RESTATED
ARTICLES OF INCORPORATION
OF
EFFECTIVE MANAGEMENT SYSTEMS, INC.
Pursuant to Section 180.1007 of the Wisconsin Business
Corporation Law, these Restated Articles of Incorporation shall supersede and
take the place of the corporation's heretofore existing Articles of
Incorporation and all amendments thereto.
ARTICLE 1
The name of the corporation is Effective Management Systems, Inc.
ARTICLE 2
The period of existence of the corporation shall be perpetual.
ARTICLE 3
The purpose of the corporation is to engage in any lawful business or
purpose whatever for which corporations may be organized under the Wisconsin
Business Corporation Law.
ARTICLE 4
The aggregate number of shares which the corporation shall have the
authority to issue shall be 23,000,000 shares, consisting of: (i) 20,000,000
shares of a class designated as "Common Stock," with a par value of $.01 per
share; and (ii) 3,000,000 shares of a class designated as "Preferred Stock,"
with a par value of $.01 per share. Upon the effectiveness of these Restated
Articles of Incorporation, each issued and outstanding share of Common Stock,
$.20 par value per share, of the corporation held of record by each shareholder
of the corporation immediately prior to such effectiveness and each share held
in the corporation's treasury shall automatically and without need of any
further action on the part of any shareholder be reclassified into thirty-five
(35) shares of Common Stock, with a par value of $.01 per share.
The designation, relative rights, preferences and limitations of the
shares of each class and the authority of the Board of Directors of the
corporation to establish and to designate series of Preferred Stock and to fix
variations in the relative rights, preferences and limitations as between such
series, shall be as set forth herein.
A. Preferred Stock.
(1) Series and Variations Between Series. The Board of Directors of
the corporation is authorized, to the full extent permitted under the Wisconsin
Business Corporation Law and the provisions of this Section A, to provide for
the issuance of the
Preferred Stock in series, each of such series to be distinctively designated,
and to have such redemption rights, dividend rights, rights on dissolution or
distribution of assets, conversion or exchange rights, voting powers,
designations, preferences and relative participating, optional or other special
rights, if any, and such qualifications, limitations or restrictions thereof as
shall be provided by the Board of Directors of the corporation consistent with
the provisions of this Article 4.
(2) Dividends. Before any dividends shall be paid or set apart for
payment upon shares of Common Stock, the holders of each series of Preferred
Stock shall be entitled to receive dividends at the rate (which may be fixed or
variable) and at such times as specified in the particular series. The holders
of shares of Preferred Stock shall have no rights to participate with the
holders of shares of Common Stock in any distribution of dividends in excess of
the preferential dividends, if any, fixed for such Preferred Stock.
(3) Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the corporation, the holders of shares
of each series of Preferred Stock shall be entitled to receive out of the assets
of the corporation in money or money's worth the preferential amount, if any,
specified in the particular series for each share at the time outstanding
together with all accrued but unpaid dividends thereon, before any of such
assets shall be paid or distributed to holders of Common Stock. The holders of
Preferred Stock shall have no rights to participate with the holders of Common
Stock in the assets of the corporation available for distribution to
shareholders in excess of the preferential amount, if any, fixed for such
Preferred Stock.
(4) Voting Rights. The holders of Preferred Stock shall have only such
voting rights as are fixed for shares of each series by the Board of Directors
pursuant to this Section A or are provided, to the extent applicable, by the
Wisconsin Business Corporation Law.
(5) Series A 8% Convertible Redeemable Preferred Stock.
(i) Designation and Amount. There is hereby created a series of
Preferred Stock which shall be designated as the "Series A 8% Convertible
Redeemable Preferred Stock" (hereinafter referred to as the "Series A"); the
number of shares constituting such series shall be 7,000. Such number of shares
may be increased or decreased by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of shares of Series A to a
number less than the number of shares then outstanding.
(ii) Dividends.
(a) Cumulative Dividends. From and after the date of
issuance of any shares of Series A, the holders of the Series A shall be
entitled to receive in cash, cumulative preferential dividends at the rate of
eight (8%) percent per annum, payable quarterly on January 2, April 1, July 1,
and October 1 of each year to holders of record of Series A as of the fifteenth
(15th) day of the month immediately preceding the month in which a quarterly
dividend is due (each a "Dividend Record Date"). Notwithstanding the foregoing,
the first dividend payment date with respect to the Series A shall be January 2,
1999, which
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dividend shall be paid on a pro rata basis for the period such shares of Series
A are outstanding. In the event that the corporation cannot, as determined by
the corporation's Board of Directors in its sole discretion, pay dividends in
cash on any dividend payment date, the corporation shall pay dividends in shares
of Series A valued at eighty (80%) percent of the lesser of: (i) $1,000 and (ii)
the Market Price (as defined below) of the Common Stock (as defined below) on
the relevant Dividend Record Date multiplied by the quotient of (a) $1,000 and
(b) the Conversion Price (as defined below). Commencing with the quarterly
period beginning January 2, 2002, the annual dividend rate will increase each
quarterly period by 2% up to a maximum annual dividend rate of 18% (e.g., the
annual dividend rate for the quarterly period commencing January 2, 2002 will be
10% and the annual dividend rate for the quarterly period commencing April 1,
2002 will be 12%).
(b) Preference of Dividends. In the event that dividends
shall not have been fully paid, or declared and set apart for payment on all
shares of Series A, the amount of the deficiency (without interest) shall be
fully paid before any dividends shall be declared or paid on any shares of the
corporation's Common Stock, $.01 par value per share (the "Common Stock"), or
any other equity security which is junior to the Series A. If any dividends are
paid on any of the Series A at any time in an aggregate amount less than the
total dividends then accumulated and payable on all shares of Series A entitled
to dividends then outstanding, the amount to be distributed shall be paid on
each share of Series A entitled to dividends in the proportion that the
dividends then accumulated and payable on each such share bears to the total
dividends accumulated and payable on all outstanding shares of Series A entitled
to dividends.
(c) Date of Payment. In any case where the due date for the
payment of dividends on the Series A shall be on a day on which banking
institutions in the United States are authorized or obligated by law to close,
the payment of dividends need not be made on such date, but may be made on the
next succeeding day which is not a day on which banking institutions are
authorized or obligated by law to close, with the same force and effect as if
made on the date of such payment, and dividends shall accrue and be paid for the
period through and including the date of payment.
(iii) Priority. All shares of the Series A shall rank on a parity
with each other and shall be preferred to the Common Stock and, except as
expressly provided below in this Section (iii), any other class of stock of the
corporation, as to the payment of dividends and the distribution of assets upon
the liquidation, dissolution or winding up of the corporation. The corporation
shall have the right to create other classes of Preferred Stock which shall rank
below the Series A without the consent of the holders of the Series A. The
holders of the Series A shall be entitled to vote as a separate class on the
issuance of any class of equity securities which ranks equal to or senior to the
Series A; provided, however, that should the corporation issue and sell prior to
September 30, 1998 at least 1,000 shares of Series A and, at any time thereafter
through September 30, 1998, subject to the right of the corporation and its
placement agent to extend such date by up to an additional thirty (30) days, the
corporation and its placement agent agree in writing to sell equity securities
for an aggregate sale price equal to or less than the difference between $5
million and the aggregate purchase price for the number of shares of Series A
sold, with different terms than the Series
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A (the "Other Securities"), the corporation shall have the right, without the
approval of the holders of the Series A, to sell the Other Securities and to
have such Other Securities rank equal in priority to the Series A.
(iv) Voluntary Conversion Rights.
(a) Voluntary Conversion. Each holder of Series A shall have
the right, at any time and from time to time, at the holder's option, to convert
all or any portion of such holder's shares of Series A into fully paid and
non-assessable (except as otherwise provided by the Wisconsin Business
Corporation Law) shares of Common Stock at the Conversion Price in effect at the
time of conversion, each share of the Series A being taken at $1,000 per share
for the purposes of such conversion. The initial Conversion Price is $3.50 per
share of Common Stock ("Initial Conversion Price"). The Initial Conversion Price
shall be adjusted as provided for below in Section (vi) (the Initial Conversion
Price and the Initial Conversion Price as thereafter then adjusted shall be
referred to as the "Conversion Price"). Upon each adjustment of the Conversion
Price, the holders of the Series A shall thereafter be entitled to receive upon
conversion, at the Conversion Price, the number of shares of Common Stock
obtained by multiplying $1,000 times the number of shares of Series A being
converted and dividing such product by the Conversion Price.
(b) Method of Conversion. In order to convert shares of the
Series A into Common Stock, the holder thereof shall surrender the certificates
representing the Series A to be converted, duly endorsed in blank, at the
principal office of the corporation or its transfer agent, if any, or at such
other office or offices, located in the United States as the Board of Directors
may designate by written notice to all holders of Series A shares, and give
written notice to the corporation at said office that the holder elects to
convert said shares of Series A. Shares of the Series A shall be deemed to have
been converted as of the date (hereinafter called the "Conversion Date") of
receipt by the corporation of the surrendered shares of Series A for conversion
as provided above, and the person or persons entitled to receive the Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Common Stock on such date. As soon as
practicable on or after the Conversion Date but in no event more than five (5)
business days thereafter, the corporation will deliver by Federal Express or
other nationally recognized overnight delivery service to the address of the
holder who submitted the Series A for conversion, a certificate or certificates
for the number of full shares of Common Stock issuable upon such conversion,
together with cash in lieu of any fraction of a share, as hereinafter provided,
to the person or persons entitled to receive the same and a check representing
all accrued and unpaid dividends on the Series A so converted through the
Conversion Date.
(v) Forced Conversion. The corporation shall have the right to
force conversion of all, but not less than all, of the Series A into shares of
Common Stock; provided, however, that on the day that notice of forced
conversion is given (the "Forced Conversion Notice Date") and on the Forced
Conversion Date (as defined below) the following conditions are satisfied: (a)
the Common Stock issued and/or issuable upon conversion of the Series A has been
registered for resale pursuant to the Securities Act of 1933, as amended (the
"Act"), and such registration is then currently effective; and (b) the
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average of the closing bid price of the Common Stock as listed on the National
Association of Securities Dealers Automated Quotation System, the New York Stock
Exchange, the American Stock Exchange or wherever the Common Stock then trades
(hereinafter, the "Market"), is at least 175% of the Conversion Price for twenty
(20) trading days within any thirty (30) consecutive trading day period ending
no more than ten (10) days prior to the Forced Conversion Notice Date. Any
notice of forced conversion must be given to all holders no less than thirty
(30) days nor more than forty-five (45) days prior to the date set forth for
conversion (the "Forced Conversion Date"). On the Forced Conversion Date, the
corporation shall pay to all registered holders of the Series A all accrued and
unpaid dividends through and including the Forced Conversion Date. In the event
that the Board of Directors of the corporation approves a transaction whereby
the holders of the Common Stock would be paid a per share price equal to or in
excess of 175% of the Conversion Price (the "Sale Event") and the Forced
Conversion Notice Date and on the Forced Conversion Date the condition set forth
in Section (v)(a) above has been satisfied, the corporation can require all
holders of the Series A to convert their shares of Series A into shares of
Common Stock immediately prior to the closing of the Sale Event. Notwithstanding
anything to the contrary, holders of Series A shall not have the right to vote
together with the holders of Common Stock, or as a separate class, on whether to
approve the Sale Event (although a holder of Series A that voluntarily converts
shares of Series A into Common Stock prior to the record date for the
shareholders' meeting to vote on the Sale Event would be entitled to vote such
shares of Common Stock) during the 150-day period following the Forced
Conversion Notice Date because it shall be deemed for all purposes relating to
the approval of the Sale Event, including for purposes of the Wisconsin Business
Corporation Law, that the Series A is no longer outstanding during such period
and that the only rights of the Series A shall be to receive shares of Common
Stock upon consummation of the forced conversion. In the event that the
foregoing sentence is determined not to eliminate the voting rights of the
Series A (either class voting rights or the right to vote with the Common Stock)
with respect to a Sale Event, the holders of the Series A shall be deemed to
have granted the President and the Secretary of the corporation (and each of
them individually) an irrevocable proxy for such 150-day period to vote the
Series A held by each such holder for the approval of the Sale Event. In the
event that the Sale Event would result in the holders of the Series A receiving
securities, it is a condition to the corporation's right to force conversion
resulting from a Sale Event that the securities to be received by the holders of
the Series A are registered under the Act and are freely transferable.
(vi) Adjustments to Conversion Price. The Conversion Price shall
be adjusted as follows:
(a) Amendment to the Restated Articles of Incorporation. In
the case of any amendment to the Restated Articles of Incorporation of the
corporation to change the designation of the Common Stock or the rights,
privileges, restrictions or conditions in respect to the Common Stock or to
provide for a division of the Common Stock, the Series A shall be adjusted so as
to provide that upon conversion thereof the holder shall receive, in lieu of
shares of Common Stock theretofore issuable upon such conversion, the kind and
amount of shares, other securities, money and property receivable upon such
designation, change or division by such holder issuable upon such conversion had
the conversion occurred immediately prior to such designation, change or
division. The Series A
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shall be deemed thereafter to provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
(vi). The provisions of this Section (vi)(a) shall apply in the same manner to
successive reclassifications, changes, consolidations and mergers.
(b) Stock Splits; Stock Dividends. If the corporation shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares of Common Stock, or declare a dividend or make any other
distribution upon the Common Stock payable in shares of Common Stock, the
Conversion Price in effect immediately prior to such subdivision or dividend or
other distribution shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
(c) Issuance of Additional Securities. In case the
corporation shall, through either a private placement or a public offering (but
other than pursuant to options granted under the corporation's directors' and
employee stock option and stock purchase plans or shares or options issued in an
acquisition or shares issuable pursuant to the exercise of warrants outstanding
on August 19, 1998), issues shares of Common Stock, or options to purchase
Common Stock or rights to subscribe for Common Stock or securities convertible
into or exchangeable for Common Stock at a price (such consideration, if other
than cash, as determined by the Board of Directors) less than the then Market
Price (as defined below) on the date of sale, the Conversion Price then in
effect shall automatically be reduced by multiplying the then Conversion Price
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issuance, sale or distribution plus
the number of shares of Common Stock which the aggregate consideration received
or to be received by the corporation for such issuance, sale or distribution
would purchase at the Market Price per share, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately after giving
effect to such issuance, sale or distribution. The term "Market Price" shall
mean the average closing bid price on the Market for the ten (10) consecutive
trading days immediately prior to the date in question. Notwithstanding the
foregoing, in no event shall the Conversion Price ever be increased as a result
of this Section (vi)(c).
(d) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the corporation, or
any consolidation or merger of the corporation with another corporation or other
entity, or the sale of all or substantially all of the corporation's assets to
another corporation or other entity shall be effected in such a way that holders
of shares of Common Stock shall be entitled to receive stock, securities, other
evidence of equity ownership or assets with respect to or in exchange for shares
of Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale (except as otherwise provided below in this
Section (vi)(d)), lawful and adequate provisions shall be made whereby the
holders of Series A shall thereafter have the right to receive upon the basis
and upon the terms and conditions specified herein, such shares of stock,
securities, other evidence of equity ownership or assets as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such Common
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Stock equal to the number of shares of Common Stock immediately
theretofore purchasable and receivable upon the conversion of Series A had such
reorganization, reclassification, consolidation, merger or sale not taken place,
and in any such case appropriate provisions shall be made with respect to the
rights and interests of the holders to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Conversion
Price and the number of shares of Common Stock receivable upon the conversion of
Series A) shall thereafter be applicable, as nearly as may be, in relation to
any shares of stock, securities, other evidence of equity ownership or assets
thereafter deliverable upon the exercise hereof (including an immediate
adjustment, by reason of such consolidation or merger, of the Conversion Price
to the value for the Common Stock reflected by the terms of such consolidation
or merger if the value so reflected is less than the Conversion Price in effect
immediately prior to such consolidation or merger; provided, however, that the
Conversion Price shall not be reduced under this Section (vi)(d) by more than
thirty (30%) percent). Subject to the terms of the Series A, in the event of a
merger or consolidation of the corporation with or into another corporation or
other entity as a result of which the number of shares of common stock of the
surviving corporation or other entity issuable to holders of Common Stock is
greater or lesser than the number of shares of Common Stock of the corporation
outstanding immediately prior to such merger or consolidation, then the
Conversion Price in effect immediately prior to such merger or consolidation
shall be adjusted in the same manner as though there were a subdivision or
combination of the outstanding shares of Common Stock. The corporation shall not
effect any such consolidation, merger or sale, unless prior to the consummation
thereof, the successor corporation or other entity (if other than the
corporation) resulting from such consolidation or merger or the corporation or
other entity purchasing such assets shall assume by written instrument executed
and mailed or delivered to the holders, the obligation to deliver to such
holders such shares of stock, securities, other evidence of equity ownership or
assets as, in accordance with the foregoing provisions, such holders may be
entitled to receive or otherwise acquire. If a purchase tender or exchange offer
is made to and accepted by the holders of more than fifty (50%) percent of the
outstanding shares of Common Stock, the corporation shall not effect any
consolidation, merger or sale with the person having made such offer or with any
affiliate of such person, unless prior to the consummation of such
consolidation, merger or sale the holders of Series A shall have been given a
reasonable opportunity to then elect to receive upon the conversion of Series A,
the amount of stock, securities, other evidence of equity ownership or assets
then issuable with respect to the number of shares of Common Stock of the
corporation in accordance with such offer.
(e) Change of Control. In case the corporation shall, at any
time prior to conversion of the shares of Series A, consolidate or merge with
any other corporation or other entity (where the corporation is not the
surviving entity) or transfer all or substantially all of its assets to any
other corporation or other entity, then the corporation shall, as a condition
precedent to such transaction, cause effective provision to be made so that the
holders of the Series A upon the conversion of the Series A after the effective
date of such transaction shall be entitled to receive the kind and amount of
shares, evidences of indebtedness and/or other securities or property receivable
on such transaction by a holder of the number of shares of Common Stock as to
which each share of Series A was convertible immediately prior to such
transaction (without giving effect to any restriction upon such
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conversion); and, in any such case, appropriate provision shall be made with
respect to the rights and interest of the holders of Series A to the end that
the provisions of the Series A shall thereafter be applicable (as nearly as may
be practicable) with respect to any shares, evidences of indebtedness or other
securities or assets thereafter deliverable upon conversion of the Series A.
Upon the occurrence of any event described in this Section (vi)(e), the holders
of the Series A shall have the right to (i) convert into shares of Common Stock
immediately prior to such event at a Conversion Price equal to the lesser of (1)
the then Conversion Price or (2) the price per share of Common Stock paid in
such event; provided, however, that the Conversion Price shall not be reduced
under this Section (vi)(e)(2) by more than thirty (30%) percent, or (ii) retain
ownership of the shares of Series A, in which event, appropriate provisions
shall be made so that the shares of Series A shall be convertible at the
holder's option into shares of stock, securities or other equity ownership of
the surviving or acquiring entity.
(f) Record of Conversion Price. Whenever the shares of
Common Stock or other types of securities or assets receivable upon conversion
of the Series A shall be adjusted as provided in this Section (vi), the
corporation shall forthwith obtain and file with its corporate records a
certificate or letter from a firm of independent public accountants of
recognized standing setting forth the computation and the adjusted number of
shares of Common Stock or other securities or assets resulting from such
adjustments, and a copy of such certificate or letter shall be mailed to the
holders of the Series A. Any such certificate or letter shall be conclusive
evidence as to the correctness of the adjustment or adjustments referred to
therein and shall be available for inspection by any holders of the Series A on
any day during normal business hours.
(g) Notice. In case:
i the corporation shall declare a dividend
(or any other distribution) on its
Common Stock payable in Common Stock; or
ii the corporation shall declare a dividend
(or any other distribution) on its
Common Stock payable in cash; or
iii any reclassification of Common Stock or
any consolidation, merger, conveyance of
the property of the corporation as an
entirety, or substantially as an
entirety, dissolution, liquidation or
winding up shall be effected by the
corporation;
then the corporation shall mail, or cause to be mailed by the corporation's
transfer agent, if any, for the Series A to the holders of record of the
outstanding shares of the Series A, at least thirty (30) days, but not more than
sixty (60) days, prior to the applicable record date hereinafter specified, a
notice stating (A) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights, or, if a record is not to be taken, the
date as
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of which the holders of Common Stock of record to be entitled to such dividend,
distribution or right are to be determined, or (B) the date on which such
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
the certificates representing their shares of Common Stock for securities or
other property deliverable upon such reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
(vii) Reservation of Shares of Common Stock.
(a) Reservation of Shares. The corporation shall at all
times reserve and keep available out of its authorized but unissued Common
Stock, for the purpose of effecting the conversion of the shares of the Series
A, the full number of shares of Common Stock then deliverable upon the
conversion of all shares of the Series A then outstanding. If shares of the
Common Stock of the corporation are listed on any securities exchange, the
corporation shall make application for the listing thereon, on notice of
issuance, of the shares of Common Stock deliverable upon the conversion of the
outstanding shares of the Series A and shall use its best efforts to effect such
listing.
(b) Fractional Shares. No fractional shares of Common Stock
are to be issued upon conversion. The corporation shall pay a cash adjustment in
respect to any fraction of a share which would otherwise be issuable, in an
amount equal to the fair market value of the Common Stock which shall be the
same fraction of the closing bid price per share at which the Common Stock was
sold on the Market prior to the opening of business on the Conversion Date, or
if no sale of such stock takes place on such day on the Market, the average of
the closing bid and asked prices on such day as officially quoted on the Market.
If the Common Stock is not then publicly traded, fair market value shall be
determined in good faith by the corporation's Board of Directors.
(c) Transfer Taxes. The corporation will pay any and all
transfer taxes that may be payable in respect of the issue or delivery of shares
of Common Stock on conversion of shares of the Series A pursuant hereto. The
corporation shall not, however, be required to pay any tax which may be payable
in respect of transfer involved in the issue and delivery of shares of Common
Stock in a name other than that in which the shares of the Series A so converted
were registered, and no such issue or delivery shall be made unless and until
the person requesting such issue 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.
(d) Common Stock. For the purpose of this Section (vii), the
term "Common Stock" shall include any stock of any class of the corporation
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the corporation, and which is not subject to redemption by the corporation.
Shares of Common Stock shall be only such shares which have no preference in
respect of dividends or of amounts payable in the event of any voluntary
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or involuntary liquidation, dissolution, or winding up of the corporation and
which are not subject to redemption by the corporation.
(e) Status of Common Stock. All Common Stock that may be
issued upon conversion of the Series A will, upon issuance, be duly issued,
fully paid and non-assessable (except as otherwise provided by the Wisconsin
Business Corporation Law) and free from all taxes, liens and charges with
respect to the issuance thereof (except to the extent resulting from the
holder's own circumstances, actions or omissions).
(viii) Voting.
(a) Voting. The holders of the Series A shall be entitled to
vote, on all matters in which holders of Common Stock are entitled to vote,
voting together with the Common Stock and the Other Securities, if any, without
regard to class. The holders of the Series A shall have the number of votes that
they would have had assuming conversion of the Series A into Common Stock as of
the record date for the meeting of the holders of Common Stock with fractional
shares being disregarded. The holders of the Series A shall be entitled to
receive all communications sent by the corporation to the holders of Common
Stock. Except as provided in Section (viii)(c) below or by the Wisconsin
Business Corporation Law, holders of shares of the Series A shall not be
entitled to vote as a separate class.
(b) No Cumulative Voting. The holders of shares of the
Series A shall not have the right of cumulative voting in an election of
directors.
(c) Voting as a Separate Class. The corporation shall not,
without the consent (given by vote at a meeting called for that purpose or by
written consent) of the holders of a majority of the shares of the Series A and
the Other Securities, if any, then outstanding, voting together as a separate
class:
i create, authorize or issue any stock or
other equity security ranking equal to
or senior to the Series A and the Other
Securities as to dividends or
distributions, or any obligation or
security convertible into shares of any
such senior stock, except as set forth
in Section (ii) above; or
ii amend, alter, change, or repeal any of
the express terms of the Series A or the
Other Securities.
(iv) Redemption.
(a) Redemption. Commencing three (3) years following the
last issuance of the shares of Series A, the corporation may redeem the Series A
in whole at any time at the option of the corporation by resolution of its Board
of Directors, at a redemption price of $1,000 per share, plus accrued and unpaid
dividends, if any, to the date fixed for redemption.
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(b) Notice of Redemption. Notice of redemption of the shares
of the Series A shall be given by certified mail, return receipt requested,
postage prepaid, not less than thirty (30) nor more than forty-five (45) days
prior to the date fixed for redemption, to each holder of the Series A, at each
holder's last address appearing on the books of the corporation; but no failure
to receive such a notice by any holder, so long as mailed in accordance with the
provisions herein, shall affect the validity of the proceedings for the
redemption of any shares of the Series A so to be redeemed. Each notice of
redemption of shares of the Series A shall state:
(i) the redemption date,
(ii) the redemption price,
(iii) the Conversion Price on the date of the
notice,
(iv) that on the redemption date the
redemption price will become due and
payable upon each share of the Series A
to be redeemed and the right to convert
each such share shall cease as of the
close of business on the redemption
date, unless default shall be made in
the payment of the redemption price, and
(v) the place or places where certificates
for such shares of the Series A to be
redeemed are to be surrendered for
conversion or for payment of the
redemption price.
(c) Conversion Prior to the Redemption. At any time prior to
the redemption date, each holder of the Series A shall be entitled to convert
all or any portion of such holder's Series A into Common Stock based on the
Conversion Price.
(d) Rights Following Redemption. If notice of redemption
shall have been duly given as provided in Section (ix)(b), and if, on the
redemption date, funds necessary for such redemption have been deposited in
trust with a bank or trust company, or have been set aside, in trust, by the
corporation, for the purpose of redeeming shares of the Series A, the shares of
the Series A called for redemption shall, as of the close of business on the
redemption date, no longer be transferable on the books of the corporation and
shall no longer be deemed to be outstanding, the right to receive dividends
thereon shall cease to accrue, and all rights with respect to such shares so
called for redemption shall terminate, except only the right of the holders
thereof to receive the redemption price, without interest thereon, upon
surrender of the certificates for such shares.
(e) Cancellation of Shares. Shares of the Series A redeemed
pursuant to this Section (ix) or otherwise reacquired by the corporation shall
be deemed cancelled and thereafter shall constitute authorized and unissued
shares of Preferred Stock,
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undesignated as to series, subject to reissuance by the corporation as shares
of any series of Preferred Stock.
(x) Liquidation.
(a) Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the corporation
(hereinafter collectively called "liquidation"), before any amount shall be paid
to or set aside for, or any assets shall be distributed among, the holders of
shares of Common Stock or of any other equity security of the corporation other
than the Other Securities, each holder of a share of the Series A shall be
entitled to receive out of the assets of the corporation or the proceeds
thereof, a preferential payment in an amount equal to $1,000 per share, plus the
amount of accrued and unpaid dividends on such share, if any, and no more.
(b) Proportional Rights. In the event the amount available
for distribution as liquidation preference payments to holders of the Series A
and any other stock ranking on a parity therewith (including the Other
Securities, if any) is insufficient to pay the full amount of their respective
preferences, such amount shall be divided among and paid to such holders ratably
in proportion to the respective amounts which would be payable to such holders
if their respective liquidation preferences were to be paid in full.
(c) Insufficient Funds. In the event any liquidation
preference payment to be made on the shares of the Series A shall amount in the
aggregate to less than $1,000 per share plus accrued and unpaid dividends, the
corporation in its discretion may require the surrender of certificates for
shares of the Series A and issue a replacement certificate or certificates, or
it may require the certificates evidencing the shares in respect of which such
payments are to be made to be presented to the corporation, or its agent, for
notation thereon of the amounts of the liquidation preference payments made in
respect of such shares. In the event a certificate for shares of the Series A on
which payment of one or more partial liquidation preferences has been made is
presented for exchange or transfer, such new certificate shall bear an
appropriate notation as to the aggregate amount of liquidation preference
payments theretofore made in respect thereof.
(d) Merger or Sale. Neither the consolidation or merger of
the corporation with or into any other corporation or other entity, nor the sale
or transfer by the corporation of all or any part of its assets, shall be deemed
to be a liquidation of the corporation for the purposes of this Section (x).
(xi) Replacement Certificates.
(a) Mutilated Certificate. If any mutilated certificate of
Series A is surrendered to the corporation, the corporation shall execute and
deliver in exchange therefor a new certificate for Series A of like tenor and
principal amount, bearing a number not contemporaneously outstanding.
(b) Destroyed, Lost or Stolen Certificate. If there is
delivered to the corporation (i) evidence to its reasonable satisfaction of the
destruction, loss or
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theft of any certificate of Series A and (ii) such reasonable security or
indemnity as may be required by it to save it harmless, then, in the absence of
notice to the corporation that such certificate of Series A has been acquired by
a bona fide purchaser, the corporation shall execute and deliver in lieu of any
such destroyed, lost or stolen certificate of Series A, a new certificate of
Series A of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
(c) Status of New Certificate. Upon the issuance of any new
certificate of Series A under this Section (xi), the corporation may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses connected therewith.
Every new certificate of Series A issued pursuant to this Section (xi), in lieu
of any destroyed, lost or stolen certificate of Series A, shall constitute an
original additional contractual obligation of the corporation, whether or not
the destroyed, lost or stolen certificate of Series A shall be at any time
enforceable by anyone. Any new certificate for Series A delivered pursuant to
this Section (xi), shall be so dated that neither gain nor loss in interest
shall result from such exchange. The provisions of this Section (xi) are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen certificates of Series A.
(6) Series B 8% Convertible Redeemable Preferred Stock.
(i) Designation and Amount. There is hereby created a series of
Preferred Stock which shall be designated as the "Series B 8% Convertible
Redeemable Preferred Stock" (hereinafter referred to as the "Series B"); the
number of shares constituting such series shall be 5,000. Such number of shares
may be increased or decreased by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of shares of Series B to a
number less than the number of shares then outstanding.
(ii) Dividends.
(a) Cumulative Dividends. From and after the date of
issuance of any shares of Series B, the holders of the Series B shall be
entitled to receive in cash, cumulative preferential dividends at the rate of
eight (8%) percent per annum, payable quarterly on January 2, April 1, July 1,
and October 1 of each year to holders of record of Series B as of the fifteenth
(15th) day of the month immediately preceding the month in which a quarterly
dividend is due (each a "Dividend Record Date"). The first dividend payment date
with respect to the Series B shall be January 2, 1999, which dividend shall be
paid on a pro rata basis for the period such shares of Series B are outstanding.
In the event that the corporation cannot, as determined by the corporation's
Board of Directors in its sole discretion, pay dividends in cash on any dividend
payment date, the corporation shall pay dividends in shares of Series B valued
at eighty (80%) percent of the lesser of: (i) $1,000 and (ii) the Market Price
(as defined below) of the Common Stock (as defined below) on the relevant
Dividend Record Date multiplied by the quotient of (a) $1,000 and (b) the
Conversion Price (as defined below). Commencing with the quarterly period
beginning January 2, 2002, the annual dividend rate will increase each quarterly
period by 2% up to a maximum annual
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dividend rate of 18% (e.g., the annual dividend rate for the quarterly period
commencing January 2, 2002 will be 10% and the annual dividend rate for the
quarterly period commencing April 1, 2002 will be 12%).
(b) Preference of Dividends. In the event that dividends
shall not have been fully paid, or declared and set apart for payment on all
shares of Series B, the amount of the deficiency (without interest) shall be
fully paid before any dividends shall be declared or paid on any shares of the
corporation's Common Stock, $.01 par value per share (the "Common Stock"), or
any other equity security which is junior to the Series B. If any dividends are
paid on any of the Series B at any time in an aggregate amount less than the
total dividends then accumulated and payable on all shares of Series B entitled
to dividends then outstanding, the amount to be distributed shall be paid on
each share of Series B entitled to dividends in the proportion that the
dividends then accumulated and payable on each such share bears to the total
dividends accumulated and payable on all outstanding shares of Series B entitled
to dividends.
(c) Date of Payment. In any case where the due date for the
payment of dividends on the Series B shall be on a day on which banking
institutions in the United States are authorized or obligated by law to close,
the payment of dividends need not be made on such date, but may be made on the
next succeeding day which is not a day on which banking institutions are
authorized or obligated by law to close, with the same force and effect as if
made on the date of such payment, and dividends shall accrue and be paid for the
period through and including the date of payment.
(iii) Priority. All shares of the Series B shall rank on a parity
with each other and shall be preferred to the Common Stock and, other than the
corporation's Series A 8% Convertible Redeemable Preferred Stock (the "Series
A"), which shall rank on a parity with the Series B, and except as expressly
provided below in this Section (iii), any other class of stock of the
corporation, as to the payment of dividends and the distribution of assets upon
the liquidation, dissolution or winding up of the corporation. The corporation
shall have the right to create other classes of Preferred Stock which shall rank
below the Series B without the consent of the holders of the Series B. The
holders of the Series B (together with the holders of Series A) shall be
entitled to vote as a separate class on the issuance of any class of equity
securities which ranks equal to or senior to the Series A and Series B;
provided, however, that should the corporation issue and sell prior to October
30, 1998 at least 700 shares of Series B and, at any time thereafter through
October 30, 1998, subject to the terms of the Series A and the right of the
corporation and its placement agent to extend such date by up to an additional
thirty (30) days, the corporation and its placement agent agree in writing to
sell equity securities for an aggregate sale price equal to or less than the
difference between $2.75 million and the aggregate purchase price for the number
of shares of Series B sold, with different terms than the Series B (the "Other
Securities"), the corporation shall have the right, without the approval of the
holders of the Series B, to sell the Other Securities and to have such Other
Securities rank equal in priority to the Series B.
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(iv) Voluntary Conversion Rights.
(a) Voluntary Conversion. Each holder of Series B shall have
the right, at any time and from time to time, at the holder's option, to convert
all or any portion of such holder's shares of Series B into fully paid and
non-assessable (except as otherwise provided by the Wisconsin Business
Corporation Law) shares of Common Stock at the Conversion Price in effect at the
time of conversion, each share of the Series B being taken at $1,000 per share
for the purposes of such conversion. The initial Conversion Price is $3.00 per
share of Common Stock (the "Initial Conversion Price"). Notwithstanding anything
to the contrary contained in the terms of the Series B, in the event that the
average closing price for the corporation's Common Stock on the highest five (5)
out of the last ten (10) trading days of the calendar month of January 1999 is
not $5.25 per share of Common Stock or greater, then effective January 31, 1999,
the Initial Conversion Price shall automatically be reduced to the lowest
closing bid price within thirty (30) days after the date that the last sale of
the Series B occurs, but in no event less than $2.00 per share of Common Stock.
In no event shall the Initial Conversion Price be increased as a result of the
foregoing. The Initial Conversion Price shall be further adjusted as provided
for below in Section (vi) (the Initial Conversion Price and the Initial
Conversion Price as thereafter then adjusted shall be referred to as the
"Conversion Price"). Upon each adjustment of the Conversion Price, the holders
of the Series B shall thereafter be entitled to receive upon conversion, at the
Conversion Price, the number of shares of Common Stock obtained by multiplying
$1,000 times the number of shares of Series B being converted and dividing such
product by the Conversion Price.
(b) Method of Conversion. In order to convert shares of the
Series B into Common Stock, the holder thereof shall surrender the certificates
representing the Series B to be converted, duly endorsed in blank, at the
principal office of the corporation or its transfer agent, if any, or at such
other office or offices, located in the United States as the Board of Directors
may designate by written notice to all holders of Series B shares, and give
written notice to the corporation at said office that the holder elects to
convert said shares of Series B. Shares of the Series B shall be deemed to have
been converted as of the date (hereinafter called the "Conversion Date") of
receipt by the corporation of the surrendered shares of Series B for conversion
as provided above, and the person or persons entitled to receive the Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Common Stock on such date. As soon as
practicable on or after the Conversion Date but in no event more than five (5)
business days thereafter, the corporation will deliver by Federal Express or
other nationally recognized overnight delivery service to the address of the
holder who submitted the Series B for conversion, a certificate or certificates
for the number of full shares of Common Stock issuable upon such conversion,
together with cash in lieu of any fraction of a share, as hereinafter provided,
to the person or persons entitled to receive the same and a check representing
all accrued and unpaid dividends on the Series B so converted through the
Conversion Date.
(v) Forced Conversion. The corporation shall have the right to
force conversion of all, but not less than all, of the Series B into shares of
Common Stock; provided, however, that on the day that notice of forced
conversion is given (the "Forced Conversion Notice Date") and on the Forced
Conversion Date (as defined below) the
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following conditions are satisfied: (a) the Common Stock issued and/or issuable
upon conversion of the Series B has been registered for resale pursuant to the
Securities Act of 1933, as amended (the "Act"), and such registration is then
currently effective; and (b) the average of the closing bid price of the Common
Stock as listed on the National Association of Securities Dealers Automated
Quotation System, the New York Stock Exchange, the American Stock Exchange or
wherever the Common Stock then trades (hereinafter, the "Market"), is at least
175% of the Conversion Price for twenty (20) trading days within any thirty (30)
consecutive trading day period ending no more than ten (10) days prior to the
Forced Conversion Notice Date. Any notice of forced conversion must be given to
all holders no less than thirty (30) days nor more than forty-five (45) days
prior to the date set forth for conversion (the "Forced Conversion Date"). On
the Forced Conversion Date, the corporation shall pay to all registered holders
of the Series B all accrued and unpaid dividends through and including the
Forced Conversion Date. In the event that the Board of Directors of the
corporation approves a transaction whereby the holders of the Common Stock would
be paid a per share price equal to or in excess of 175% of the Conversion Price
(the "Sale Event") and on the Forced Conversion Notice Date and on the Forced
Conversion Date the condition set forth in Section (v)(a) above has been
satisfied, the corporation can require all holders of the Series B to convert
their shares of Series B into shares of Common Stock immediately prior to the
closing of the Sale Event. Notwithstanding anything to the contrary, holders of
Series B shall not have the right to vote together with the holders of Common
Stock, or as a separate class, on whether to approve the Sale Event (although a
holder of Series B that voluntarily converts shares of Series B into Common
Stock prior to the record date for the shareholders' meeting to vote on the Sale
Event would be entitled to vote such shares of Common Stock) during the 150-day
period following the Forced Conversion Notice Date because it shall be deemed
for all purposes relating to the approval of the Sale Event, including for
purposes of the Wisconsin Business Corporation Law, that the Series B is no
longer outstanding during such period and that the only rights of the Series B
shall be to receive shares of Common Stock upon consummation of the forced
conversion. In the event that the foregoing sentence is determined not to
eliminate the voting rights of the Series B (either class voting rights or the
right to vote with the Common Stock) with respect to a Sale Event, the holders
of the Series B shall be deemed to have granted the President and the Secretary
of the corporation (and each of them individually) an irrevocable proxy for such
150-day period to vote the Series B held by each such holder for the approval of
the Sale Event. In the event that the Sale Event would result in the holders of
the Series B receiving securities, it is a condition to the corporation's right
to force conversion resulting from a Sale Event that the securities to be
received by the holders of the Series B are registered under the Act and are
freely transferable.
(vi) Adjustments to Conversion Price. The Conversion Price shall
be adjusted as follows:
(a) Amendment to the Restated Articles of Incorporation. In
the case of any amendment to the Restated Articles of Incorporation of the
corporation to change the designation of the Common Stock or the rights,
privileges, restrictions or conditions in respect to the Common Stock or to
provide for a division of the Common Stock, the Series B shall be adjusted so as
to provide that upon conversion thereof the holder shall receive, in lieu of
shares of Common Stock theretofore issuable upon such conversion, the
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kind and amount of shares, other securities, money and property receivable upon
such designation, change or division by such holder issuable upon such
conversion had the conversion occurred immediately prior to such designation,
change or division. The Series B shall be deemed thereafter to provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section (vi). The provisions of this Section
(vi)(a) shall apply in the same manner to successive reclassifications, changes,
consolidations and mergers.
(b) Stock Splits; Stock Dividends. If the corporation shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares of Common Stock, or declare a dividend or make any other
distribution upon the Common Stock payable in shares of Common Stock, the
Conversion Price in effect immediately prior to such subdivision or dividend or
other distribution shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
(c) Issuance of Additional Securities. In case the
corporation shall, through either a private placement or a public offering (but
other than pursuant to options granted under the corporation's directors' and
employee stock option and stock purchase plans or shares or options issued in an
acquisition or shares issuable pursuant to the exercise of warrants outstanding
on October 22, 1998), issues shares of Common Stock, or options to purchase
Common Stock or rights to subscribe for Common Stock or securities convertible
into or exchangeable for Common Stock at a price (such consideration, if other
than cash, as determined by the Board of Directors) less than the then Market
Price on the date of sale, the Conversion Price then in effect shall
automatically be reduced by multiplying the then Conversion Price by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance, sale or distribution plus the number of
shares of Common Stock which the aggregate consideration received or to be
received by the corporation for such issuance, sale or distribution would
purchase at the Market Price per share, and the denominator of which shall be
the number of shares of Common Stock outstanding immediately after giving effect
to such issuance, sale or distribution. The term "Market Price" shall mean the
average closing bid price on the Market for the ten (10) consecutive trading
days immediately prior to the date in question. Notwithstanding the foregoing,
in no event shall the Conversion Price ever be increased as a result of this
Section (vi)(c).
(d) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the corporation, or
any consolidation or merger of the corporation with another corporation or other
entity, or the sale of all or substantially all of the corporation's assets to
another corporation or other entity shall be effected in such a way that holders
of shares of Common Stock shall be entitled to receive stock, securities, other
evidence of equity ownership or assets with respect to or in exchange for shares
of Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale (except as otherwise provided below in this
Section (vi)(d)), lawful and adequate provisions shall be made whereby the
holders of Series B shall thereafter
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have the right to receive upon the basis and upon the terms and conditions
specified herein, such shares of stock, securities, other evidence of equity
ownership or assets as may be issued 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 Common Stock immediately theretofore purchasable and receivable upon
the conversion of Series B had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case appropriate
provisions shall be made with respect to the rights and interests of the holders
to the end that the provisions hereof (including, without limitation, provisions
for adjustments of the Conversion Price and the number of shares of Common Stock
receivable upon the conversion of Series B) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities, other evidence
of equity ownership or assets thereafter deliverable upon the exercise hereof
(including an immediate adjustment, by reason of such consolidation or merger,
of the Conversion Price to the value for the Common Stock reflected by the terms
of such consolidation or merger if the value so reflected is less than the
Conversion Price in effect immediately prior to such consolidation or merger;
provided, however, that the Conversion Price shall not be reduced under this
Section (vi)(d) by more than thirty (30%) percent). Subject to the terms of the
Series B, in the event of a merger or consolidation of the corporation with or
into another corporation or other entity as a result of which the number of
shares of common stock of the surviving corporation or other entity issuable to
holders of Common Stock is greater or lesser than the number of shares of Common
Stock of the corporation outstanding immediately prior to such merger or
consolidation, then the Conversion Price in effect immediately prior to such
merger or consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of Common Stock. The
corporation shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof, the successor corporation or other entity (if
other than the corporation) resulting from such consolidation or merger or the
corporation or other entity purchasing such assets shall assume by written
instrument executed and mailed or delivered to the holders, the obligation to
deliver to such holders such shares of stock, securities, other evidence of
equity ownership or assets as, in accordance with the foregoing provisions, such
holders may be entitled to receive or otherwise acquire. If a purchase tender or
exchange offer is made to and accepted by the holders of more than fifty (50%)
percent of the outstanding shares of Common Stock, the corporation shall not
effect any consolidation, merger or sale with the person having made such offer
or with any affiliate of such person, unless prior to the consummation of such
consolidation, merger or sale the holders of Series B shall have been given a
reasonable opportunity to then elect to receive upon the conversion of Series B,
the amount of stock, securities, other evidence of equity ownership or assets
then issuable with respect to the number of shares of Common Stock of the
corporation in accordance with such offer.
(e) Change of Control. In case the corporation shall, at any
time prior to conversion of the shares of Series B, consolidate or merge with
any other corporation or other entity (where the corporation is not the
surviving entity) or transfer all or substantially all of its assets to any
other corporation or other entity, then the corporation shall, as a condition
precedent to such transaction, cause effective provision to be made so that the
holders of the Series B upon the conversion of the Series B after the effective
date of such transaction shall be entitled to receive the kind and amount of
shares, evidences of
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indebtedness and/or other securities or property receivable on such transaction
by a holder of the number of shares of Common Stock as to which each share of
Series B was convertible immediately prior to such transaction (without giving
effect to any restriction upon such conversion); and, in any such case,
appropriate provision shall be made with respect to the rights and interest of
the holders of Series B to the end that the provisions of the Series B shall
thereafter be applicable (as nearly as may be practicable) with respect to any
shares, evidences of indebtedness or other securities or assets thereafter
deliverable upon conversion of the Series B. Upon the occurrence of any event
described in this Section (vi)(e), the holders of the Series B shall have the
right to (i) convert into shares of Common Stock immediately prior to such event
at a Conversion Price equal to the lesser of (1) the then Conversion Price or
(2) the price per share of Common Stock paid in such event; provided, however,
that the Conversion Price shall not be reduced under this Section (vi)(e)(i)(2)
by more than thirty (30%) percent, or (ii) retain ownership of the shares of
Series B, in which event, appropriate provisions shall be made so that the
shares of Series B shall be convertible at the holder's option into shares of
stock, securities or other equity ownership of the surviving or acquiring
entity.
(f) Record of Conversion Price. Whenever the shares of
Common Stock or other types of securities or assets receivable upon conversion
of the Series B shall be adjusted as provided in this Section (vi), the
corporation shall forthwith obtain and file with its corporate records a
certificate or letter from a firm of independent public accountants of
recognized standing setting forth the computation and the adjusted number of
shares of Common Stock or other securities or assets resulting from such
adjustments, and a copy of such certificate or letter shall be mailed to the
holders of the Series B. Any such certificate or letter shall be conclusive
evidence as to the correctness of the adjustment or adjustments referred to
therein and shall be available for inspection by any holders of the Series B on
any day during normal business hours.
(g) Notice. In case:
i the corporation shall declare a dividend
(or any other distribution) on its
Common Stock payable in Common Stock; or
ii the corporation shall declare a dividend
(or any other distribution) on its
Common Stock payable in cash; or
iii any reclassification of Common Stock or
any consolidation, merger, conveyance of
the property of the corporation as an
entirety, or substantially as an
entirety, dissolution, liquidation or
winding up shall be effected by the
corporation;
then the corporation shall mail, or cause to be mailed by the corporation's
transfer agent, if any, for the Series B to the holders of record of the
outstanding shares of the Series B, at least
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thirty (30) days, but not more than sixty (60) days, prior to the applicable
record date hereinafter specified, a notice stating (A) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights,
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or right are to be
determined, or (B) the date on which such reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange the certificates representing their
shares of Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(vii) Reservation of Shares of Common Stock.
(a) Reservation of Shares. The corporation shall at all
times reserve and keep available out of its authorized but unissued Common
Stock, for the purpose of effecting the conversion of the shares of the Series
B, the full number of shares of Common Stock then deliverable upon the
conversion of all shares of the Series B then outstanding. If shares of the
Common Stock of the corporation are listed on any securities exchange, the
corporation shall make application for the listing thereon, on notice of
issuance, of the shares of Common Stock deliverable upon the conversion of the
outstanding shares of the Series B and shall use its best efforts to effect such
listing.
(b) Fractional Shares. No fractional shares of Common Stock
are to be issued upon conversion. The corporation shall pay a cash adjustment in
respect to any fraction of a share which would otherwise be issuable, in an
amount equal to the fair market value of the Common Stock which shall be the
same fraction of the closing bid price per share at which the Common Stock was
sold on the Market prior to the opening of business on the Conversion Date, or
if no sale of such stock takes place on such day on the Market, the average of
the closing bid and asked prices on such day as officially quoted on the Market.
If the Common Stock is not then publicly traded, fair market value shall be
determined in good faith by the corporation's Board of Directors.
(c) Transfer Taxes. The corporation will pay any and all
transfer taxes that may be payable in respect of the issue or delivery of shares
of Common Stock on conversion of shares of the Series B pursuant hereto. The
corporation shall not, however, be required to pay any tax which may be payable
in respect of transfer involved in the issue and delivery of shares of Common
Stock in a name other than that in which the shares of the Series B so converted
were registered, and no such issue or delivery shall be made unless and until
the person requesting such issue 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.
(d) Common Stock. For the purpose of this Section (vii), the
term "Common Stock" shall include any stock of any class of the corporation
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the corporation, and which is not subject
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to redemption by the corporation. Shares of Common Stock shall be only such
shares which have no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution, or winding
up of the corporation and which are not subject to redemption by the
corporation.
(e) Status of Common Stock. All Common Stock that may be
issued upon conversion of the Series B will, upon issuance, be duly issued,
fully paid and non-assessable (except as otherwise provided by the Wisconsin
Business Corporation Law) and free from all taxes, liens and charges with
respect to the issuance thereof (except to the extent resulting from the
holder's own circumstances, actions or omissions).
(vii) Voting.
(a) Voting. The holders of the Series B shall be entitled to
vote, on all matters in which holders of Common Stock are entitled to vote,
voting together with the Common Stock and the Series A and Other Securities, if
any, without regard to class. The holders of the Series B shall have the number
of votes that they would have had assuming conversion of the Series B into
Common Stock as of the record date for the meeting of the holders of Common
Stock with fractional shares being disregarded. The holders of the Series B
shall be entitled to receive all communications sent by the corporation to the
holders of Common Stock. Except as provided in Section (viii)(c) below or by the
Wisconsin Business Corporation Law, holders of shares of the Series B shall not
be entitled to vote as a separate class.
(b) No Cumulative Voting. The holders of shares of the
Series B shall not have the right of cumulative voting in an election of
directors.
(c) Voting as a Separate Class. The corporation shall not,
without the consent (given by vote at a meeting called for that purpose or by
written consent) of the holders of a majority of the shares of the Series B, the
Series A and Other Securities, if any, then outstanding, voting together as a
separate class:
(i) create, authorize or issue any stock or
other equity security ranking equal to
or senior to the Series B, the Series A
and the Other Securities as to dividends
or distributions, or any obligation or
security convertible into shares of any
such senior stock; or
(ii) amend, alter, change, or repeal any of
the express terms of the Series B, the
Series A or the Other Securities.
(iv) Redemption.
(a) Redemption. Commencing three (3) years following the
last issuance of the shares of Series B, the corporation may redeem the Series B
in whole
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at any time at the option of the corporation by resolution of its Board of
Directors, at a redemption price of $1,000 per share, plus accrued and unpaid
dividends, if any, to the date fixed for redemption.
(b) Notice of Redemption. Notice of redemption of the shares
of the Series B shall be given by certified mail, return receipt requested,
postage prepaid, not less than thirty (30) nor more than forty-five (45) days
prior to the date fixed for redemption, to each holder of the Series B, at each
holder's last address appearing on the books of the corporation; but no failure
to receive such a notice by any holder, so long as mailed in accordance with the
provisions herein, shall affect the validity of the proceedings for the
redemption of any shares of the Series B so to be redeemed. Each notice of
redemption of shares of the Series B shall state:
i the redemption date,
ii the redemption price,
iii the Conversion Price on the date of the
notice,
iv that on the redemption date the
redemption price will become due and
payable upon each share of the Series B
to be redeemed and the right to convert
each such share shall cease as of the
close of business on the redemption
date, unless default shall be made in
the payment of the redemption price, and
v the place or places where certificates
for such shares of the Series B to be
redeemed are to be surrendered for
conversion or for payment of the
redemption price.
(c) Conversion Prior to the Redemption. At any time prior to
the redemption date, each holder of the Series B shall be entitled to convert
all or any portion of such holder's Series B into Common Stock based on the
Conversion Price.
(d) Rights Following Redemption. If notice of redemption
shall have been duly given as provided in Section (ix)(b), and if, on the
redemption date, funds necessary for such redemption have been deposited in
trust with a bank or trust company, or have been set aside, in trust, by the
corporation, for the purpose of redeeming shares of the Series B, the shares of
the Series B called for redemption shall, as of the close of business on the
redemption date, no longer be transferable on the books of the corporation and
shall no longer be deemed to be outstanding, the right to receive dividends
thereon shall cease to accrue, and all rights with respect to such shares so
called for redemption shall terminate, except only the right of the holders
thereof to receive the redemption price, without interest thereon, upon
surrender of the certificates for such shares.
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(e) Cancellation of Shares. Shares of the Series B redeemed pursuant to this
Section (ix) or otherwise reacquired by the corporation shall be deemed
cancelled and thereafter shall constitute authorized and unissued shares of
Preferred Stock, undesignated as to series, subject to reissuance by the
corporation as shares of any series of Preferred Stock.
(x) Liquidation.
(a) Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the corporation
(hereinafter collectively called "liquidation"), before any amount shall be paid
to or set aside for, or any assets shall be distributed among, the holders of
shares of Common Stock or of any other equity security of the corporation other
than the Series A and the Other Securities, each holder of a share of the Series
B shall be entitled to receive out of the assets of the corporation or the
proceeds thereof, a preferential payment in an amount equal to $1,000 per share,
plus the amount of accrued and unpaid dividends on such share, if any, and no
more.
(b) Proportional Rights. In the event the amount available
for distribution as liquidation preference payments to holders of the Series B
and any other stock ranking on a parity therewith (including the Series A and
the Other Securities, if any) is insufficient to pay the full amount of their
respective preferences, such amount shall be divided among and paid to such
holders ratably in proportion to the respective amounts which would be payable
to such holders if their respective liquidation preferences were to be paid in
full.
(c) Insufficient Funds. In the event any liquidation
preference payment to be made on the shares of the Series B shall amount in the
aggregate to less than $1,000 per share plus accrued and unpaid dividends, the
corporation in its discretion may require the surrender of certificates for
shares of the Series B and issue a replacement certificate or certificates, or
it may require the certificates evidencing the shares in respect of which such
payments are to be made to be presented to the corporation, or its agent, for
notation thereon of the amounts of the liquidation preference payments made in
respect of such shares. In the event a certificate for shares of the Series B on
which payment of one or more partial liquidation preferences has been made is
presented for exchange or transfer, such new certificate shall bear an
appropriate notation as to the aggregate amount of liquidation preference
payments theretofore made in respect thereof.
(d) Merger or Sale. Neither the consolidation or merger of
the corporation with or into any other corporation or other entity, nor the sale
or transfer by the corporation of all or any part of its assets, shall be deemed
to be a liquidation of the corporation for the purposes of this Section (x).
(xi) Replacement Certificates.
(a) Mutilated Certificate. If any mutilated certificate of
Series B is surrendered to the corporation, the corporation shall execute and
deliver in
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exchange therefor a new certificate for Series B of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
(b) Destroyed, Lost or Stolen Certificate. If there is
delivered to the corporation (i) evidence to its reasonable satisfaction of the
destruction, loss or theft of any certificate of Series B and (ii) such
reasonable security or indemnity as may be required by it to save it harmless,
then, in the absence of notice to the corporation that such certificate of
Series B has been acquired by a bona fide purchaser, the corporation shall
execute and deliver in lieu of any such destroyed, lost or stolen certificate of
Series B, a new certificate of Series B of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
(c) Status of New Certificate. Upon the issuance of any new
certificate of Series B under this Section (xi), the corporation may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses connected therewith.
Every new certificate of Series B issued pursuant to this Section (xi), in lieu
of any destroyed, lost or stolen certificate of Series B, shall constitute an
original additional contractual obligation of the corporation, whether or not
the destroyed, lost or stolen certificate of Series B shall be at any time
enforceable by anyone. Any new certificate for Series B delivered pursuant to
this Section (xi), shall be so dated that neither gain nor loss in interest
shall result from such exchange. The provisions of this Section (xi) are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen certificates of Series B.
B. Common Stock.
(1) Dividends. Subject to the provisions of this Article 4, the Board
of Directors of the corporation may, in its sole discretion, out of funds
legally available for the payment of dividends and at such times and in such
manner as determined by the Board of Directors, declare and pay dividends on the
Common Stock.
(2) Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the corporation, after there shall
have been paid to or set aside for the holders of Preferred Stock the full
preferential amounts, if any, to which they are entitled, the holders of
outstanding shares of Common Stock shall be entitled to receive pro rata,
according to the number of shares held by each, the remaining assets of the
corporation available for distribution.
(3) Voting Rights. Except as otherwise provided by the Wisconsin
Business Corporation Law, and except as may be determined by the Board of
Directors with respect to Preferred Stock pursuant to Section A of this Article
4, only the holders of Common Stock shall be entitled to vote for the election
of directors of the corporation and for all other corporate purposes. Upon any
such vote the holders of Common Stock shall, except as otherwise provided by
law, be entitled to one vote for each share of Common Stock held by them
respectively.
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ARTICLE 5
A. General Powers, Number, Classification and Tenure of Directors. The
general powers, number, classification and tenure of the directors of the
corporation shall be as set forth in Section 3.01 of Article III of the By-laws
of the corporation (and as such Section shall exist from time to time). Such
Section 3.01 of the By-laws, or any provision thereof, may only be amended,
altered, changed or repealed by the affirmative vote of shareholders holding at
least sixty-six and two-thirds percent (66-2/3%) of the voting power of the then
outstanding shares of all classes of capital stock of the corporation generally
possessing voting rights in the election of directors, considered for this
purpose as a single class; provided, however, that the Board of Directors, by
resolution adopted by the Requisite Vote (as hereinafter defined), may amend,
alter, change or repeal Section 3.01 of the By-laws, or any provision thereof,
without a vote of the shareholders. As used herein, the term "Requisite Vote"
shall mean the affirmative vote of at least two-thirds of the directors then in
office plus one director.
B. Removal of Directors. Any director may be removed from office with
or without cause, but only by the affirmative vote of holders of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of the then
outstanding shares of stock of the voting group of shareholders that elected the
director to be removed; provided, however, that if the Board of Directors by
resolution adopted by the Requisite Vote shall have recommended removal of a
director, then the shareholders may remove such director from office with or
without cause by a majority vote of such outstanding shares.
C. Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy created by the removal of a director or an increase in the
number of directors, shall be filled by the affirmative vote of a majority of
the directors then in office, although less than a quorum of the Board of
Directors; provided, however, that if the vacant office was held by a director
elected by a voting group of shareholders, only the remaining directors elected
by that voting group shall fill the vacancy. For purposes of this Article 5, a
director elected by directors to fill a vacant office pursuant to this Section C
shall be deemed to be a director elected by the same voting group of
shareholders that elected the director(s) who voted to fill the vacancy. Any
director elected pursuant to this Section C shall serve until the next election
of the class for which such director shall have been chosen and until his
successor shall be elected and qualified.
D. Amendments.
(1) Notwithstanding any other provision of these Restated Articles of
Incorporation, the provisions of this Article 5 may be amended, altered, changed
or repealed only by the affirmative vote of shareholders holding at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of the then
outstanding shares of all classes of capital stock of the corporation generally
possessing voting rights in the election of directors, considered for this
purpose as a single class.
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2. Notwithstanding the foregoing and any provisions in the By-laws of
the corporation, whenever the holders of any one or more series of Preferred
Stock issued by the corporation pursuant to Article 4 hereof shall have the
right, voting separately as a class or by series, to elect directors at an
annual or special meeting of shareholders, the election, term of office, filing
of vacancies and other features of such directorships shall be governed by the
terms of the series of Preferred Stock applicable thereto, and such directors so
elected shall not be divided into classes unless expressly provided by the terms
of the applicable series.
ARTICLE 6
The address of the registered office of the corporation shall be 12000
West Park Place, Milwaukee, Wisconsin 53224.
ARTICLE 7
The name of the registered agent of the corporation at such address
shall be Michael D. Dunham.
ARTICLE 8
No holder of shares of any class of capital stock of the corporation
shall have a preemptive right to acquire unissued shares or securities
convertible into unissued shares or conveying a right to subscribe for or
acquire shares, unless otherwise determined by the Board of Directors.
ARTICLE 9
These Restated Articles of Incorporation may be amended solely as
authorized herein and by law at the time of amendment.
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