
THE UNDERSIGNED, Bruce A. Backberg, the Vice
President and Corporate Secretary of The St. Paul Companies,
Inc. (the "Corporation"), does hereby certify that pursuant
to Minnesota Statutes Section 302A.401, Subd.3(a),
resolutions as hereinafter set forth were adopted by written
consent executed by a majority of the Directors as of May 9,
1995.
RESOLVED, that there is hereby established, out of the
presently available undesignated shares of the
Corporation, a series of Preferred Stock of the
Corporation designated and having such terms and
relative rights, preferences and privileges as set
forth in Exhibit A attached hereto (the "Series C
Preferred Stock").
RESOLVED FURTHER, that the Vice President and Corporate
Secretary or any Assistant Secretary of the Corporation
shall prepare a Certificate of Designation describing
the Series C Preferred Stock and cause the same to be
filed with the Secretary of State of the State of
Minnesota.
IN WITNESS WHEREOF, the undersigned has signed
this Certificate of Designation this 16th day of May, 1995.
/s/ Bruce A. Backberg
---------------------
Bruce A. Backberg
Vice President and Corporate
Secretary
EXHIBIT A
SECTION 1. Designation and Amount; Special
Purpose; Restriction on Senior Series.
(A) The shares of this series of Preferred Stock
shall be designated as "Series C Cumulative Convertible
Preferred Stock" ("Series C Preferred Stock") and the number
of shares constituting such series shall be 41,400, without
par value.
(B) Shares of Series C Preferred Stock shall be
issued by the conversion and exchange agent (the "Conversion
Agent") for the Series C Preferred Stock only upon the
exchange of 6% Convertible Subordinated Debentures due 2025
of the Corporation (the "Subordinated Debentures"), and
accrued interest thereon following a valid exchange election
(an "Exchange Election") by the holders of a majority of the
aggregate liquidation preference of the outstanding 6%
Convertible Monthly Income Preferred Securities, liquidation
preference $50 per security (the "St. Paul Capital Preferred
Securities"), of St. Paul Capital L.L.C., a Delaware limited
liability company ("St. Paul Capital"), to cause the
St. Paul Capital Preferred Securities then outstanding to be
exchanged for depositary shares, each representing a one
hundredth (1/100th) interest in a share of Series C
Preferred Stock (the "Depositary Shares"), issued pursuant
to the Deposit Agreement, dated as of May 16, 1995, among
the Corporation, The Chase Manhattan Bank (National
Association), as Depositary, and the holders from time to
time of the receipts described therein (the "Deposit
Agreement"), in the manner prescribed in the Amended and
Restated Limited Liability Company Agreement of St. Paul
Capital, dated as of May 16, 1995 (the "L.L.C. Agreement").
(C) So long as any St. Paul Capital Preferred
Securities are outstanding, the Corporation shall not
authorize or issue any other class or series of capital
stock ranking senior as to the payment of dividends or
amounts upon liquidation, dissolution or winding-up to the
Series C Preferred Stock without the approval of the holders
of not less than 66% of the aggregate liquidation preference
of the St. Paul Capital Preferred Securities then
outstanding.
SECTION 2. Dividends and Distributions.
(A)(1) The holders of shares of Series C Pre-
ferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors of the Corporation out of
funds legally available therefor, cumulative cash dividends
in an amount per share per annum equal to $300 (equivalent
to a rate per annum of 6% of the stated liquidation
preference of $5,000 per share of Series C Preferred Stock),
calculated on the basis of a 360-day year consisting of
12 months of 30 days each, and for any period shorter than a
full monthly dividend period, dividends will be computed on
the basis of the actual number of days elapsed in such
period, and payable in United States dollars monthly in
arrears on the last day of each calendar month of each year.
(2) Dividends, when, as and if declared by the
Board of Directors of the Corporation out of funds legally
available therefor, shall be paid on the last day of each
month. Such dividends will accrue and be cumulative whether
or not they have been earned or declared and whether or not
there are funds of the Corporation legally available for the
payment of dividends. Dividends on the Series C Preferred
Stock shall be cumulative from the date of the Exchange
Election. Accumulated but unpaid dividends, if any
(including arrearages at the rate of 6% per annum compounded
monthly), on the St. Paul Capital Preferred Securities on
the date of the Exchange Election shall constitute, and be
treated as, accumulated and unpaid dividends on the Series C
Preferred Stock as of the date of the issuance thereof. The
record date for each dividend payment date shall be the day
immediately preceding such dividend payment date, provided
that such day is a day on which banking institutions in The
City of New York are not authorized or obligated by law or
executive order to be closed (a "Business Day"). In the
event that any date on which dividends are payable on the
Series C Preferred Stock is not a Business Day, then payment
of the dividend payable on such date will be made on the
next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and
effect as if made on such date.
(B) In the event that full cumulative dividends
on the Series C Preferred Stock have not been declared and
paid or set apart for payment when due, then the Corporation
shall not, and shall not permit any direct or indirect
majority-owned subsidiary of the Corporation (except any of
The John Nuveen Company, a Delaware corporation, and its
consolidated subsidiaries) to, declare or pay any dividend
on, or redeem, purchase, acquire for value or make a
liquidation payment with respect to, any Pari Passu Stock or
Junior Stock (each as defined herein) (other than as a
result of a reclassification of Pari Passu Stock or Junior
Stock or the exchange or conversion of one class or series
of Pari Passu Stock or Junior Stock for another class or
series of Pari Passu Stock or Junior Stock, respectively),
or make any guarantee payments with respect to the foregoing
(other than payments under the Guarantee Agreement dated as
of May 16, 1995 of the Corporation in favor of the holders
of St. Paul Capital Preferred Securities with respect to
such securities or dividends or guarantee payments to the
Corporation).
When dividends are not paid in full, all dividends
declared upon the Series C Preferred Stock and all dividends
declared upon any Pari Passu Stock shall be paid ratably in
proportion to the respective amounts of dividends
accumulated and unpaid on the Series C Preferred Stock and
accumulated and unpaid on such Pari Passu Stock. "Pari
Passu Stock" means the Series B Convertible Preferred Stock,
liquidation preference $100 per share (the "Senior B
Preferred Stock") of the Corporation, together with any
preference stock or preferred stock of
the Corporation, or any guarantee now or hereafter entered
into by the Corporation in respect of any preferred or
preference stock of any affiliate of the Corporation,
ranking, in such case, as to the payment
of dividends and amounts upon liquidation, dissolution and
winding-up on a parity with the Series C Preferred Stock.
"Junior Stock" means Common Stock, the Series A Junior
Participating Preferred Stock, without par value, of the
Corporation, and any other class or series of capital stock
of the Corporation or any of its affiliates which by its
express terms ranks junior in the payment of dividends or
amounts upon liquidation, dissolution or winding-up to the
Series C Preferred Stock.
SECTION 3. Voting Rights.
(A) In the event that full cumulative dividends
on the Series C Preferred Stock have not been paid for
18 monthly dividend periods (including for this purpose any
arrearage with respect to St. Paul Capital Preferred
Securities), the number of directors of the Corporation
constituting the entire Board of Directors shall be
increased by two (2) persons and the holders of the Series C
Preferred Stock shall have the right to elect two persons to
fill such positions at any regular meeting of shareholders
or special meeting held in place thereof, or at a special
meeting of the holders of the Series C Preferred Stock
called as hereinafter provided. Whenever all arrearages of
dividends on the Series C Preferred Stock then outstanding
shall have been paid and dividends thereon for the current
monthly period shall have been paid or declared and set
apart for payment, then the right of the holders of the
Series C Preferred Stock to elect such additional two (2)
directors shall cease (but subject always to the same
provisions for the vesting of such voting rights in the case
of any similar future arrearages in dividends), and the
terms of office of all persons elected as directors by the
holders of the Series C Preferred Stock shall forthwith
terminate and the number of directors of the Corporation
shall be reduced accordingly. At any time after such voting
power shall have been so vested in the holders of shares of
the Series C Preferred Stock, the Secretary of the
Corporation may, and upon the written request for a special
meeting signed by the holders of at least 10% of all
outstanding Series C Preferred Stock (addressed to the
Secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Series C
Preferred Stock for the election of the two (2) directors to
be elected by them as herein provided; such call to be made
by notice similar to that provided for in the by-laws for a
special meeting of the shareholders or as required by law.
If any such special meeting required to be called as above
provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of
Series C Preferred Stock may call such meeting, upon the
notice above provided, and for that purpose shall have
access to the stock books and records of the Corporation.
The directors elected at any such special meeting shall hold
office until the next regular meeting of the shareholders or
special meeting held in place thereof if such office shall
not have previously terminated as above provided. In case
any vacancy shall occur among the directors elected by the
holders of the Series C Preferred Stock, a successor shall
be elected by the Board of Directors to serve until the next
regular meeting of the shareholders or special meeting held
in place thereof upon the nomination of the then remaining
director elected by the holders of the Series C Preferred
Stock or the successor of such remaining director.
(B) Except as otherwise required by law or set
forth herein, holders of Series C Preferred Stock shall have
no voting rights and their consent shall not be required for
the taking of any corporate action. So long as any shares
of Series C Preferred Stock are outstanding, the consent of
the holders of not less than 66% of the outstanding shares
of Series C Preferred Stock, given in person or by proxy
either at a regular meeting or at a special meeting called
for that purpose, at which the holders of Series C Preferred
Stock shall vote separately as a series, shall be necessary
for effecting, validating or authorizing any one or more of
the following:
(1) The amendment, alteration or repeal of any of
the provisions of the Restated Articles of Incorpora-
tion, as amended, of the Corporation, or any amendment
thereto or any other certificate filed pursuant to law
(including any such amendment, alteration or repeal
effected by any merger or consolidation to which the
Corporation is a party) that would adversely affect any
of the rights, powers or preferences of outstanding
shares of Series C Preferred Stock; provided, however,
that any amendment or amendments to the provisions of
the Restated Articles of Incorporation, as amended, so
as to authorize or create, or to increase the
authorized amount of, any Pari Passu Stock or any
Junior Stock shall not be deemed to adversely affect
the voting powers, rights or preferences of the holders
of the Series C Preferred Stock;
(2) The creation of any shares of any class or
series or any security convertible into shares of any
class or series of capital stock ranking prior to the
Series C Preferred Stock in the distribution of assets
on any liquidation, dissolution or winding-up of the
Corporation or in the payment of dividends; or
(3) Any merger or consolidation with or into, or
any sale, transfer, exchange or lease of all or substan-
tially all of the assets of the Corporation to, any
other corporation, in either case that would adversely
affect any of the rights, powers or preferences of
outstanding shares of Series C Preferred Stock;
provided, that so long as the convertible subordinated
debentures of the Corporation issued pursuant to the
Indenture, dated as of May 16, 1995, among the
Corporation, St. Paul Capital L.L.C. ("St. Paul
Capital") and The Chase Manhattan Bank (National
Association), as Trustee, are exchangeable for shares
of Series C Preferred Stock, that the consent of the
holders of not less than 66_% of the aggregate
liquidation preference of the 6% Convertible Monthly
Income Preferred Securities of St. Paul Capital, given
in person or by proxy at a meeting called for that
purpose, shall be necessary for effecting validity or
authorizing any one or more of the foregoing actions.
(C) For purposes of this Section 3, while
St. Paul Capital Preferred Securities are outstanding and
owned by any entity other than the Corporation, St. Paul
Capital, or their subsidiaries or affiliates, any St. Paul
Capital Preferred Securities owned by the Corporation,
St. Paul Capital or their subsidiaries or affiliates shall
not have the voting rights referred to in this Section.
SECTION 4. Redemption.
(A) If at any time following the Conversion
Expiration Date (as defined below), less than five percent
(5%) of the shares of Series C Preferred Stock remain
outstanding, such shares of Series C Preferred Stock are
redeemable, at the option of the Corporation, in whole but
not in part, from time to time, at a redemption price equal
to the liquidation preference, plus accumulated and unpaid
dividends, whether or not earned or declared, to the date of
redemption (the "Redemption Price").
(B) Unless otherwise required by law, notice of
redemption will be sent to the holders of Series C Preferred
Stock by first-class mail, postage prepaid, mailed not less
than thirty (30), nor more than sixty (60) days prior to the
redemption date. Each such notice shall state: (i) the
redemption date; (ii) the Redemption Price; (iii) the place
or places where receipts for Depositary Shares representing
such shares are to be surrendered for payment of the
Redemption Price; and (iv) that dividends on the shares to
be redeemed will cease to accrue on such redemption date.
Upon surrender of the receipts for Depositary Shares
representing the shares so called for redemption (properly
endorsed or assigned for transfer, if the Board of Directors
of the Corporation shall so require and the notice shall so
state), such shares shall be redeemed by the Corporation on
the date fixed for redemption at the Redemption Price.
SECTION 5. Liquidation, Dissolution or
Winding-Up.
(A) Upon any voluntary or involuntary liquida-
tion, dissolution, winding-up or termination of the
Corporation, the holders of Series C Preferred Stock at the
time outstanding will be entitled to receive out of the net
assets of the Corporation available for payment to
shareholders and subject to the rights of the holders of any
stock of the Corporation ranking senior to or on a parity
with the Series C Preferred Stock in respect of distri-
butions upon liquidation, dissolution, winding-up or
termination of the Corporation, before any amount shall be
paid or distributed with respect to any Junior Stock,
liquidating distributions in the amount of $50 per share
plus an amount equal to all accrued and unpaid dividends
thereon (whether or not earned or declared) to the date
fixed for distribution. If, upon any liquidation,
dissolution, winding-up or termination of the Corporation,
the amounts payable with respect to the Series C Preferred
Stock and the Pari Passu Stock are not paid in full, the
holders of the Series C Preferred Stock and the Pari Passu
Stock shall share ratably in any distribution of assets
based on the proportion of their full respective liquidation
preference to the entire amount of the unpaid aggregate
liquidation preference of the Series C Preferred Stock and
the Pari Passu Stock. After payment of the full amount to
which they are entitled as provided by the foregoing
provisions of this Section 5(A), the holders of shares of
Series C Preferred Stock shall not be entitled to any
further right or claim to any of the remaining assets of the
Corporation.
(B) Neither the merger or consolidation of the
Corporation with or into any other corporation, nor the
merger or consolidation of any other corporation with or
into the Corporation, nor the sale, transfer, exchange or
lease of all or any portion of the assets of the Corpora-
tion, shall be deemed to be a dissolution, liquidation or
winding-up of the affairs of the Corporation for purposes of
this Section 5.
(C) Written notice of any voluntary or
involuntary liquidation, dissolution or winding-up of the
Corporation, stating the payment date or dates when, and the
place or places where, the amounts distributable to holders
of Series C Preferred Stock in such circumstances shall be
payable, shall be given by first-class mail, postage pre-
paid, mailed not less than twenty (20) days prior to any
payment date stated therein, to the holders of Series C
Preferred Stock, at the address shown on the books of the
Corporation or the transfer agent for the Series C Preferred
Stock; provided, however, that a failure to give notice as
provided above or any defect therein shall not affect the
Corporation's ability to consummate a voluntary or
involuntary liquidation, dissolution or winding-up of the
Corporation.
SECTION 6. Conversion Rights of Series C
Preferred Stock.
(A) The shares of Series C Preferred Stock are
convertible at any time before the close of business on the
Conversion Expiration Date (as defined in the L.L.C.
Agreement), at the option of the holder thereof, into shares
of Common Stock at the initial conversion price of $59 per
share of Common Stock, subject to adjustment, as provided in
Section 7 (as so adjusted, the "Conversion Price"). For
this purpose, each share of Series C Preferred Stock shall
be taken at $5,000.
(B) Holders of record of Series C Preferred Stock at
the close of business on a dividend payment record date will
be entitled to receive the dividend payable on such shares
of Series C Preferred Stock on the corresponding dividend
payment date notwithstanding the conversion thereof
following such dividend payment record date but on or prior
to such dividend payment date. Except as provided in the
immediately preceding sentence, the Corporation will make no
payment or allowance for accumulated and unpaid dividends,
whether or not in arrears, on converted shares of Series C
Preferred Stock.
(C) No fractional shares of Common Stock will be
issued as a result of conversion, but in lieu thereof, the
Corporation shall pay a cash adjustment in an amount equal
to the same fraction of the Closing Price (as hereinafter
defined) on the date on which the certificate or certifi-
cates for such shares were duly surrendered for conversion,
or, if such date is not a Trading Day (as hereinafter
defined), on the next Trading Day.
(D) Any holder of shares of Series C Preferred Stock
desiring to convert such shares into shares of Common Stock
shall surrender the certificate or certificates representing
the shares of Series C Preferred Stock being converted, duly
assigned or endorsed for transfer to the Corporation (or
accompanied by duly executed stock powers relating thereto),
at the principal executive office of the Corporation or the
offices of the transfer agent for the Series C Preferred
Stock or such office or offices in the continental United
States of an agent for conversion as may from time to time
be designated by notice to the holders of the Series C
Preferred Stock by the Corporation or the transfer agent for
the Series C Preferred Stock, accompanied by written notice
of conversion, on any day prior to the Conversion Expiration
Date that is a Business Day. Such notice of conversion
shall specify (i) the number of shares of Series C Preferred
Stock to be converted and the name or names in which such
holder desires the certificate or certificates for Common
Stock and for any shares of Series C Preferred Stock not to
be so converted to be issued (subject to compliance with
applicable legal requirements if any of such certificates
are to be issued in a name other than the name of the
holder), and (ii) the address to which such holder wishes
delivery to be made of such new certificates to be issued
upon such conversion.
(E) Upon surrender of a certificate representing a
share or shares of Series C Preferred Stock for conversion,
the Corporation shall issue and send by hand delivery (with
receipt to be acknowledged) or by first-class mail, postage
prepaid, to the holder thereof, at the address designated by
such holder, a certificate or certificates representing the
number of shares of Common Stock to which such holder shall
be entitled upon conversion. In the event that there shall
have been surrendered a certificate or certificates
representing shares of Series C Preferred Stock, only part
of which are to be converted, the Corporation shall issue
and deliver to such holder or such holder's designee in the
manner provided in the immediately preceding sentence a new
certificate or certificates representing the number of
shares of Series C Preferred Stock that shall not have been
converted.
(F) The issuance by the Corporation of shares of
Common Stock upon a conversion of shares of Series C
Preferred Stock into shares of Common Stock made at the
option of the holder thereof shall be effective upon the
surrender by such holder or such holder's designee of the
certificate or certificates for the shares of Series C
Preferred Stock to be converted, duly assigned or endorsed
for transfer to the Corporation (or accompanied by duly
executed stock powers relating thereto). The person or
persons entitled to receive the Common Stock issuable upon
such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as
of the close of business on the effective date of the
conversion. No allowance or adjustment shall be made in
respect of dividends payable to holders of Common Stock of
record as of any date prior to such effective date.
(G) Whenever the Corporation shall issue shares
of Common Stock upon conversion of shares of Series C
Preferred Stock as contemplated by this Section 6, the
Corporation shall issue, together with each such share of
Common Stock, one right to purchase Series A Junior
Participating Preferred Stock of the Corporation (or other
securities in lieu thereof) pursuant to the Shareholder
Protection Rights Agreement, dated as of December 4, 1989
(the "Rights Agreement"), between the Corporation and First
Chicago Trust Company of New York, as Rights Agent, as such
Rights Agreement may from time to time be amended, or any
similar rights issued to holders of Common Stock of the
Corporation in addition thereto or in replacement therefor
(such rights, together with any additional or replacement
rights, being collectively referred to as the "Rights"),
whether or not such Rights shall be exercisable at such
time, but only if such Rights are issued and outstanding and
held by other holders of Common Stock of the Corporation (or
are evidenced by outstanding share certificates representing
Common Stock) at such time and have not expired or been
redeemed.
(H) (i) On and after May 31, 1999, the Corporation
shall have the right, at its option, to cause the conversion
rights set forth in this Section to expire, provided that
the Current Market Price (as defined below) of the Common
Stock of the Corporation on each of 20 Trading Days within
any period of 30 consecutive Trading Days, including the
last Trading Day of such period, exceeds 120% of the
Conversion Price in effect on such Trading Day;
(ii) In order to exercise its option to cause the
conversion rights of holders of shares of Series C Preferred
Stock to expire, the Corporation must issue a press release
for publication on the Dow Jones News Service and such other
print and electronic media as the Corporation shall select
announcing the Conversion Expiration Date (the "Press
Release") prior to the opening of business on the second
Trading Day after a period in which the condition in the
preceding paragraph has been met (but in no event prior to
May 31, 1999). The Press Release shall state that the
Corporation has elected to exercise its right to extinguish
the conversion rights of holders of shares of Series C
Preferred Stock, specify the Conversion Expiration Date and
provide the Conversion Price of the Series C Preferred Stock
and the Current Market Price of the Common Stock, in each
case as of the close of business on the Trading Day next
preceding the date of the Press Release. If the Corporation
exercises the option described in this paragraph, the
"Conversion Expiration Date" shall be a date selected by the
Corporation which date shall be not less than 30 or more
than 60 days after the date on which the Corporation issues
the Press Release; and
(iii) In addition to issuing the Press Release,
the Company shall send notice of the expiration of con-
version rights (a "Notice of Conversion Expiration") by
first-class mail to each record holder of shares of Series C
Preferred Stock not more than four (4) Business Days after
the Corporation issues the Press Release. Such Notice of
Conversion Expiration shall state: (1) the Conversion
Expiration Date; (2) the Conversion Price of the Series C
Preferred Stock and the Current Market Price of the Common
Stock, in each case as of the close of business on the
Trading Day next preceding the date of the Notice of
Conversion Expiration; (3) the place or places at which
receipts for Depositary Shares representing shares of
Series C Preferred Stock are to be surrendered prior to the
Conversion Expiration Date for certificates representing
shares of Common Stock; and (4) such other information or
instructions as the Corporation deems necessary or advisable
to enable a holder of shares of Series C Preferred Stock to
exercise its conversion right hereunder. No defect in the
Notice of Conversion Expiration or in the mailing thereof
with respect to any shares of Series C Preferred Stock shall
affect the validity of such notice with respect to any other
share of Series C Preferred Stock. As of the close of
business on the Conversion Expiration Date, the Series C
Preferred Stock shall no longer be convertible into Common
Stock. As used in this Section, "Current Market Price" of
publicly traded shares of Common Stock for any day means the
last reported sales price, regular way on such day, or, if
no sale takes place on such day, the average of the reported
closing bid and asked prices on such day, regular way, in
either case as reported on the New York Stock Exchange
Consolidated Transaction Tape, or, if the Common Stock is
not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading if
the Common Stock is listed on a national securities
exchange, or the National Market System of the National
Association of Securities Dealers, Inc., or, if the
Common Stock is not quoted or admitted to trading on such
quotation system, on the principal quotation system on which
the Common Stock may be listed or admitted to trading or
quoted, or, if not listed or admitted to trading or quoted
on any national securities exchange or quotation system, the
average of the closing bid and asked prices of the Common
Stock in the over-the-counter market on the day in question
as reported by the National Quotation Bureau Incorporated,
or a similar generally accepted reporting service, or, if
not so available in such manner, as furnished by any New
York Stock Exchange member firm selected from time to time
by the Board of Directors of the Corporation for that
purpose or, if not so available in such manner, as otherwise
determined in good faith by the Board of Directors.
(I) The Corporation shall at all times reserve and
keep available out of its authorized and unissued Common
Stock, solely for issuance upon the conversion of shares of
Series C Preferred Stock as herein provided, free from any
preemptive or other similar rights, such number of shares of
Common Stock as shall from time to time be issuable upon the
conversion of all the shares of Series C Preferred Stock
then outstanding. All shares of Common Stock delivered upon
conversion of the Series C Preferred Stock shall be duly
authorized, validly issued, fully paid and non-assessable,
free and clear of all liens, claims, interests and other
encumbrances. The Corporation shall prepare and shall use
its best efforts to obtain and keep in force such govern-
mental or regulatory permits or other authorizations as may
be required by law, and shall comply with all applicable
requirements as to registration or qualification of the
Common Stock (and all requirements to list the Common Stock
issuable upon conversion of Series C Preferred Stock that
are at the time applicable), in order to enable the Corpora-
tion lawfully to issue and deliver to each holder of record
of Series C Preferred Stock such number of shares of its
Common Stock as shall from time to time be sufficient to
effect the conversion of all shares of Series C Preferred
Stock then outstanding and convertible into shares of Common
Stock.
SECTION 7. Adjustment of Conversion Price.
(A) Adjustment of Conversion Price. The Conversion
Price at which a share of Series C Preferred Stock is con-
vertible into Common Stock shall be subject to adjustment
from time to time as follows:
(i) In case the Corporation shall pay or make a
dividend or other distribution on any class or series of
capital stock of the Corporation exclusively in Common
Stock, the Conversion Price in effect at the opening of busi-
ness on the day following the date fixed for the determina-
tion of shareholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination
and the denominator shall be the sum of such number of
shares and the total number of shares constituting such
dividend or other distribution or exchange, such reduction
to become effective immediately after the opening of
business on the day following the date fixed for such
determination. For the purposes of this subparagraph (i),
the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the
Corporation. The Corporation shall not pay any dividend or
make any distribution on shares of any class or series of
capital stock of the Corporation exclusively in Common Stock
held in the treasury of the Corporation.
(ii) In case the Corporation shall pay or make a
dividend or other distribution on its Common Stock consist-
ing exclusively of, or shall otherwise issue to all holders
of its Common Stock, rights or warrants entitling the
holders thereof to subscribe for or purchase shares of
Common Stock at a price per share less than the current
market price per share (determined as provided in subpara-
graph (vii) of this Section 7(a)) of the Common Stock on the
date fixed for the determination of shareholders entitled to
receive such rights or warrants, the Conversion Price in
effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multi-
plying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total num-
ber of shares of Common Stock so offered for subscription or
purchase would purchase at such current market price and the
denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock
so offered for subscription or purchase, such reduction to
become effective immediately after the opening of business
on the day following the date fixed for such determination.
In case any rights or warrants referred to in this subpara-
graph (ii) in respect of which an adjustment shall have been
made shall expire unexercised within 45 days after the same
shall have been distributed or issued by the Corporation,
the Conversion Price shall be readjusted at the time of such
expiration to the Conversion Price that would have been in
effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(iii) In case outstanding shares of Common Stock shall
be subdivided into a greater number of shares of Common
Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such subdi-
vision becomes effective shall be proportionately reduced,
and conversely, in case outstanding shares of Common Stock
shall each be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such
combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be,
to become effective immediately after the opening of
business on the day following the day upon which such
subdivision or combination becomes effective.
(iv) Subject to the last sentence of this subparagraph
(iv), in case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness, shares of any class or series
of capital stock, cash or assets (including securities, but
excluding any rights or warrants referred to in subparagraph
(ii) of this Section 7(A), any dividend or distribution paid
exclusively in cash and any dividend or distribution
referred to in subparagraph (i) of this Section 7(A)), the
Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion
Price in effect immediately prior to the effectiveness of
the Conversion Price reduction contemplated by this subpara-
graph (iv) by a fraction of which the numerator shall be the
current market price per share (determined as provided in
subparagraph (vii) of this Section 7(A)) of the Common Stock
on the date fixed for the payment of such distribution (the
"Reference Date") less the fair market value (as determined
in good faith by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the
Board of Directors), on the Reference Date, of the portion
of the evidences of indebtedness, shares of capital stock,
cash and assets so distributed applicable to one share of
Common Stock and the denominator shall be such current
market price per share of the Common Stock, such reduction
to become effective immediately prior to the opening of
business on the day following the Reference Date. If the
Board of Directors determines the fair market value of any
distribution for purposes of this subparagraph (iv) by
reference to the actual or when issued trading market for
any securities comprising such distribution, it must in
doing so consider the prices in such market over the same
period used in computing the current market price per share
of Common Stock pursuant to subparagraph (vii) of this
Section 7(A). For purposes of this subparagraph (iv), any
dividend or distribution that includes shares of Common
Stock or rights or warrants to subscribe for or purchase
shares of Common Stock shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness,
shares of capital stock, cash or assets other than such
shares of Common Stock or such rights or warrants (making
any Conversion Price reduction required by this subpara-
graph (iv)) immediately followed by (2) a dividend or
distribution of such shares of Common Stock or such rights
or warrants (making any further Conversion Price reduction
required by subparagraph (i) or (ii) of this Section 7(A)),
except (A) the Reference Date of such dividend or distri
bution as defined in this subparagraph (iv) shall be
substituted as "the date
fixed for the determination of shareholders entitled to
receive such dividend or other distribution," "the date
fixed for the determination of shareholders entitled to
receive such rights or warrants" and "the date fixed for
such determination" within the meaning of subparagraphs (i)
and (ii) of this Section 7(A) and (B) any shares of Common
Stock included in such dividend or distribution shall not be
deemed "outstanding at the close of business on the date
fixed for such determination" within the meaning of sub-
paragraph (i) of this Section 7(A).
(v) In case the Corporation shall pay or make a
dividend or other distribution on its Common Stock exclu-
sively in cash (excluding, in the case of any regular cash
dividend on the Common Stock, the portion thereof that does
not exceed the per share amount of the next preceding
regular cash dividend on the Common Stock (as adjusted to
appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this
Section 7(A)), or excluding all of such regular cash
dividend if the annualized amount thereof per share of
Common Stock does not exceed 15% of the current market price
per share (determined as provided in subparagraph (vii) of
this Section 7(A)) of the Common Stock on the Trading Day
(as defined in Section 7(E)) next preceding the date of
declaration of such dividend), the Conversion Price shall be
reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior
to the effectiveness of the Conversion Price reduction
contemplated by this subparagraph (v) by a fraction of which
the numerator shall be the current market price per share
(determined as provided in subparagraph (vii) of this
Section 7(A)) of the Common Stock on the date fixed for the
payment of such distribution less the amount of cash so
distributed and not excluded as provided above applicable to
one share of Common Stock and the denominator shall be such
current market price per share of the Common Stock, such
reduction to become effective immediately prior to the
opening of business on the day following the date fixed for
the payment of such distribution.
(vi) In case a tender or exchange offer made by the
Corporation or any subsidiary of the Corporation for all or
any portion of the Corporation's Common Stock shall expire
and such tender or exchange offer shall involve the payment
by the Corporation or such subsidiary of consideration per
share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a reso-
lution of the Board of Directors) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant
to such tender or exchange offer (as it shall have been
amended) that exceeds 10% of the current market price per
share (determined as provided in subparagraph (vii) of this
Section 7(A)) of the Common Stock on the Trading Day (as
defined in Section 7(E)) next succeeding the Expiration
Time, the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying the Conver-
sion Price in effect immediately prior to the effectiveness
of the Conversion Price reduction contemplated by this
subparagraph (vi)
by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding (including any tendered
or exchanged shares) at the Expiration Time multiplied by
the current market price per share (determined as provided
in subparagraph (vii) of this Section 7(A)) of the Common
Stock on the Trading Day next succeeding the Expiration Time
and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate
consideration payable to holders of Common Stock based on
the acceptance (up to any maximum specified in the terms of
the tender or exchange offer) of all shares validly tendered
or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding
(less any Purchased Shares) at the Expiration Time and the
current market price per share (determined as provided in
subparagraph (vii) of this Section 7(A)) of the Common Stock
on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the
opening of business on the day following the Expiration
Time.
(vii) For the purpose of any computation under subpara-
graphs (ii), (iv), (v) and (vi) of this Section 7(A), the
current market price per share of Common Stock on any date
in question shall be deemed to be the average of the daily
Closing Prices (as defined in Section 7(E)) for the five
consecutive Trading Days selected by the Company commencing
not more than 20 Trading Days before, and ending not later
than, the earlier of the day in question and, if applicable,
the day before the "ex" date with respect to the issuance or
distribution requiring such computation; provided, however,
that if another event occurs that would require an adjust-
ment pursuant to subparagraphs (i) through (vi), inclusive,
the Board of Directors may make such adjustments to the
Closing Prices during such five Trading Day period as it
deems appropriate to effectuate the intent of the adjust-
ments in this Section 7(A), in which case any such
determination by the Board of Directors shall be set forth
in a resolution of the Board of Directors and shall be
conclusive. For purposes of this paragraph, the term "ex"
date, (1) when used with respect to any issuance or distri-
bution, means the first date on which the Common Stock
trades regular way on the New York Stock Exchange or on such
successor securities exchange as the Common Stock may be
listed or in the relevant market from which the Closing
Price was obtained without the right to receive such
issuance or distribution, and (2) when used with respect to
any tender or exchange offer means the first date on which
the Common Stock trades regular way on such securities
exchange or in such market after the Expiration Time of such
offer.
(viii) The Corporation may make such reductions in the
Conversion Price, in addition to those required by subpara-
graphs (i), (ii), (iii), (iv), (v) and (vi) of this Section
7(A), as it considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or dis-
tribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes. The
Corporation from time to time may reduce the
Conversion Price by any amount for any period of time if the
period is at least twenty (20) days, the reduction is
irrevocable during the period, and the Board of Directors of
the Corporation shall have made a determination that such
reduction would be in the best interest of the Corporation,
which determination shall be conclusive. Whenever the
Conversion Price is reduced pursuant to the preceding
sentence, the Corporation shall mail to holders of record of
the Series C Preferred Stock a notice of the reduction at
least fifteen (15) days prior to the date the reduced
Conversion Price takes effect, and such notice shall state
the reduced Conversion Price and the period it will be in
effect.
(ix) Notwithstanding anything herein to the contrary,
no adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease
of at least 1% in the Conversion Price; provided, however,
that any adjustments which by reason of this subparagraph
(ix) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
(x) Whenever the Conversion Price is adjusted as
herein provided:
(1) the Corporation shall compute the adjusted
Conversion Price and shall prepare a certificate signed
by the Chief Financial Officer or the Treasurer of the
Corporation setting forth the adjusted Conversion Price
and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall
forthwith be filed with the transfer agent for the
Series C Preferred Stock; and
(2) a notice stating that the Conversion Price
has been adjusted and setting forth the adjusted
Conversion Price shall as soon as practicable be mailed
by the Corporation to all record holders of shares of
Series C Preferred Stock at their last addresses as
they shall appear upon the stock transfer books of the
Corporation.
(B) Reclassification, Consolidation, Merger or Sale of
Assets. In the event that the Corporation shall be a party
to any transaction (including without limitation any
recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result
of a subdivision or combination of the Common Stock), any
consolidation of the Corporation with, or merger of the
Corporation into, any other person, any merger of another
person into the Corporation (other than a merger which does
not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the
Corporation), any sale or transfer of all or substantially
all of the assets of the Corporation or any compulsory share
exchange) pursuant to which the Common Stock is converted
into the right to receive other securities, cash or other
property), then lawful provision shall be made as part of
the terms of such transaction whereby the holder of each
share of Series C Preferred Stock then outstanding shall
have the right thereafter, to convert such share only into
(i) in the case of any such
transaction other than a Common Stock Fundamental Change (as
defined in Section 7(E)), the kind and amount of securities,
cash and other property receivable upon such transaction by
a holder of the number of shares of Common Stock of the
Corporation into which such share of Series C Preferred
Stock could have been converted immediately prior to such
transaction, after giving effect, in the case of any
Non-Stock Fundamental Change (as defined in Section 7(E)),
to any adjustment in the Conversion Price required by the
provisions of Section 7(D), and (ii) in the case of a Common
Stock Fundamental Change, common stock of the kind received
by holders of Common Stock as a result of such Common Stock
Fundamental Change in an amount determined pursuant to the
provisions of Section 7(D). The Corporation or the person
formed by such consolidation or resulting from such merger
or which acquires such assets or which acquires the
Corporation's shares, as the case may be, shall make
provision in its certificate or articles of incorporation or
other constituent document to establish such right. Such
certificate or articles of incorporation or other consti-
tuent document shall provide for adjustments which, for
events subsequent to the effective date of such certificate
or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 7. The above
provisions shall similarly apply to successive transactions
of the foregoing type.
(C) Prior Notice of Certain Events. In case:
(i) the Corporation shall (1) declare any dividend (or
any other distribution) on its Common Stock, other than
(A) a dividend payable in shares of Common Stock or
(B) a dividend payable in cash out of its retained
earnings that would not require an adjustment pursuant
to 7(A)(iv) or (v) or (2) authorize a tender or
exchange offer that would require an adjustment
pursuant to 7(A)(vi);
(ii) the Corporation shall authorize the granting to
all holders of Common Stock of rights or warrants to
subscribe for or purchase any shares of stock of any
class or series or of any other rights or warrants;
(iii) of any reclassification of Common Stock (other
than a subdivision or combination of the outstanding
Common Stock, or a change in par value, or from par
value to no par value, or from no par value to par
value), or of any consolidation or merger to which the
Corporation is a party and for which approval of any
shareholders of the Corporation shall be required, or
of the sale or transfer of all or substantially all of
the assets of the Corporation or of any compulsory
share exchange whereby the Common Stock is converted
into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation;
then the Corporation shall cause to be filed with the
transfer agent for the Series C Preferred Stock, and shall
cause to be mailed to the holders of record of the Series C
Preferred Stock, at their last addresses as they shall
appear upon the stock transfer books of the Corporation, at
least fifteen (15) days prior to the applicable record or
effective date hereinafter specified, a notice stating
(x) the date on which a record (if any) is to be taken for
the purpose of such dividend, distribution, redemption,
repurchase, rights or warrants or, if a record is not to be
taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution,
redemption, repurchase, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash
or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding-up (but no failure to
mail such notice or any defect therein or in the mailing
thereof shall affect the validity of the corporate action
required to be specified in such notice).
(D) Adjustments in Case of Fundamental Changes.
Notwithstanding any other provision in this Section 7 to the
contrary, if any Fundamental Change (as defined in Section
7(E)) occurs, then the Conversion Price in effect will be
adjusted immediately after such Fundamental Change as
described below. In addition, in the event of a Common
Stock Fundamental Change, each share of Series C Preferred
Stock shall be convertible solely into common stock of the
kind and amount received by holders of Common Stock as the
result of such Common Stock Fundamental Change as more
specifically provided in the following clauses (D)(i) and
(D)(ii).
For purposes of calculating any adjustment to be made pur-
suant to this Section 7(D) in the event of a Fundamental
Change, immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change, the
Conversion Price of the Series C Preferred Stock shall
thereupon become the lower of (A) the Conversion Price in
effect immediately prior to such Non-Stock Fundamental
Change, but after giving effect to any other prior adjust-
ments effected pursuant to this Section 7, and (B) the
result obtained by multiplying the greater of the Applicable
Price (as defined in Section 7(E)) or the then applicable
Reference Market Price (as defined in Section 7(E)) by a
fraction of which the numerator shall be $50 and the denomi-
nator shall be an amount per share of Series C Preferred
Stock determined by the Corporation in its sole discretion,
after consultation with a nationally recognized investment
banking firm, to be the equivalent of the hypothetical
redemption price that would have been applicable if the
Series C Preferred Stock had been redeemable during such
period; and
(ii) in the case of a Common Stock Fundamental Change,
the Conversion Price of the Series C Preferred Stock in
effect immediately prior to such Common Stock Fundamental
Change, but after giving effect to any other prior adjust-
ments effected pursuant to this Section 7, shall thereupon
be adjusted by multiplying such Conversion Price by a frac-
tion of which the numerator shall be the Purchaser Stock
Price (as defined in Section 7(E)) and the denominator shall
be the Applicable Price; provided, however, that in the
event of a Common Stock Fundamental Change in which (A) 100%
by value of the consideration received by a holder of Common
Stock is common stock of the successor, acquiror or other
third party (and cash, if any, is paid with respect to any
fractional interests in such common stock resulting from
such Common Stock Fundamental Change) and (B) all of the
Common Stock shall have been exchanged for, converted into
or acquired for common stock (and cash with respect to
fractional interests) of the successor, acquiror or other
third party, the Conversion Price of the Series C Preferred
Stock in effect immediately prior to such Common Stock
Fundamental Change shall thereupon be adjusted by
multiplying such Conversion Price by a fraction of which the
numerator shall be one (1) and the denominator shall be the
number of shares of common stock of the successor, acquiror,
or other third party received by a shareholder for one share
of Common Stock as a result of such Common Stock Fundamental
Change.
(E) Definitions. The following definitions shall
apply to terms used in this Section 7:
(1) "Applicable Price" shall mean (i) in the event of
a Non-Stock Fundamental Change in which the holders of the
Common Stock receive only cash, the amount of cash received
by a shareholder for one share of Common Stock and (ii) in
the event of any other Non-Stock Fundamental Change or any
Common Stock Fundamental Change, the average of the daily
Closing Prices of the Common Stock for the ten (10) consecu-
tive Trading Days prior to and including the record date for
the determination of the holders of Common Stock entitled to
receive securities, cash or other property in connection
with such Non-Stock Fundamental Change or Common Stock
Fundamental Change, or, if there is no such record date, the
date upon which the holders of the Common Stock shall have
the right to receive such securities, cash or other
property, in each case, as adjusted in good faith by the
Board of Directors of the Corporation to appropriately
reflect any of the events referred to in subparagraphs (i),
(ii), (iii), (iv), (v) and (vi) of Section 7(A).
(2) "Closing Price" of any common stock on any day
shall mean the last reported sale price regular way on such
day or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices regular
way of such common stock, in each case on the principal
national securities exchange on which such common stock is
listed, if the common stock is listed on a national securi-
ties exchange, or the NASDAQ National Market System of the
National Association of Securities Dealers, Inc., or, if the
common stock is not quoted or admitted to trading on such
quotation system, on the principal national securities
exchange or quotation system on which the common
stock is listed or admitted to trading or quoted, or, if not
listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the
closing bid and asked prices of the common stock in the over-
the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similarly
generally accepted reporting service, or, if not so
available in such manner, as furnished by any New York Stock
Exchange member firm selected from time to time by the Board
of Directors of the Corporation for that purpose or, if not
so available in such manner, as otherwise determined in good
faith by the Board of Directors.
(3) "Common Stock Fundamental Change" shall mean any
Fundamental Change in which more than 50% by value (as
determined in good faith by the Board of Directors of the
Corporation) of the consideration received by holders of
Common Stock consists of common stock that for each of the
ten (10) consecutive Trading Days referred to with respect
to such Fundamental Change in Section 7(E)(1) above has been
admitted for listing or admitted for listing subject to
notice of issuance on a national securities exchange or
quoted on the NASDAQ National Market System of the National
Association of Securities Dealers, Inc.; provided, however,
that a Fundamental Change shall not be a Common Stock
Fundamental Change unless either (i) the Corporation con-
tinues to exist after the occurrence of such Fundamental
Change and the outstanding shares of Series C Preferred
Stock continue to exist as outstanding shares of Series C
Preferred Stock, or (ii) not later than the occurrence of
such Fundamental Change, the outstanding shares of Series C
Preferred Stock are converted into or exchanged for shares
of convertible preferred stock of a corporation succeeding
to the business of the Corporation, which convertible
preferred stock has powers, preferences and relative,
participating, optional or other rights, and qualifications,
limitations and restrictions, substantially similar to those
of the Series C Preferred Stock.
(4) "Fundamental Change" shall mean the occurrence of
any transaction or event in connection with a plan pursuant
to which all or substantially all of the Common Stock shall
be exchanged for, converted into, acquired for or constitute
solely the right to receive securities, cash or other
property (whether by means of an exchange offer, liquida-
tion, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise); provided,
however, in the case of a plan involving more than one such
transaction or event, for purposes of adjustment of the
Conversion Price, such Fundamental Change shall be deemed to
have occurred when substantially all of the Common Stock of
the Corporation shall be exchanged for, converted into, or
acquired for or constitute solely the right to receive
securities, cash or other property, but the adjustment shall
be based upon the highest weighted average of consideration
per share which a holder of Common Stock could have received
in such transactions or events as a result of which more
than 50% of the Common Stock of the Corporation shall have
been exchanged for, converted into, or acquired for or
constitute solely the right to receive securities, cash or
other property.
(5) "Non-Stock Fundamental Change" shall mean any
Fundamental Change other than a Common Stock Fundamental
Change.
(6) "Purchaser Stock Price" shall mean, with respect
to any Common Stock Fundamental Change, the average of the
daily Closing Prices of the common stock received in such
Common Stock Fundamental Change for the ten (10) consecutive
Trading Days prior to and including the record date for the
determination of the holders of Common Stock entitled to
receive such common stock, or, if there is no such record
date, the date upon which the holders of the Common Stock
shall have the right to receive such common stock, in each
case, as adjusted in good faith by the Board of Directors of
the Corporation to appropriately reflect any of the events
referred to in subparagraphs (i), (ii), (iii), (iv), (v) and
(vi) of Section 7(A).
(7) "Reference Market Price" shall initially mean
$32.25 and in the event of any adjustment to the Conversion
Price other than as a result of a Non-Stock Fundamental
Change, the Reference Market Price shall also be adjusted so
that the ratio of the Reference Market Price to the Conver-
sion Price after giving effect to any such adjustment shall
always be the same as the ratio of $32.25 to the initial
Conversion Price per share.
(8) "Trading Day" shall mean a day on which securities
are traded on the national securities exchange or quotation
system or in the over-the-counter market used to determine
the Closing Price.
(F) Dividend or Interest Reinvestment Plans.
Notwithstanding the foregoing provisions, the issuance of
any shares of Common Stock pursuant to any plan providing
for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of addi-
tional optional amounts in shares of Common Stock under any
such plan, and the issuance of any shares of Common Stock or
options or rights to purchase such shares pursuant to any
employee benefit plan or program of the Corporation or
pursuant to any option, warrant, right or exercisable,
exchangeable or convertible security outstanding as of the
date the Series C Preferred Stock is first issued, shall not
be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the
Corporation to which any of the adjustment provisions
described above applies.
(G) Certain Additional Rights. In case the Corpora-
tion shall, by dividend or otherwise, declare or make a
distribution on its Common Stock referred to in Section
7(A)(iv) or 7(A)(v) (including, without limitation,
dividends or distributions referred to in the last sentence
of Section 7(A)(iv)), the holder of each share of Series C
Preferred Stock, upon the conversion thereof subsequent to
the close of business on the date fixed for the determina-
tion of shareholders entitled to receive such distribution
and prior to the effectiveness of the Conversion Price
adjustment in respect of such distribution, shall also be
entitled to receive for each share of Common Stock into
which such share
of Series C Preferred Stock is converted, the portion of the
shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Corporation
(whose election shall be evidenced by a resolution of the
Board of Directors) with respect to all holders so
converting, the Corporation may, in lieu of distributing to
such holder any portion of such distribution not consisting
of cash or securities of the Corporation, pay such holder an
amount in cash equal to the fair market value thereof (as
determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a
resolution of the Board of Directors). If any conversion of
a share of Series C Preferred Stock described in the
immediately preceding sentence occurs prior to the payment
date for a distribution to holders of Common Stock which the
holder of the share of Series C Preferred Stock so converted
is entitled to receive in accordance with the immediately
preceding sentence, the Corporation may elect (such election
to be evidenced by a resolution of the Board of Directors)
to distribute to such holder a due bill for the shares of
Common Stock, rights, warrants, evidences of indebtedness,
shares of capital stock, cash or assets to which such holder
is so entitled, provided that such due bill (i) meets any
applicable requirements of the principal national securities
exchange or other market on which the Common Stock is then
traded and (ii) requires payment or delivery of such shares
of Common Stock, rights, warrants, evidences of indebted
ness, shares of capital stock, cash or assets no later than
the date of payment or delivery thereof to holders of shares
of Common Stock receiving such distribution.
(H) Stock Issuances; Multiple Adjustments. There
shall be no adjustment of the Conversion Price in case of
the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Corporation except as
specifically described in this Section 7. If any action
would require adjustment of the Conversion Price pursuant to
more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the
amount of adjustment which has the highest absolute value to
holders of Series C Preferred Stock.
SECTION 8. Ranking; Attributable Capital and
Adequacy of Surplus; Retirement of Shares.
(A) The Series C Preferred Stock shall rank
senior to all shares of Junior Stock and pari passu (i.e.,
on a parity) with Pari Passu Stock of the Corporation as to
the payment of dividends and amounts upon the liquidation,
dissolution or winding-up of the Corporation. The ranking
of any subsequent series of Preferred Stock issued by the
Corporation as compared to the Series C Preferred Stock as
to the payment of dividends and amounts upon the
liquidation, dissolution or winding-up of the Corporation
shall be as specified in the Restated Articles of
Incorporation, as amended, of the Corporation, the Certifi-
cate of Designation pertaining thereto and, if appropriate,
shall also be subject to the provisions of paragraph (C) of
Section 1 and paragraph (B) of Section 3 hereof.
(B) The capital of the Corporation allocable to
the Series C Preferred Stock for purposes of the Minnesota
Business Corporation Act shall be $5,000 per share.
(C) Any shares of Series C Preferred Stock
acquired by the Corporation by reason of the conversion or
redemption of such shares, or otherwise so acquired, shall
be retired as shares of Series C Preferred Stock and
restored to the status of authorized but unissued
undesignated shares of the Corporation and may thereafter be
reissued as part of a new series of Preferred Stock as
permitted by law.
SECTION 9. Miscellaneous.
(A) All notices referred to herein shall be in
writing, and all notices hereunder shall be deemed to have
been given upon the earlier of receipt thereof or three
business days after the mailing thereof if sent by regis-
tered or certified mail (unless first-class mail shall be
specifically permitted for such notice) with postage prepaid
addressed: (i) if to the Corporation, to its office at 385
Washington Street, St. Paul, Minnesota 55102 (Attention:
Secretary) or to the transfer agent for the Series C
Preferred Stock, or such other agent of the Corporation
designated as permitted by this paragraph, or (ii) if to any
holder of the Series C Preferred Stock or Common Stock, as
the case may be, to such holder at the address of such
holder as listed in the stock record books of the
Corporation (which may include the records of any transfer
agent for the Series C Preferred Stock or Common Stock, as
the case may be) or (iii) to such other address as the
Corporation or any such holder, as the case may be, shall
have designated by notice similarly given.
(B) The term "Common Stock" as used herein means
the Corporation's Common Stock, without par value, as the
same exists at the date of filing of the Certificate of
Designation relating to the Series C Preferred Stock (the
"Certificate of Designation") with the Secretary of State of
the state of Minnesota, or any other class of stock
resulting from successive changes or reclassifications of
such Common Stock consisting solely of changes in par value,
or from par value to no par value, or from no par value to
par value. However, subject to the provisions of Sec-
tion 7(B), shares of Common Stock issuable on conversion of
shares of Series C Preferred Stock shall include only shares
of the class designated as Common Stock of the Corporation
at the date of the filing of the Certificate of Designation
with the Secretary of State of the state of Minnesota or
shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation and which are
not subject to redemption by the Corporation; provided that
if at any time there shall be more than one such resulting
class, the shares of each such class then so issuable shall
be substantially in the proportion which the total number of
shares of such class resulting from all such reclassi-
fications bears to the total number of shares of such
classes resulting from all such reclassifications.
(C) The Corporation shall pay any and all stock
transfer and documentary stamp taxes that may be payable in
respect of any issuance or delivery of shares of Series C
Preferred Stock or shares of Common Stock or other secur-
ities issued on account of Series C Preferred Stock pursuant
hereto or certificates representing such shares or secur-
ities. The Corporation shall not, however, be required to
pay any such tax that may be payable in respect of any
transfer involving the issuance or delivery of shares of
Series C Preferred Stock or Common Stock or other securities
in a name other than that in which the shares of Series C
Preferred Stock with respect to which such shares or other
securities are issued or delivered were registered, or in
respect of any payment to any person with respect to any
such shares or securities other than a payment to the
registered holder thereof, and shall not be required to make
any such issuance, delivery or payment unless and until the
person otherwise entitled to such issuance, delivery or
payment has paid to the Corporation the amount of any such
tax or has established, to the satisfaction of the Corpora-
tion, that such tax has been paid or is not payable.
(D) In the event that a holder of shares of
Series C Preferred Stock shall not by written notice
designate the name in which shares of Common Stock to be
issued upon conversion of such shares should be registered
or to whom payment upon redemption of shares of Series C
Preferred Stock should be made or the address to which the
certificate or certificates representing such shares, or
such payment, should be sent, the Corporation shall be
entitled to register such shares, and make such payment, in
the name of the holder of such Series C Preferred Stock as
shown on the records of the Corporation and to send the
certificate or certificates representing such shares, or
such payment, to the address of such holder shown on the
records of the Corporation.
(E) The Corporation may appoint, and from time to
time discharge and change, a transfer agent for the
Series C Preferred Stock. Upon any such appointment or
discharge of a transfer agent, the Corporation shall send
notice thereof by first-class mail, postage prepaid, to each
holder of record of Series C Preferred Stock.