Exhibit (3)(i)
CHARTER
of
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
Hartford, Connecticut
as
AMENDED EFFECTIVE
DECEMBER 30, 1996
CHARTER
of
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
Section 1. The Hartford Steam Boiler Inspection and Insurance Company shall
continue under that name, a body corporate, with power to purchase or otherwise
acquire, have, hold and enjoy lands, rents, tenements, hereditaments, goods,
monies, chattels, choses in action and property and effects of every kind, and
also any or all of the shares or other securities or any interest in, or
obligation of, any insurance corporation or any other corporation or
governmental unit and the same to sell, grant and convey and to loan, invest,
reinvest, alienate and dispose of any of such assets in any manner permitted on
or after the effective date of this act in the case of any other corporation
chartered on or after said date by Connecticut and empowered to do a class of
business referred to in Section 2 hereof, and to have and enjoy all the rights,
privileges, powers and immunities granted on or after to said date to
corporations under the general statutes, including the power to amend this
charter from time to time.
Section 2. The Corporation shall have the power to write boiler and machinery,
fire, marine, casualty, liability, indemnity, accident and health and fidelity
insurance and any and all other forms of insurance against hazards or risks of
every kind and description which on or after the effective date of this act may
lawfully be the subject of insurance except life and endowment insurance and
contracts for the payment of annuities; and the Corporation is specifically
empowered to accept and to cede reinsurance of any such risks or hazards. The
Corporation shall have the power to make inspections and render inspection and
engineering services in connection with the design, construction, maintenance or
operation of boilers, machinery or any equipment regardless of whether policies
of insurance are issued in connection therewith. The Corporation may exercise
such powers outside of Connecticut to the extent permitted by the laws of the
particular jurisdiction. Policies or other contracts may be issued, stipulated
to be with or without participation in profits; and they may be with or without
seal.
Section 3. The capital stock of the Corporation shall not be less than one
million dollars. The authorized number of shares, which may be increased from
time to time when and if authorized by the stockholders shall consist of
50,000,000 shares of common stock without par value and 500,000 shares of
preferred stock without par value. The Board of Directors is authorized to fix
and determine the terms, limitations and relative rights and preferences of the
preferred stock including, without limitation, any voting rights thereof, to
divide and issue the preferred stock in series, to fix and determine the
variations among series to the extent permitted by law and to provide that
shares of the preferred stock, or any series thereof, may be convertible into
the same or a different number of shares of common stock. No stockholder shall
have any preemptive right to purchase or subscribe to any shares of any class of
stock of the Corporation, whether authorized on or after the effective date of
this act, or to any securities convertible into shares of any class of stock of
the Corporation. The capital stock of the Corporation shall be transferable in
accordance with the bylaws, and one or more transfer agents may be employed.
Section 4. The corporate office shall be in Hartford or in such other town in
Connecticut as the Board of Directors may determine. The annual meeting of the
stockholders shall be held at such time and place within the state and upon such
notice as may be determined from time to time either by or in accordance with
the bylaws. At all meetings of the stockholders and subject, in the case of
preferred stockholders, to such provisions concerning voting rights as the Board
of Directors may determine pursuant to the authority granted in Section 3
hereof, each stockholder shall be entitled to vote in person or by an attorney
duly authorized by a written proxy and each share of stock represented at the
meeting shall be entitled to one vote.
Section 5. The business property and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors consisting of not less than
nine nor more than fourteen directors, the exact number of directorships to be
determined from time to time by resolution adopted by the affirmative vote of a
majority of the entire Board of Directors. The directors shall be divided into
three classes, designated Class I, Class II and Class III. Each class shall
consist, as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board of Directors. The class of directors
that was elected by the stockholders at the 1984 annual meeting of stockholders
shall be assigned to Class I for a term expiring in 1987; the current directors
in the class expiring in 1986 shall be assigned to Class II for a term expiring
in 1986; the current directors in the class expiring in 1985 shall be assigned
to Class III for a term expiring in 1985. At each annual meeting of
stockholders, successors to the class of directors whose term expires at the
annual meeting shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal
as possible, and any additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case will a reduction
of the number of directors remove any director in office or shorten the term of
any incumbent director. A director shall hold office until the annual meeting
for the year in which his term expires and until his successor shall be elected
and shall qualify, subject, however, to prior death, resignation, removal from
office or order of court that, by reason of incompetency or any other lawful
cause, he is no longer a director in office.
Any vacancy on the Board of Directors that results from an increase in the
number of directors may be filled by the concurring vote of directors holding a
majority of the directorships, which number of directorships shall be the number
prior to the vote on the increase, and any other vacancy occurring in the Board
of Directors may be filled by concurring vote of a majority of the remaining
directors then in office, although less than a quorum, or by a sole remaining
director. Any director elected to fill a vacancy not resulting from an increase
in the number of directors shall have the same remaining term as that of his
predecessor.
Any director or the entire Board of Directors may be removed only for cause
by the affirmative vote of eighty percent (80%) of the votes entitled to be cast
by the holders of all then outstanding shares of voting stock of the
Corporation, voting together as a single class. For the purposes of this Section
5, "cause" shall be defined as (a) a final non-appealable order of conviction of
a felony involving moral turpitude by a court of competent jurisdiction in the
United States or (b) a final non-appealable order of a court of competent
jurisdiction in the United States finding gross negligence in the performance of
duties as a director or officer of the Corporation.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Charter applicable thereto, and such directors so elected shall
not be divided into classes pursuant to this Section 5 unless expressly provided
by such term.
Notwithstanding any other provisions of this Charter or the bylaws of the
Corporation (and notwithstanding the fact that a lesser percentage or separate
class vote may be specified by law, this Charter or the bylaws of the
Corporation) the affirmative vote of the holders of not less than eighty percent
(80%) of the votes entitled to be cast by the holders of all then outstanding
shares of voting stock of the Corporation, voting together as a single class,
shall be required to amend or repeal, or adopt any provisions inconsistent with
this Section 5; provided, however, that this paragraph shall not apply to, and
such eighty percent (80%) vote shall not be required for any amendment, repeal
or adoption recommended by three-quarters of the entire Board if all of such
directors are persons who were members of the Board at the annual meeting of
stockholders of the Corporation held prior to the proposal of any such
amendment, repeal or adoption or persons nominated by such members.
Section 6. The directors of the Corporation shall choose from among their number
a president and shall elect one or more vice presidents, a treasurer, a
secretary and such other officers as they may deem desirable. The officers shall
be elected to hold office until the next annual meeting and until their
successors have been chosen; they may be removed at any time at the pleasure of
the directors.
Section 7.
A. In addition to any affirmative vote required by law or this Charter or the
bylaws of the Corporation, and except as otherwise expressly provided in Section
B of this Section 7, a Business Combination (as hereinafter defined) shall
require the affirmative vote of not less than eighty percent (80%) of the votes
entitled to be cast by the holders of all then outstanding shares of Voting
Stock (as hereinafter defined), voting together as a single class. Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage or separate class vote may be specified,
by law or in any agreement with any national securities exchange or otherwise.
B. The provisions of Section A of this Section 7 shall not be applicable to any
particular Business Combination, and such Business Combination shall require
only such affirmative vote, if any, as is required by law or by any other
provision of this Charter or the bylaws of the Corporation, or any agreement
with any national securities exchange, if all of the conditions specified in
either of the following Paragraphs 1 or 2 are met:
1. The Business Combination shall have been approved by two-thirds (whether such
approval is made prior to or subsequent to the acquisition of beneficial
ownership of the Voting Stock that caused the Interested Stockholder, as
hereinafter defined to become an Interested Stockholder) of the Continuing
Directors, as hereinafter defined.
2. All of the following conditions shall have been met:
a. The aggregate amount of cash and the Fair Market Value (as
hereinafter defined) as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share
by holders of Common Stock in such Business Combination shall be at
least equal to the highest amount determined under clauses (i), (ii),
(iii) and (iv) below:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by or on behalf of the Interested Stockholder for
any share of Common Stock in connection with the acquisition
by the Interested Stockholder of beneficial ownership of
shares of Common Stock within the two-year period immediately
prior to the first public announcement of the proposed
Business Combination (the "Announcement Date");
(ii) the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested
Stockholder became an Interested Stockholder (the
"Determination Date"), whichever is higher;
(iii) (if applicable) the price per share equal to the Fair
Market Value per share of Common Stock determined pursuant to
the immediately preceding clause (ii), multiplied by the ratio
of (x) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid
by or on behalf of the Interested Stockholder for any share of
Common Stock in connection with the acquisition by the
Interested Stockholder of beneficial ownership of shares of
Common Stock within the two-year period immediately prior to
the Announcement Date to (y) the Fair Market Value per share
of Common Stock on the first day in such two-year period on
which the Interested Stockholder acquired beneficial ownership
of any share of Common Stock; and
(iv) The Corporation's net income per share of Common Stock
for the four full consecutive fiscal quarters immediately
preceding the Announcement Date, multiplied by the higher of
the then price/earnings multiple (if any) with respect to
common stock of such Interested Stockholder or the highest
price/earnings multiple with respect to Common Stock within
the two-year period immediately preceding the Announcement
Date (such price/earnings multiples being determined as
customarily computed and reported in the financial community);
b. The aggregate amount of cash and the Fair Market Value as of the
date of the consummation of the Business Combination of consideration
other than cash to be received per share by holders of shares of any
class or series of outstanding Capital Stock (as hereinafter defined),
other than Common Stock, shall be at least equal to the highest amount
determined under clauses (i), (ii), (iii) and (iv) below:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by or on behalf of the Interested Stockholder for
any share of such class or series of Capital Stock in
connection with the acquisition by the Interested Stockholder
of beneficial ownership of shares of such class or series of
Capital Stock within the two-year period immediately prior to
the Announcement Date;
(ii) the Fair Market Value per share of such class or series
of Capital Stock on the Announcement Date or on the
Determination Date, whichever is higher;
(iii) (if applicable) the price per share equal to the Fair
Market Value per share of such class or series of Capital
Stock determined pursuant to the immediately preceding clause
(ii), multiplied by the ratio of (x) the highest per share
price (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Stockholder for any share of such class or series
of the Capital Stock in connection with the acquisition by the
Interested Stockholder of beneficial ownership of shares of
such class or series of Capital Stock within the two-year
period immediately prior to the Announcement Date to (y) the
Fair Market Value per share of such class or series of Capital
Stock on the first day in such two-year period on which the
Interested Stockholder acquired beneficial ownership of any
share of such class or series of Capital Stock; and
(iv) (if applicable) the highest preferential amount per share
to which the holders of shares of such class or series of
Capital Stock would be entitled in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, regardless of whether the Business
Combination to be consummated constitutes such an event.
The provision of this Paragraph 2.b shall be required to be met with
respect to every class or series of outstanding Capital Stock, whether
or not the Interested Stockholder has previously acquired beneficial
ownership of any shares of a particular class or series of Capital
Stock.
c. The consideration to be received by holders of a particular class or
series of outstanding Capital Stock shall be in cash or in the same
form as previously has been paid by or on behalf of the Interested
Stockholder in connection with its direct or indirect acquisition of
beneficial ownership of shares of such class or series of Capital
Stock. If the consideration so paid for shares of any class or series
of Capital Stock varied as to form, the form of consideration for such
class or series of Capital Stock shall be either cash or the form used
to acquire beneficial ownership of the largest number of shares of such
class or series of Capital Stock previously acquired by the Interested
Stockholder.
d. After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business Combination:
(i) except as approved by two-thirds of the Continuing Directors, there
shall have been no failure to declare and pay at the regular date
therefor any full quarterly dividends (whether or not cumulative)
payable in accordance with the terms of any outstanding Capital Stock;
(ii) there shall have been no reduction in the annual rate of dividends
paid on the Common Stock (except as necessary to reflect any stock
split, stock dividend or subdivision of the Common Stock), except as
approved by two-thirds of the Continuing Directors; (iii) there shall
have been an increase in the annual rate of dividends paid on the
Common Stock as necessary to reflect fully any reclassification
(including any reverse stock split), recapitalization, reorganization
or any similar transaction that has the effect of reducing the number
of outstanding shares of Common Stock, unless the failure so to
increase such annual rate is approved by two-thirds of the Continuing
Directors; and (iv) such Interested Stockholder shall not have become
the beneficial owner of any additional shares of Capital Stock except
as part of the transaction that results in such Interested Stockholder
becoming an Interested Stockholder and except in a transaction that,
after giving effect thereto, would not result in any increase in the
Interested Stockholder's percentage beneficial ownership of any class
or series of Capital Stock.
e. After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the
benefit, directly or indirectly (except proportionately as a
stockholder of this Corporation), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax
advantages provided by this Corporation, whether in anticipation of or
in connection with such Business Combination or otherwise.
f. A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder (the
"Act") (or any subsequent provisions replacing such Act, rules and
regulations) or the insurance laws and regulations of the State of
Connecticut, if applicable, shall be mailed to all stockholders of the
Corporation at least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is
required by law to be mailed). The proxy or information statement shall
contain on the first page thereof, in a prominent place, any statement
as to the advisability (or inadvisability) of the Business Combination
that the Continuing Directors, or any of them, may choose to make and,
if deemed advisable by a majority of the Continuing Directors, the
opinion of an investment banking firm selected by a majority of the
Continuing Directors as to the fairness (or not) of the terms of the
Business Combination from a financial point of view to the holders of
the outstanding shares of Capital Stock other than the Interested
Stockholder and its Affiliates or Associates (as hereinafter defined),
such investment banking firm to be paid a reasonable fee for its
services by the Corporation.
g. Such Interested Stockholder shall not have made or caused the making
of any major change in the Corporation's business or equity capital
structure without the approval of a majority of the continuing
Directors.
C. For the purposes of this Section 7:
1. The term "Business Combination" shall mean:
a. any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested
Stockholder or (ii) any other corporation (whether or not
itself an Interested Stockholder) which is or after such
merger or consolidation would be an Affiliate or Associate
of an Interested Stockholder; or
b. any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of
transactions) with any Interested Stockholder or any
Affiliate or Associate of any Interested Stockholder
involving any assets or securities of this Corporation, any
subsidiary or any Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder having an aggregate
Fair Market Value of $10,000,000 or more; or
c. the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation proposed by or on behalf
of an Interested Stockholder or any Affiliate or Associate
of any Interested Stockholder; or
d. any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with
or otherwise involving an Interested Stockholder) that has
the effect, directly or indirectly, of increasing the
proportionate share of any class or series of Capital Stock,
or any securities convertible into Capital Stock or into
equity securities of any Subsidiary, that is beneficially
owned by any Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder: or
e. any agreement, contract or other arrangement providing
for any one or more of the actions specified in the
foregoing clauses (a) to (d).
2. The term "Capital Stock" shall mean all capital stock of the
Corporation authorized to be issued from time to time under Section 3
of this Charter, and the term "Voting Stock" shall mean all Capital
Stock which by its terms may be voted on all matters submitted to
stockholders of the Corporation generally.
3. The term "person" shall mean any individual, firm, corporation or
other entity and shall include any group comprised of any person and
any other person with whom such person or any Affiliate or Associate of
such person has any agreement, arrangement or understanding, directly
or indirectly, for the purpose of acquiring, holding, voting or
disposing of Capital Stock.
4. The term "Interested Stockholder" shall mean any person (other than
the Corporation or any Subsidiary and other than any profit-sharing,
employee stock ownership or other employee benefit plan of the
Corporation or any Subsidiary or any trustee of or fiduciary with
respect to any such plan when acting in such capacity) who (a) is the
beneficial owner of Voting Stock representing ten percent (10%) or more
of the votes entitled to be cast by the holders of all then outstanding
shares of Voting Stock or (b) is an Affiliate or Associate of the
Corporation and at any time within the two-year period immediately
prior to the date in question was the beneficial owner of Voting Stock
representing ten percent (10%) or more of the votes entitled to be cast
by the holders of all then outstanding shares of Voting Stock.
5. A person shall be a "beneficial owner" of any Capital Stock (a)
which such person or any of its Affiliates or Associates beneficially
owns, directly or indirectly; (b) which such person or any of its
Affiliates or Associates has, directly or indirectly, (i) the right to
acquire (whether such right is exercisable immediately or subject only
to the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, convertible
securities, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, convertible
securities, exchange rights, warrants or options, or otherwise; or (c)
which are beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of Capital Stock.
For the purposes of determining whether a person is an Interested
Stockholder pursuant to Paragraph 4 of this Section C, the number of
shares of Capital Stock deemed to be outstanding shall include shares
deemed beneficially owned by such person through application of
Paragraph 5 of this Section C, but shall not include any other shares
of Capital Stock that may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
6. The terms "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Act as in
effect on March 1, 1984 (the term "registrant" in said Rule 12b-2
meaning in this case the Corporation).
7. The term "Subsidiary" means any corporation of which a majority of
any class of equity security is beneficially owned by the Corporation;
provided, however, that for the purposes of the definition of
Interested Stockholder set forth in Paragraph 4 of this Section C, the
term "Subsidiary" shall mean only a corporation of which a majority of
each class of equity security is beneficially owned by the Corporation.
8. The term "Continuing Director" means any member of the board of
directors of the Corporation (the "Board") while such person is a
member of the Board, who is not an Affiliate or Associate or
representative of the Interested Stockholder and was a Member of the
Board prior to the time that the Interested Stockholder became an
Interested Stockholder, and any successor of a Continuing Director,
while such successor is a member of the Board, who is not an Affiliate
or Associate or representative of the Interested Stockholder and is
recommended or elected to succeed the Continuing Director by a majority
of Continuing Directors.
9. The term "Fair Market Value" means (a) in the case of cash, the
amount of such cash; (b) in the case of stock, the highest closing
sales price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or if such stock is not
listed on such Exchange, on the principal United States securities
exchange registered under the Act on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock as determined by a
majority of the Continuing Directors in good faith; and (c) in the case
of property other than cash or stock, the fair market value of such
property on the date in question as determined in good faith by a
majority of the Continuing Directors.
10. In the event of any Business Combination in which this Corporation
survives, the phrase "consideration other than cash to be received" as
used in Paragraphs 2.a and 2.b of Section B of this Section 7 shall
include the shares of Common Stock and/or the shares of any other class
or series of Capital Stock retained by the holders of such shares.
D. The Board of Directors shall have the power and duty to determine for the
purposes of this Section 7 on the basis of information known to them after
reasonable inquiry, (a) whether a person is an Interested Stockholder, (b) the
number of shares of Capital Stock or other securities beneficially owned by any
person, (c) whether a person is an Affiliate or Associate of another, and (d)
whether the assets that are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by this
Corporation have, or any Subsidiary in any Business Combination has, an
aggregate Fair Market Value of $10,000,000 or more. Any such determination made
in good faith shall be binding and conclusive on all parties.
E. Nothing contained in this Section 7 shall be construed to relieve any
Interested Stockholder from any fiduciary obligation imposed by law.
F. The fact that any Business Combination complies with the provisions of
Section B of this Section 7 shall not be construed to impose any fiduciary duty,
obligation or responsibility on the Board, or any member thereof, to approve
such Business Combination or recommend its adoption or approval to the
stockholders of this Corporation, nor shall such compliance limit, prohibit or
otherwise restrict in any manner the Board, or any member thereof, with respect
to evaluations of or actions and responses taken with respect to such Business
Combination.
G . Notwithstanding any other provisions of this Charter or the Bylaws of the
Corporation (and notwithstanding the fact that a lesser percentage or separate
class vote may be specified by law, this Charter or the bylaws of the
Corporation), the affirmative vote of the holders of not less than eighty
percent (80%) of the votes entitled to be cast by the holders of all then
outstanding shares of Voting Stock, voting together as a single class, shall be
required to amend or repeal, or adopt any provisions inconsistent with, this
Section 7; provided, however, that this Section G shall not apply to, and such
eighty percent (80%) vote shall not be required for, any amendment, repeal or
adoption unanimously recommended by the Board if all of such directors are
persons who would be eligible to serve as Continuing Directors within the
meaning of Section C, Paragraph 8 of this Section 7.
Section 8. To the fullest extent permitted by the Connecticut General Statutes
as the same exists or may hereafter be amended, the personal liability of a
director to the Corporation or its stockholders for monetary damages for breach
of duty as a director shall be limited to an amount that is not less than the
compensation received by such director for serving the Corporation during the
year of the violation. If the Connecticut General Statutes are amended after
approval by the stockholders of this Section 8 to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of each director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Connecticut General Statutes, as so amended.
Any repeal or modification of this Section 8 by the stockholders 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.
AMENDMENT NO. 1
The Charter of The Hartford Steam Boiler Inspection and Insurance Company is
hereby amended effective December 30, 1996 by the addition of Attachment A to
Section 3 thereof:
Attachment A
SECTION 1. Number of Shares and Designations.
Two thousand (2,000) shares of the Preferred Stock, without par value,
of the Corporation are constituted as a series thereof designated as
Series B Convertible Preferred Stock (the "Series B Preferred Stock").
SECTION 2. Definitions. For purposes of the Series B Preferred Stock, the
following terms shall have the meanings indicated:
2.1 "Accrued Dividends" shall have the meaning set forth in Section
4.1 below.
2.2 "Board of Directors" shall mean the board of directors of the
Corporation or any committee authorized by such board of
directors to perform any of its responsibilities with respect to
the Series B Preferred Stock.
2.3 "Business Day" shall mean any day other than 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.
2.4 "Call Event" shall mean the consummation of a transaction
pursuant to Section 2.2 of the Transaction Agreement.
2.5 "Charter" shall mean the Charter of the Corporation, as amended
from time to time.
2.6 "Common Stock" shall mean the common stock of the Corporation,
without par value.
2.7 "Constituent Person" shall have the meaning set forth in Section
8.5 below.
2.8 "Conversion Price" shall mean the conversion price per share of
Common Stock for which the Series B Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to
Section 8.
below. The initial conversion price will be $ 50.20.
2.9 "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 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 Composite Tape or, if
such security is not listed or admitted for trading on the New
York Stock Exchange ("NYSE"), on the principal national
securities exchange on which such security is listed or admitted
for trading or, if not listed or admitted for trading on any
national securities exchange, on the National Market System of
the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or, if such security is not quoted
on such National Market System, the average of the closing bid
and asked prices on such day in the over-the-counter market as
reported by NASDAQ or, if bid and asked prices for such security
on such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished by
any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
2.10 "Dividend Payment Date" shall mean the last business day of
January, April, July and October in each year, commencing on the
last business day of January, 1997, provided, however, that if
any Dividend Payment Date falls on any day other than a Business
Day, the dividend payment due on such Dividend Payment Date shall
be paid on the Business Day immediately following such Dividend
Payment Date.
2.11 "Dividend Periods" shall mean quarterly dividend periods
commencing on the last business day of January, April, July and
October of each year and ending on and including the day
preceding the first day of the next succeeding Dividend Period
(other than the initial Dividend Period, which shall commence on
the Issue Date and end on and include January 30, 1997).
2.12 "Fair Market Value" shall mean the average of the daily Current
Market Prices of a share of Common Stock during the five (5)
consecutive Trading Days selected by the Corporation commencing
not more than 20 Trading Days before, and ending not later than,
the earlier of the day in question and the day before the "ex"
date with respect to the issuance or distribution requiring such
computation. The term "'ex' date," when used with respect to any
issuance or distribution, means the first day on which the Common
Stock trades regular way, without the right to receive such
issuance or distribution, on the exchange or in the market, as
the case may be, used to determine that day's Current Market
Price.
2.13 "Issue Date" shall mean the first date on which shares of Series
B Preferred Stock are issued and sold.
2.14 "Junior Stock" shall mean the Common Stock, the Series A
Preferred Stock and any other class or series of shares of the
Corporation over which the Series B Preferred Stock has
preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding
up of the Corporation.
2.15 "Liquidation Preference" shall have the meaning set forth in
Section 4.1 hereof.
2.16 "non-electing share" shall have the meaning set forth in Section
8.5 hereof.
2.17 "Person" shall mean any individual, firm, partnership,
corporation or other entity, and shall include any successor (by
merger or otherwise) of such entity.
2.18 "Put Event" shall mean the consummation of a transaction pursuant
to Section 2.3 of the Transaction Agreement.
2.19 "Redemption Date" shall have the meaning set forth in Section
5.3 hereof.
2.20 "Rights" shall mean the rights of the Corporation which are
issuable under the Corporation's Rights Agreement dated as of
November 28, 1988, and as amended from time to time, or rights to
purchase any capital stock of the Corporation under any successor
shareholder rights plan or plans adopted in replacement of the
Corporation's Rights Agreement.
2.21 "Securities" shall have the meaning set forth in Section
8.4(c) below.
2.22 "Series A Preferred Stock" shall mean the series of Preferred
Stock of the Corporation, without par value, designated Series A
Junior Participating Preferred Stock.
2.23 "Series B Preferred Stock" shall have the meaning set forth in
Section 1 hereof.
2.24 "set apart for payment" shall be deemed to include, without any
action other than the following, the recording by the Corporation
in its accounting ledgers of any accounting or bookkeeping entry
which indicates, pursuant to a declaration of dividends or other
distribution by the Board of Directors, the allocation of funds
to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class
or series of Junior Stock or any class or series of stock ranking
on a parity with the Series B Preferred Stock as to the payment
of dividends are placed in a separate account of the Corporation
or delivered to a disbursing, paying or other similar agent, then
"set apart for payment" with respect to the Series B Preferred
Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar
agent.
2.25 "Stated Value" shall have the meaning set forth in Section 4.1
hereof.
2.26 "Trading Day" shall mean any day on which the securities in
question are traded on the NYSE, or if such securities are not
listed or admitted for trading on the NYSE, on the principal
national securities exchange on which such securities are listed
or admitted, or if not listed or admitted for trading on any
national securities exchange, on the National Market System of
the NASDAQ, or if such securities are not quoted on such National
Market System, in the applicable securities market in which the
securities are traded.
2.27 "Transaction" shall have the meaning set forth in Section
8.5 hereof.
2.28 "Transaction Agreement" shall mean that certain Transaction
Agreement, dated as of December 30, 1994, by and among the
Corporation and General Reinsurance Corporation.
2.29 "Transfer Agent" means The First National Bank of Boston or such
other agent or agents of the Corporation as may be designated by
the Board of Directors as the transfer agent for the Series B
Preferred Stock.
SECTION 3. Dividends.
3.1 The holders of shares of the Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors out of assets legally available for that purpose,
dividends payable in cash at the rate per annum of $650 per share
of Series B Preferred Stock. Such dividends shall be cumulative
from the Issue Date, whether or not in any Dividend Period or
Periods there shall be assets of the Corporation legally
available for the payment of such dividends, and shall be payable
quarterly, when, as and if declared by the Board of Directors, in
arrears on Dividend Payment Dates, commencing on January 31,
1997. Each such dividend shall be payable in arrears to the
holders of record of shares of the Series B Preferred Stock, as
they appear on the stock records of the Corporation at the close
of business on such record dates, which shall not be more than 60
days nor less than 10 days preceding the payment dates thereof,
as shall be fixed by the Board of Directors or a duly authorized
committee thereof. Accrued and unpaid dividends for any past
Dividend Periods may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on
such date, not exceeding 45 days preceding the payment date
thereof, as may be fixed by the Board of Directors.
3.2 The amount of dividends payable for each full Dividend Period for
the Series B Preferred Stock shall be computed by dividing the
annual dividend rate by four. The amount of dividends payable for
the initial Dividend Period, or any other period shorter or
longer than a full Dividend Period, on the Series B Preferred
Stock shall be computed on the basis of twelve 30-day months and
a 360-day year. Holders of shares of Series B Preferred Stock
shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of cumulative dividends, as herein
provided, on the Series B Preferred Stock. No interest, or sum of
money in lieu of interest, shall be payable in respect of any
dividend payment or payments on the Series B Preferred Stock that
may be in arrears.
3.3 So long as any shares of the Series B Preferred Stock are
outstanding, no dividends, except as described in the next
succeeding sentence, shall be declared or paid or set apart for
payment on any class or series of stock of the Corporation
ranking, as to dividends and amounts distributable upon
liquidation, dissolution or winding up, on a parity with the
Series B Preferred Stock, for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart
for such payment on the Series B Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment of the
dividend on such class or series of parity stock. When dividends
are not paid in full or a sum sufficient for such payment is not
set apart, as aforesaid, all dividends declared upon shares of
the Series B Preferred Stock and all dividends declared upon any
other class or series of stock ranking on a parity as to
dividends and amount distributable upon liquidation, dissolution
or winding up shall be declared ratably in proportion to the
respective amounts of dividends accumulated and unpaid on the
Series B Preferred Stock and accumulated and unpaid on such
parity stock.
3.4 So long as any shares of the Series B Preferred Stock are
outstanding, no dividends (other than (i) the Rights and (ii)
dividends or distributions paid in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Junior
Stock) shall be declared or paid or set apart for payment or
other distribution declared or made upon Junior Stock, nor shall
any Junior Stock or any series of stock of the Corporation
ranking, as to dividends and amounts distributable upon
liquidation, dissolution or winding up, on a parity with Series B
Preferred Stock be redeemed, purchased or otherwise acquired
(other than a redemption, purchase or other acquisition of shares
of Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any
consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock)
by the Corporation, directly or indirectly (except by conversion
into or exchange for Junior Stock), unless in each case the full
cumulative dividends on all outstanding shares of the Series B
Preferred Stock and any other stock of the Corporation ranking on
a parity with the Series B Preferred Stock, as to dividends and
amounts distributable upon liquidation, dissolution or winding up
shall have been paid or set apart for payment for all past
Dividend Periods with respect to the Series B Preferred Stock and
all past dividend periods with respect to such parity stock.
SECTION 4. Payments upon Liquidation.
4.1 In the event of any liquidation, dissolution or winding up of the
Corporation before any payment or distribution of the assets of
the Corporation (whether capital or surplus) shall be made to or
set apart for the holders of Junior Stock, the holders of the
shares of Series B Preferred Stock shall be entitled to receive
Ten Thousand Dollars ($10,000) per share of Series B Preferred
Stock (the "Stated Value") plus an amount equal to all dividends
(whether or not earned or declared) accrued and unpaid thereon
("Accrued Dividends") to the date of final distribution to such
holders (the "Liquidation Preference"); but such holders shall not
be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders
of the shares of Series B Preferred Stock shall be insufficient to
pay in full the Liquidation Preference, and the liquidation
preference on all other shares of any class or series of stock
ranking, as to dividends and amounts distributable upon
liquidation, dissolution or winding up, on a parity with the
Series B Preferred Stock, then such assets, or the proceeds
thereof, shall be distributed among the holders of shares of
Series B Preferred Stock and any such other parity stock ratably
in accordance with the respective amounts that would be payable on
such shares of Series B Preferred Stock and any such other stock
if all amounts payable thereon were paid in full. For the purposes
of this Section 4., (i) a consolidation or merger of the
Corporation with one or more corporations, or (ii) a sale or
transfer of all or substantially all of the Corporation's assets,
shall not be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of any series or
class or classes of stock ranking on a parity with or prior to the
Series B Preferred Stock as to dividends and amounts distributable
upon liquidation, dissolution or winding up of the Corporation,
after payment shall have been made to the holders of the Series B
Preferred Stock, as and to the fullest extent provided in this
Section 4, any other series or class or classes of Junior Stock
shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of the Series
B Preferred Stock shall not be entitled to share therein.
SECTION 5. Redemption at the Option of the Corporation.
5.1 The shares of Series B Preferred Stock shall be redeemable at the
option of the Corporation by resolution of its Board of Directors,
in whole (i) at any time on or after the fifth anniversary of the
Issue Date or (ii) if on the date of a notice pursuant to Section
5.3 hereof, the Current Market Price of all Common Stock which
would be issuable upon conversion of all of the 2,000 shares of
Preferred Stock originally issued, as of any date within ten
Business Days prior to such notice date, exceeded $22 million. In
either case, such redemption shall be at the Stated Value, plus
all dividends accrued and unpaid on the shares of Series B
Preferred Stock up to the date fixed for the redemption, upon
giving notice as provided hereinbelow.
5.2 At least 90 days prior to the date fixed for the redemption of
shares of Series B Preferred Stock, a written notice shall be
mailed in a postage prepaid envelope to each holder of record of
the shares of Series B Preferred Stock to be redeemed, addressed
to such holder at his post office address as shown on the records
of the Corporation, notifying such holder of the election of the
corporation to redeem such shares, stating the date fixed for
redemption thereof (the "Redemption Date"), and calling upon such
holder to surrender to the Corporation, on the Redemption Date at
the place designated in such notice, his certificate or
certificates representing the number of shares specified in such
notice of redemption.
On or after the Redemption Date, each holder of shares of Series B
Preferred Stock to be redeemed shall present and surrender his
certificate or certificates for such shares to the Corporation at
the place designated in such notice and thereupon the redemption
price of such shares shall be paid to or on the order of the
person whose name appears on such certificate or certificates as
the owner thereof and each surrendered certificate shall be
canceled. In case less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
From and after the Redemption Date (unless default shall be made
by the Corporation in payment of the redemption price), all
dividends on the shares of Series B Preferred Stock designated for
redemption in such notice shall cease to accrue, and all rights of
the holders thereof as stockholders of the Corporation, except the
right to receive the redemption price of such shares (including
all accrued and unpaid dividends up to the Redemption Date) upon
the surrender of certificates representing the same, shall cease
and terminate and such shares shall not thereafter be transferred
(except with the consent of the Corporation) on the books of the
Corporation, and such shares shall not be deemed to be outstanding
for any purpose whatsoever. At its election, the Corporation,
prior to the Redemption Date, may deposit the redemption price
(including all accrued and unpaid dividends up to the Redemption
Date) of shares of Series B Preferred Stock so called for
redemption in trust for the holders thereof with a bank or trust
company (having a capital surplus and undivided profits
aggregating not less than $50,000,000) in the Borough of
Manhattan, City and State of New York, or in any other city in
which the Corporation at the time shall maintain a transfer agency
with respect to such shares, in which case the aforesaid notice to
holders of shares of Series B Preferred Stock to be redeemed shall
state the date of such deposit, shall specify the office of such
bank or trust company as the place of payment of the redemption
price, and shall call upon such holders to surrender the
certificates representing such shares at such place on or after
the date fixed in such redemption notice (which shall not be later
than the Redemption Date) against payment of the redemption price
(including all accrued and unpaid dividends up to the Redemption
Date). Any interest accrued on such funds shall be paid to the
Corporation from time to time. Any moneys so deposited which shall
remain unclaimed by the holders of such shares of Series B
Preferred Stock at the end of two years after the Redemption Date
shall be returned by such bank or trust company to the
Corporation.
If a notice of redemption has been given pursuant to this Section
5 and any holder of shares of Series B Preferred Stock shall,
prior to the close of business on the day preceding the Redemption
Date, give written notice to the Corporation pursuant to Section
8 below of the conversion of any or all of the shares to be
redeemed held by such holder (accompanied by a certificate or
certificates for such shares, duly endorsed or assigned to the
Corporation, and any necessary transfer tax payment, as required
by Section 8 below), then such redemption shall not become
effective as to such shares to be converted, such conversion shall
become effective as provided in Section 8 below, and any moneys
set aside by the Corporation for the redemption of such shares of
converted Series B Preferred Stock shall revert to the general
funds of the Corporation.
SECTION 6. Redemption at the Option of the Holder.
The Corporation, when requested to do so in writing by a holder of
Series B Preferred Stock at any time after the earlier of (i) the
eighth anniversary of an Issue Date pursuant to a Call Event or (ii)
the fifth anniversary of an Issue Date pursuant to a Put Event, shall
purchase or redeem the share or shares of Series B Preferred Stock
identified by such holder, such purchase or redemption to occur on a
date not more than thirty days after receipt by the Corporation of such
request, at the Stated Value of the share or shares to be purchased or
redeemed, plus all dividends accrued and unpaid on such share or shares
up to the date of such purchase or redemption.
SECTION 7. Shares to Be Retired.
All shares of Series B Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation (excluding, until the
Corporation elects to retire them, shares which are held as treasury
shares) shall be restored to the status of authorized but unissued
shares of Preferred Stock, without designation as to series.
SECTION 8. Conversion.
Holders of shares of Series B Preferred Stock shall have the right to
convert all or a portion of such shares into shares of Common Stock, as
follows:
8.1 Subject to and upon compliance with the provisions of this
Section 8, a holder of shares of Series B Preferred Stock shall
have the right, at its option, at any time after 5 Business Days
after the Issue Date, to convert such shares into the number of
fully paid and nonassessable shares of Common Stock obtained by
dividing the aggregate Stated Value of such shares by the
Conversion Price (as in effect on the date provided for in the
last paragraph of Section 8.2) by surrendering such shares to be
converted, such surrender to be made in the manner provided in
Section 8.2; provided, however, that the right to convert shares
called for redemption pursuant to Section 5 of this article shall
terminate at the close of business on the day preceding the
Redemption Date, unless the Corporation shall default in making
payment of the cash payable upon such redemption under Section 5
of this article. Certificates will be issued for the remaining
shares of Series B Preferred Stock in any case in which fewer
than all of the shares of Series B Preferred Stock represented by
a certificate are converted.
8.2 In order to exercise the conversion right, the holder of shares
of Series B Preferred Stock to be converted shall surrender the
certificate or certificates representing such shares, duly
endorsed or assigned to the Corporation or in blank, at the
office of the Transfer Agent in the Borough of Manhattan, City of
New York, accompanied by written notice to the Corporation that
the holder thereof elects to convert Series B Preferred Stock.
Unless the shares issuable on conversion are to be issued in the
same name as the name in which such share of Series B Preferred
Stock is registered, each share surrendered for conversion shall
be accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or such holder's
duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to
the Corporation demonstrating that such taxes have been paid).
Holders of shares of Series B Preferred Stock 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 conversion thereof
following such dividend payment record date and prior to such
Dividend Payment Date. Except as provided above, the Corporation
shall make no payment or allowance for unpaid dividends, whether
or not in arrears, on converted shares or for dividends on the
shares of Common Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates
for shares of Series B Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver at such office to such
holder, or on his or her written order, a certificate or
certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares in accordance with
provisions of this Section 8, and any fractional interest in
respect of a share of Common Stock arising upon such conversion
shall be settled as provided in Section 8.3.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the
certificates for shares of Series B Preferred Stock shall have
been surrendered and such notice (and if applicable, payment of
an amount equal to the dividend payable on such shares) received
by the Corporation as aforesaid, and the person or persons in
whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be
deemed to have become the holder or holders of record of the
shares represented thereby at such time on such date and such
conversion shall be at the Conversion Price in effect at such
time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event such
person or persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date
upon which such shares shall have been surrendered and such
notice received by the Corporation.
8.3 No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon conversion of the Series B
Preferred Stock. Instead of any fractional interest in a share of
Common Stock that would otherwise be deliverable upon the
conversion of a share of Series B Preferred Stock, the
Corporation shall pay to the holder of such share an amount in
cash based upon the Current Market Price of Common Stock on the
Trading Day immediately preceding the date of conversion. If more
than one share shall be surrendered for conversion at one time by
the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis
of the aggregate number of shares of Series B Preferred Stock so
surrendered.
8.4 The Conversion Price shall be adjusted from time to time as
follows:
(a) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its capital stock in
shares of its Common Stock, (B) subdivide its outstanding
Common Stock into a greater number of shares, (C) combine
its outstanding Common Stock into a smaller number of shares
or (D) issue any shares of capital stock by reclassification
of its Common Stock, the Conversion Price in effect at the
opening of business on the day next following the date fixed
for the determination of stockholders entitled to receive
such dividend or distribution or at the opening of business
on the day next following the day on which such subdivision,
combination or reclassification becomes effective, as the
case may be, shall be adjusted so that the holder of any
share of Series B Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares
of Common Stock that such holder would have owned or have
been entitled to receive after the happening of any of the
events described above had such share been converted
immediately prior to the record date in the case of a
dividend or distribution or the effective date in the case
of a subdivision, combination or reclassification. An
adjustment made pursuant to this subparagraph (a) shall
become effective immediately after the opening of business
on the day next following the record date (except as
provided in Section 8.8 below) in the case of a dividend or
distribution and shall become effective immediately after
the opening of business on the day next following the
effective date in the case of a subdivision, combination or
reclassification.
(b) If the Corporation shall issue after the Issue Date rights
or warrants (in each case, other than the Rights) to all
holders of Common Stock entitling them (for a period
expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Common Stock at a price
per share less than the Fair Market Value per share of
Common Stock on the record date for the determination of
stockholders entitled to receive such rights or warrants,
then the Conversion Price in effect at the opening of
business on the day next following such record date shall be
adjusted to equal the price determined by multiplying (I)
the Conversion Price in effect immediately prior to the
opening of business on the day next following the date fixed
for such determination by (II) a fraction, the numerator of
which shall be the sum of (A) the number of shares of Common
Stock outstanding on the close of business on the date fixed
for such determination and (B) the number of shares that the
aggregate proceeds to the Corporation from the exercise of
such rights or warrants for Common Stock would purchase at
such Fair Market Value, and the denominator of which shall
be the sum of (A) the number of shares of Common Stock
outstanding on the close of business on the date fixed for
such determination and (B) the number of additional shares
of Common Stock offered for subscription or purchase
pursuant to such rights or warrants. Such adjustment shall
become effective immediately after the opening of business
on the day next following such record date (except as
provided in Section 8.8 below). In determining whether any
rights or warrants entitle the holders of Common Stock to
subscribe for or purchase shares of Common Stock at less
than such Fair Market Value, there shall be taken into
account any consideration received by the Corporation upon
issuance and upon exercise of such rights or warrants, the
value of such consideration, if other than cash, to be
determined by the Board of Directors.
(c) If the Corporation shall distribute to all holders of its
Common Stock any shares of capital stock of the Corporation
(other than Common Stock) or evidence of its indebtedness or
assets (excluding cash dividends or distributions paid from
profits or surplus of the Corporation) or rights or warrants
(in each case, other than the Rights) to subscribe for or
purchase any of its securities (excluding those rights and
warrants issued to all holders of Common Stock entitling
them for a period expiring within 45 days after the record
date referred to in subparagraph (b) above to subscribe for
or purchase Common Stock, which rights and warrants are
referred to in and treated under subparagraph (b) above (any
of the foregoing being hereinafter in this subparagraph (3)
called the "Securities"), then in each such case the
Conversion Price shall be adjusted so that it shall equal
the price determined by multiplying (I) the Conversion Price
in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to
receive such distribution by (II) a fraction, the numerator
of which shall be the Fair Market Value per share of the
Common Stock on the record date mentioned below less the
then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) of the
portion of the capital stock or assets or evidences of
indebtedness so distributed or of such rights or warrants
applicable to one share of Common Stock, and the denominator
of which shall be the Fair Market Value per share of the
Common Stock on the record date mentioned below. Such
adjustment shall become effective immediately at the opening
of business on the Business Day next following (except as
provided in Section 8.8 below) the record date for the
determination of shareholders entitled to receive such
distribution. For the purposes of this clause (c), the
distribution of a Security, which is distributed not only to
the holders of the Common Stock on the date fixed for the
determination of stockholders entitled to such distribution
of such security, but also is distributed with each share of
Common Stock delivered to a person converting a share of
Series B Preferred Stock after such determination date,
shall not require an adjustment of the Conversion Price
pursuant to this clause (c); provided that on the date, if
any, on which a Person converting a share of Series B
Preferred Stock would no longer be entitled to receive such
Security with a share of Common Stock (other than as a
result of the termination of all such Securities), a
distribution of such Securities shall be deemed to have
occurred and the Conversion Price shall be adjusted as
provided in this clause (c) (and such day shall be deemed to
be "the date fixed for the determination of the stockholders
entitled to receive such distribution" and "the record date"
within the meaning of the two preceding sentences).
(d) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase
or decrease of at least 1% in such price; provided, however,
that any adjustments that by reason of this subparagraph (d)
are not required to be made shall be carried forward and
taken into account in any subsequent adjustment until made;
and provided, further, that any adjustment shall be required
and made in accordance with the provisions of this Section 8
(other than this subparagraph (d)) not later than such time
as may be required in order to preserve the tax-free nature
of a distribution to the holders of shares of Common Stock.
Notwithstanding any other provisions of this Section 8, the
Corporation shall not be required to make any adjustment of
the Conversion Price for the issuance of any shares of
Common Stock pursuant to any plan providing for the
reinvestment of dividends on securities of the Corporation.
All calculations under this Section 8 shall be made to the
nearest cent (with $.005 being rounded upward) or to the
nearest 1/10 of a share (with .05 of a share being rounded
upward), as the case may be. Anything in this Section 8.4 to
the contrary notwithstanding, the Corporation shall be
entitled, to the extent permitted by law, to make such
reductions in the Conversion Price, in addition to those
required by this Section 8.4, as it in its discretion shall
determine to be advisable in order that any stock dividends,
subdivision of shares, reclassification or combination of
shares, distribution of rights or warrants to purchase stock
or securities, or a distribution of other assets (other than
cash dividends) hereafter made by the Corporation to its
stockholders shall not be taxable.
8.5 If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, sale of all or
substantially all of the Corporation's assets or recapitalization
of the Common Stock and excluding any transaction as to which
Section 8.4(a) applies) (each of the foregoing being referred to
herein as a "Transaction"), in each case as a result of which
shares of Common Stock shall be converted into the right to
receive stock, securities or other property (including cash or
any combination thereof), each share of Series B Preferred Stock
which is not converted into the right to receive stock,
securities or other property in connection with such Transaction
shall thereafter be convertible into the kind and amount of
shares of stock, securities and other property (including cash or
any combination thereof) receivable upon the consummation of such
Transaction by a holder of that number of shares or fraction
thereof of Common Stock into which one share of Series B
Preferred Stock was convertible immediately prior to such
Transaction, assuming such holder of Common Stock (i) is not a
Person with which the Corporation consolidated or into which the
Corporation merged or which merged into the Corporation or to
which such sale or transfer was made, as the case may be
("Constituent Person"), or an affiliate of a Constituent Person
and (ii) failed to exercise his rights of election, if any, as to
the kind or amount of stock, securities and other property
(including cash) receivable upon such Transaction (provided that
if the kind or amount of stock, securities and other property
(including cash) receivable upon such Transaction is not the same
for each share of Common Stock of the Corporation held
immediately prior to such Transaction by other than a Constituent
Person or an affiliate thereof and in respect of which such
rights of election shall not have been exercised ("non-electing
share"), then for the purpose of this Section 8.5. the kind and
amount of stock, securities and other property (including cash)
receivable upon such Transaction by each non-electing share shall
be deemed to be the kind and amount so receivable per share by
the plurality of the non-electing shares). The Corporation shall
not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this Section
8.5. and it shall not consent or agree to the occurrence of any
Transaction until the Corporation has entered into an agreement
with the successor or purchasing entity, as the case may be, for
the benefit of the holders of the Series B Preferred Stock that
will contain provisions enabling the holders of the Series B
Preferred Stock that remains outstanding after such Transaction
to convert into the consideration received by holders of Common
Stock at the Conversion Price in effect immediately prior to such
Transaction. The provisions of this Section 8.5 shall similarly
apply to successive Transactions.
8.6 If:
(a) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than in cash out of
profits or surplus and other than the Rights); or
(b) the Corporation shall authorize the granting to the holders
of the Common Stock of rights or warrants (other than the
Rights) to subscribe for or purchase any shares of any class
or any other rights or warrants (other than the Rights); or
(c) there shall be any reclassification of the Common Stock
(other than an event to which Section 8.4(a) applies) or any
consolidation or merger to which the Corporation is a party
and for which approval of any stockholders of the
Corporation is required, or the sale or transfer of all or
substantially all of the assets of the Corporation as an
entirety; or
(d) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, then the
Corporation shall cause to be filed with the Transfer Agent
and shall cause to be mailed to the holders of shares of the
Series B Preferred Stock at their addresses as shown on the
stock records of the Corporation, as promptly as possible,
but at least 15 days prior to the applicable date
hereinafter specified, a notice stating (A) the date on
which a record is to be taken for the purpose of such
dividend, distribution or 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 or rights or warrants are to be determined or
(B) the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution 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 or other property, if any, deliverable upon such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up. Failure to give or
receive such notice or any defect therein shall not affect
the legality or validity of the proceedings described in
this Section 8.
8.7 Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an
officer's certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts
requiring such adjustment which certificate shall be prima facie
evidence of the correctness of such adjustment. Promptly after
delivery of such certificate, the Corporation shall prepare a
notice of such adjustment of the Conversion Price setting forth
the adjusted Conversion Price and the effective date of such
adjustment and shall mail such notice of such adjustment of the
Conversion Price to the holder of each share of Series B
Preferred Stock at such holder's last address as shown on the
stock records of the Corporation.
8.8 In any case in which Section 8.4 provides that an adjustment
shall become effective on the day next following a record date
for an event, the Corporation may defer until the occurrence of
such event (A) issuing to the holder of any share of Series B
Preferred Stock converted after such record date and before the
occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock issuable
upon such conversion before giving effect to such adjustment and
(B) paying to such holder any amount in cash in lieu of any
fraction pursuant to Section 8.3.
8.9. For purposes of this Section 8, the number of shares of Common
Stock at any time outstanding shall not include any shares of
Common Stock then owned or held by or for the account of the
Corporation. The Corporation shall not pay a dividend or make any
distribution on shares of Common Stock held in the treasury of
the Corporation.
8.10 There shall be no adjustment of the Conversion Price in case of
the issuance of any stock of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically
set forth in this Section 8. If any action or transaction would
require adjustment of the Conversion Price pursuant to more than
one paragraph of this Section 8, only one adjustment shall be
made and such adjustment shall be the amount of adjustment that
has the highest absolute value.
8.11 If the Corporation shall take any action affecting the Common
Stock, other than action described in this Section 8, that in the
opinion of the Board of Directors would materially adversely
affect the conversion rights of the holders of the shares of
Series B Preferred Stock, the Conversion Price for the Series B
Preferred Stock may be adjusted, to the extent permitted by law,
in such manner, if any, and at such time, as the Board of
Directors may determine to be equitable in the circumstances.
8.12 The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate
of its authorized but unissued shares of Common Stock or its
issued shares of Common Stock held in its treasury, or both, for
the purpose of effecting conversion of the Series B Preferred
Stock, the full number of shares of Common Stock deliverable upon
the conversion of all outstanding shares of Series B Preferred
Stock not theretofore converted. For purposes of this Section
8.12, the number of shares of Common Stock that shall be
deliverable upon the conversion of all outstanding shares of
Series B Preferred Stock shall be computed as if at the time of
computation all such outstanding shares were held by a single
holder.
The Corporation covenants that any shares of Common Stock issued
upon conversion of the Series B Preferred Stock shall be validly
issued, fully paid and non-assessable. Before taking any action
that would cause an adjustment reducing the Conversion Price
below the then-par value of the shares of Common Stock
deliverable upon conversion of the Series B Preferred Stock, the
Corporation will take any corporate action that, in the opinion
of its counsel, may be necessary in order that the Corporation
may validly and legally issue fully-paid and nonassessable shares
of Common Stock at such adjusted Conversion Price.
8.13 The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or
delivery of shares of Common Stock or other securities or
property on conversion of the Series B Preferred Stock pursuant
hereto; provided, however, that the Corporation shall not be
required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of shares of Common
Stock or other securities or property in a name other than that
of the holder of the Series B Preferred Stock to be converted and
no such issue or delivery shall be made unless and until the
person requesting any issue or delivery has paid to the
Corporation the amount of any such tax or established, to the
reasonable satisfaction of the Corporation, that such tax has
been paid.
SECTION 9. Ranking. Any class or series of stock of the Corporation shall
be deemed to rank:
(a) prior to the Series B Preferred Stock, as to the payment of
dividends and as to distributions of assets upon liquidation,
dissolution or winding up, if the holders of such class or series
shall be entitled to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding up in
preference or priority to the holders of Series B Preferred
Stock;
(b) on a parity with the Series B Preferred Stock, as to thepayment
of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per
share thereof be different from those of the Series B Preferred
Stock if the holders of such class of stock or series and the
Series B Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective
amounts of accrued and unpaid dividends per share or liquidation
preferences, without preference or priority one over the other;
and
(c) junior to the Series B Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation,
dissolution or winding up, if such stock or series shall be
Common Stock or Series A Preferred Stock or if the holders of
Series B Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation,
dissolution or winding up in preference or priority to the
holders of shares of such stock or series.
10. Voting.
10.1 The holders of shares of Series B Preferred Stock shall have the
following voting rights:
(a) Subject to the provision for adjustment hereinafter
setforth, each share of Series B Preferred Stock shall
entitle the holder thereof to 199 votes on all matters
submitted to a vote of the shareholders of the Corporation.
In the event the Corporation shall at any time after the
Issue Date (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the
number of votes per share to which holders of shares of
Series B Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a
fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, theholders of
shares of Series B Preferred Stock and the holders of shares
of Common Stock shall vote together as one class on all
matters submitted to a vote of shareholders of the
Corporation.
10.2 Unless the affirmative vote or consent of the holders of a
greater number of shares shall then be required by law, the
consent of the holders of at least 66 2/3% of all of the
outstanding shares of Series B Preferred Stock (in addition to
any vote required by the terms of any other affected series of
Preferred Stock ranking on a parity with the Series B Preferred
Stock as to dividends and amounts distributable upon liquidation,
dissolution and winding up), given in person or by proxy, either
in writing or by a vote at a meeting called for the purpose, at
which the holders of shares of Series B Preferred Stock and such
other series of Preferred Stock shall vote together as a single
class without regard to series, shall be necessary for
authorizing, effecting or validating the amendment, alteration or
repeal of any of the provisions of this Charter or of any
certificate amendatory thereof or supplemental thereto (including
any Certificate of Designations, Preferences and Rights or any
similar document relating to any series of Preferred Stock) which
would materially adversely affect the preferences, rights, powers
or privileges of the Series B Preferred Stock; provided, however,
that the amendment of the provisions of this Charter so as to
authorize or create, or to increase the authorized amount of, any
Junior Stock or any shares of any class ranking on a parity with
the Series B Preferred Stock shall not be deemed to materially
adversely affect the preferences, rights, powers or privileges of
Series B Preferred Stock.
10.3 Unless the affirmative vote or consent of the holders of a
greater number of shares shall then be required by law, the
consent of the holders of at least 66 2/3% of all of the
outstanding shares of Series B Preferred Stock (in addition to
any vote required by the terms of any other series of Preferred
Stock ranking on a parity with the Series B Preferred Stock as
to dividends and amounts distributable upon liquidation,
dissolution or winding up), given in person or by proxy, either
in writing or by a vote at a meeting called for the purpose at
which the holders of shares of Series B Preferred Stock and such
other series of Preferred Stock shall vote together as a single
class without regard to series, shall be necessary for
authorizing, effecting or validating the creation, authorization
or issue of any shares of any class of stock of the Corporation
ranking prior to the Series B Preferred Stock as to dividends or
upon liquidation, dissolution or winding up, or the
reclassification of any authorized stock of the Corporation into
any such prior shares, or the creation, authorization or
issuance of any obligation or security convertible into or
evidencing the right to purchase any such prior shares.
10.4 For purposes of the provisions of Sections 10.2 and 10.3, each
share of Series B Preferred Stock shall have one (1) vote per
share.
10.5 Except as set forth herein, holders of Series B Preferred Stock
shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any
corporate action.
SECTION 11. Record Holders. The Corporation and the Transfer Agent may deem
and treat the record holder of any shares of Series B Preferred Stock as
the true and lawful owner thereof for all purposes, and neither the
Corporation nor the Transfer Agent shall be affected by any notice to the
contrary.