ARTICLES OF INCORPORATION
OF
USF&G CORPORATION
USF&G CORPORATION
ARTICLES OF INCORPORATION
FIRST: THE UNDERSIGNED, Elver T. Pearson, whose address is 100 Light Street,
Baltimore, Maryland 21202, being at least eighteen years of age, acting as
incorporator, does hereby form a corporation under the General Laws of the State
of Maryland.
SECOND: The name of the corporation (which is hereinafter called the
"Corporation") is:
USF&G CORPORATION
THIRD: The purposes for which and any of which the Corporation is formed and
the business and objects to be carried on and promoted by it are:
(1) To purchase, own, and hold the stock of other corporations, and to do
every act and thing covered generally by the denomination "holding company";
(2) To purchase, subscribe for, acquire, own, hold, sell, exchange, assign,
transfer, create security interests in, pledge, or otherwise dispose of shares,
or voting trust certificates for shares, of the capital stock of, or any bonds,
notes, securities, or evidences of indebtedness created by, any other
corporation or corporations organized under the laws of this state or any other
state or district, county, nation or government; and
(3) To engage in any one or more businesses or transactions, or to acquire
all or any portion of any entity engaged in any one or more businesses or
transactions which the Board of Directors may from time to time authorize or
approve, whether or not related to the business described elsewhere in this
Article or to any other business at the time or theretofore engaged in by the
Corporation.
The foregoing enumerated purposes and objects shall be in no way limited or
restricted by reference to, or inference from, the terms of any other clause of
this or any other Article of the charter of the Corporation, and each shall be
regarded as independent; and they are intended to be and shall be construed as
powers as well as purposes and objects of the Corporation and shall be in
addition to and not in limitation of the general powers of corporations under
the General Laws of the State of Maryland.
FOURTH: The present address of the principal office of the Corporation in
this state is 100 Light Street, Baltimore, Maryland 21202.
FIFTH: The name and address of the resident agent of the Corporation in this
state are John A. MacColl, 100 Light Street, Baltimore, Maryland 21202.
Said resident agent is a citizen of the State of Maryland who resides there.
SIXTH: The total number of shares of stock of all classes which the
Corporation has authority to issue is 252,000,000 having an aggregate par value
of $1,200,000,000 of which 240,000,000 shares of the par value of $2.50 per
share, amounting in aggregate par value to $600,000,000, shall be Common Stock,
and 12,000,000 shares of the par value of $50.00 per share, amounting in
aggregate par value to $600,000,000, shall be Preferred Stock.
SEVENTH: The following is a description of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Common Stock and
the Preferred Stock of the Corporation:
COMMON STOCK
(1) The Common Stock shall not be subject to classification or
reclassification by the Board of Directors, and shall have the rights and terms
hereinafter specified, subject to the terms of any other stock provided in the
charter pursuant to classification or reclassification by the Board of Directors
or otherwise in accordance with law.
(2) Each share of Common Stock shall have one vote, and, except as otherwise
provided in respect of any Preferred Stock, the exclusive voting power for all
purposes shall be vested in the holders of the Common Stock.
(3) Subject to the provisions of law and any preferences of any Preferred
Stock, dividends may be paid on the Common Stock of the Corporation at such time
and in such amounts as the Board of Directors may deem advisable.
(4) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Common Stock
shall be entitled, after payment or provision for payment of the debts and other
liabilities of the Corporation and the amount to which the holders of any
Preferred Stock shall be entitled, to share ratably in the remaining net assets
of the Corporation.
PREFERRED STOCK
(5) The Board of Directors shall have authority to classify and reclassify
any unissued shares of the Preferred stock from time to time by setting or
changing in any one or more respects the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends, and
qualifications, or terms or conditions of redemption, of the Preferred Stock;
provided, that the Board of Directors shall not classify or reclassify any of
such shares into shares of the Common Stock, or into any class or series of
stock (i) which is not prior to the Common Stock either as to dividends or upon
liquidation and (ii) which is not limited in some respects either as to
dividends or upon liquidation. Subject to the foregoing, the power of the Board
of Directors to classify and reclassify any of the shares of Preferred Stock
shall include, without limitation, subject to the provisions of the charter,
authority to classify or reclassify any unissued shares of such stock into a
class or classes of preferred stock, preference stock, special stock or other
stock, and to divide and classify shares of any class into one or more series of
such class, by determining, fixing or altering one or more of the following:
(a) The distinctive designation of such class or series and the number
of shares to constitute such class or series; provided that, unless otherwise
prohibited by the terms of such or any other class or series, the number of
shares of any class or series may be decreased by the Board of Directors in
connection with any classification or reclassification of unissued shares and
the number of shares of such class or series may be increased by the Board of
Directors in connection with any such classification or reclassification, and
any shares of any class or series which have been redeemed, purchased, otherwise
acquired or converted into shares of Common Stock or any other class or series
shall remain part of the authorized Preferred Stock and be subject to
classification and reclassification as provided in this Section.
(b) Whether or not and, if so, the rates, amounts and times at which,
and the conditions under which, dividends shall be payable on shares of such
class or series, whether any such dividends shall rank senior or junior to or on
a parity with the dividends payable on any other class or series of Preferred
Stock, and the status of any such dividends as cumulative, cumulative to a
limited extent, or non-cumulative and as participating or non-participating.
(c) Whether or not shares of such class or series shall have voting
rights, in addition to any voting rights provided by law and, if so, the terms
of such voting rights.
(d) Whether or not shares of such class or series shall have conversion
or exchange privileges and, if so, the terms and conditions thereof, including
provision for adjustment of the conversion or exchange rate in such events or at
such times as the Board of Directors shall determine.
(e) Whether or not shares of such class or series shall be subject to
redemption and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates; and whether or not there shall be
any sinking fund or purchase account in respect thereof, and if so, the terms
thereof.
(f) The rights of the holders of shares of such class or series upon
the liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation, which rights may vary depending
upon whether such liquidation, dissolution or winding up is voluntary or
involuntary and, if voluntary, may vary at different dates, and whether such
rights shall rank senior or junior to or on a parity with such rights of any
other class of series of Preferred Stock.
(g) Whether or not there shall be any limitations applicable, while
shares of such class or series are outstanding, upon the payment of dividends or
making of distributions on, or the acquisition of, or the use of moneys for
purchase or redemption of, any stock of the Corporation, or upon any other
action of the Corporation, including action under this Section, and, if so, the
terms and conditions thereof.
(h) Any other preferences, rights, restrictions, including restrictions
on transferability, and qualification of shares of such class or series, not
inconsistent with law and the charter of the Corporation.
(6) For the purposes hereof and of any articles supplementary to the charter
providing for the classification or reclassification of any shares of Preferred
Stock or of any other charter document of the Corporation (unless otherwise
provided in any such articles or documents), any class or series of stock of the
Corporation shall be deemed to rank: (a) prior to another class or series either
as to dividends or upon liquidation, if the holders of such class or series
shall be entitled to the receipt of dividends or of amounts distributable on
liquidation, dissolution or winding up, as the case may be, in preference or
priority to holders of such other class or series; (b) on a parity with another
class or series either as to dividends or upon liquidation, whether or not the
dividend rates, dividend payment dates, or redemption or liquidation price per
share thereof be different from those of such others, if the holders of such
class or series of stock shall be entitled to receipt of dividends or amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or redemption or liquidation
prices, without preferences or priority over the holders of such other class or
series; and (c) junior to another class or series either as to dividends or upon
liquidation, if the rights of the holders of such class or series shall be
subject or subordinate to the rights of the holders of such other class or
series in respect of the receipt of dividends or the amounts distributable upon
liquidation, dissolution or winding up, as the case may be.
EIGHTH: The number of directors of the Corporation shall be three (3), which
number may be increased or decreased pursuant to the By-Laws of the Corporation,
but shall never be less than the minimum number permitted by the General Laws of
the State of Maryland now or hereafter in force. The names of the directors who
will serve until the first annual meeting and until their successors are elected
and qualify are as follows: Charles H. Foelber, Jack Moseley and Larry P.
Scriggins.
NINTH: The following provisions are hereby adopted for the purpose of
defining, limiting, and regulating the powers of the Corporation and of the
directors and stockholders:
(1) The Board of Directors is hereby empowered to authorize the issuance from
time to time of shares of its stock of any class, whether now or hereafter
authorized, or securities convertible into shares of its stock of any class or
classes, whether now or hereafter authorized, for such consideration as may be
deemed advisable by the Board of Directors and without any action by the
stockholders.
(2) No holder of any stock or any other securities of the Corporation,
whether now or hereafter authorized, shall have any preemptive right to
subscribe for or purchase any stock or any other securities of the Corporation
other than such, if any, as the Board of Directors, in its sole discretion, may
determine and at such price or prices and upon such other terms as the Board of
Directors, in its sole discretion, may fix; and any stock or other securities
which the Board of Directors may determine to offer for subscription may, as the
Board of Directors in its sole discretion shall determine, be offered to the
holders of any class, series or type of stock or other securities at the time
outstanding to the exclusion of the holders of any or all other classes, series
or types of stock or other securities at the time outstanding.
(3) The Board of Directors shall have power from time to time and in its sole
discretion to determine in accordance with sound accounting practice, what
constitutes annual or other net profits, earnings, surplus, or net assets in
excess of capital; to fix and vary from time to time the amount to be reserved
as working capital, or determine that retained earnings or surplus shall remain
in the hands of the Corporation; to set apart out of any funds of the
Corporation such reserve or reserves in such amount or amounts and for such
proper purpose or purposes as it shall determine and to abolish any such reserve
or any part thereof; to distribute and pay distributions or dividends in stock,
cash or other securities or property, out of surplus or any other funds or
amounts legally available therefor, at such times and to the stockholders of
record on such dates as it may, from time to time, determine; and to determine
whether and to what extent and at what times and places and under what
conditions and regulations the books, accounts and documents of the Corporation,
or any of them shall be open to the inspection of stockholders, except as
otherwise provided by statute or by the By-Laws, and, except as so provided, no
stockholder shall have any right to inspect any book, account or document of the
Corporation unless authorized so to do by resolution of the Board of Directors.
(4) A contract or other transaction between the Corporation and any of its
directors or between the Corporation and any other corporation, firm or other
entity in which any of its directors is a director or has a material financial
interest is not void or voidable solely because of any one or more of the
following: the common directorship or interest; the presence of the director at
the meeting of the Board of Directors which authorizes, approves, or ratifies
the contract or transaction; or the counting of the vote of the director for the
authorization, approval, or ratification of the contract or transaction. This
Section applies if:
(a) the fact of the common directorship or interest is disclosed or
known to: the Board of Directors and the Board authorizes, approves, or ratifies
the contract or transaction by the affirmative vote of a majority of
disinterested directors, even if the disinterested directors constitute less
than a quorum; or the stockholders entitled to vote, and the contract or
transaction is authorized, approved, or ratified by a majority of the votes cast
by the stockholders entitled to vote other than the votes of shares owned of
record or beneficially by the interested director or corporation, firm, or other
entity; or
(b) the contract or transaction is fair and reasonable to the
Corporation.
Common or interested directors or the stock owned by them or by an
interested corporation, firm, or other entity may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or at a meeting of
the stockholders, as the case may be, at which the contract or transaction is
authorized, approved, or ratified. If a contract or transaction is not
authorized, approved, or ratified in one of the ways provided for in clause (a)
of the second sentence of this Section, the person asserting the validity of the
contract or transaction bears the burden of proving that the contract or
transaction was fair and reasonable to the Corporation at the time it was
authorized, approved, or ratified. The procedures in this Section do not apply
to the fixing by the Board of Directors of reasonable compensation for a
director, whether as a director or in any other capacity.
(5) The Corporation shall indemnify (a) its directors to the full extent
provided by the General Laws of the State of Maryland now or hereafter in force,
including the advance of expenses under the procedures provided by such laws;
(b) its officers to the same extent it shall indemnify its directors; and (c)
its officers who are not directors to such further extent as shall be authorized
by the Board of Directors and be consistent with law. The foregoing shall not
limit the authority of the Corporation to indemnify other employees and agents
consistent with law.
(6) The Corporation reserves the right from time to time to make any
amendments of its charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as expressly set
forth in its charter, of any of its outstanding stock by classification,
reclassification or otherwise; but no such amendment which changes such terms or
contract rights of any of its outstanding stock shall be valid unless such
amendment shall have been authorized by not less than a majority of the
aggregate number of the votes entitled to be cast thereon, by a vote at a
meeting or in writing with or without a meeting.
(7) To the fullest extent permitted by Maryland statutory or decisional law,
as amended or interpreted, no director or officer of this Corporation shall be
personally liable to the Corporation or its stockholders for money damages. No
amendment of the Charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the benefits provided to directors and officers under
this provision with respect to any act or omission which occurred prior to such
amendment or repeal. The enumeration and definition of particular powers of the
Board of Directors included in the foregoing shall in no way be limited or
restricted by reference to or inference from the terms of any other clause of
this or any other Article of the charter of the Corporation, or construed as or
deemed by inference or otherwise in any manner to exclude or limit any powers
conferred upon the Board of Directors under the General Laws of the State of
Maryland now or hereafter in force.
TENTH: The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation
acknowledging the same to be my act, on July 22,1981.
Witness:
/SAMUEL H. McCOY, II/ /ELVER T. PEARSON/
USF&G CORPORATION
ARTICLES OF AMENDMENT
USF&G CORPORATION, a Maryland corporation , having its principal office in
Baltimore City, Maryland (which is hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended as follows:
(a) By changing and reclassifying each one (1) share of Common Stock,
$2.50 par value, issued at the time of effectiveness of this Amendment into
two (2) shares of Common Stock, $2.50 par value; and
(b) by deleting Article SIXTH of the Articles of Incorporation in its
entirety and in lieu thereof substituting the following:
"SIXTH: The total number of shares of stock of all classes which
the Corporation has authority to issue is 132,000,000 shares having an aggregate
par value of $900,000,000, of which 120,000,000 shares of the par value of $2.50
per share, amounting in aggregate par value to $300,000,000, shall be Common
Stock, and 12,000,000 shares of the par value of $50.00 per share, amounting in
aggregate par value to $600,000,000, shall be Preferred Stock."
SECOND: (a) As of immediately before the amendment the total number of shares
of stock of all classes which the Corporation has authority to issue is
44,000,000 shares, of which 4,000,000 shares are Preferred Stock (par value
$50.00 per share) and 40,000,000 shares are Common Stock (par value $2.50 per
share).
(b) As amended the total number of shares of stock of all classes
which the Corporation has authority to issue is 132,000,000 shares, of which
12,000,000 shares are Preferred Stock (par value $50.00 per share) and
120,000,000 shares are Common Stock (par value $2.50 per share).
(c) The aggregate par value of all shares having a par value is
$300,000,000 before the amendment and $900,000,000 as amended.
(d) The descriptions of each class of stock of the Corporation
are not changed by the amendment.
THIRD: The foregoing amendment to the Charter of the Corporation has been
advised by the Board of Directors and approved by the stockholders of the
Corporation.
FOURTH: The foregoing amendment to the Charter of the Corporation shall be
effective as of 5:00 p.m., Baltimore Time, on May 14, 1984.
IN WITNESS WHEREOF, USF&G CORPORATION has caused these presents to be signed
in its name and on its behalf by its Chairman of the Board and President and
witnessed by its Secretary on May 14, 1984.
WITNESS: USF&G CORPORATION
By: /s/William F. Spliedt, /s/Jack Moseley,
Secretary Chairman of the Board and President
THE UNDERSIGNED, Chairman of the Board and President of USF&G CORPORATION,
who executed on behalf of the Corporation the foregoing Articles of Amendment of
which this certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles of Amendment to be the
corporate act of said Corporation and hereby certifies that to the best of his
knowledge, information, and belief the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
Jack Moseley,
Chairman of the Board and President
ARTICLES SUPPLEMENTARY
ARTICLES SUPPLEMENTARY
$4.10 SERIES A CONVERTIBLE EXCHANGEABLE
PREFERRED STOCK
OF
USF&G CORPORATION
USF&G CORPORATION, a Maryland corporation, having its principal office in
Baltimore City, Maryland (the "Corporation"), hereby certifies to the Maryland
State Department of Assessments and Taxation that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Article Seventh of the Charter of the Corporation, the Board
of Directors has duly divided and classified 4,000,000 shares of the Preferred
Stock of the Corporation into a series designated $4.10 Series A Convertible
Exchangeable Preferred Stock and has provided for the issuance of such series.
SECOND: The terms of the $4.10 Series A Convertible Exchangeable Preferred
Stock are as follows:
(i) Designation and Amount. The designation of said series of the
Preferred Stock shall be "$4.10 Series A Convertible Exchangeable Preferred
Stock" (the "Series A"). The number of shares of Series A shall initially be
4,000,000, subject to increase or decrease by action of the Board of Directors
effectuated by further Articles Supplementary.
(ii) Dividends. Holders of shares of Series A will be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available therefor, dividends from the date of issue thereof at the annual rate
of $4.10 per share, payable quarterly, in arrears, on January 31, April 30, July
31 and October 31, (a "Dividend Payment Date") in each year, commencing on
October 31, 1986. Such dividends shall be cumulative with respect to each share
from the date of original issuance, whether or not earned or declared. The
holders of Series A will not be entitled to any dividends other than the cash
dividends described in this Clause (ii). Unless full cumulative dividends on all
outstanding shares of Series A or any other class of preferred stock ranking on
a parity with the Series A as to dividends and upon liquidation at the time such
dividends are payable ("Parity Stock") have been paid or are contemporaneously
declared and paid (or declared and a sum sufficient for the payment thereof is
set apart for such payment), the Corporation will not (a) declare or pay any
dividend on the Common Stock, $2.50 par value (the "Common Stock"), of the
Corporation or on any other class of stock ranking junior to the Series A as to
dividends and upon liquidation (the Common Stock and any such junior class being
the "Junior Stock") or make any payment on account of, or set apart money for, a
sinking or other analogous fund for, the purchase, redemption or other
retirement of, any Junior Stock or make any distribution in respect thereof,
either directly or indirectly and whether in cash or property or in obligations
or shares of the Corporation (other than in shares of Junior Stock) or (b)
purchase any shares of Series A or Parity Stock (except for consideration
payable in Junior Stock) or redeem fewer than all of the shares of Series A or
Parity Stock then outstanding. Unless and until all dividends accrued and
payable but unpaid on the Series A and any Parity Stock at the time outstanding
have been paid in full, all dividends declared by the Corporation upon such
Series A or Parity Stock shall be declared pro rata with respect to all Series A
and Parity Stock then outstanding, so that the amounts of any dividends declared
on the Series A and such Parity Stock shall in all cases bear to each other the
same ratio that, at the time of such declaration, all accrued and payable but
unpaid dividends on the Series A and such other Parity Stock, respectively, bear
to each other.
(iii) Optional Redemptions for Cash. Shares of Series A shall be
redeemable at the option of the Corporation at any time on or after
October 31, 1989 at the following redemption prices per share, if redeemed
during the 12-month period beginning October 31 in each of the following years:
Redemption
Year Price
1989 $52.87
1990 52.46
1991 52.05
1992 51.64
1993 51.23
1994 50.82
1995 50.41
and on or after October 31, 1996 at $50 per share, plus, in each case, any
accrued and unpaid dividends thereon.
The Corporation may not purchase or redeem less than all the Series A and
Parity Stock then outstanding if, as of such time, the Corporation has failed to
pay all accrued and unpaid dividends thereon, whether or not earned or declared.
The Corporation will mail notice of redemption to each holder of record of
Series A to be redeemed no less than 20 nor more than 60 days prior to the
redemption date. Such notice shall specify the time and place of such
redemption, the number of shares to be redeemed and the Conversion Price as
defined in Clause (vi) below, the date on which the right to convert the Series
A to be redeemed will terminate and the place or places where such Series A may
be surrendered for conversion. Such notice shall be given by first class mail,
postage prepaid, to the holders of record of the shares of Series A to be
redeemed at their respective addresses as the same shall appear on the books of
the Corporation, but neither failure to mail such notice, nor any defect therein
or in the mailing thereof, to any particular holder shall affect the sufficiency
of the notice or the validity of the proceedings for redemption with respect to
the other holders. Any notice which was mailed in the manner herein provided
shall be conclusively presumed to have been duly given whether or not the holder
receives the notice. If fewer than all of the shares of Series A are to be
redeemed, the shares to be redeemed shall be selected by lot or pro rata or in
some other equitable manner determined by the Corporation.
If a notice of redemption has been given pursuant to this Clause (iii) and if,
on or before the date fixed for redemption, the funds necessary for such
redemption shall have been set aside by the Corporation, separate and apart from
its other funds, in trust for the pro rata benefit of the holders of the shares
so called for redemption, then on and after the redemption date, notwithstanding
that any certificates for such shares have not been surrendered for
cancellation, dividends shall cease to accrue on the shares of Series A to be
redeemed, such shares shall no longer be deemed to be outstanding and all rights
of the holders of such shares as stockholders of the Corporation shall cease
except the right to receive the moneys payable upon such redemption, without
interest, upon surrender of the certificates evidencing such shares.
(iv) Optional Redemption Through Debenture Exchange.
(A) Shares of Series A shall be redeemable at the option of the
Corporation, in whole but not in part, on any Dividend Payment Date beginning
October 31, 1989, to and including October 31, 2011, through the issuance of the
Corporation's 8.2% Convertible Subordinated Debentures due October 31, 2011
(hereinafter referred to as the "Debentures") in redemption of and in exchange
for the shares of Series A, in the manner provided in this Clause (iv).
(B) Holders of Series A will be entitled to receive $50 principal
amount of the Debentures for each share of Series A held by them on the Exchange
Date (as hereinafter defined).
(C) The Corporation will mail notice of its intention to redeem
through such an exchange to each holder of record of the shares of Series A no
less than 20 nor more than 60 days prior to the redemption date. Such notice
shall be given by first class mail, postage prepaid to the holders of record of
shares of Series A at their respective addresses as the same shall appear on the
books of the Corporation, specifying the effective date of the exchange (the
"Exchange Date") and the place where certificates for shares of Series A are to
be surrendered for Debentures and stating that dividends on shares of Series A
will cease to accrue on the Exchange Date, but neither failure to mail such
notice, nor any defect therein or in the mailing thereof, to any particular
holder shall affect the sufficiency of the notice or the validity of the
proceedings for redemption and exchange with respect to the other holders. Any
notice which was mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the holder received the notice.
If notice of redemption and exchange has been given pursuant to this Clause (iv)
then on or after the Exchange Date (unless the Corporation shall default in
issuing Debentures in redemption of and in exchange for shares of Series A) and
notwithstanding that any certificates for shares of this series have not been
surrendered for exchange, the rights of the holders of the Series A as
stockholders of the Corporation shall cease (except the right to receive accrued
and unpaid dividends to the date of redemption, whether or not earned or
declared), and the person or persons entitled to receive the Debentures issuable
upon such redemption and exchange shall be treated for all purposes as the
registered holder or holders of such Debentures. Upon the surrender (and
endorsement, if required by the Corporation) in accordance with such notice of
the certificates for shares of Series A, such certificates shall be exchanged
for Debentures and such accrued dividends in accordance with this Clause (iv).
(D) Prior to issuance of the Debentures, the Corporation will use
reasonable efforts to list the Debentures for trading on the New York Stock
Exchange or, if they cannot be so listed, the Corporation will use reasonable
efforts to list the Debentures on another principal national securities exchange
or include them on a national quotations system.
(v) Liquidation.
(A) In case of the voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation, the holders of any shares of Series A are
entitled to receive a liquidation preference of $50 per share, plus an amount
equal to the dividends accrued and unpaid thereon to the payment date, before
any distribution is made to the holders of Junior Stock.
(B) The holders of shares of Series A and all Parity Stock shall
share ratably, in accordance with the respective amounts payable thereon, in any
such distribution which is not sufficient to pay in full the aggregate of the
amounts payable thereon. After payment in full of the liquidation price to which
the holders of shares of Series A are entitled, the holders of shares of Series
A will not be entitled to any further participation in any distribution of
assets by the Corporation.
(C) Neither a consolidation or merger of the Corporation with or
into any other corporation, nor a merger of any other corporation with or into
the Corporation, nor a sale or transfer of all or substantially all of the
Corporation's assets for cash or securities nor a statutory share exchange in
which stockholders of the Corporation may participate shall be considered a
liquidation, dissolution or winding-up of the Corporation within the meaning of
this Clause (v).
(vi) Conversion.
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A shall be convertible at the option of the holder thereof,
in the manner hereinafter set forth, into fully paid and nonassessable shares of
Common Stock at the conversion price, determined as hereinafter provided, in
effect on the date of conversion, provided that if any of the Series A is called
for redemption (whether for cash or Debentures), the conversion rights
pertaining thereto will terminate at the close of business on the redemption
date. The price at which shares of Common Stock shall be delivered upon
conversion (hereinafter referred to as the "Conversion Price") shall be
initially $46.00 per share of Common Stock. The Conversion Price shall be
adjusted in certain instances as provided in subclause (B) of this Clause (vi).
Any holder of shares of Series A desiring to convert the same into shares of
Common Stock shall surrender the certificate or certificates for the shares of
Series A being converted, duly endorsed or assigned to the Corporation or in
blank, at the principal office of the Corporation or at a bank or trust company
appointed by the Corporation for that purpose, accompanied by a written notice
of conversion specifying the number (in whole shares) of shares of Series A to
be converted and the name or names in which such holder wishes the certificate
or certificates for shares of Common Stock to be issued; in case such notice
shall specify a name or names other than that of such holder, such notice shall
be accompanied by payment of all transfer taxes payable upon the issue of shares
of Common Stock in such name or names. In case less than all of the shares of
Series A represented by a certificate are to be converted by a holder, upon such
conversion the Corporation shall issue and deliver or cause to be issued and
delivered, to the holder a certificate or certificates for the shares of Series
A not so converted. The holders of shares of Series A at the close of business
on a dividend payment record date shall be entitled to receive the dividend
payable on such shares (except shares called for redemption on a redemption date
between such record date and the Dividend Payment Date) on the corresponding
dividend payment date notwithstanding the conversion thereof or the
Corporation's default on payment of the dividend due on such Dividend Payment
Date. However, shares of Series A surrendered for conversion during the period
from the close of business on any dividend payment record date for the Series A
to the opening of business on the corresponding Dividend Payment Date (except
shares called for 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. A holder of shares of Series A on a dividend
payment record date who (or whose transferee) converts shares of Series A on a
dividend payment date will receive the dividend payable on such shares by the
Corporation on such date, and the converting holder need not include payment in
the amount of such dividend upon surrender of shares of Series A for conversion.
Except as provided above, no payment or adjustment will be made on account of
accrued or unpaid dividends upon the conversion of shares of Series A.
(B) The Conversion Price shall be adjusted from time to time as
follows:
(1) on any class of capital stock of the Corporation in shares
of Common Stock, the Conversion Price in effect at the opening of business on
the day following the date fixed for the determination of stockholders 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, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination.
(2) In case the Corporation shall issue rights or warrants to
all holders of its shares of Common Stock entitling them to subscribe for or
purchase Common Stock at a price per share less than the current market price
per share (determined as provided in subclause (C)) of the Common Stock on the
date fixed for the determination of stockholders 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
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 plus the number of shares of Common Stock
which the aggregate of the offering price of the total number 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.
(3) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares, the Conversion Price in effect at
the opening of business on the day following the day upon which such subdivision
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, 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.
(4) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of shares of Common Stock evidences of indebtedness or
assets (including securities, but excluding any rights or warrants referred to
in subclause (B)(2), any dividend or distribution paid in cash out of the earned
surplus of the Corporation and any dividend or distribution referred to in
subclause (B)(1), the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying 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 a
fraction of which the numerator shall be the current market price per share
(determined as provided in subclause (C)) of the Common Stock on the date fixed
for such determination less the then fair market value (as determined by the
Board of Directors, whose determination shall be conclusive) of the portion of
the assets or evidences of indebtedness so distributed allocable to one share of
Common Stock and the denominator shall be such current market price per share of
the Common Stock, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the determination of
stockholders entitled to receive such distribution.
(5) The reclassification of Common Stock into securities other
than Common Stock (other than any reclassification upon a consolidation or
merger to which subclause (F) applies) shall be deemed to involve (a) a
distribution of such securities other than Common Stock to all holders of Common
Stock (and the effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled to receive such
distribution" and the "date fixed for such determination" within the meaning of
subclause (B)(4), and (b) a subdivision or combination, as the case may be, of
the number of shares of Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be "the day upon which such subdivision becomes effective", or "the
day upon which such combination becomes effective", as the case may be, and "the
day upon which such subdivision or combination becomes effective" within the
meaning of subclause (B)(3) of this Section).
(C) For the purpose of any computation under subclauses (B)(2) and
(B)(4), the current market price per share of Common Stock on any day shall be
deemed to be the average of the daily Closing Prices for the 15 consecutive
Business Days selected by the Board of Directors commencing not less than 20 nor
more than 30 Business Days before the day in question. The term "Closing Price"
on any day shall mean the reported last sale price or, in case no such reported
sale takes place on such day, the average of the reported closing bid and asked
prices regular way, in either case on the New York Stock Exchange, or, if the
Common Stock is not listed or admitted to trading on such Exchange, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the National Association of Securities Dealers Automated
Quotations National Market System or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors for that purpose; and the
term "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday, and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.
(D) Notwithstanding the provisions of subclause (B) above, no
adjustment in the Conversion Price shall be required unless such adjustment
(plus any adjustments not previously made by reason of this subclause (D)) would
require an increase or decrease of at least 1% in such price; provided, however,
that any adjustments which by reason of this subclause (D) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Clause (vi) shall be made to the nearest
cent.
(E) The Corporation may make such reductions in the Conversion
Price, in addition to those required by this Clause (vi), as it considers to be
advisable in order to avoid or diminish any income tax to any holder of shares
of Common Stock resulting from any dividend or distribution of stock or issuance
of rights or warrants to purchase or subscribe forstock or from any event
treated as such for income tax purposes or for any other reasons. The
Corporation shall have the power to resolve any ambiguity or correct any error
in this Clause (vi) and its actions in so doing shall be final and conclusive.
(F) In case the Corporation shall effect any capital reorganization
of the Common Stock (other than a subdivision, combination, capital
reorganization or reclassification provided for in subclause (B)) or shall
consolidate, merge or engage in a statutory share exchange with or into any
other corporation (other than a consolidation, merger or share exchange in which
the Corporation is the surviving corporation and each share of Common Stock
outstanding immediately prior to such consolidation or merger is to remain
outstanding immediately after such consolidation or merger) or shall sell or
transfer all or substantially all its assets to any other corporation, lawful
provision shall be made as a part of the terms of such transaction whereby the
holders of shares of Series A shall receive upon conversion thereof, in lieu of
each share of Common Stock which would have been issuable upon conversion of
such shares if converted immediately prior to the consummation of such
transaction, the same kind and amount of stock (or other securities, cash or
property, if any) as may be issuable or distributable in connection with such
transaction with respect to each share of Common Stock outstanding at the
effective time of such transaction, subject to subsequent adjustments for
subsequent stock dividends and distributions, subdivisions or combinations of
shares, capital reorganizations, reclassifications, consolidations mergers or
share exchanges as nearly equivalent as possible to the adjustments provided for
in this Clause (vi).
(G) Whenever the Conversion Price is adjusted as herein provided:
(1) the Corporation shall compute the adjusted Conversion
Price and shall cause to be prepared a certificate signed by the chief financial
or accounting officer of the Corporation setting forth the adjusted Conversion
Price and showing in reasonable detail the facts upon which such adjustment is
based and the computation thereof and such certificate shall forthwith be filed
with each transfer agent for the shares of Series A; 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 to the holders of record of outstanding shares of Series
A.
(H) In case:
(1) the Corporation shall declare a dividend or other
distribution on its shares of Common Stock otherwise than in cash out of its
earned surplus;
(2) the Corporation shall authorize the granting to the
holders of its shares of Common Stock of rights or warrants entitling them to
subscribe for or purchase any shares of capital stock of any class or of any
other rights;
(3) of any reclassification of the shares of Common Stock
(other than a subdivision or combination of its outstanding shares of Common
Stock), or of any consolidation, merger or share exchange to which the
Corporation is a party and for which approval of any stockholders of the
Corporation is required, or of the sale or transfer of all or substantially all
the assets of the Corporation; or
(4) of the voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation;
then the Corporation shall cause to be mailed to each transfer agent for the
shares of Series A and to the holders of record of the outstanding shares of
Series A, at least 20 days (or 10 days in any case specified in subclauses (1)
or (2) above) prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date as of which the holders of record of
shares of Common Stock to be entitled to such dividend, distribution, rights or
warrants are to be determined, or (y) the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer, liquidation, dissolution
or winding-up is expected to become effective and the date as of which it is
expected that holders of record of shares of Common Stock shall be entitled to
exchange their shares for securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, share exchange, sale, transfer,
liquidation, dissolution or winding-up. Such notice shall also state whether
such transaction will result in any adjustment in the Conversion Price
applicable to the shares of Series A and, if so, shall state what the adjusted
Conversion Price will be and when it will become effective. Neither the failure
to give the notice required by this subclause (H), nor any defect therein, to
any particular holder shall affect the sufficiency of the notice or the legality
or validity of the proceedings described in subclauses (H)(1) through (H)(4).
(I) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock, for the purpose of
issuance upon conversion of shares of Series A, the full number of shares of
Common Stock then issuable upon the conversion of all shares of Series A then
outstanding and shall take all action necessary so that shares of Common Stock
so issued will be validly issued, fully paid and nonassessable.
(J) The Corporation will pay any and all stamp or similar taxes that
may be payable in respect of the issuance or delivery of shares of Common Stock
on conversion of shares of Series A. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of shares of Common Stock in a name other than that
in which the shares of Series A so converted were registered, and no such
issuance or delivery shall be made unless and until the person requesting such
issuance has paid to the Corporation the amount of any such tax or has
established to the satisfaction of the Corporation that such tax has been paid.
(K) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of shares of Series A. If any such
conversion would otherwise require the issuance of a fractional share an amount
equal to such fraction multiplied by the Closing Price per share of Common Stock
(determined as provided in subclause (C) above) on the day of conversion shall
be paid to the holder in cash by the Corporation.
(L) The certificate of any independent firm of public accountants of
recognized standing selected by the Board of Directors shall be presumptive
evidence of the correctness of any computation made under this Clause (vi).
(vii) Voting Rights. Except as otherwise required by law, holders of
shares of Series A shall have no voting rights; provided, however, that:
(A) Dividend Defaults.
(1) If on the date used to determine stockholders of record
for any meeting of stockholders for the election of directors, accrued dividends
on the shares of Series A or any Parity Stock shall not have been paid in an
aggregate amount equal to or greater than six quarterly dividends on the shares
of Series A or such Parity Stock at the time outstanding, then, and in any such
event, the number of Directors then constituting the entire Board of Directors
of the Corporation shall automatically be increased by two Directors and the
holders of shares of Series A and the holders of shares of Parity Stock, voting
together as a single class, shall be entitled at such meeting to fill such newly
created directorships. Such right to vote as a single class to elect two
Directors shall, when vested, continue until all dividends in default on the
shares of Series A and such Parity Stock, as the case may be, shall have been
paid in full and, when so paid, such right to elect two Directors separately as
a class shall cease, subject, always, to the same provisions for the vesting of
such right to elect two Directors separately as a class in the case of future
dividend defaults.
(2) So long as any shares of Series A are outstanding the
number of Directors of the Corporation shall at all times be such that the
exercise, by the holders of shares of Series A and the holders of shares of
Parity Stock, of the right to elect Directors under the circumstances provided
in paragraph (1) of this subclause (A) will not contravene any provisions of the
Maryland General Corporation Law or the Charter of the Corporation.
(3) Directors elected pursuant to paragraph (1) of this
subclause (A) shall serve until the earlier of (x) the next annual meeting of
the stockholders of the Corporation and the election (by the holders of shares
of Series A and Parity Stock) and qualification of their respective successors
or (y) the date upon which all dividends in default on the shares of Series A
and such Parity Stock shall have been paid in full. Directors elected pursuant
to paragraph (1) of this Subclause (A) may be removed by, and shall not be
removed except by, the vote of the holders of record of the outstanding shares
of Series A and Parity Stock, voting together as a single class without regard
to series, at a meeting of the stockholders, or the holders of shares of Series
A and Parity Stock, called for that purpose. If, prior to the end of the term of
any Director elected as aforesaid, a vacancy in the office of such Director
shall occur during the continuance of a default in dividends on the shares of
Series A or such Parity Stock by reason other than removal, such vacancy shall
be filled for the unexpired term by the appointment by the remaining Director
elected as aforesaid of a new Director for the unexpired term of such former
Director.
(B) Miscellaneous.
(1) Without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A and Parity Stock, voting as a
single class, the Corporation may not:
(x) amend any provision of the Charter which would
materially adversely affect the voting powers (except as such voting powers may
be affected by the authorization of any new series of Parity Stock having the
same voting rights as Series A or by the authorization of any other shares of
any class which are not entitled to vote together with Series A in any class
vote) or other rights or preferences of holders of the shares of Series A; or
(y) authorize or create any class of stock senior to the
Series A as to dividends and upon liquidation.
(2) Without the affirmative vote of the holders of at least a
majority of the outstanding shares of Series A and Parity Stock, voting together
as a single class, the Corporation may not increase the number of shares of
Preferred Stock authorized in Article SEVENTH of the Charter or create any other
class of capital stock of the Corporation ranking on a parity with the Preferred
Stock as to dividends and upon liquidation.
IN WITNESS WHEREOF, USF&G Corporation has caused these presents to be
signed in its name and on its behalf by its President and witnessed by its
Secretary on July 31, 1986.
WITNESS: USF&G CORPORATION
William F. Spliedt Jack Moseley
Secretary President, Chief Executive Officer
and Chairman of the Board
[CORPORATE SEAL]
THE UNDERSIGNED, Chairman of the Board and President of USF&G
Corporation, who executed on behalf of the Corporation Articles Supplementary of
which this Certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles Supplementary to be the
corporate act of said Corporation and hereby certifies that the matters and
facts set forth herein with respect to the authorization and approval thereof
are true in all material respects under the penalties of perjury.
/s/Jack Moseley President, Chief Executive Officer and Chairman of the Board
USF&G CORPORATION
ARTICLES SUPPLEMENTARY
USF&G CORPORATION, a Maryland corporation, having its principal office
in Baltimore City, Maryland (which is hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Article Seventh of the Charter of the
Corporation, the Board of Directors has duly divided and classified 1,200,000
shares of the Preferred Stock of the Corporation into a series designated
"Junior Participating Preferred Stock" and designated and provided for the
issuance of such series pursuant to Articles Supplementary dated October 1, 1987
(the "Articles Supplementary - Junior Participating Preferred Stock") and filed
with the State Department of Assessment and Taxation of Maryland on October 7,
1987.
SECOND: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Section 1 of Article Second of the Articles
Supplementary - Junior Participating Preferred Stock, the Board of Directors has
unanimously adopted a resolution to authorize an increase in the number of
shares constituting such series.
THIRD: The terms of the Junior Participating Preferred Stock as set
forth by the Board of Directors are modified to increase the number of shares
constituting such series by deleting Section 1 of Article Second of the Articles
Supplementary - Junior Participating Preferred Stock in its entirety and in lieu
thereof substituting the following:
"1. Designation and Amount. The shares of
such series shall be designated as "Junior Participating Preferred Stock" (the
"Junior Preferred Stock") and the number of shares constituting such series
shall be 2,400,000, subject to increase or decrease by action of the Board of
Directors effectuated by further Articles Supplementary."
FOURTH: The foregoing Articles Supplementary shall be effective at the
time these Articles Supplementary are accepted for recording by the Maryland
State Department of Assessments and Taxation.
IN WITNESS WHEREOF, USF&G CORPORATION has caused these presents to be signed in
its name and on its behalf by its Chairman of the Board and President and
attested to by its Secretary on April 27, 1995.
ATTEST: USF&G CORPORATION
/s/ John F. Hoffen, Jr. /s/ Norman P. Blake, Jr.
Secretary Chairman of the Board
and President
CERTIFICATION
THE UNDERSIGNED, Chairman of the Board and President of USF&G
Corporation, who executed on behalf of the Corporation the foregoing Articles
Supplementary of which this certificate is made a part, hereby acknowledges in
the name and on behalf of said Corporation the foregoing Articles Supplementary
to be the corporate act of said Corporation and hereby certifies that to the
best of his knowledge, information, and belief the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
---------------------------
Norman P. Blake, Jr.
Chairman of the Board and
President
Junior Participating Preferred Stock
OF
USF&G CORPORATION
USF&G CORPORATION, a Maryland corporation, having its principal office in
Baltimore City, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Article Seventh of the Charter of the Corporation, the Board
of Directors has duly divided and classified 1,200,000 shares of the Preferred
Stock of the Corporation into a series designated "Junior Participating
Preferred Stock" and has provided for the issuance of such series.
SECOND: The terms of the Junior Participating Preferred Stock as set by the
Board of Directors are as follows:
1. Designation and Amount. The shares of such series shall be designated as
"Junior Participating Preferred Stock" (the "Junior Preferred Stock") and the
number of shares constituting such series shall initially be 1,200,000, subject
to increase or decrease by action of the Board of Directors effectuated by
further Articles Supplementary.
2. Dividends and Distributions.
(i) The holders of shares of Junior Preferred Stock, in preference to
the holders of Common Stock and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Junior Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) Sixty-Two dollars ($62.00) or
(b) subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock of the
Corporation or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Junior Preferred Stock. In the event the Corporation
shall at any time after the date hereof declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of Junior Preferred Stock
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount 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.
(ii) The Corporation shall declare a dividend or distribution on the
Junior Preferred Stock as provided in subparagraph (i) of this paragraph 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of Sixty-Two Dollars
($62.00) per share on the Junior Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Junior Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Junior Preferred Stock entitled to receive
a quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Junior Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Junior Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
3. Voting Rights. The holders of shares of Junior Preferred Stock shall
have the following voting rights:
(i) Subject to the provision for adjustment hereinafter set forth, each
share of Junior Preferred Stock shall entitle the holder thereof to 100 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 date hereof declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per share to
which holders of shares of Junior 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.
(ii) Except as otherwise provided herein or by law, the holders of shares
of Junior Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of shareholders of the
Corporation.
(iii) (a) If on the date used to determine stockholders of record for any
meeting of stockholders for the election of directors, accrued dividends on the
shares of Junior Preferred Stock shall not have been paid in an aggregate amount
equal to or greater than six quarterly dividends on the shares of Junior
Preferred Stock at the time outstanding, then, and in any such event, the number
of Directors then constituting the entire Board of Directors of the Corporation
shall automatically be increased by two Directors and the holders of shares of
Junior Preferred Stock and holders of any other shares of the Preferred Stock of
the Corporation then outstanding ranking on a parity with the Junior Preferred
Stock as to dividends and upon liquidation ("Parity Stock"), voting together as
a single class, shall be entitled at such meeting to fill such newly created
directorships. Such right to vote as a single class to elect two Directors
shall, when vested, continue until all dividends in default on the shares of
Junior Preferred Stock shall have been paid in full and, when so paid, such
right to elect two Directors separately as a class shall cease, subject, always,
to the same provisions for the vesting of such right to elect two Directors
separately as a class in the case of future dividend defaults.
(b) So long as any shares of Junior Preferred Stock are outstanding
the number of Directors of the Corporation shall at all times be such that the
exercise, by the holders of shares of Junior Preferred Stock and the holders of
shares of Parity Stock, of the right to elect Directors under the circumstances
provided in paragraph (a) of this subclause (iii) will not contravene any
provisions of the Maryland General Corporation Law or the Charter of the
Corporation.
(c) Directors elected pursuant to paragraph (a) of this subclause
(iii) shall serve until the earlier of (x)the next annual meeting of the
stockholders of the Corporation and the election (by the holders of shares of
Junior Preferred and Parity Stock) and qualification of their respective
successors or (y) the date upon which all dividends in default on the shares of
Junior Preferred and such Parity Stock shall have been paid in full. Directors
elected pursuant to paragraph (a) of this subclause (iii) may be removed by, and
shall not be removed except by, the vote of the holders of record of the
outstanding shares of Junior Preferred and Parity Stock, voting together as a
single class without regard to series, at a meeting of the stockholders, or the
holders of shares of Junior Preferred and Parity Stock, called for that purpose.
If, prior to the end of the term of any Director elected as aforesaid, a vacancy
in the office of such Director shall occur during the continuance of a default
in dividends on the shares of Junior Preferred Stock by reason other than
removal, such vacancy shall be filled for the unexpired term by the appointment
by the remaining Director elected as aforesaid of a new Director for the
unexpired term of such former Director.
(iv) Except as set forth herein, holders of Junior 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 and any other
capital stock of the Corporation having general voting rights as set forth
herein) for taking any corporate action.
4. Certain Restrictions.
(i) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Stock as provided in paragraph 2 of this Section
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(a) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Junior Preferred Stock;
(b) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
dividends paid ratably on the Junior Preferred Stock and all such parity stock
on which dividends are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled; (c) redeem or
purchase or otherwise acquire for consideration shares of any stock ranking
junior either as to dividends or upon liquidation, dissolution or winding up)
with the Junior Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Junior
Preferred Stock; or (d) purchase or otherwise acquire for consideration any
shares of Junior Preferred Stock, or any shares of stock ranking on a parity
with the Junior Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(ii) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under subparagraph (i) of this
paragraph 4, purchase or otherwise acquire such shares at such time and in such
manner.
5. Reacquired Shares. Any shares of Junior Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be classified again and reissued as part of a new series or class of
Preferred Stock to be created by the Board of Directors pursuant to its power
contained in the Charter, subject to the conditions and restrictions on issuance
set forth herein.
6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (a)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock unless,
prior thereto, the holders of shares of Junior Preferred Stock shall have
received One Hundred Forty dollars ($140) per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Junior
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock, or (b) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except distributions made ratably on the Junior Preferred Stock
and all other such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time after the date hereof
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Junior Preferred Stock were entitled
immediately prior to such event under the proviso in clause (a) of the preceding
sentence shall be adjusted by multiplying such amount 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.
7. Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, share exchange, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Junior Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the date hereof declare or
pay any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Junior
Preferred Stock shall be adjusted by multiplying such amount 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.
8. No Redemption. The shares of Junior Preferred Stock shall not be
redeemable.
9. Rank. The Junior Preferred Stock shall rank junior with respect to
payment of dividends and on liquidation to all other Preferred Stock of the
Corporation unless the terms of any other Preferred Stock specifically provide
that it shall rank junior to, or on a parity with, the Junior Preferred Stock.
10. Amendment. The Charter of the Corporation shall not be amended in any
manner that would materially alter or change the powers, preferences or special
rights of the Junior Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds of the outstanding shares of
Junior Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, USF&G Corporation has caused these presents to be signed
in its name and on its behalf by its Executive Vice President and witnessed by
its Secretary on October 1, 1987.
WITNESS: USF&G CORPORATION
By William F.Spliedt, Secretary
Paul J. Scheel, Executive Vice President
THE UNDERSIGNED, Executive Vice President of USF&G Corporation, who executed
on behalf of the Corporation Articles Supplementary of which this Certificate is
made a part, hereby acknowledges in the name and on behalf of said Corporation
the foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect to
the authorization and approval thereof are true in all material respects under
the penalties of perjury.
/s/Paul J. Scheel, Executive Vice President
USF&G CORPORATION
ARTICLES OF AMENDMENT
USF&G CORPORATION, a Maryland corporation, having its principal office in
Baltimore City, Maryland (which is hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended as follows:
Article NINTH of the Charter is amended by adding the following
paragraph (7) to said Article NINTH, as follows:
"(7) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no director or officer of this
Corporation shall be personally liable to the Corporation or its stockholders
for money damages. No amendment of the Charter of the Corporation or repeal of
any of its provisions shall limit or eliminate the benefits provided to
directors and officers under this provision with respect to any act or omission
which occurred prior to such amendment or repeal."
SECOND: The amendment does not increase the authorized stock of the
Corporation.
THIRD: The foregoing amendment to the Charter of the Corporation has been
advised by the Board of Directors and approved by the stockholders of the
Corporation.
IN WITNESS WHEREOF, USF&G CORPORATION has caused these presents to be signed
in its name and on its behalf by its Chairman of the Board and President and
witnessed by its Secretary on May 4, 1988.
WITNESS: USF&G CORPORATION
By: William F. Spliedt, Secretary Jack Moseley, Chairman of the Board
and President
Articles Supplementary
Series B
Cumulative Convertible Preferred Stock
and 11% Preferred Stock of USF&G Corporation
USF&G Corporation, a Maryland Corporation, having its principal office in
Baltimore City, Maryland (the "Corporation"), hereby certifies to the Maryland
State Department of Assessments and Taxation that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article SEVENTH of the Charter of the Corporation, the
Board of Directors has duly divided and classified (i) 1,300,000 shares of the
Preferred Stock of the Corporation into a Series designated Series B Cumulative
Convertible Preferred Stock and has provided for the issuance of such Series and
(ii) 1,000 shares of the Preferred Stock of the Corporation into a Series
designated 11% Preferred Stock and has provided for the issuance of such Series.
SECOND: The terms of the Series B Cumulative Convertible Preferred
Stock are as follows:
(i) Designation and Amount. The designation of the Series of the
Preferred Stock described in clause (i) of Article FIRST hereof shall be "Series
B Cumulative Convertible Preferred Stock" (the "Series B Preferred Stock"),
which shall be further designated into three subseries, being the "Series B
Cumulative Convertible Preferred Stock 1995" (the "Series B Preferred Stock
1995"), the "Series B Cumulative Convertible Preferred Stock 1996" (the "Series
B Preferred Stock 1996") and the "Series B Cumulative Convertible Preferred
Stock 1997" (the "Series B Preferred Stock 1997"). The number of shares of
Series B Preferred Stock shall be 1,300,000, of which 650,000 shall be Series B
Preferred Stock 1995, 325,000 shall be Series B Preferred Stock 1996 and 325,000
shall be Series B Preferred Stock 1997. (ii) Dividends. (a) Rate, etc. Except as
such rate of dividends may be otherwise increased pursuant to the final sentence
of this clause (ii), the holders of shares of Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available therefor, annual dividends from the date of issue
thereof at the rate of $10.25 per share, calculated on the basis of a 360-day
year of 12 30-day months, accruing on a daily basis, payable quarterly, in
arrears, on January 31, April 30, July 31 and October 31 (a "Dividend Payment
Date"), in each year, commencing on July 31, 1991. Such dividends shall be
cumulative with respect to each share from the date of original issuance,
whether or not earned or declared. The rate per annum shall be increased from
$10.25 per share, as set forth in the first sentence of this clause (ii), to
$10.75 per share for the dividend period commencing August 1, 1991; provided,
however, that this sentence shall be and become of no force and effect if the
Corporation shall have received gross proceeds (exclusive of costs of issuance
and underwriters' discounts and commissions) ("Gross Proceeds") of at least
$170,000,000 pursuant to the issuance and sale of capital stock of the
Corporation after the date of issuance of the Series B Preferred Stock and prior
to September 30, 1991.
(b) Rank, etc. The Series B Preferred Stock shall rank on a parity
with the Corporation's $4.10 Series A Convertible Exchangeable Preferred Stock,
11% Preferred Stock (as defined in Article Third (i)) and Series C Cumulative
Convertible Preferred Stock, $50.00 par value (the "Series C Preferred Stock"),
if and when such Series C Preferred Stock, or any other series of Preferred
Stock by its terms ranking on a parity with the Series B Preferred Stock as to
dividends and upon liquidation, is duly divided and classified and so designated
by the Board of Directors, as to dividends and upon liquidation. Unless full
cumulative dividends on all outstanding shares of Series B Preferred Stock or
any other class of Preferred Stock ranking on a parity with the Series B
Preferred Stock as to dividends and upon liquidation at the time such dividends
are payable ("Parity Stock") have been paid or are contemporaneously declared
and paid (or declared and a sum sufficient for the payment thereof is set apart
for such payment), the Corporation will not (1) declare or pay any dividend on
the Common Stock, $2.50 par value (the "Common Stock"), of the Corporation or on
any other class of stock ranking junior to the Series B Preferred Stock as to
dividends and upon liquidation (the Common Stock and any such junior class being
the "Junior Stock") or make any payment on account of, or set apart money for, a
sinking or other analogous fund for the purchase, redemption or other retirement
of, any Junior Stock or make any distribution in respect thereof, either
directly or indirectly and whether in cash or property or in obligations or
shares of the Corporation (other than in shares of Junior Stock) or (2) purchase
any shares of Series B Preferred Stock or Parity Stock (except for consideration
payable in Junior Stock) or redeem fewer than all of the shares of Series B
Preferred Stock or Parity Stock then outstanding. Unless and until all dividends
accrued and payable but unpaid on the Series B Preferred Stock and any Parity
Stock at the time outstanding have been paid in full, all dividends declared by
the Corporation upon such Series B Preferred Stock or Parity Stock shall be
declared with respect to all Series B Preferred Stock and Parity Stock then
outstanding, so that the amounts of any dividends declared on the Series B
Preferred Stock and such Parity Stock shall in all cases bear to each other the
same ratio that, at the time of such declaration, all accrued and payable but
unpaid dividends on the Series B Preferred Stock and such other Parity Stock,
respectively, bear to each other.
(iii) Liquidation. (a) Preference on Liquidation. In the event of
any liquidation, dissolution or winding up of the affairs of the Corporation
(any or all of such events, a "liquidation"), whether voluntary or involuntary,
the holders of shares of Series B Preferred Stock then outstanding shall be
entitled, pari passu as if members of a single class of securities with the
holders of other Parity Stock, to be paid out of the assets of the Corporation,
before any payment shall be made to the holders of the Junior Stock or the
holders of any other capital stock of the Corporation, an amount equal to $100
per share of such Series B Preferred Stock (the "Liquidation Value") plus an
amount equal to the dividends accrued and unpaid thereon to the payment date.
Alternatively, a holder of shares of Common Stock may convert any or all of such
holder's shares of Series B Preferred Stock into shares of Common Stock in
accordance with clause (vi) of this Article SECOND.
(b) Insufficient Assets. If, upon any liquidation of the Corporation,
the assets of the Corporation are insufficient to pay the holders of shares of
the Parity Stock then outstanding the full amounts to which they shall be
entitled, such assets shall be distributed to the holders of the Parity Stock
pro rata in proportion to the amounts to which they shall be entitled.
(c) Rights of Other Holders. In the event of any liquidation, after
payment shall have been made to the holders of the Series B Preferred Stock and
other Parity Stock of all preferential amounts to which they shall be entitled,
the holders of shares of Junior Stock and other capital stock of the Corporation
shall receive such amounts as to which they are entitled by the terms thereof.
(d) Consolidation, Merger or Sale of Assets. Neither a consolidation or merger
of the Corporation with or into any other Corporation, nor a sale or transfer of
all or substantially all of the Corporation's assets for cash or securities nor
a statutory share exchange in which stockholders of the Corporation may
participate shall be considered a liquidation, dissolution or winding-up of the
Corporation within the meaning of this clause (iii). (iv) Redemption. (a)
Special Redemption at Holders' Option Upon Change in Control Event. Subject to
and limited by the provisions of this paragraph, the Series B Preferred Stock
shall be subject to redemption at the option of the holder exercisable for a
period ending 30 days subsequent to receipt by such holder of notice from the
Corporation to the effect that a Change in Control Event (as hereinafter
defined) has occurred, upon written notice to the Corporation by such holder
specifying the number of shares and the subseries of Series B Preferred Stock
held by such holder to be redeemed. The Corporation shall give notice of any
Change in Control Event to the holders of Series B Preferred Stock within five
days of the occurrence of such Change in Control Event. The Corporation shall
redeem the Series B Preferred Stock pursuant to the notice delivered by the
requesting holder at a redemption price per share equal to the Liquidation Value
plus the Redemption Premium (as hereinafter defined) plus dividends accrued
thereon to the date of redemption (the "Special Redemption Price"). Anything in
this clause (iv)(a) to the contrary notwithstanding, the Corporation shall be
required to redeem such Series B Preferred Stock to, and only to, the extent to
which, after receiving notice from the holder, the Corporation shall have, (1)
using its best efforts, offered for sale in one or more issuances,
non-redeemable (other than at the option of the Corporation) capital stock of
the Corporation and (2) received net proceeds from the sale thereof equal to or
greater than the Special Redemption Price with respect to such Series B
Preferred Stock to be redeemed; provided, however, that to the extent such net
proceeds are less than the aggregate amount required to redeem all such Series B
Preferred Stock requested to be redeemed at the Special Redemption Price, the
Corporation shall, to the extent of such net proceeds, redeem such Series B
Preferred Stock pro rata from the holders requesting such redemption. For the
purposes of this clause (iv) the following definitions shall apply:
(A) "Change in Control Event" shall mean (i) the acquisition in one
or more related transactions by any Person of beneficial ownership, direct or
indirect, of securities of the Corporation representing 50% or more of the
combined voting power of the Corporation's then outstanding voting securities,
(ii) the sale, transfer or other disposition in one or more related transactions
of all or substantially all of the assets of the Corporation or (iii) the merger
or consolidation of the Corporation with or into another Person, other than a
wholly-owned subsidiary, unless such merger or consolidation does not result in
a reclassification, conversion, exchange or cancellation of any outstanding
shares of Common Stock of the Corporation.
(B) "Redemption Premium" shall mean:
Period
June 1, 1991 to May 31, 1992 $10.250
June 1, 1992 to May 31, 1993 9.225
June 1, 1993 to May 31, 1994 8.200
June 1, 1994 to May 31, 1995 7.175
June 1, 1995 to May 31, 1996 6.150
June 1, 1996 to May 31, 1997 5.125
June 1, 1997 to May 31, 1998 4.100
June 1, 1998 to May 31, 1999 3.075
June 1, 1999 to May 31, 2000 2.050
June 1, 2000 to May 31, 2001 1.025
June 1, 2001 and thereafter 0
provided, however, that if the dividend rate on the Series B Preferred Stock has
been increased pursuant to the last sentence of Article Second (ii), "Redemption
Premium" shall mean:
Period
June 1, 1991 to May 31, 1992 $10.750
June 1, 1992 to May 31, 1993 9.675
June 1, 1993 to May 31, 1994 8.600
June 1, 1994 to May 31, 1995 7.525
June 1, 1995 to May 31, 1996 6.450
June 1, 1996 to May 31, 1997 5.375
June 1, 1997 to May 31, 1998 4.300
June 1, 1998 to May 31, 1999 3.225
June 1, 1999 to May 31, 2000 2.150
June 1, 2000 to May 31, 2001 1.075
June 1, 2001 and thereafter 0
(b) Optional Redemption Upon Satisfaction of Certain Conditions. The
Series B Preferred Stock shall be subject to redemption, at the option of the
Corporation, in whole or from time to time in part, in each case as set forth in
the second proviso below, (i) at any time on or after June 1, 1994 and prior to
June 1, 1997, at a per share redemption price equal to the Liquidation Value
plus any dividends accrued thereon to the date of redemption, and (ii) at any
time on or after June 1, 1997, at a per share redemption price equal to the
Special Redemption Price; provided, however, that in the event of a redemption
described in clause (i), on the date notice of redemption is given and for each
of the twenty consecutive trading days prior to such date, the closing price for
a share of Common Stock on the principal national securities exchange for such
Common Stock shall be equal to or greater than an amount equal to 150% of the
Conversion Price (as defined in clause (vi) hereof) then in effect; provided,
further, however, that the Corporation may redeem (i) only Series B Preferred
Stock 1995 prior to June 1, 1995 and (ii) only Series B Preferred Stock 1995 or
Series B Preferred Stock 1996 on or after June 1, 1995 and prior to June 1,
1996.
(c) Notice of Redemption. The Corporation shall give each
holder of Series B Preferred Stock written notice of each redemption pursuant to
clause (iv) (b) hereof not less than 30 days nor more than 45 days prior to any
redemption date, specifying such redemption date and the number of shares to be
redeemed on such date. Notice of redemption having been given as aforesaid, the
number of shares to be redeemed as specified in such notice shall be so redeemed
on the redemption date specified, except to the extent that any share of
Series B Preferred Stock which is to be so redeemed shall have been surrendered
to the Corporation for conversion prior to such redemption date in accordance
with clause (vi) hereof.
(d) Effect of Redemption. On or after the date established for
redemption, all rights in respect of the shares of Series B Preferred Stock to
be redeemed, except the right to receive the applicable redemption price,
including premium, if any, plus accrued dividends, if any, to the date of
redemption, shall (unless default shall be made by the Corporation in the
payment of the applicable redemption price, including premium, if any, plus
accrued dividends, if any, in which event such rights shall be exercisable until
such default is cured) cease and terminate, and such shares shall no longer be
deemed to be outstanding, notwithstanding that any certificates representing
such shares shall not have been surrendered to the Corporation.
(e) Conversion Prior to Redemption. Anything to the contrary in
this clause (iv) of this Article SECOND notwithstanding, the holders of Series B
Preferred Stock shall have the right, exercisable at any time prior to the date
set for redemption thereof, to convert all or any part of such Series B
Preferred Stock into shares of Common Stock pursuant to clause (vi) hereof.
(v) Voting Rights. Excepting the rights specified below in this
clause (v), the holders of the Series B Preferred Stock shall not be entitled to
any voting rights. For purposes of this clause (v) and in any case where the
holders of the Series B Preferred Stock are entitled to vote upon any matter
together with holders of Parity Stock as a single class, holders of Series B
Preferred Stock shall have a number of votes per share determined by dividing
the Liquidation Value of such share by $50.00.
(a) Voting Rights Related to Unpaid Dividends.
(1) If on the date used to determine stockholders of record for any
meeting of stockholders for the election of directors, accrued dividends on the
shares of Series B Preferred Stock or any Parity Stock shall not have been paid
in an aggregate amount equal to or greater than two quarterly dividends on the
shares of Series B Preferred Stock or such Parity Stock at the time outstanding,
then, and in any such event, the number of Directors then constituting the
entire Board of Directors of the Corporation shall automatically be increased by
two Directors and the holders of shares of Series B Preferred Stock and the
holders of shares of Parity Stock, voting together as a single class, shall be
entitled at such meeting to fill such newly created directorships. Such right to
vote as a single class to elect two Directors shall, when vested, continue until
all dividends in default on the shares of Series B Preferred Stock and such
Parity Stock, as the case may be, shall have been paid in full and, when so
paid, such right to elect two Directors separately as a class shall cease,
subject, always, to the same provisions for the vesting of such right to elect
two Directors separately as a class in the case of future dividend defaults.
(2) So long as any shares of Series B Preferred Stock are outstanding
the number of Directors of the Corporation shall at all times be such that the
exercise, by the holders of shares of Series B Preferred Stock and the holders
of shares of Parity Stock, of the right to elect Directors under the
circumstances provided in paragraph (1) of this subclause (a) will not
contravene any provisions of the Maryland General Corporation Law or the Charter
of the Corporation.
(3) Directors elected pursuant to paragraph (1) of this subclause (a)
shall serve until the earlier of (A) the next annual meeting of the stockholders
of the Corporation and the election (by the holders of shares of Series B
Preferred Stock and Parity Stock) and qualification of their respective
successors or (B) the date upon which all dividends in default on the shares of
Series B Preferred Stock and such Parity Stock shall have been paid in full.
Directors elected pursuant to paragraph (1) of this subclause (a) may be removed
by, and shall not be removed except by, the vote of the holders of record of the
outstanding shares of Series B Preferred Stock and Parity Stock, voting together
as a single class without regard to Series, at a meeting of the stockholders, or
the holders of shares of Series B Preferred Stock and Parity Stock, called for
that purpose. If, prior to the end of the term of any Director elected as
aforesaid, a vacancy in the office of such Director shall occur during the
continuance of a default in dividends on the shares of Series B Preferred Stock
or such Parity Stock by reason other than removal, such vacancy shall be filled
for the unexpired term by the appointment by the remaining Director elected as
aforesaid of a new Director for the unexpired term of such former Director.
(b) Additional Capital Stock, etc. The Corporation shall not,
without the affirmative consent or approval of the holders of shares
representing at least 66-2/3% of the Series B Preferred Stock then outstanding,
voting as a single class (such consent or approval to be given by written
consent in lieu of a meeting or by vote at a meeting called for such purpose for
which notice shall have been given to the holders of the Series B Preferred
Stock): (i) authorize the issuance of any new, or increase the authorized number
of shares of any existing, class of capital stock of the Corporation which would
be senior or superior as to dividends and upon liquidation to the Series B
Preferred Stock, (ii) increase the number of shares of Preferred Stock
authorized in the Charter or create any other class of stock (or any other
Series of Preferred Stock) ranking on a parity with the Series B Preferred
Stock, 11% Preferred Stock, Series C Preferred Stock and any other Parity Stock
(which other Parity Stock, together with the Series C Preferred Stock, shall not
exceed $170,000,000 in Liquidation Value plus an additional $25,500,000 in
Liquidation Value of such stock which may be issued pursuant to an underwriter's
over-allotment option) issued or issuable as part of the Total Equity Financing
(as defined below) as to dividends and upon liquidation, (iii) reissue any
shares of Series B Preferred Stock that have been redeemed or (iv) take any
action to cause any amendment, alteration or repeal of any of the provisions of
the Charter that would materially adversely affect the rights of holders of
Series B Preferred Stock.
(vi) Conversion Rights. (a) Optional Conversion of Series B Preferred
Stock. The holder of a share of Series B Preferred Stock shall have the right,
at such holder's option, at any time or from time to time to convert such share
of Series B Preferred Stock into such number of fully paid and nonassessable
shares of Common Stock (the "Conversion Shares") as is obtained by dividing the
Liquidation Value by $12.025, being a price equal to the sum of (i) the average
of the closing price for Common Stock on the New York Stock Exchange for each of
the 20 consecutive trading days immediately preceding the date of issue of the
Series B Preferred Stock (the "Average Price") plus (ii) 15% of the Average
Price (the "Initial Conversion Price").
(b) If at any time after the date hereof and prior to June 1,
1992 the Corporation (i) shall have issued or sold any convertible security or
instrument convertible into Common Stock at less than the Initial Conversion
Price or (ii) shall have issued or sold any Common Stock at a price per share
less than the Average Price or (iii) shall have issued or sold warrants, options
or rights to purchase Common Stock at a price such that the sum of such price
and the price at which such instrument maybe exercised is less than the Initial
Conversion Price, then the Initial Conversion Price shall be adjusted to (xx)
the price at which such convertible security or instrument may be exercised or
(yy) the sale price of such Common Stock plus 15% of such sale price or (zz) the
sum of the price of such instrument and its exercise price, respectively;
provided, however, that there shall not be taken into account for the purposes
of such adjustment (A) stock, options or rights issued to the officers or key
employees of the Corporation and of its subsidiaries or the issuance of any
securities pursuant to employee stock purchase plans or (B) any sale or issuance
of such securities, instruments, capital stock or warrants that yields Gross
Proceeds (including further proceeds, if any, upon the exercise thereof) of less
than $15,000,000 in the aggregate; provided, further, however that in any case
the Initial Conversion Price shall not be less than $10.00. If the Initial
Conversion Price should be adjusted pursuant to clause (xx), (yy) or (zz) above
prior to December 31, 1991 and such adjustment would result in the Series B
Preferred Stock being convertible into more shares of Common Stock than the
Corporation has authorized and reserved for such purpose, then no such
adjustment shall be made at such time; provided, however, that the Corporation
shall use its best efforts to increase the number of authorized and reserved
shares of Common Stock to a number sufficient to effect such adjustment as
promptly as practicable; provided, further, however, that any adjustment not
made as a result of this sentence shall be made immediately upon the increase of
authorized shares of Common Stock. The provisions of this paragraph (b) shall be
of no further force and effect and the adjustments to the Initial Conversion
Price required by this paragraph shall not be made for any event that occurs
from and after the date, if any, that the Total Equity Financing (as hereinafter
defined) exceeds $250,000,000. For the purposes of this clause (vi) of this
Article Second, "Total Equity Financing" shall at any date mean Gross Proceeds
(calculated using the Liquidation Value with respect to the Series B Preferred
Stock) from the sale, on and after the date of issuance of the Series B
Preferred Stock, of capital stock of the Corporation (including Series B
Preferred Stock and Series C Preferred Stock, but excluding the issuance of any
11% Preferred Stock) or any other securities convertible into or exchangeable
for capital stock of the Corporation.
(c) If the Initial Conversion Price would have been reduced to less
than $10.00 pursuant to any provision of clause (vi) (b) above but for the
provisos therein prohibiting any Initial Conversion Price below $10.00 (the
Initial Conversion Price as so adjusted without regard to any prohibition on a
price below $10.00, being referred to as the "Fully Adjusted Conversion Price"),
the Corporation shall, without additional consideration therefor, issue a number
of shares of its 11% Preferred Stock to each holder of Series B Preferred Stock
calculated pursuant to the following formula: Fully Adjusted Conversion Price
multiplied by Incremental Shares multiplied by 0.5, divided by $10,000. For the
purposes of this paragraph (c) "Incremental Shares" shall mean (A) that number
of shares of Common Stock that each holder of Series B Preferred Stock would
have received upon conversion of such Series B Preferred Stock if the Initial
Conversion Price had been the Fully Adjusted Conversion Price, less (B) that
number of shares of Common Stock each holder will receive upon conversion
assuming an Initial Conversion Price of $10.00.
Initial Conversion Price and Fully Adjusted Conversion Price,
individually or collectively, as applicable, are hereinafter referred to as the
"Conversion Price." The Conversion Shares and the Conversion Price are subject
to certain adjustments as set forth herein, and the terms Conversion Shares and
Conversion Price as used herein shall as of any time be deemed to include all
such adjustments to be given effect as of such time in accordance with the terms
hereof.
Upon the exercise of the option of the holder of any shares of Series
B Preferred Stock to convert Series B Preferred Stock into Common Stock, the
holder of such shares of Series B Preferred Stock to be converted shall
surrender the certificates representing the shares of Series B Preferred Stock
so to be converted in the manner provided in clause (vi)(d) below.
(d) Delivery of Stock Certificates; No Fractional Shares. The holder
of any shares of Series B Preferred Stock may exercise the conversion right
pursuant to clause (vi) (a) above by delivering to the Corporation during
regular business hours at the office of the Corporation the certificate or
certificates for the shares to be converted, duly endorsed or assigned either in
blank or to the Corporation (if required by it), accompanied by written notice
stating that such holder elects to convert such shares. Conversion shall be
deemed to have been effected on the date when the aforesaid delivery is made,
and such date is referred to herein as the "Conversion Date." As promptly as
practicable thereafter the Corporation shall issue and deliver to or upon the
written order of such holder to the place designated by such holder, a
certificate or certificates for the number of full shares of Common Stock to
which such holder is entitled and a check or cash in respect of any fractional
interest in a share of Common Stock, as provided below, payable with respect to
the shares of Series B Preferred Stock so converted; provided, however, that in
the case of a conversion in connection with liquidation, no such certificates
need be issued. The person in whose name the certificate or certificates for
Common Stock are to be issued shall be deemed to have become the stockholder of
record in respect of such Common Stock on the applicable Conversion Date unless
the transfer books of the Corporation are closed on that date, in which event
such holder shall be deemed to have become the stockholder of record in respect
of such Common Stock on the next succeeding date on which the transfer books are
open, but the Conversion Price shall be that in effect on the Conversion Date.
Upon conversion of only a portion of the number of shares covered by a
certificate representing shares of Series B Preferred Stock surrendered for
conversion, the Corporation shall issue and deliver to or upon the written order
of the holder of the certificate so surrendered for conversion, at the expense
of the Corporation, a new certificate covering the number of shares of Series B
Preferred Stock representing the unconverted portion of the certificate so
surrendered. If the new certificate or certificates are to be issued to a person
who is not the registered holder of the certificate delivered for conversion,
any transfer taxes applicable to the transaction shall be paid by such
transferee.
(e) No Fractional Shares of Common Stock. (i) No fractional
shares of Common Stock shall be issued upon conversion of shares of Series B
Preferred Stock. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any shares of Series B Preferred Stock,
the Corporation shall pay a cash adjustment in respect of such fractional
interest in an amount equal to the then current Market Price (as defined in
clause (vi)(f)(8) below) of a share of Common Stock multiplied by such
fractional interest. The holders of fractional interests shall not be entitled
to any rights as stockholders of the Corporation in respect of such fractional
interests. In determining the number of shares of Common Stock and the payment,
if any, in lieu of fractional shares that a holder of Series B Preferred Stock
shall receive, the total number of shares of Series B Preferred Stock
surrendered for conversion by such holder shall be aggregated.
(ii) The Corporation shall forthwith upon conversion of all or any
portion of the Series B Preferred Stock pay all dividends accrued on such Series
B Preferred Stock to the date of such conversion.
(f) Adjustment of Conversion Price Upon Issuance of Common Stock. If
and whenever (i) after the date hereof and prior to June 1, 1992, the Total
Equity Financing shall have yielded Gross Proceeds in excess of $250,000,000 and
the Corporation shall thereafter take any of the actions described in subclauses
(i), (ii) or (iii) of clause (b) above, (except (xx) upon conversion of the
Series B Preferred Stock (yy) issuances subject to subclauses (A) and (B) of the
first proviso set forth in clause (b) and (zz) the term "Average Price" in
subclause (ii) of clause (b) shall mean the Conversion Price as then in effect);
or (ii) at any time after the date hereof the Corporation takes any of the
actions described in paragraphs (1) through (4) below involving the deemed
issuance of shares of Common Stock for a consideration per share less than the
Market Price on the day immediately prior to such deemed issue or sale, then,
forthwith upon such actual or deemed issue or sale, as the case may be, the
Conversion Price shall be reduced (but not increased, except as otherwise
specifically provided in paragraph (3) below) to the price (calculated to the
nearest cent) (or, where an event may occur which would require an adjustment
under more than one provision hereof, to the lower of the prices) determined as
follows:
(A) in the case of taking any of the actions described above in
subclause (i) of this clause (f), by dividing (i) an amount equal to the sum of
(A) the aggregate number of shares of Common Stock outstanding immediately prior
to such issue or sale multiplied by the then existing Conversion Price and (B)
the consideration, if any, received by the Corporation upon such issue or sale
(determined, in the case of warrants, options, rights or convertible securities,
on the basis described below in paragraphs (1) and (2) as the Rights Formula and
the Convertible Formula), by (ii) the aggregate number of shares of Common Stock
of all classes outstanding immediately after such issue or sale (determined, in
the case of warrants, options, rights or convertible securities, on the basis
described below in paragraphs (1) and (2) as the Rights Formula and the
Convertible Formula); and
(B) in the case of taking any of the actions described above in
subclause (ii) of this clause (f), by multiplying the Conversion Price in effect
immediately prior to the time of such deemed issue or sale by a fraction, the
numerator of which shall be the sum of (i) the aggregate number of shares of
Common Stock outstanding immediately prior to such issue or sale multiplied by
the Market Price on the day immediately prior to such issue or sale plus (ii)
the consideration received by the Corporation upon such issue or sale, and the
denominator of which shall be the product of (iii) the aggregate number of
shares of Common Stock of all classes outstanding immediately after such issue
or sale, multiplied by (iv) the Market Price on the day immediately prior to
such issue or sale.
No adjustment of the Conversion Price, however, shall be made in an
amount less than $.10 per share, but any such lesser adjustment shall be carried
forward and taken into account at the time of and together with the next
subsequent adjustment.
For the purposes of subclause (ii) of this clause (vi)(f), the
following paragraphs (1) through (4) shall also be applicable; and for purposes
of this clause (vi)(f) generally, the following paragraphs (5) through (10)
shall be applicable:
(1) Issuance of Rights or Options - In case at any time after the
date hereof the Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise, except in the circumstances described in
clause (vi)(g) below) any rights to subscribe for or to purchase, or any options
for the purchase of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether or not such
rights or options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such rights or options or upon conversion
or exchange of such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Corporation as consideration for
the granting of such rights or options, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the exercise
of such rights or options, plus, in the case of such rights or options which
relate to Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the exercise of such
rights or options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or options (the "Rights
Formula")) shall be less than the Market Price, determined as of the date of
granting such rights or options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or options or upon
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such rights or options shall (as of the date of granting of such
rights or options) be deemed to be outstanding and to have been issued for such
price per share. Except as provided in paragraph (3), no further adjustment of
the Conversion Price shall be made upon the actual issue of such Common Stock or
of such Convertible Securities upon exercise of such rights or options or upon
the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
(2) Issuance of Convertible Securities - In case at any time after the
date hereof the Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible Securities, whether
or not the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which Common Stock is issuable upon such conversion
or exchange (determined by dividing (i) the total amount received or receivable
by the Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange thereof, by (ii)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities (the "Convertible Formula"))
shall be less than the Market Price, determined as of the date of such issue or
sale of such Convertible Securities, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of all such Convertible
Securities shall (as of the date of the issue or sale of such Convertible
Securities) be deemed to be outstanding and to have been issued for such price
per share; provided, however, that (a) except as otherwise provided in paragraph
(3), no further adjustment of the Conversion Price shall be made upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities, and (b) if any such issue or sale of such Convertible Securities is
made upon exercise of any rights to subscribe for or to purchase or any option
to purchase any such Convertible Securities for which adjustments of the
Conversion Price have been or are to be made pursuant to other provisions of
this clause (vi) (f), no further adjustment of the Conversion Price shall be
made by reason of such issue or sale.
(3) Change in Option Price or Conversion Rate - Upon the happening of
any of the following events, namely, if the purchase price provided for in any
right or option referred to in paragraph (1), the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities
referred to in paragraph (1) or (2), or the rate at which any Convertible
Securities referred to in paragraph (1) or (2) are convertible into or
exchangeable for Common Stock shall change (other than under or by reason of
provisions designed to protect against dilution), the Conversion Price then in
effect hereunder shall forthwith be readjusted (increased or decreased, as the
case maybe) to the Conversion Price which would have been in effect at such time
had such rights, options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion rate, as
the case may be, at the time initially granted, issued or sold. On the
expiration of any such option or right referred to in paragraph (1) or the
termination of any such right to convert or exchange any such Convertible
Securities referred to in paragraph (1) or (2), the Conversion Price then in
effect hereunder shall forthwith be readjusted (increased or decreased, as the
case may be) to the Conversion Price which would have been in effect at the time
of such expiration or termination had such right, option or Convertible
Securities, to the extent outstanding immediately prior to such expiration or
termination, never been granted, issued or sold, and the Common Stock issuable
thereunder shall no longer be deemed to be outstanding. If the purchase price
provided for in any such right or option referred to in paragraph (1) or the
rate at which any Convertible Securities referred to in paragraph (1) or (2) are
convertible into or exchangeable for Common Stock shall be reduced at any time
under or by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of shares of Common Stock upon
the exercise of any such right or option or upon conversion or exchange of any
such Convertible Securities, the Conversion Price then in effect hereunder
shall, if not already adjusted, forthwith be adjusted to such amount as would
have obtained had such right, option or Convertible Securities never been issued
as to such shares of Common Stock and had adjustments been made upon the
issuance of the shares of Common Stock delivered as aforesaid, but only if as a
result of such adjustment the Conversion Price then in effect hereunder is
thereby reduced.
(4) Stock Dividends - In case at any time the Corporation shall
declare a dividend or make any other distribution upon any class or series of
stock of the Corporation payable in shares of Common Stock or Convertible
Securities, any shares of Common Stock or Convertible Securities, as the case
may be, issuable in payment of such dividend or distribution shall be deemed to
have been issued or sold without consideration.
(5) Consideration for Stock - Anything herein to the contrary
notwithstanding, in case at any time any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount received by the Corporation
therefor, without deduction therefrom of any expenses incurred or any
underwriting discounts, commissions or concessions paid or allowed by the
Corporation in connection therewith.
In case at any time any shares of Common Stock or any class of
Convertible Securities or any rights or options to purchase any such shares of
Common Stock or Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the consideration other than cash
received by the Corporation shall be deemed to be the fair value of such
consideration as determined reasonably and in good faith by the Board of
Directors of the Corporation, without deduction of any expenses incurred or any
underwriting discounts, commissions or concessions paid or allowed by the
Corporation in connection therewith. In case at any time any shares of Common
Stock or any class or Convertible Securities or any rights or options to
purchase such shares of Common Stock or Convertible Securities shall be issued
in connection with any merger or consolidation in which the Corporation is the
surviving Corporation, the amount of consideration received therefor shall be
deemed to be the fair value as determined reasonably and in good faith by the
Board of Directors of the Corporation of such portion of the assets and business
of the nonsurviving Corporation as such Board may determine to be attributable
to such shares of Common Stock, Convertible Securities, rights or options, as
the case may be. In case at any time any rights or options to purchase any
shares of Common Stock or Convertible Securities shall be issued in connection
with the issue and sale of other securities of the Corporation, together
comprising one integral transaction in which no consideration is allocated to
such rights or options by the parties thereto, such rights or options shall be
deemed to have been issued for an amount of consideration equal to the fair
value thereof as determined reasonably and in good faith by the Board of
Directors of the Corporation.
(6) Record Date - In case the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in shares of Common Stock or in
Convertible Securities, or (ii) to subscribe for or purchase shares of Common
Stock or Convertible Securities, then such record date shall be deemed to be the
date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold as a result of the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(7) Treasury Shares - The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition of any such shares shall be
considered an issue or sale of Common Stock for the purposes of this clause
(vi)(f).
(8) Definition of Market Price - Unless otherwise set forth in these
Articles, "Market Price" shall mean, for any day, the last sale price of the
Common Stock on the principal national securities exchange on which the Common
Stock may at the time be listed, or, if there shall have been no sales on any
such exchange on any such day, the average of the bid and asked prices at the
end of such day, or, if the Common Stock shall not be so listed, the average of
the bid and asked prices at the end of the day in the domestic over-the-counter
market. If at any time the Common Stock is not listed on any exchange or quoted
in the domestic over-the-counter market, the "Market Price" shall be deemed to
be the higher of (aa) the book value thereof, as determined (in accordance with
generally accepted accounting principles consistent with those then being
applied by the Corporation) by any firm of independent public accountants (which
may be the regular auditors of the Corporation) of recognized national standing
selected by the Board of Directors of the Corporation, as of the last day of the
month ending within 31 days preceding the date as of which the determination is
to be made, and (bb) the fair value thereof, as determined in good faith by the
Board of Directors of the Corporation.
(9) Determination of Market Price under Certain Circumstances-
Anything herein to the contrary notwithstanding, in case at any time after the
date hereof the Corporation shall issue any shares of Common Stock or
Convertible Securities, or any rights or options to purchase any such Common
Stock or Convertible Securities, in connection with the acquisition by the
Corporation of the stock or assets of any other Corporation or the merger of any
other Corporation into the Corporation under circumstances where on the date of
the issuance of such shares of Common Stock or Convertible Securities or such
rights or options the consideration received for such Common Stock or deemed to
have been received for the Common Stock into which such Convertible Securities
or such rights or options are convertible is less than the Market Price of the
Common Stock but on the date the number of shares of Common Stock or Convertible
Securities (or in the case of Convertible Securities other than stock, the
aggregate principal amount of Convertible Securities) or the number of such
rights or options was determined (as set forth in a binding agreement between
the Corporation and the other party to the transaction) the consideration
received for such Common Stock or deemed to have been received for the Common
Stock into which such Convertible Securities or such rights or options are
convertible would not have been less than the Market Price thereof, such shares
of Common Stock shall not be deemed to have been issued for less than the Market
Price of the Common Stock.
(10) Adjustment to Determination of Market Price. When making the
calculations and determinations described in clause (vi) (f) (1) through clause
(vi) (f) (9) hereof, the issuance to officers or key employees of the
Corporation and of its subsidiaries of shares of Common Stock or warrants,
options or rights for Common Stock issued pursuant to any instruments or
agreements or plans, or shares issuable to employees under employee stock
purchase plans, shall not be taken into account.
(g) Liquidating Dividends; Purchase Rights. (i) In case at any
time after the date hereof the Corporation shall declare a dividend upon the
shares of Common Stock of any class payable otherwise than in shares of Common
Stock or Convertible Securities, otherwise than out of consolidated earnings or
consolidated earned surplus (determined in accordance with generally accepted
accounting principles, but excepting quarterly Common Stock dividends at the
rate of $.05 per share or increases therein out of consolidated net income of
the Corporation determined in accordance with generally accepted accounting
principles for the period from the end of the last fiscal year to the date of
the most recent consolidated quarterly financial statements of the Corporation
as at the time of the declaration of the dividend), and otherwise than in the
securities to which the provisions of clause (ii) below apply, the Corporation
shall pay over to each holder of Series B Preferred Stock, upon conversion
thereof on or after the dividend payment date, the securities and other property
(including cash) which such holder would have received (together with all
distributions thereon) if such holder had converted the Series B Preferred Stock
held by it on the record date fixed in connection with such dividend, and the
Corporation shall take whatever steps are necessary or appropriate to keep in
reserve at all times such securities and other property as shall be required to
fulfill its obligations hereunder in respect of the shares issuable upon the
exercise or conversion of all the Series B Preferred Stock.
(ii) If at any time or from time to time on or after the date hereof,
the Corporation shall grant, issue or sell any options or rights (other than
Convertible Securities) to purchase stock, warrants, securities or other
property pro rata to the holders of Common Stock of all classes ("Purchase
Rights"), and if the holder shall be entitled to an adjustment pursuant to
clause (vi) (f) above, then in lieu of such adjustment, and if deemed by the
Board of Directors to be not materially adverse to the interests of the holders
of Series B Preferred Stock, the Corporation shall reserve for distribution to
holders of Series B Preferred Stock upon conversion of the same and upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which
such holder could have acquired if such holder had held the number of shares of
Common Stock issuable upon conversion of such Series B Preferred Stock
immediately prior to the time or times at which the Corporation granted, issued
or sold such Purchase Rights.
(h) Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide its outstanding shares of Common Stock
into a greater number of shares, the Conversion Price in effect immediately
prior to such subdivision shall be proportionately reduced, and conversely, in
case the outstanding shares of Common Stock of the Corporation shall be combined
into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination shall be proportionately increased.
(i) Changes in Common Stock. If any capital reorganization or
reclassification of the capital stock of the Corporation, or consolidation or
merger of the Corporation with another Corporation, or the sale, transfer or
other disposition of all or substantially all of its properties to another
Corporation, shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition,
lawful and adequate provision shall be made whereby each holder of Series B
Preferred Stock shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
shares of the Common Stock of the Corporation immediately theretofore issuable
upon conversion of the Series B Preferred Stock, such shares of stock,
securities or properties as may be issuable or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such Common Stock immediately theretofore issuable upon
conversion of the Series B Preferred Stock had such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition not
taken place, and in any such case appropriate provisions shall be made with
respect to the rights and interests of each holder of Series B Preferred Stock
to the end that the provisions hereof (including without limitation provisions
for adjustment of the Conversion Price) shall thereafter be applicable, as
nearly equivalent as may be practicable in relation to any shares of stock,
securities or properties thereafter deliverable upon the exercise thereof. The
Corporation shall not effect any such consolidation, merger, sale, transfer or
other disposition, unless prior to or simultaneously with the consummation
thereof the successor corporation (if other than the Corporation) resulting from
such consolidation or merger or the corporation purchasing or otherwise
acquiring such properties shall assume, by written instrument executed and
mailed or delivered to the holders of Series B Preferred Stock at the last
address of such holders appearing on the books of the Corporation, the
obligation to deliver to such holders such shares of stock, securities or
properties as, in accordance with the foregoing provisions, such holders may be
entitled to acquire. The above provisions of this subparagraph shall similarly
apply to successive reorganizations, reclassifications, consolidations, mergers,
sales, transfers, or other dispositions.
(j) Certain Events. If any event occurs as to which in the opinion of
the Board of Directors of the Corporation the other provisions of this clause
(vi) are not strictly applicable or if strictly applicable would not fairly
protect the conversion rights of the holders of the Series B Preferred Stock in
accordance with the essential intent and principles of such provisions, then
such Board of Directors shall appoint a firm of independent certified public
accountants (which may be the regular auditors of the Corporation) of recognized
national standing, which shall give their opinion upon the adjustment, if any,
on a basis consistent with such essential intent and principles, necessary to
preserve, without dilution, the rights of the holders of the Series B Preferred
Stock. Upon receipt of such opinion by the Board of Directors, the Corporation
shall forthwith make the adjustments described therein; provided, however, that
no such adjustment shall have the effect of increasing the Conversion Price as
otherwise determined pursuant to this clause (vi) except in the event of a
combination of shares of the type contemplated in clause (vi)(h) and then in no
event to an amount larger than the Conversion Price as adjusted pursuant to
clause (vi) (h).
(k) Prohibition of Certain Actions. The Corporation will not (i)
authorize or issue, or agree to authorize or issue, any shares of its capital
stock of any class preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation unless the rights of the holders thereof shall be limited to a fixed
sum or percentage of par value in respect of participation in dividends and in
the distribution of such assets, or (ii), except in accordance with clause
(vi)(b), take any action which would result in any adjustment of the Conversion
Price if the total number of shares of Common Stock issuable after such action
upon conversion of all of the Series B Preferred Stock would exceed the total
number of shares of Common Stock then authorized by the Corporation's Charter.
(l) Stock to be Reserved. Except as otherwise provided in clause
(vi) (b) hereof, the Corporation will at all times reserve and keep available
out of its authorized Common Stock, solely for the purpose of issue upon the
conversion of Series B Preferred Stock as herein provided, such number of shares
of Common Stock as shall then be issuable upon the conversion of all outstanding
Series B Preferred Stock, and the Corporation will maintain at all times all
other rights and privileges sufficient to enable it to fulfill all its
obligations hereunder. The Corporation covenants that all shares of Common Stock
which shall be so issuable shall, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable, free from preemptive or similar rights on
the part of the holders of any shares of capital stock or securities of the
Corporation, and without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value, if any, per share of the Common Stock
is at all times equal to or less than the then effective Conversion Price. The
Corporation will use its best efforts to take all such action as may be
necessary to assure that such shares of Common Stock may be so issued without
violation by the Corporation of any applicable law or regulation, or of any
requirements of any domestic securities exchange upon which the Common Stock may
be listed.
(m) Registration and Listing of Common Stock. If any shares of Common
Stock required to be reserved for purposes of conversion of Series B Preferred
Stock hereunder require registration with or approval of any governmental
authority under any Federal or state law (other than the Securities Act of 1933
or any state "blue sky" law) before such shares may be issued upon conversion,
the Corporation will, at its expense and as expeditiously as possible, use its
best efforts to cause such shares to be duly registered or approved, as the case
may be. If and so long as the Common Stock is listed on any national securities
exchange, the Corporation will, at its expense, use its best efforts to obtain
promptly and maintain the approval for listing on each such exchange upon
official notice of issuance, of shares of Common Stock issuable upon conversion
of the then outstanding Series B Preferred Stock and maintain the listing of
such shares after their issuance; and the Corporation will also use its best
efforts to list on such national securities exchange, to register under the
Securities Exchange Act of 1934 and to maintain such listing of, any other
securities that at any time are issuable upon conversion of the Series B
Preferred Stock, if and at the time that any securities of the same class shall
be listed on such national securities exchange by the Corporation.
(n) Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Preferred Stock or of any shares of
Common Stock issued or issuable upon the conversion of any Series B Preferred
Stock in any manner which interferes with the timely conversion of such Series B
Preferred Stock.
(o) Statement of Adjustment of Conversion Price. Whenever the
Conversion Price shall be adjusted as provided in clause (vi) (f) above, the
Corporation shall forthwith file at its office a statement, signed by its
independent certified public accountants, showing in detail the facts requiring
such adjustment and the Conversion Price that shall be in effect after such
adjustment. The Corporation shall also cause a copy of such statement to be sent
by certified mail, return receipt requested, to each holder of shares of Series
B Preferred Stock to such holder's address appearing on the Corporation's
records. Where appropriate, such copy may be given in advance and may be
included as part of a notice required to be mailed under the provisions of
clause (vi) (p) below.
(p) Notice. In the event the Corporation shall propose to take
any action of the types described in clause (vi)(f) above, the Corporation shall
give notice to each holder of shares of Series B Preferred Stock, in the manner
set forth in clause (vi) (o) above, which notice shall specify the record date,
if any, (or the method of determining the same) with respect to any such action
and the date (or the method of determining the same) on which such action is to
take place. Such notice shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Price and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of shares of Series B Preferred Stock. In the case
of any action which would require the fixing of a record date, such notice shall
be given at least 20 days prior to the date so fixed, and in case of all other
action, such notice shall be given at least 30 days prior to the taking of such
proposed action.
(q) Taxes. The Corporation shall pay all documentary, stamp or
other transactional taxes attributable to the issuance or delivery of shares of
capital stock of the Corporation upon conversion of any shares of Series B
Preferred Stock.
THIRD: The terms of the 11% Preferred Stock are as follows:
(i) Designation and Amount. The designation of the Series of
Preferred Stock described in clause (ii) of Article First hereof shall be
"11% Preferred Stock" (the "11% Preferred Stock"). The number of shares of
11% Preferred Stock shall initially be 1,000.
(ii) Dividends. (a) Rate, etc. The holders of shares of 11% Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of the funds legally available therefor, annual dividends from the
date of issue thereof at the rate of $1,100.00 per share, calculated on the
basis of a 360-day year of 12 30-day months, accruing on a daily basis, payable
quarterly, in arrears, on each Dividend Payment Date in each year commencing on
the first Dividend Payment Date subsequent to the issuance of any shares of such
11% Preferred Stock. Such dividends shall be cumulative with respect to each
share from the date of original issuance, whether or not earned or declared.
(b) Rank, etc. The 11% Preferred Stock shall rank on a parity
with the Corporation's $4.10 Series A Convertible Exchangeable Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and any other Parity Stock as
to dividends and upon liquidation. Unless full cumulative dividends on all
outstanding shares of 11% Preferred Stock or any other class of Parity Stock
have been paid or are contemporaneously declared and paid (or declared and a sum
sufficient for the payment thereof is set apart for such payment), the
Corporation will not (1) declare or pay any dividend on the Common Stock of the
Corporation or on any other class of Junior Stock or make any payment on account
of, or set apart money for, a sinking or other analogous fund for the purchase,
redemption or other retirement of, any Junior Stock or make any distribution in
respect thereof, either directly or indirectly and whether in cash or property
or in obligations or shares of the Corporation (other than in shares of Junior
Stock) or (2) purchase any shares of 11% Preferred Stock or Parity Stock (except
for consideration payable in Junior Stock) or redeem fewer than all of the
shares of 11% Preferred Stock or Parity Stock then outstanding. Unless and until
all dividends accrued and payable but unpaid on the 11% Preferred Stock and any
Parity Stock at the time outstanding have been paid in full, all dividends
declared by the Corporation upon such 11% Preferred Stock or Parity Stock shall
be declared pro rata with respect to all 11% Preferred Stock and Parity Stock
then outstanding, so that the amounts of any dividends declared on the 11%
Preferred Stock and such Parity Stock shall in all cases bear to each other the
same ratio that, at the time of such declaration, all accrued and payable but
unpaid dividends on the 11% Preferred Stock and such other Parity Stock,
respectively, bear to each other.
(iii) Liquidation. (a) Preference on Liquidation. In the event of any
liquidation, dissolution or winding up of the affairs of the Corporation (any or
all of such events, a "liquidation"), whether voluntary or involuntary, the
holders of shares of 11% Preferred Stock then outstanding shall be entitled,
pari passu as if members of a single class of securities with the holders of
other Parity Stock, to be paid out of the assets of the Corporation, before any
payment shall be made to the holders of the Junior Stock or the holders of any
other capital stock of the Corporation, an amount equal to $10,000 per share of
such 11% Preferred Stock plus an amount equal to the dividends accrued and
unpaid thereon to the payment date.
(b) Insufficient Assets. If, upon any liquidation of the
Corporation, the assets of the Corporation are insufficient to pay the holders
of shares of the Parity Stock then outstanding the full amounts to which they
shall be entitled, such assets shall be distributed to the holders of the Parity
Stock pro rata in proportion to the amounts to which they shall be entitled.
(c) Rights of Other Holders. In the event of any liquidation,
after payment shall have been made to the holders of the 11% Preferred Stock and
other Parity Stock of all preferential amounts to which they shall be entitled,
the holders of shares of Junior Stock and other capital stock of the Corporation
shall receive such amounts as to which they are entitled by the terms thereof.
(d) Consolidation, Merger or Sale of Assets. Neither a consolidation
or merger of the Corporation with or into any other Corporation, nor a sale or
transfer of all or substantially all of the Corporation's assets for cash or
securities nor a statutory share exchange in which stockholders of the
Corporation may participate shall be considered a liquidation, dissolution or
winding-up of the Corporation within the meaning of this clause (iii).
(iv) Redemption. (a) Mandatory Redemption. On June 1, 2001,
the Corporation will redeem the 11% Preferred Stock then outstanding at a
redemption price equal to $10,000 per share, together with dividends accrued
thereon to the date of redemption.
(b) Optional Redemption. The 11% Preferred Stock shall be
subject to redemption, at the option of the Corporation, in whole or from time
to time in part, at any time on or after June 1, 1994 at a redemption price
equal to $10,000 per share, plus the Redemption Premium (as hereinafter
defined), together with dividends accrued thereon to the date of redemption.
For the purposes of this clause (iv) "Redemption Premium" shall
mean:
Period
June 1, 1994 to May 31, 1995 $770
June 1, 1995 to May 31, 1996 660
June 1, 1996 to May 31, 1997 550
June 1, 1997 to May 31, 1998 440
June 1, 1998 to May 31, 1999 330
June 1, 1999 to May 31, 2000 220
June 1, 2000 to May 31, 2001 110
June 1, 2001 and thereafter 0
(v) Voting Rights. Excepting the rights specified below in this
clause (v), the holders of the 11% Preferred Stock shall not be entitled to any
voting rights. For purposes of this clause (v) and in any case where holders of
the 11% Preferred Stock are entitled to vote upon any matter together with
holders of Parity Stock as a single class, holders of 11% Preferred Stock have a
number of votes per share determined by dividing $10,000 by $50.00.
(a) Voting Rights Relating to Unpaid Dividends. (1) If on the date
used to determine stockholders of record for any meeting of stockholders for the
election of directors, accrued dividends on the shares of 11% Preferred Stock or
any Parity Stock shall not have been paid in an aggregate amount equal to or
greater than two quarterly dividends on the shares of 11% Preferred Stock or
such Parity Stock at the time outstanding, then, and in any such event, the
number of Directors then constituting the entire Board of Directors of the
Corporation shall automatically be increased by two Directors and the holders of
shares of 11% Preferred Stock and the holders of shares of Parity Stock, voting
together as a single class, shall be entitled at such meeting to fill such newly
created directorships. Such right to vote as a single class to elect two
Directors shall, when vested, continue until all dividends in default on the
shares of 11% Preferred Stock and such Parity Stock, as the case may be, shall
have been paid in full and, when so paid, such right to elect two Directors
separately as a class shall cease, subject, always, to the same provisions for
the vesting of such right to elect two Directors separately as a class in the
case of future dividend defaults.
(2) So long as any shares of 11% Preferred Stock are outstanding
the number of Directors of the Corporation shall at all times be such that the
exercise, by the holders of shares of 11% Preferred Stock and the holders of
shares of Parity Stock, of the right to elect Directors under the circumstances
provided in paragraph (1) of this subclause (a) will not contravene any
provisions of the Maryland General Corporation Law or the Charter of the
Corporation.
(3) Directors elected pursuant to paragraph (1) of this subclause (a)
shall serve until the earlier of (A) the next annual meeting of the stockholders
of the Corporation and the election (by the holders of shares of 11% Preferred
Stock and Parity Stock) and qualification of their respective successors or (B)
the date upon which all dividends in default on the shares of 11% Preferred
Stock and such Parity Stock shall have been paid in full. Directors elected
pursuant to paragraph (1) of this subclause (a) may be removed by, and shall not
be removed except by, the vote of the holders of record of the outstanding
shares of 11% Preferred Stock and Parity Stock, voting together as a single
class without regard to Series, at a meeting of the stockholders, or the holders
of shares of 11% Preferred Stock and Parity Stock, called for that purpose. If,
prior to the end of the term of any Director elected as aforesaid, a vacancy in
the office of such Director shall occur during the continuance of a default in
dividends on the shares of 11% Preferred Stock or such Parity Stock by reason
other than removal, such vacancy shall be filled for the unexpired term by the
appointment by the remaining director elected as aforesaid of a new Director for
the unexpired term of such former Director.
(b) Additional Capital Stock, etc. The Corporation shall not, without
the affirmative consent or approval of the holders of shares representing at
least 66- 2/3% of the 11% Preferred Stock and Parity Stock then outstanding,
voting as a single class (such consent or approval to be given by written
consent in lieu of a meeting or by vote at a meeting called for such purpose for
which notice shall have been given to the holders of the 11% Preferred Stock and
Parity Stock): (i) authorize the issuance of any new, or increase the authorized
number of shares of any existing, class of capital stock of the Corporation
which would be senior or superior as to dividends and upon liquidation to the
11% Preferred Stock, (ii) increase the number of shares of Preferred Stock
authorized in the charter or create any other class of stock (but not any other
series of Preferred Stock) ranking on a parity with the 11% Preferred Stock,
Series B Preferred Stock and Parity Stock as to dividends and upon liquidation,
(iii) reissue any shares of 11% Preferred Stock that have been redeemed or (iv)
take any action to cause any amendment, alteration or repeal of any of the
provisions of the Corporation's Charter that would materially adversely affect
the rights of holders of 11% Preferred Stock.
(vi) Exchange for Depositary Shares. The shares of 11% Preferred Stock
shall be subject to exchange, in whole or in part, at the option of the holder
thereof exercisable at any time and from time to time in part, upon 30 days
written notice to the Corporation specifying the number of shares of 11%
Preferred Stock to be so exchanged. The Corporation shall accept deposit of such
shares and hold them in trust for the benefit of the holders making such deposit
and shall deliver to such holders in exchange therefor depositary shares of the
Corporation (the "Depositary Shares") of equal aggregate liquidation value to
the shares of 11% Preferred Stock delivered for deposit, each such Depositary
Share having a liquidation value of $25.00. On each Dividend Payment Date with
respect to the 11% Preferred Stock, upon any redemption thereof, and upon any
liquidation, dissolution or winding-up of the Corporation, the holders of each
Depositary Share shall be paid, from the proceeds of any such dividend,
redemption or payment upon liquidation, dissolution or winding-up payable with
respect to the shares of 11% Preferred Stock so deposited, the portion of such
proceeds allocable to the Depositary Shares held by such holder.
IN WITNESS WHEREOF, USF&G Corporation has caused these presents to be
signed in its name and on its behalf by its Chairman of the Board and President
and witnessed by its Secretary on May 31, 1991.
WITNESS: USF&G Corporation
WILLIAM F. SPLIEDT By: NORMAN P. BLAKE, JR.---------------------
Secretary Chairman of the Board and President
THE UNDERSIGNED, Chairman of the Board and President of USF&G
Corporation, who executed on behalf of the Corporation Articles Supplementary of
which this certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles Supplementary to be the
corporate act of said Corporation and hereby certifies that the matters and
facts set forth herein with respect to the authorization and approval thereof
are true in all material respects under the penalties of perjury.
/s/NORMAN P. BLAKE, JR
Norman P. Blake, Jr. Chairman of the Board and President
ARTICLES SUPPLEMENTARY
$5.00 SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
USF&G CORPORATION
USF&G CORPORATION, a Maryland corporation, having its principal office in
Baltimore City, Maryland (the "Corporation"), hereby certifies to the Maryland
State Department of Assessments and Taxation that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article SEVENTH of the Charter of the Corporation, the
Board of Directors has duly divided and classified 3,800,000 shares of the
Preferred Stock of the Corporation into a series designated $5.00 Series C
Cumulative Convertible Preferred Stock and has provided for the issuance of such
series.
SECOND: The terms of the $5.00 Series C Cumulative Convertible Preferred Stock
are as follows:
(1) Designation and Amount.
The designation of said series of the Preferred Stock shall be "$5.00
Series C Cumulative Convertible Preferred Stock" (the "Series C Preferred
Stock"). The number of shares of Series C Preferred Stock shall initially be
3,800,000, subject to increase or decrease by action of the Board of Directors
effectuated by further Articles Supplementary.
(2) Dividends.
(a) The holders of record of Series C Preferred Stock, on such respective
dates as shall be determined by the Board of Directors in advance of the payment
of each dividend provided for herein, shall be entitled to receive, as and when
declared by the Board of Directors out of assets of the Corporation which are by
law available for the payment of dividends, cumulative preferential cash
dividends, at the rate of $5.00 per share per annum payable quarterly on January
31, April 30, July 31, and October 31 of each year, commencing on July 31, 1991
(each such day being hereinafter called a "dividend date" and each quarterly
period ending on a dividend date being hereinafter called a "dividend period"),
which dividends on each share of Series C Preferred Stock shall accrue from the
date of issue thereof. Each such dividend shall be payable to the holders of
record as they appear on the stock books of the Corporation on such record
dates, not exceeding forty-five (45) days preceding the payment dates thereof,
as shall be fixed by the Board of Directors of the Corporation. Dividends on the
Series C Preferred Stock for any period greater or less than a full dividend
period shall be computed on the basis of a 360-day year consisting of twelve
30-day months. Dividends on the Series C Preferred Stock for each full dividend
period shall be computed by dividing the annual dividend rate by four.
(b) Dividends on the Series C Preferred Stock shall be cumulative,
whether or not in any dividend period or periods there shall be funds of the
Corporation legally available for the payment of such dividends or whether or
not earned or declared.
(c) Accumulations of dividends on any shares of Series C Preferred Stock
shall not bear interest.
(d) All dividends declared on the Series C Preferred Stock for any
dividend period and on any class or series of stock ranking on a parity with the
Series C Preferred Stock as to dividends and upon liquidation ("Parity Stock")
shall be declared pro rata so that the amounts of dividends per share declared
for such period on the Series C Preferred Stock and on any classes of Parity
Stock that were outstanding during such period shall in all cases bear to each
other the same proportions that the respective dividend rates of such stock for
such period bear to each other.
(e) The Corporation shall not (i) declare or pay dividend or other
distribution with respect to any junior stock of the Corporation or (ii) redeem
or set apart funds for the purchase or redemption of any junior stock through a
sinking fund or otherwise, unless (A) all cumulating and accrued dividends with
respect to the Series C Preferred Stock have been paid or funds have been set
apart for payment of such dividends and (B) sufficient funds have been set apart
for the payment of the dividend for the current dividend period with respect to
the Series C Preferred Stock.
(f) As used herein the term "dividends" does not include dividends
payable solely in shares of junior stock, or rights to holders of junior stock
to subscribe for or purchase any junior stock.
(g) As used herein, the phrase "set apart" in respect of the payment of
dividends or redemption prices shall require deposit of any funds in a bank or
trust company in a separate deposit account maintained for the benefit of the
holders of the Series C Preferred Stock.
(h) As used herein, the term "junior stock" means the Common Stock and
any other class of capital stock of the Corporation now or hereafter issued and
outstanding which ranks junior in priority to the Series C Preferred Stock as to
dividends and upon liquidation.
(i) As used herein, the term "cumulating or accrued" in respect of
dividends with respect to the Series C Preferred Stock means an amount equal to
dividends thereon at the rate of $5.00 per share per annum, computed from the
date on which such dividends commenced to cumulate, and cumulating on each
dividend date thereafter, less the aggregate amount of all dividends previously
paid with respect to such Series C Preferred Stock.
(3) Liquidation Preference.
(a) The amount which the holders of Series C Preferred Stock shall be
entitled to receive in the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, shall be $50 per share
plus an amount per share equal to all dividends cumulating or accrued and unpaid
thereon to the date of such liquidation, dissolution or winding up, and no more.
(b) Upon any such liquidation, dissolution or winding up, the
preferential amounts with respect to the Series C Preferred Stock and any class
of Parity Stock shall be distributed pro rata in accordance with the aggregate
preferential amounts of the Series C Preferred Stock and such other classes of
Parity Stock, if any, out of or to the extent of the net assets of the
Corporation legally available for such distribution, before any distributions
are made with respect to any junior stock.
(c) Neither a consolidation or merger of the Corporation with or into any
corporation nor a merger of any other corporation with or into the Corporation,
nor a sale or transfer of all or substantially all of the Corporation's assets
for cash or securities nor a statutory share exchange in which stockholders of
the Corporation may participate shall be considered a liquidation or dissolution
or winding-up of the Corporation within the meaning of this paragraph (3).
(4) Redemption.
(a) At any time on and after June 13, 1994 all the Series C Preferred
Stock, or any part thereof, at any time outstanding, may be redeemed by the
Corporation, at any time or from time to time at its election expressed by
resolution of the Board of Directors upon not less than 30 nor more than 60 days
previous notice to the holders of record of the Series C Preferred Stock to be
redeemed, given by (i) registered or certified mail, postage prepaid, and (ii)
the single publication of such notice in the The Wall Street Journal or similar
daily financial publication of general circulation in the United States, at the
redemption prices set forth below during the 12 month periods beginning on June
13 of the years shown below, in each case plus accrued and unpaid dividends to
the date fixed for redemption (the "redemption date").
Year Redemption
1994 $53.50
1995 53.00
1996 52.50
1997 52.00
1998 51.50
1999 51.00
2000 50.50
2001 and thereafter 50.00
(b) Any notice of redemption mailed to a holder of Series C Preferred
Stock at his address as the same appears on the books of the Corporation shall
be conclusively presumed to have been given whether or not the holder receives
the notice. Each such notice shall state the redemption date; the number of
shares of Series C Preferred Stock to be redeemed, and, if less than all shares
of Series C Preferred Stock held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder and the fact that a new
certificate or certificates representing any unredeemed shares shall be issued
without cost to such holder; the redemption price applicable to the shares to be
redeemed; the place or places where such shares are to be surrendered; and that
dividends on shares to be redeemed shall cease to accrue and accumulate on the
redemption date. No defect in any such notice as to any shares of Series C
Preferred Stock shall affect the validity of the proceedings for the redemption
of any other shares of Series C Preferred Stock.
(c) The Corporation shall not give notice of redemption of Series C
Preferred Stock after the record date for the payment of any dividend on the
Common Stock payable for the dividend period in which the redemption date occurs
unless the record date for the payment of dividends on the Series C Preferred
Stock is the same as the record date for the payment of dividends on the Common
Stock.
(d) The Corporation may not purchase or redeem less than all of the
outstanding shares of Series C Preferred Stock and any other series of Parity
Stock unless all cumulating or accrued dividends with respect to the shares of
Series C Preferred Stock and any Parity Stock which shall not be so redeemed or
purchased have either been paid or set aside for payment.
(e) If less than all of the outstanding shares of Series C Preferred
Stock are to be redeemed, the redemption may be made either pro rata or by lot
or in some other equitable manner as may be prescribed by resolution of the
Board of Directors.
(f) Any shares of Series C Preferred Stock called for redemption
pursuant to this paragraph (4) shall not be deemed to be outstanding for the
purposes of voting, determining the total number of shares entitled to vote, or
payment of dividends thereon on or after the date on which the notice of
redemption is mailed to the holders thereof and a sum sufficient to redeem such
shares has been set apart for payment of the redemption price upon surrender of
the certificates therefor. Any money set apart for such payment which is not
required to redeem such shares because of conversions shall be promptly returned
to the Corporation. In addition, any money set apart for such payment which
remains unclaimed for a period of six years after the redemption date shall be
repaid to the Corporation upon the request of the Corporation as expressed by a
resolution of the Board of Directors. The holders of record of the shares so
called for redemption who have not made a claim against such moneys prior to
such repayment to the Corporation shall be deemed to be unsecured creditors of
the Corporation for an amount equivalent to the amount set apart for payment of
the redemption price and so repaid to the Corporation, but in no event shall any
such holder be entitled to any interest thereon. The Corporation shall be
entitled to receive any interest paid from time to time on the money so set
apart.
(5) Conversion.
(a) Subject to and upon compliance with the provisions of this paragraph
(5), the holder of a share of Series C Preferred Stock, shall have the right, at
his option, at any time after the issue date thereof, to convert such share into
that number of fully paid and nonassessable shares of Common Stock obtained by
dividing $50.00 by the Conversion Price and by surrender of such share so to be
converted, such surrender to be made in the manner provided in subparagraph (b)
of this paragraph (5); provided, however, that the right to convert shares
called for redemption pursuant to paragraph (4) shall terminate at the close of
business on the date fixed for such redemption, unless the Corporation shall
default in making payment of the amount payable upon such redemption.
(b) In order to exercise the conversion privilege, the holder of each
share of Series C Preferred Stock to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the transfer agent for the Series C
Preferred Stock in the Borough of Manhattan, City of New York, or at the office
of any agent or agents of the Corporation as may be designated by the Board of
Directors (the "Transfer Agent") accompanied by written notice to the
Corporation that the holder thereof elects to convert the Series C 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 C 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). In the event that some but not
all of the shares of the Series C Preferred Stock represented by certificates
surrendered by a holder are converted, the Corporation shall execute and deliver
to or on the order of the holder, at the expense of the Corporation, a new
certificate representing the number of shares of Series C Preferred Stock which
were not converted.
Upon conversion of the Series C Preferred Stock, (i) no payment shall be
made on account of any dividends cumulating or accrued and unpaid on such Series
C Preferred Stock to the conversion date, and (ii) no adjustment in the
conversion rate will be made on account of any such dividends. Notwithstanding
the foregoing, if any share of Series C Preferred Stock is converted after any
record date for the payment of a dividends on the Series C Preferred Stock but
before the due date for payment therefor then (i) such dividend shall be payable
on such due date to the record holder of such share on such record date, and
(ii) such share, when surrendered for conversion, shall be accompanied by
payment of an amount equal to the dividend payable on such due date on such
share (unless such share has been called for redemption prior to the due date
for payment therefor).
As promptly as practicable after the surrender of the certificates for
shares of Series C Preferred Stock as aforesaid, the Corporation shall issue and
shall deliver at such office to such holder, or on his 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 the provisions of
this paragraph (5), and any fractional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as provided in subparagraph
(c) of this paragraph (5).
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 C Preferred Stock shall have been surrendered and such notice 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 opening 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. All shares of Common
Stock delivered upon conversions of the Series C Preferred Stock will upon
delivery be duly and validly issued and fully paid and nonassessable, free of
all liens and charges and not subject to any preemptive rights.
(c) No fractional shares or script representing fractions of shares of
Common Stock shall be issued upon conversion of the Series C Preferred Stock.
Instead of any fractional interest in a share of Common Stock which would
otherwise be deliverable upon the conversion of a share of Series C Preferred
Stock, the Corporation shall pay to the holder of such share an amount in cash
(computed to the nearest cent) based upon the last reported sales price (as
defined in subparagraph (d)(iv) of this paragraph (5)) of the Common Stock on
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 liquidation preference of the shares of Series C Preferred Stock so
surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) In case the Corporation shall after the issue date of the
Series C Preferred Stock (the "Issue Date") (A) pay a dividend or make a
distribution on its Common 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 immediately prior thereto shall be adjusted so that the holder of any
share of Series C preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock and other shares of
capital stock, if appropriate, of the Corporation which 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 happening
of such event or the record date therefor, whichever is earlier. An adjustment
made pursuant to this clause (i) shall become effective immediately after the
close of business on the record date in the case of a dividend or distribution
(except as provided in subparagraph (i) below) and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification.
(ii) In case the Corporation shall issue after the Issue Date rights
or warrants 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 then current market
price per share of Common Stock (as defined in clause (iv) below) at the record
date for the determination of shareholders entitled to receive such rights or
warrants, then in each such case the Conversion Price in effect immediately
prior thereto shall be adjusted to equal the price determined by multiplying (I)
the Conversion Price in effect immediately prior to the date of issuance of such
rights or warrants by (II) a fraction, the numerator of which shall be the sum
of (A) the number of shares of Common Stock outstanding on the record date for
the issuance of such rights or warrants and (B), the number of shares which the
aggregate proceeds from the exercise of such rights or warrants for Common Stock
would purchase at such current market price, and the denominator of which shall
be the sum of (A) the number of shares of Common Stock outstanding on such
record date and (B), the number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall be made successively whenever
any such rights or warrants are issued, and shall become effective immediately
after such record date after the date of issuance thereof. 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 current market price,
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.
(iii) In case the Corporation shall distribute to all holders of its
Common Stock any shares of capital stock of the Corporation (other than Common
Stock) or evidences of its indebtedness or assets (excluding cash dividends or
distributions paid from consolidated earnings or consolidated earned surplus of
the Corporation (determined in accordance with generally accepted accounting
principles, but excepting quarterly Common Stock dividends at the rate of $.05
per share or increases therein out of consolidated net income of the Corporation
determined in accordance with generally accepted accounting principles for the
period from the end of its most recent fiscal year to the date of the most
recent consolidated quarterly financial statements of the Corporation as at the
time of the declaration of the dividend (herein called "Normal Cash Dividends")
or rights or warrants to subscribe for or purchase any of its securities
(excluding those referred to in clause (ii) above) (any of the foregoing being
hereinafter in this clause (iii) called the "Securities"), then in each such
case, unless the Corporation elects to reserve shares or other units of such
Securities for distribution to the holders of the Series C Preferred Stock, upon
the conversion of the shares of Series C Preferred Stock, so that any such
holder converting shares of Series C Preferred Stock will receive upon such
conversion, in addition to the shares of the Common Stock to which such holder
is entitled, the amount and kind of such Securities which such holder would have
received if such holder had, immediately prior to the record date for the
distribution of the Securities, converted its shares of Series C Preferred Stock
into Common Stock (such election to be based upon a determination by the Board
of Directors that such reservation will not materially adversely affect the
interests of any holder of Series C Preferred Stock in any such reserved
Securities), the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying (I) the Conversion Price in effect
immediately prior to the date of such distribution by (II) a fraction, the
numerator of which shall be the current market price per share (as defined in
clause (iv) below) 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, if made in good faith, 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 current market price per share (as defined in clause (iv)
below) of the Common Stock. Such adjustment shall become effective immediately,
except as provided in subparagraph (i) below, after the record date for the
determination of shareholders entitled to receive such distribution.
(iv) For the purpose of any computation under clause (ii) above,
the current market price per share of Common Stock on any date shall be deemed
to be the average of the last reported sales price for the thirty consecutive
Trading Days commencing forty-five Trading Days before the date in question. For
the purpose of any computation under clause (iii) above, the current market
price per share of Common Stock on any date shall be deemed to be the average of
the last reported sales price for the ten consecutive Trading Days preceding the
record date for the distribution with respect to which such computation relates.
The last reported sales price for each day shall be the last reported sales
price regular way on The New York Stock Exchange, or, if not reported for such
Exchange, on the Composite Tape, or, in case no such reported sale takes place
one such day, the average of the reported closing bid and asked quotations on
The New York Stock Exchange, or, if the Common Stock is not listed on such
Exchange or no such quotations are available, the average of the high bid and
low asked quotations in the over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or similar organization, or, if no such
quotations are available, the fair market value of such class of stock as
determined by a member firm of The New York Stock Exchange selected by the
Corporation.
(v) Notwithstanding anything in clauses (ii) or (iii) above, if such
rights or warrants shall by their terms provide for an increase or increases
with the passage of time or otherwise in the price payable to the Corporation
upon the exercise thereof, the Conversion Price upon any such increase becoming
effective shall forthwith be readjusted (but to no greater extent than
originally adjusted by reason of such issuance or sale) to reflect the same.
Upon the expiration or termination of such rights or warrants, if any such
rights or warrants shall not have been exercised, then the Conversion Price
thereof shall forthwith be readjusted and thereafter be the rate which it would
have been had an adjustment been made on the basis that the only rights or
warrants so issued or sold were those so exercised and they were issued or sold
for the consideration actually received by the Corporation upon such exercise,
plus the consideration, if any, actually received by the Corporation for the
granting of all such rights or warrants whether or not exercised. An adjustment
made pursuant to this clause (v) shall be made on the next Business Day
following the date on which any such issuance is made and shall be effective
immediately after the close of business on such date. For purposes of clauses
(ii) and (v), the aggregate consideration received by the Corporation in
connection with the issuance of rights or warrants shall be deemed to be equal
to the sum of the aggregate offering price (before deduction of underwriting
discounts or commissions and expenses payable to third parties) of all such
securities plus the minimum aggregate amount, if any, payable upon exercise of
such rights or warrants.
(vi) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason of this
subparagraph (vi) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment; and provided, further, any adjustment
shall be required and made in accordance with the provisions of this paragraph
(5) (other than this clause (vi)) 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. All calculations under this paragraph (5) shall be made to the
nearest cent (with $.005 being rounded upward) or to the nearest 1/100 of a
share (with .005 of a share being rounded upward), as the case may be. Anything
in this subparagraph (d) 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 subparagraph (d), as it
in its discretion shall determine to be advisable in order that any stock,
dividends, subdivision 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.
(e) Notwithstanding any other provision herein to the contrary, if any
Fundamental Change occurs, then the Conversion Price in effect will be adjusted,
in accordance with this subparagraph (e), immediately after such Fundamental
Change. 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 received by holders of Common Stock as the result of such Common
Stock Fundamental Change (the amount of such common stock to be determined in
accordance with this subparagraph (e)). The Corporation shall not consent or
agree to the occurrence of any Fundamental Change 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 C Preferred Stock, which
shall contain provisions which will enable the holders of the Series C Preferred
Stock to convert into the consideration received by holders of Common Stock at
the Conversion Price immediately after such Fundamental Change.
For purposes of calculating any adjustment to be made pursuant to the
preceding paragraph in the event of a Fundamental Change, immediately after such
Fundamental Change:
(A) in the case of a Non-Stock Fundamental Change, the Conversion Price
of the shares of Series C Preferred Stock shall become the lower of (a) the then
applicable Conversion Price (after giving effect to any adjustments required
pursuant to subparagraph (d) of this paragraph (5) and (b) the result obtained
by multiplying the greater of the Applicable Price or the then applicable
Reference Market Price by (i) if such Non-Stock Fundamental Change occurs on or
after June 13, 1994 a fraction of the numerator of which shall be $50.00 and the
denominator of which shall be the amount at which one share of Series C
Preferred Stock would be redeemed by the Corporation pursuant to paragraph (4)
if the redemption date were the date of such Non-Stock Fundamental Change (such
amount being the sum of the redemption price set forth in paragraph (4) and any
accrued and accumulated and unpaid dividends); and (ii) if such Non-Stock
Fundamental Change occurs prior to June 13, 1994 a fraction the numerator of
which shall be $50.00 and the denominator of which shall be the sum of the
relevant amount relating to one share of Series C Preferred Stock during the
twelve-month period beginning on June 13 in each of the following years within
which such Non-Stock Fundamental Change occurs plus any accrued and accumulated
and unpaid dividends:
Year Amount
1991 $55.00
1992 $54.50
1993 to and including June 12, 1994 $54.00
(B) in the case of a Common Stock Fundamental Change, the Conversion
Price shall be the then applicable Conversion Price after giving effect to any
adjustment required pursuant to subparagraph (d) of the paragraph (5) multiplied
by a fraction, the numerator of which is the Purchaser Stock Price and the
denominator of which is the Applied Price.
The provisions of this subparagraph (e) shall similarly apply to
successive Fundamental Changes.
(f) In case 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, liquidation or recapitalization
of the Common Stock and excluding any transaction as to which subparagraph d(i)
of this paragraph (5) applies, each of the foregoing being referred to as a
"Transaction"), in each case (except in the case of a Common Stock Fundamental
Change) 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 C Preferred Stock shall thereafter be
convertible into the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such Transaction
by a holder of that number of shares of Common Stock into which one share of
Series C Preferred Stock was convertible immediately prior to such Transaction
(but after giving effect to any adjustment required by subparagraph (e) of this
paragraph (5) if such Transaction constitutes a Fundamental Change). The
Corporation shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this subparagraph (f) 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 C
Preferred Stock which will contain provisions enabling the holders of the Series
C Preferred Stock to convert into the consideration received by holders of
Common Stock at the Conversion Price immediately after such Transaction.
The provisions of this paragraph (f) shall similarly apply to successive
Transactions.
(g) If:
(i) the Corporation shall declare a dividend (or any other distribution)
on the Common Stock (other than in cash out of consolidated earnings or
consolidated earned surplus and Normal Cash Dividends);
(ii) the Corporation shall authorize the granting to the holders of the
Common Stock of rights or warrants to subscribe for or purchase any shares of
any class or any other rights or warrants; or
(iii) there shall be any reclassification of the Common Stock (other
than an event to which subparagraph (d)(i) of this paragraph (5) 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; or
(iv) there shall be any Fundamental Change; 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 shares of the Series C Preferred
Stock at their addresses as shown on the stock books 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 (or the manner of
determining 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 (or the manner of determining 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 or Fundamental Change 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 deliverable upon such
reclassification, consolidation, merger, sale, transfer or Fundamental Change.
Failure to give such notice or any defect therein shall not affect the legality
or validity of the proceedings described in this paragraph (5).
(h) Whenever the Conversion Price is adjusted, as herein provided, the
Corporation shall promptly file with any transfer agent for the Series C
Preferred Stock, an officers' certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
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 date on which such adjustment became
effective and shall mail such notice of such adjustment of the Conversion Price
to the holder of each share of Series C Preferred Stock at his last address as
shown on the stock books of the Corporation.
(i) In any case in which subparagraph (d) of this paragraph (5) provides that
an adjustment shall become effective immediately after 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 C 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 subparagraph (c) of this paragraph
(5).
(j) For purposes of this paragraph (5), 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.
(k) 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 paragraph
(5). If any action or transaction would require adjustment of the Conversion
Price pursuant to more than one subparagraph of this paragraph (5), only one
adjustment shall be made and such adjustment shall be the amount of adjustment
which has the highest absolute value.
(l) In case the Corporation shall take any action affecting the Common
Stock, other than action described in this paragraph (5), which in the opinion
of the Board of Directors would materially adversely affect the conversion
rights of the holders of the shares of Series C Preferred Stock, the Conversion
Price for the Series C 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. Failure of the Board of
Directors to provide for any such adjustment prior to the effective date of any
such action by the Corporation affecting the Common Stock shall be evidence that
such Board of Directors has determined that it is equitable to make no
adjustment in the circumstances.
(m) 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, for the purpose of effecting conversion of
the Series C Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of Series C Preferred
Stock not theretofore converted.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the shares of Common Stock
deliverable upon conversion of the Series C Preferred Stock, the Corporation
will take any corporate action which may, in the opinion of its counsel, 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.
The Corporation will endeavor to list the shares of Common Stock required
to be delivered upon conversion of the Series C Preferred Stock, prior to such
delivery, upon each national securities exchange, if any, upon which the
outstanding Common Stock is listed at the time of delivery.
(n) 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 on conversion of the Series C Preferred Stock, pursuant hereto;
provided, however, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issue or
delivery of shares of Common Stock in a name other than that of the holder of
the Series C Preferred Stock to be converted and no such issue or delivery shall
be made unless and until the person requesting such issue or delivery has paid
to the Corporation the amount of any such tax or has established, to the
reasonable satisfaction of the Corporation, that such tax has been paid.
(o) For purposes of this paragraph (5), the following terms shall have the
meanings indicated:
"Applicable Price" means (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 the holder of 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 last reported sales price for the Common Stock during
the ten Trading Days immediately prior to the record date for the determination
of the holders of Common Stock entitled to receive cash, securities, property or
other assets in connection with such Non-Stock Fundamental Change and 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 cash,
securities, property or other assets.
"Common Stock Fundamental Change" means any Fundamental Change in which
more than 50% (by value as determined in good faith by the Board of Directors)
of the consideration received by holders of Common Stock consists of common
stock that for the consecutive ten Trading Days immediately prior to such
Fundamental Change has been admitted for listing or that immediately prior to
such Common Stock Fundamental Change has been admitted for listing subject to
notice of issuance on a national securities exchange or quoted on the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotations System.
"Conversion Price" shall mean the conversion price per share of Common
Stock for which the Series C Preferred Stock is convertible, as such Conversion
Price may be adjusted pursuant to paragraph (5). The initial conversion Price
will be $12.025 per share of Common Stock.
"Fundamental Change" means the occurrence of any transaction or event in
connection with a plan pursuant to which all or substantially all the Common
Stock shall be exchanged for, converted into, acquired for or constitute solely
the right to receive, cash or securities, property or other assets (whether by
means of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise); provided that, 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 cash, securities, property or other assets, but the
adjustment shall be based upon the consideration which the holders of Common
Stock received in such transaction or event 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 cash, securities,
property or other assets; provided, further, however, that such term does not
include (i) any such transaction or event in which the Corporation and/or its
subsidiaries are the issuers of all the cash, securities, property or other
assets exchanged, acquired or otherwise issued in such transaction or event, or
(ii) any such transaction or event in which the holders of Common Stock receive
securities of an issuer other than the Corporation if, immediately following
such transaction or event, the holders of Common Stock hold a majority of the
securities having the power to vote normally in the election of directors of
such other issuer outstanding immediately following such transaction or other
event.
"Non-Stock Fundamental Change" means any Fundamental Change other than a
Common Stock Fundamental Change.
"Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the last reported sales price (determined as
set forth in subparagraph (d)(iv) of paragraph (5)) for the common stock, on the
principal national securities exchange or National Market System on which such
common stock is listed, received in such Common Stock Fundamental Change during
the ten days which such exchange or system is open immediately prior to 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; provided, however, if no such last reported sales price for the
common stock during the last ten days prior to the record date exists, then the
Purchaser Stock Price shall be set at a price determined in good faith by the
Board of Directors.
"Reference Market Price" shall initially mean $6.42 and in the event of
any adjustment to the Conversion Price pursuant to paragraph (5) other than an
adjustment pursuant to subparagraph (e) thereof, the Reference Market Price
shall also be adjusted so that the ratio of the Reference Market Price to the
Conversion Price after giving effect to any such adjustment shall always be the
same as the ratio of $6.42 to the initial Conversion Price (without regard to
any adjustment thereto).
"Trading Day" means a day on which the principal national securities
exchange or National Market System on which the Common Stock is listed or
admitted to trading (currently the New York Stock Exchange) is open for the
transaction of business or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or National Market System, a
Business Day.
(6) Voting Rights. Except as otherwise required by law, holders of shares
of Series C Preferred Stock shall have no voting rights; provided, however,
that:
(a)(i) If on the date used to determine stockholders of record for any
meeting of stockholders for the election of directors, accrued dividends on the
shares of Series C Preferred Stock or any Parity Stock shall not have been paid
in an aggregate amount equal to or greater than two quarterly dividends on the
shares of Series C Preferred Stock or such Parity Stock at the time outstanding,
then and in any such event, the number of Directors then constituting the entire
Board of Directors of the Corporation shall automatically be increased by two
Directors and the holders of shares of Series C Preferred Stock and the holders
of shares of Parity Stock, voting together as a single class, shall be entitled
at such meeting to fill such newly created directorships. Such right to vote as
a single class to elect two Directors shall, when vested, continue until all
dividends in default on the shares of Series C Preferred Stock and such Parity
Stock, as the case may be, shall have been paid in full and, when so paid, such
right to elect two Directors separately as a class shall cease, subject, always,
to the same provisions for the vesting of such right to elect two Directors
separately as a class in the case of future dividend defaults.
(ii) So long as any shares of Series C Preferred Stock are outstanding the
number of Directors of the Corporation shall at all times be such that the
exercise, by the holders of shares of Series C Preferred Stock and the holders
of shares of Parity Stock, of the right to elect Directors under the
circumstances provided in clause (i) of this subparagraph (a) will not
contravene any provisions of the Maryland General Corporation Law or the Charter
of the Corporation.
(iii) Directors elected pursuant to clause (i) of this subparagraph (a)
shall serve until the earlier of (x) the next annual meeting of the stockholders
of the Corporation and the election (by the holders of shares of Series C
Preferred Stock and Parity Stock) and qualification of their respective
successors or (y) the date upon which all dividends in default on the shares of
Series C Preferred Stock and such Parity Stock shall have been paid in full.
Directors elected pursuant to clause (i) of this subparagraph (a) may be removed
by, and shall not be removed except by, the vote of the holders of record of the
outstanding shares of Series C Preferred Stock and Parity Stock, voting together
as a single class without regard to series, at a meeting of the stockholders, or
the holders of shares of Series C Preferred Stock and Parity Stock, called for
that purpose. If, prior to the end of the term of any Director elected as
aforesaid, a vacancy in the office of such Director shall occur during the
continuance of a default in dividends on the shares of Series C Preferred Stock
or such Parity Stock by reason other than removal, such vacancy shall be filled
for the unexpired term by the appointment by the remaining Director elected as
aforesaid of a new Director for the unexpired term of such former Director.
(b)(i) Without the affirmative vote of the holders of at least two-thirds
of the votes entitled to be cast by the outstanding shares of Series C Preferred
Stock and Parity Stock, voting as a single class, the Corporation may not:
(A) amend any provision of the Charter which would materially adversely
affect the voting powers (except as such voting powers may be affected by the
authorization of any new series of Parity Stock having the same voting rights as
the Series C Preferred Stock or by the authorization of any other shares of any
class which are not entitled to vote together with the Series C Preferred Stock
in any class vote) or other rights or preferences of holders of the shares of
Series C Preferred Stock; or
(B) authorize or create any class of stock senior to the Series C Preferred
Stock as to dividends and upon liquidation.
(ii) Without the affirmative vote of the holders of at least a majority of the
votes entitled to be cast by the outstanding shares of Series C Preferred Stock
and Parity Stock, voting together as a single class, the Corporation may not
increase the number of shares of Preferred Stock authorized in Article SEVENTH
of the Charter or create any other class of capital stock of the Corporation
ranking on a parity with the Preferred Stock as to dividends and upon
liquidation.
(c) For purposes of this paragraph (6) each share of Series C Preferred Stock
shall have one vote per share. Parity Stock shall have the number of votes per
share specified in the Charter documents governing such Parity Stock.
(7) Reacquired Shares.
Shares of Series C Preferred Stock converted, redeemed, or otherwise
purchased or acquired by the Corporation shall be restored to the status of
authorized but unissued shares of Preferred Stock without designation as to
series.
(8) No Sinking Fund
Shares of Series C Preferred Stock are not subject to the operation of a
sinking fund.
IN WITNESS WHEREOF, USF&G Corporation has caused these presents to be
signed in its name and on its behalf by its Chairman of the Board and President
and witnessed by its Secretary on June 18, 1991.
Witness: USF&G CORPORATION
William F. Spliedt Norman P. Blake, Jr.
Secretary Chairman of the Board and President
[CORPORATE SEAL]
THE UNDERSIGNED, Chairman of the Board and President of USF&G Corporation,
who executed on behalf of the Corporation Articles Supplementary of which this
certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
Norman P. Blake, Jr.
Chairman of the Board and President
USF&G CORPORATION
ARTICLES OF AMENDMENT
USF&G CORPORATION, a Maryland corporation, having its principal office in
Baltimore City, Maryland (which is hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended by deleting
Article SIXTH of the Articles of Incorporation in its entirety and in lieu
thereof substituting the following:
"SIXTH: The total number of shares of stock of all classes which
the Corporation has authority to issue is 252,000,000 having an aggregate par
value of $1,200,000,000 of which 240,000,000 shares of the par value of $2.50
per share, amounting in aggregate par value to $600,000,000, shall be Common
Stock, and 12,000,000 shares of the par value of $50.00 per share, amounting in
aggregate par value to $600,000,000, shall be Preferred Stock."
SECOND: (a) As of immediately before the amendment the total number of
shares of stock of all classes which the Corporation has authority to issue is
132,000,000, having an aggregate par value of $900,000,000, of which 120,000,000
shares of the par value of $2.50 per share, amounting to an aggregate par value
of $300,000,000, designated as Common Stock, and 12,000,000 shares of the par
value of $50.00 per share, amounting to an aggregate par value of $600,000,000,
designated as Preferred Stock.
(b) As amended, the total number of shares of stock of all classes which
the Corporation has authority to issue is 252,000,000, having an aggregate par
value of $1,200,000,000, of which 240,000,000 shares of the par value of $2.50
per share, amounting in aggregate par value to $600,000,000, shall be Common
Stock, and 12,000,000 shares of the par value of $50.00 per share, amounting in
aggregate par value to $600,000,000, shall be Preferred Stock.
(c) The aggregate par value of all shares having a par value is
$900,000,000 before the amendment and $1,200,000,000 as amended.
(d) The shares of stock of the Corporation are divided into classes, but
the descriptions of each class of stock of the Corporation are not changed by
the amendment.
THIRD: The foregoing amendment to the Charter of the Corporation has been
advised by the Board of Directors and approved by the stockholders of the
Corporation.
FOURTH: The foregoing amendment to the Charter of the Corporation shall be
effective at the time these Articles of Amendment are accepted for recording by
the Maryland State Department of Assessments and Taxation.
IN WITNESS WHEREOF, USF&G CORPORATION has caused these presents to be
signed in its name and on its behalf by its Chairman of the Board and President
and witnessed by its Secretary on May 7, 1992.
WITNESS: USF&G CORPORATION
By John F. Hoffen, Jr. Norman P. Blake, Jr.
Secretary Chairman of the Board and President
CERTIFICATION
THE UNDERSIGNED, Chairman of the Board and President of USF&G Corporation,
who executed on behalf of the Corporation the foregoing Articles of Amendment of
which this certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles of Amendment to be the
corporate act of said Corporation and hereby certifies that to the best of his
knowledge, information, and belief the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
Norman P. Blake, Jr.
Chairman of the Board and President
ARTICLES SUPPLEMENTARY
USF&G CORPORATION, a Maryland corporation, having its principal office
in Baltimore City, Maryland (which is hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Article Seventh of the Charter of the
Corporation, the Board of Directors has duly divided and classified 1,200,000
shares of the Preferred Stock of the Corporation into a series designated
"Junior Participating Preferred Stock" and designated and provided for the
issuance of such series pursuant to Articles Supplementary dated October 1, 1987
(the "Articles Supplementary - Junior Participating Preferred Stock") and filed
with the State Department of Assessment and Taxation of Maryland on October 7,
1987.
SECOND: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Section 1 of Article Second of the Articles
Supplementary - Junior Participating Preferred Stock, the Board of Directors has
unanimously adopted a resolution to authorize an increase in the number of
shares constituting such series.
THIRD: The terms of the Junior Participating Preferred Stock as set
forth by the Board of Directors are modified to increase the number of shares
constituting such series by deleting Section 1 of Article Second of the Articles
Supplementary - Junior Participating Preferred Stock in its entirety and in lieu
thereof substituting the following:
"1. Designation and Amount. The shares of
such series shall be designated as "Junior Participating Preferred Stock"
(the "Junior Preferred Stock") and the number of shares constituting such
series shall be 2,400,000, subject to increase or decrease by action of the
Board of Directors effectuated by further Articles Supplementary."
FOURTH: The foregoing Articles Supplementary shall be effective at the
time these Articles Supplementary are accepted for recording by the Maryland
State Department of Assessments and Taxation.
IN WITNESS WHEREOF, USF&G CORPORATION has caused these presents to be signed in
its name and on its behalf by its Chairman of the Board and President and
attested to by its Secretary on April 27, 1995.
ATTEST: USF&G CORPORATION
/s/ John F. Hoffen, Jr. /s/ Norman P. Blake, Jr.
Secretary Chairman of the Board
and President
CERTIFICATION
THE UNDERSIGNED, Chairman of the Board and President of USF&G
Corporation, who executed on behalf of the Corporation the foregoing Articles
Supplementary of which this certificate is made a part, hereby acknowledges in
the name and on behalf of said Corporation the foregoing Articles Supplementary
to be the corporate act of said Corporation and hereby certifies that to the
best of his knowledge, information, and belief the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Norman P. Blake, Jr.
Chairman of the Board
and President
ARTICLES SUPPLEMENTARY
Junior Participating Preferred Stock
OF
USF&G CORPORATION
USF&G CORPORATION, a Maryland corporation, having its principal office
in Baltimore City, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article Seventh of the Charter of the Corporation, the
Board of Directors has previously duly divided and classified 2,400,000 shares
of the Preferred Stock of the Corporation into a series designated "Junior
Participating Preferred Stock" and has provided for the issuance of such series.
SECOND: No shares of Junior Participating Preferred Stock have been
issued, and the Board of Directors wishes to reclassify the Junior Participating
Preferred Stock.
THIRD: The Junior Participating Preferred Stock as previously divided
and classified by the Board of Directors are hereby reclassified as follows:
1. Designation and Amount. The shares of such series shall be
designated as "Junior Participating Preferred Stock" (the "Junior Preferred
Stock") and the number of shares constituting such series shall initially be
2,400,000, subject to increase or decrease by action of the Board of Directors
effectuated by further Articles Supplementary.
2. Dividends and Distributions.
(i) The holders of shares of Junior Preferred Stock, in
preference to the holders of Common Stock and of any other junior
stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose,
quarterly dividends payment in cash on the last day of March, June,
September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Junior Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) Twenty
dollars ($20.00) or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all
cash dividends, and 100 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock of the Corporation or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Junior Preferred Stock.
In the event the Corporation shall at any time after the date hereof
declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Junior Preferred
Stock were entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying such amount 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.
(ii) The Corporation shall declare a dividend or distribution
on the Junior Preferred Stock as provided in subparagraph (i) of this
paragraph 2 immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date, a dividend of Twenty Dollars ($20.00)
per share on the Junior Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Junior Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for
the determination of holders of shares of Junior Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Junior Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Junior
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than
60 days prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Junior Preferred
Stock shall have the following voting rights:
(i) Subject to the provision for adjustment hereinafter set
forth, each share of Junior Preferred Stock shall entitle the holder
thereof to 100 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 date hereof declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Junior 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.
(ii) Except as otherwise provided herein or by law, the
holders of shares of Junior Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(iii) (a) If on the date used to determine stockholders of
record for any meeting of stockholders for the election of directors,
accrued dividends on the shares of Junior Preferred Stock shall not
have been paid in an aggregate amount equal to or greater than six
quarterly dividends on the shares of Junior Preferred Stock at the time
outstanding, then, and in any such event, the number of Directors then
constituting the entire Board of Directors of the Corporation shall
automatically be increased by two Directors and the holders of shares
of Junior Preferred Stock and holders of any other shares of the
Preferred Stock of the Corporation then outstanding ranking on a parity
with the Junior Preferred Stock as to dividends and upon liquidation
("Parity Stock"), voting together as a single class, shall be entitled
at such meeting to fill such newly created directorships. Such right to
vote as a single class to elect two Directors shall, when vested,
continue until all dividends in default on the shares of Junior
Preferred Stock shall have been paid in full and, when so paid, such
right to elect two Directors separately as a class shall cease,
subject, always, to the same provisions for the vesting of such right
to elect two Directors separately as a class in the case of future
dividend defaults.
(b) So long as any shares of Junior Preferred Stock
are outstanding the number of Directors of the Corporation shall at all
times be such that the exercise, by the holders of shares of Junior
Preferred Stock and the holders of shares of Parity Stock, of the right
to elect Directors under the circumstances provided in paragraph (a) of
this subclause (iii) will not contravene any provision of the Maryland
General Corporation Law or the Charter of the Corporation.
(c) Directors elected pursuant to paragraph (a) of
this subclause (iii) shall serve until the earlier of (x) the next
annual meeting of the stockholders of the Corporation and the election
(by the holders of shares of Junior Preferred and Parity Stock) and
qualification of their respective successors or (y) the date upon which
all dividends in default on the shares of Junior Preferred and such
Parity Stock shall have been paid in full. Directors elected pursuant
to paragraph (a) of this subclause (iii) may be removed by, and shall
not be removed except by, the vote of the holders of record of the
outstanding shares of Junior Preferred and Parity Stock, voting
together as a single class without regard to series, at a meeting of
the stockholders, or the holders of shares of Junior Preferred and
Parity Stock, called for that purpose. If, prior to the end of the term
of any Director elected as aforesaid, a vacancy in the office of such
Director shall occur during the continuance of a default in dividends
on the shares of Junior Preferred Stock by reason other than removal,
such vacancy shall be filled for the unexpired term by the appointment
by the remaining Director elected as aforesaid of a new Director for
the unexpired term of such former Director.
(iv) Except as set forth herein, holders of Junior 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 and any other capital stock of the Corporation
having general voting rights as set forth herein) for taking any
corporate action.
4. Certain Restrictions.
(i) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Preferred Stock as provided in
paragraph 2 of this Section are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Junior Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(a) declare or pay dividends on, make other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Junior Preferred Stock;
(b) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Junior Preferred Stock, except dividends
paid ratably on the Junior Preferred Stock and all such parity
stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(c) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior either as to
dividends or upon liquidation, dissolution or winding up) with
the Junior Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of
any such junior stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Junior
Preferred Stock; or
(d) purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock or Parity Stock, except
in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(ii) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under subparagraph (i) of
this paragraph 4, purchase or otherwise acquire such shares at such time and in
such manner.
5. Reacquired Shares. Any shares of Junior Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be classified again and reissued as part of a new series or class of
Preferred Stock to be created by the Board of Directors pursuant to its power
contained in the Charter, subject to the conditions and restrictions on issuance
set forth herein.
6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (a)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock unless,
prior thereto, the holders of shares of Junior Preferred Stock shall have
received One Hundred Five dollars ($105) per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Junior
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock, or (b) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except distributions made ratably on the Junior Preferred Stock
and all other such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time after the date hereof
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Junior Preferred Stock were
entitled immediately prior to such event under the proviso in clause (a) of the
preceding sentence shall be adjusted by multiplying such amount 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.
7. Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, share exchange, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Junior Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the date hereof declare or
pay any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Junior
Preferred Stock shall be adjusted by multiplying such amount 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.
8. No Redemption. The shares of Junior Preferred Stock shall not be
redeemable.
9. Rank. The Junior Preferred Stock shall rank junior with respect to
payment of dividends and on liquidation to all other Preferred Stock of the
Corporation unless the terms of any other Preferred Stock specifically provide
that it shall rank junior to, or on a parity with, the Junior Preferred Stock.
10. Amendment. The Charter of the Corporation shall not be amended in
any manner that would materially alter or change the powers, preferences or
special rights of the Junior Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds of the outstanding
shares of Junior Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, USF&G Corporation has caused these presents to be
signed in its name and on its behalf by its President and witnessed by its
Secretary on March 11, 1997.
WITNESS: USF&G CORPORATION
/s/John F. Hoffen, Jr. By: /s/ Norman P. Blake, Jr.
Secretary President
THE UNDERSIGNED, President of USF&G Corporation, who executed
on behalf of the Corporation Articles Supplementary of which this Certificate is
made a part, hereby acknowledges in the name and on behalf of said Corporation
the foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect to
the authorization and approval thereof are true in all material respects under
the penalties of perjury.
/s/ Norman P. Blake, Jr.