Exhibit 3.1
DISCUS ACQUISITION CORPORATION
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
The undersigned, William H. Spell, Chief Executive Officer of Discus
Acquisition Corporation, a Minnesota corporation (the "Company"), hereby
certifies:
(i) That Article I of the Company's Articles of Incorporation has been
amended in its entirety as follows:
ARTICLE I
The name of this Corporation is Peerless Industrial Group, Inc.
(ii) That Section 3.01 of Article III of the Articles of Incorporation
of the Company has been amended to read in its entirety as follows:
ARTICLE III
3.01 The aggregate number of shares which this Corporation
shall have authority to issue is 30,000,000 shares, which shares shall
be without par value; provided, however, that such shares shall have a
par value of one cent per share, solely for the purpose of a statute or
regulation imposing a tax or fee based upon the capitalization of a
corporation.
(iii) That such amendments were adopted in accordance with the
requirements of, and pursuant to, Chapter 302A of the Minnesota Statutes.
I certify that I am authorized to execute this Amendment and I further
certify that I understand that by signing this Amendment, I am subject to the
penalties of perjury as set forth in Section 609.48 as if I had signed this
Amendment under oath.
/s/ William H. Spell
William H. Spell, Chief Executive Officer
ARTICLES OF INCORPORATION
OF
DISCUS CORPORATION
The undersigned incorporator, being a natural person 18 years of age or
older, in order to form a corporate entity under Minnesota Statutes, Chapter
302A, hereby adopts the following articles of incorporation;
ARTICLE I
NAME: The name of this Corporation shall be DISCUS CORPORATION.
ARTICLE II
REGISTERED OFFICE: The address of the Corporation's registered office
is 2400 IDS Center, Minneapolis, Minnesota 55402.
ARTICLE III
AUTHORIZED SHARES: The aggregate number of shares that this Corporation
has authority to issue is 10,000,000 shares.
3.1 The Board of Directors may, from time to time, establish by
resolution, different classes or series of shares and may fix the rights and
preferences of said shares in any class or series.
3.2 The Board of Directors shall have the authority to issue shares of
a class or series to holders of shares of another class or series to effectuate
share dividends, splits, or conversions of its outstanding shares.
ARTICLE IV
CERTAIN SHAREHOLDER RIGHTS: Shareholders shall have preemptive rights
to purchase, subscribe for or otherwise acquire any new or additional securities
of the Corporation. Each shareholder shall be entitled to any cumulative voting
rights in connection with the election of the Board of Directors. The
shareholders shall take action by the affirmative vote of the holders of a
majority of the voting power of all voting shares, except where a larger
proportion is required by law, or under a shareholder control agreement.
ARTICLE V
WRITTEN ACTION BY BOARD: An action required or permitted to be taken by
the Board of Directors of this Corporation may be taken by written action signed
by the number of directors that would be required to take the same action at a
meeting of the Board at which all directors are present, except as to those
matters requiring shareholder approval, in which case the written action shall
be signed by all members of the Board of Directors then in office.
ARTICLE VI
The name and address of the incorporator is:
Barbara J. Caruthers
2400 IDS Center
Minneapolis, Minnesota 55402
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of June,
1983.
/s/ Barbara J. Caruthers
--------------------
Barbara J. Caruthers
STATE OF MINNESOTA)
) ss.
COUNTY OF HENNEPIN)
The foregoing instrument was acknowledged before me this 1st day of
June, 1983, by Barbara J. Caruthers.
/s/ Diane D. Hiscock
----------------
Notary Public
THIS INSTRUMENT DRAFTED BY:
Avron L. Gordon, Esq.
Briggs and Morgan
2400 IDS Center
Minneapolis, Minnesota 55402
AMENDMENT OF ARTICLES
OF INCORPORATION OF
DISCUS CORPORATION
Pursuant to the provisions of Minnesota Statutes, Sections 302A.133 and
302A.135, the following amendment and restatement of Articles of Incorporation
regulating Discus Corporation was adopted on March 7, 1984 by the shareholders
of the Corporation to be effective as of the date of the filing of this
Amendment with the Secretary of State of Minnesota.
WHEREAS, it is desirable to restate Articles of
Incorporation of this Corporation, it is
RESOLVED, that this Corporation hereby approves and
adopts the Restated Articles of Incorporation in the
form attached hereto as Exhibit A and incorporated
herein by reference.
The undersigned swears that the foregoing is true and correct and that
the undersigned has the authority to sign this document on behalf of the
Corporation.
Signed: /s/ Michael E. Platt
----------------
Michael E. Platt
Chief Executive Officer
STATE OF MINNESOTA)
) ss.
COUNTY OF HENNEPIN)
The foregoing instrument was acknowledged before me this 7th day of
March, 1984, by Michael E. Platt, Chief Executive Officer of Discus Corporation
on behalf of said Corporation.
/s/ Avron L. Gordon
---------------
Notary Public
EXHIBIT A
RESTATED ARTICLES OF INCORPORATION
OF
DISCUS CORPORATION
ARTICLE I
The name of this Corporation is Discus Corporation.
ARTICLE II
The registered office of this Corporation is located at 2400 IDS
Center, Minneapolis, Minnesota 55402.
ARTICLE III
3.01 The aggregate number of shares of stock which this Corporation
shall have authority to issue is 10,000,000 shares, which shares shall be
without par value; provided, however, that such shares shall have a par value of
one cent per share, solely for the purpose of a statute or regulation imposing a
tax or fee based upon the capitalization of a corporation.
3.02 The board of directors may, from time to time, establish by
resolution different classes or series of shares and may fix the rights and
preferences of said shares in any class or series.
3.03 The board of directors shall have the authority to issue shares of
a class or series to holders of shares of another class or series to effectuate
share dividends, splits, or conversion of its outstanding shares.
3.04 No shareholder of the Corporation shall have any preemptive
rights.
3.05 No shareholder shall be entitled to any cumulative voting rights.
3.06 The shareholders shall take action by the affirmative vote of the
holders of a majority of the voting power of all voting shares, except where a
larger proportion may be required by law.
ARTICLE IV
An action required or permitted to be taken by the board of directors
of this Corporation may be taken by written action signed by that number of
directors that would be required to take the same action at a meeting of the
board at which all directors were present, except as to those matters requiring
shareholder approval, in which case the written action must be signed by all
members of the board of directors then in office.
ARTICLE V
The foregoing Restated Articles of Incorporation supersede the Articles
of Incorporation of this Corporation filed with the Minnesota Secretary of State
on June 1, 1983. The foregoing Restated Articles of Incorporation have been
adopted by the shareholders of this Corporation effective March 7, 1984 to be
effective as of the date of filing such Restated Articles of Incorporation with
the Secretary of State of the State of Minnesota.
State of Minnesota * See instructions at bottom
Office of the Secretary of State of page for completing
this form
MODIFICATION OF STATUTORY REQUIREMENTS
OR AMENDMENT OF ARTICLES
- --------------------------------------------------------------------------------
Corporate Name
Discus Corporation
- --------------------------------------------------------------------------------
Date of Adoption of Amendments/Modifications
May 8, 1986
Effective Date, if any, of Amendments/Modifications*
Upon filing with the Secretary of State
- --------------------------------------------------------------------------------
Amendments/Modifications Approved by Corporate:
|X| Shareholders |_| Incorporators |_| Directors
- --------------------------------------------------------------------------------
Pursuant to the provisions of Minnesota Statues, Sections 302A.133 and 302A.135,
the following amendments of articles or modifications to the statutory
requirements, regulating the above corporation were adopted: (Insert full text
of newly amended or modified article(s), indicating which article(s) is (are)
being amended or added. If the full text of the amendment will not fit into the
space provided, please do not use this form. Instead, retype the amendment on a
separate sheet or sheets, using this format.)
ARTICLE III Section 3.06
Article III, Section 3.06 of the Restated Articles of Incorporation of
this Corporation is hereby rescinded and deleted in its entirety.
*Note: Effective date may be any date within 30 days after the filing date. If
no date is specified, the effective date is the filing date.
I swear that the foregoing is true and accurate and that I have the authority to
sign this document on behalf of the corporation.
STATE OF MINNESOTA )
) ss.
County of Hennepin )
(Notarial Seal)
Signed: /s/ Avron L. Gordon
-------------------
Position: Secretary
The foregoing instrument was acknowledged before me on this 28th day of May,
1986.
/s/ Jennifer J. Snider
Notary Public
(Notarial Seal)
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR USE BY SECRETARY OF STATE
1. Type or print with dark black ink.
2. Filing Fee: $15.00
3. Make check for the filing fee payable
to the Secretary of State.
4. Mail or bring completed form to:
Secretary of State
Corporation Division
180 State Office Building
St. Paul, MN 55155
(612) 296-2803
SC-00175-01
State of Minnesota
Office of the Secretary of State
* See instructions at bottom
of page for completing this form
MODIFICATION OF STATUTORY REQUIREMENTS
OR AMENDMENT OF ARTICLES
- --------------------------------------------------------------------------------
Corporate Name
Discus Corporation
- --------------------------------------------------------------------------------
Date of Adoption of Amendments/Modifications
May 7, 1987
Effective Date, if any, of Amendments/Modifications*
- --------------------------------------------------------------------------------
Amendments/Modifications Approved by Corporate:
|X| Shareholders |_| Incorporators |_| Directors
- --------------------------------------------------------------------------------
Pursuant to the provisions of Minnesota Statues, Sections 302A.133 and 302A.135,
the following amendments of articles or modifications to the statutory
requirements, regulating the above corporation were adopted: (Insert full text
of newly amended or modified article(s), indicating which article(s) is (are)
being amended or added. If the full text of the amendment will not fit into the
space provided, please do not use this form. Instead, retype the amendment on a
separate sheet or sheets, using this format.)
ARTICLE IV
Shall be amended in its entirety as attached hereto as Exhibit A.
*Note: Effective date may be any date within 30 days after the filing date. If
no date is specified, the effective date is the filing date.
I swear that the foregoing is true and accurate and that I have the authority to
sign this document on behalf of the corporation.
STATE OF MINNESOTA )
) ss.
County of Hennepin )
(Notarial Seal)
Signed: /s/ Michael E. Platt
--------------------
Michael E. Platt
Position: Chief Executive Officer
The foregoing instrument was acknowledged before me on this 7th day of May,
1987.
/s/ Avron L. Gordon
- -------------------
Notary Public
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR USE BY SECRETARY OF STATE
1. Type or print with dark black ink.
2. Filing Fee: $15.00
3. Make check for the filing fee payable
to the Secretary of State.
4. Mail or bring completed form to:
Secretary of State
Corporation Division
180 State Office Building
St. Paul, MN 55155
(612) 296-2803
Avron L. Gordon
Briggs and Morgan, P.A.
2400 IDS Center, Mpls. MN
SC-00175-01
EXHIBIT A
ARTICLE IV
4.01 An action required or permitted to be taken by the board of
directors of this corporation may be taken by written action signed by that
number of directors that would be required to take the same action at a meeting
of the board at which all directors were present, except as to those matters
requiring shareholder approval, in which case the written action must be signed
by all members of the board of directors then in office.
4.02 To the fullest extent permitted by the Minnesota Business
Corporation Act, a director of the Corporation shall not be personally liable to
the corporation or its shareholders for monetary damages for a breach of
fiduciary duty as a director, except for (i) liability based on a breach of the
duty of loyalty to the Corporation or its shareholders; (ii) liability based on
illegal distributions under Minnesota Statutes, Section 302A.559; (iii)
liability for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; (iv) liability for actions or
omissions pursuant to which the director derived an improper personal benefit;
(v) liability based on a violation of Minnesota Statutes Section 80A.23, or (vi)
liability for any act or omission, occurring prior to the effective date of this
Section 4.02. If the Minnesota Business Corporation Act is amended after
approval of this section to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Minnesota Business Corporation Act, as so amended. Any repeal
or modification of this section by the shareholders of the Corporation shall be
prospective only, shall not adversely affect any limitation on the personal
liability of a director of the Corporation existing at the time of such repeal
or modification, and shall be made only upon the affirmative vote of the same
percentage of votes represented by shares of the common stock of the corporation
present and entitled to vote, in person or by proxy, at a meeting of
shareholders duly called for such purpose, as were originally obtained to adopt
this section.
State of Minnesota
Office of the Secretary of State
Notice of Change of
Registered Office - Registered Agent or Both
by
- --------------------------------------------------------------------------------
Name of Corporation Discus Corporation
- --------------------------------------------------------------------------------
Pursuant to Minnesota Statutes, Section 302A.123, 303.10, 317.19, 317A.123 or
308A.025 the undersigned hereby certifies that the Board of Directors of the
above named Corporation has resolved to change the corporation's registered
office and/or agent to:
- --------------------------------------------------------------------------------
Agent's If you do not wish to designate an agent, you must list
"NONE" in this box. DO NOT LIST THE CORPORATE NAME
Name NONE
- --------------------------------------------------------------------------------
Address (You may not list a P.O. Box, but you may list a rural route
and box number)
(No. & Street) 3601 Minnesota Drive, Suite 925
- --------------------------------------------------------------------------------
City County MN Zip
Bloomington Hennepin 55435
- --------------------------------------------------------------------------------
Mailing (If different than address above -- P.O. Box is acceptable)
Address
- --------------------------------------------------------------------------------
City County MN Zip
- --------------------------------------------------------------------------------
The new address may not be a post office box. It must be a street address,
pursuant to Minnesota Statutes, Section 302A.011, Subd. 3., 303.02, Subd. 5,
317.02 Subd. 13, 317A.01 Subd. 2.
This change is effective on the day it is filed with the
Secretary of State, unless you indicate another date, no later
than 30 days after filing with the Secretary of State, in this
box:
---------------------------------
| |
| |
---------------------------------
I certify that I am authorized to execute this certificate and I further certify
that I understand that by signing this certificate I am subject to the penalties
of perjury as set forth in section 609.48 as if I had signed this certificate
under oath.
-------------------------------------------------------------------------------
Name of Officer or Other Authorized Agent of CorSignature
(Please Print) Stephan P. Jones /s/ Stephan P. Jones
-------------------------------------------------------------------------------
Title or Office Date
Chief Financial Officer 11/20/91
-------------------------------------------------------------------------------
Do not write below this line. For Secretary of State's use only.
- --------------------------------------------------------------------------------
Receipt Number File Data D.A.R.
- --------------------------------------------------------------------------------
- -------------------------------------------
Filing Fee: $35.00
Return to: Business Services Division
Office of the Secretary
of State
180 State Office Building
St. Paul, Minnesota 55155
(612) 296-2803
Make checks payable to: Secretary of State
SC-00014-06
STATE OF MINNESOTA
SECRETARY OF STATE
NOTICE OF CHANGE OF REGISTERED OFFICE/
REGISTERED AGENT
Please read the instructions on the back before completing this form.
1. Corporate Name:
Discus Corporation
2. Registered Office Address (No. & Street): List a complete street
address or rural route and rural route box number. A post office box
is not acceptable.
5001 W. 80th Street, Suite 901, Bloomington, MN 55437
Street City State Zip Code
3. Registered Agent (Registered agents are required for foreign
corporations but optional for Minnesota corporations):
None
If you do not wish to designate an agent, you must list "NONE" in this
box. DO NOT LIST THE CORPORATE NAME.
In compliance with Minnesota Statutes, Section 302A.123, 303.10, 308A.025,
317A.123 or 322B.135 I certify that the above listed company has resolved to
change the company's registered office and/or agent as listed above.
I certify that I am authorized to execute this certificate and I further certify
that I understand that by signing this certificate I am subject to the penalties
as set forth in Minnesota Statutes 609.48 as if I had signed this certificate
under oath.
/s/ Stephan P. Jones
----------------
Signature of Authorized Person
Name and Telephone Number of Contact Person: Stephan Jones (612) 831-2326
-----------------------------
please print legibly
- --------------------------------------------------------------------------------
Filing Fee: Minnesota Corporations, Cooperatives and Office Use Only
Limited Liability Companies: $35.00
Non-Minnesota Corporations: $50.00
Make checks payable to Secretary of State
Return to: Minnesota Secretary of State
180 State Office Building
100 Constitution Avenue
St. Paul, Minnesota 55155-1299
(612) 296-2803
03930275 Rev. 5/93
MINNESOTA SECRETARY OF STATE
AMENDMENT OF ARTICLES OF INCORPORATION
BEFORE COMPLETING THIS FORM, PLEASE READ INSTRUCTIONS LISTED BELOW.
CORPORATE NAME: (List the name of the company prior to any desired name change)
Discus Corporation
This amendment is effective on the day it is filed with the Secretary of State,
unless you indicate another date, no later than 30 days after filing with the
Secretary of State.
----------------------------------
The following amendment(s) of articles regulating the above corporation were
adopted: (Insert full text of newly amended article(s) indicating which
article(s) is (are) being amended or added.) If the full text of the amendment
will not fit in the space provided, attach additional numbered pages. (Total
number of pages including this form 1.)
ARTICLE I
The name of this Corporation shall be Discus Acquisition Corporation.
This amendment has been approved pursuant to Minnesota Statutes chapter 302A or
317A. I certify that I am authorized to execute this amendment and I further
certify that I understand that by signing this amendment, I am subject to the
penalties of perjury as set forth in section 609.48 as if I had signed this
amendment under oath.
/s/ Stephan P. Jones Chief Financial Officer
-----------------------------------------
(Signature of Authorized Person)
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR OFFICE USE ONLY
1. Type or print with black ink.
2. A Filing Fee of: $35.00, made payable to the
Secretary of State.
3. Return completed forms to:
Secretary of State
180 State Office Building
100 Constitution Avenue
St. Paul, Minnesota 55155-1299
(612) 296-2803
08921340 Rev. 8/92
STATE OF MINNESOTA
SECRETARY OF STATE
NOTICE OF CHANGE OF REGISTERED OFFICE/
REGISTERED AGENT
Please read the instructions on the back before completing this form.
1. Corporate Name:
Discus Acquisition Corporation
2. Registered Office Address (No. & Street): List a complete street
address or rural route and rural route box number. A post office box
is not acceptable.
2430 Metropolitan Centre, 333 S. Seventh Street, Minneapolis, MN 55402
-----------------------------------------------------------------------
Street City State Zip Code
3. Registered Agent (Registered agents are required for foreign
corporations but optional for Minnesota corporations):
None
If you do not wish to designate an agent, you must list "NONE" in this
box. DO NOT LIST THE CORPORATE NAME.
In compliance with Minnesota Statutes, Section 302A.123, 303.10, 308A.025,
317A.123 or 322B.135 I certify that the above listed company has resolved to
change the company's registered office and/or agent as listed above.
I certify that I am authorized to execute this certificate and I further certify
that I understand that by signing this certificate I am subject to the penalties
as set forth in Minnesota Statutes 609.48 as if I had signed this certificate
under oath.
/s/ William H. Spell
----------------
Signature of Authorized Person
William H. Spell, Chief Executive Officer
Name and Telephone Number of Contact Person: Jennifer Christman, Paralegal
-----------------------------
(612) 334-8662
please print legibly
- --------------------------------------------------------------------------------
Filing Fee: Minnesota Corporations, Cooperatives and Office Use Only
Limited Liability Companies: $35.00
Non-Minnesota Corporations: $50.00
Make checks payable to Secretary of State
Return to: Minnesota Secretary of State
180 State Office Building
100 Constitution Avenue
St. Paul, Minnesota 55155-1299
(612) 296-2803
03930275 Rev. 5/93
DESIGNATION OF RIGHTS AND PREFERENCES OF CLASS B COMMON STOCK
OF
DISCUS ACQUISITION CORPORATION
The undersigned, being the Chief Executive Officer of Discus
Acquisition Corporation, a Minnesota corporation, hereby certifies that the
Board of Directors of said Corporation, by written action dated as of January 4,
1996, did adopt a resolution providing that 1,227,273 shares of the
Corporation's undesignated shares be designated as Class B Common Stock, no par
value per share, having the rights and preferences set forth in Exhibit A
attached hereto and incorporated herein by reference.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designation this 4th day of January, 1996.
/s/ William H. Spell
----------------
William H. Spell
Chief Executive Officer
EXHIBIT I
CLASS B STOCK PROVISIONS
(A) Classification.
The class B common stock of the corporation (the "Class B Common
Stock") shall be equal in all respects to the common stock of the corporation
(the "Common Stock"), except as otherwise provided herein. Such Common Stock and
Class B Common Stock are sometimes hereinafter collectively referred to as the
"capital stock."
(B) Voting, Privileges.
(a) General. Each holder of Class B Common Stock shall have that number
of votes on all matters submitted to the stockholders that is equal to the
number of shares of Common Stock into which such holder's shares of Class B
Common Stock are then convertible as hereinafter provided. Except as otherwise
provided herein, and except as otherwise required by agreement or law, the
shares of capital stock of the corporation shall vote as a single class on all
matters submitted to the stockholders.
(b) Election of Directors. So long as Northland Business Capital,
L.L.P. or its affiliates shall continue to own at least 100,000 shares of Class
B Common Stock, (i) the Board of Directors of the corporation shall consist of
not more than nine (9) members, (ii) the holders of the Class B Common Stock,
exclusively and voting as a single class, shall be entitled, by a vote of a
majority of the outstanding shares of Class B Common Stock held by such holders,
to elect one (1) director of the corporation and to exercise any right of
removal or replacement of such director, and (iii) the holders of the Common
Stock, exclusively and voting as a single class, shall be entitled, by a vote of
a majority of the outstanding shares of Common Stock held by such holders, to
elect not more than eight (8) of the directors of the corporation and to
exercise any right of removal or replacement of such directors.
(c) Additional Class Votes by Class B Common Stock. Without the
affirmative vote or written consent of the holders (acting together as a class)
of a majority of the shares of Class B Common Stock at the time outstanding, the
corporation shall not;
(1) authorize or issue any additional shares of Class B Common
Stock; or
(2) amend the Articles of Incorporation of the corporation so as
to alter any existing provision relating to Class B Common
Stock or the holders thereof or waive any of the rights
granted to the holders of the Class B Common Stock by the
Articles of Incorporation of the corporation.
(C) Dividends.
In the event any dividend or distribution is declared or made with
respect to the Common Stock, each holder of shares of Class B Common Stock shall
be paid such dividend or receive such distribution on the basis of the number of
shares of Common Stock into which such holder's shares of Class B Common Stock
are then convertible, as hereinafter provided. Dividends on shares of Class B
Common Stock shall be payable only out of funds legally available therefor.
(D) Conversion Right.
At the option of the holders thereof, the shares of Class B Common
Stock shall be convertible, at the office of the corporation (or at such other
office or offices, if any, as the Board of Directors may designate), into fully
paid and nonassessable shares (calculated as to each conversion to the nearest
1/100th of a share) of Common Stock of the corporation, at the conversion price,
determined as hereinafter provided, in effect at the time of conversion, each
share of Class B Common Stock being deemed to have a value of $1.10 for the
purpose of such conversion. The price at which shares of Common Stock shall be
delivered upon conversion (herein called the "conversion price") shall be
initially $1.10 per share of Common Stock, provided, however, that such initial
conversion price shall be subject to adjustment from time to time in certain
instances as hereinafter provided. The following provisions shall govern such
right of conversion:
(1) In order to convert shares of Class B Common Stock into shares
of Common Stock of the corporation, the holder thereof shall
surrender at any office herein above mentioned the certificate
or certificates therefor, duly endorsed to the corporation or
in blank, and give written notice to the corporation at such
office that such holder elects to convert such shares. Shares
of Class B Common Stock shall be deemed to have been converted
immediately prior to the close of business on the day of the
surrender of such shares for conversion as herein provided,
and the person entitled to receive the shares of Common Stock
of the corporation issuable upon such conversion shall be
treated for all purposes as the record holder of such shares
of Common Stock at such time. As promptly as practicable on or
after the conversion date, the corporation shall issue and
deliver or cause to be issued and delivered at such office a
certificate or certificates for the number of shares of Common
Stock of the corporation issuable upon such conversion.
(2) The conversion price shall be subject to adjustment from time
to time as hereinafter provided. Upon each adjustment of the
conversion price each holder of shares of Class B Common Stock
shall thereafter be entitled to receive the number of shares
of Common Stock of the corporation obtained by multiplying the
conversion price in effect immediately prior to such
adjustment by the number of shares issuable pursuant to
conversion immediately prior to such adjustment and dividing
the product thereof by the conversion price resulting from
such adjustment.
(3) Except for the issuance of options to purchase Common Stock
referred to in Section 5.11 of that certain Stock Purchase
Agreement dated January 9, 1996 between the corporation and
Northland Business Capital, L.L.P. and except for shares of
Common Stock issued upon the exercise of such options
(provided that the aggregate number of shares thus awarded and
covered by unexercised options and thus issued pursuant to
such options shall not be in excess of 1,231,750
(appropriately adjusted to reflect stock splits, stock
dividends, reorganizations, consolidations and similar
changes)), if and whenever the corporation shall issue or sell
any shares of its Common Stock for a consideration per share
less than the lower of (i) the conversion price in effect
immediately prior to the time of such issue or sale, and (ii)
the market price (as defined below) on the date of such issue
of sale, then, forthwith upon such issue or sale, the
conversion price shall be reduced to the price (calculated to
the nearest cent) determined as follows:
(i) by dividing (A) an amount equal to the sum of (1) the
number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by
the then existing conversion price and (2) the
consideration, if any, received by the corporation
upon such issue or sale, by (B) an amount equal to
the sum of (1) the number of shares of Common Stock
outstanding immediately prior to such issue or sale
and (2) the number of shares of Common Stock thus
issued or sold; or
(ii) by multiplying the conversion price in effect
immediately prior to the time of such issue or sale
by a fraction, the numerator of which shall be the
sum of (1) the number of shares of Common Stock
outstanding immediately prior to such issue or sale
multiplied by the market price immediately prior to
such issue or sale, plus (2) the consideration
received by the corporation upon such issue or sale,
and the denominator of which shall be the product of
(1) the total number of shares of Common Stock
outstanding immediately after such issue or sale,
multiplied by (2) the market price immediately prior
to such issue or sale.
Solely for purposes of calculating the number of
shares of Common Stock outstanding in clauses (i) and (ii)
above, the term "Common Stock outstanding" shall include those
shares of Common Stock issuable upon conversion of outstanding
shares of Class B Common Stock.
No adjustment of the conversion price, however, shall
be made in an amount less than 2% of the conversion price in
effect on the date of such adjustment, but any such lesser
adjustment shall be carried forward and shall be made at the
time and together with the next subsequent adjustment which,
together with any such adjustment so carried forward, shall be
an amount equal to or greater than 4% of the conversion price
then in effect.
For the purposes of this subparagraph (3), the
following provisions (i) to (v), inclusive, shall also be
applicable:
(i) In case at any time the corporation shall grant
(whether directly or by assumption in a merger or
otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of, (a)
Common Stock or (b) any obligations or any shares of
stock of the corporation which are convertible into,
or exchangeable for Common Stock (any of such
obligations or shares of stock being hereinafter
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 (x)
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 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 of such Convertible Securities
and upon the conversion or exchange thereof, by (y)
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) shall be less than the lower
of (i) the conversion price in effect immediately
prior to the time of the granting of such rights or
options and (ii) the market price on the date of the
granting of 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 the total maximum amount of
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 have been issued for such price per share. Except
as provided in subparagraph (6) below, no further
adjustments 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.
(ii) In case the corporation shall issue or sell (whether
directly or by assumption in a merger or otherwise)
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 (x) 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 (y) the
total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the lower
of (i) the conversion price in effect immediately
prior to the time of such issue or sale and (ii) the
market price on the date of such issue or sale, 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 that (a) except as
provided in subparagraph (6) below, no further
adjustments 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
subparagraph (3), no further adjustment of the
conversion price shall be made by reason of such
issue or sale.
(iii) In case 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 deducting therefrom
any expenses incurred or any underwriting
commissions, discounts or concessions paid or allowed
by the corporation in connection therewith. In case
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 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 by the Board of
Directors of the corporation, without deducting
therefrom any expenses incurred or any underwriting
commissions, discounts or concessions paid or allowed
by the corporation in connection therewith. In case
any shares of Common Stock or Convertible Securities
or any rights or options to purchase such 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 therefor shall be deemed to
be the fair value as determined by the Board of
Directors of the corporation of such portion of the
assets and business of the non-surviving corporation
or corporations as such Board shall determine to be
attributable to such Common Stock, Convertible
Securities, rights or options, as the case may be. In
the event of any consolidation or merger of the
corporation in which the corporation is not the
surviving corporation or in the event of any sale of
all or substantially all of the assets of the
corporation for stock or other securities of any
other corporation, the corporation shall be deemed to
have issued a number of shares of its Common Stock
for stock or securities of the other corporation
computed on the basis of the actual exchange ratio on
which the transaction was predicated and for a
consideration equal to the fair market value on the
date of such transaction of such stock or securities
of the other corporation, and if any such calculation
results in adjustment of the conversion price, the
determination of the number of shares of Common Stock
issuable upon conversion immediately prior to such
merger, conversion or sale, for purposes of
subparagraph (7) below, shall be made after giving
effect to such adjustment of the conversion price.
(iv) In case the corporation shall take a record of the
holders of its Common Stock for the purpose of
entitling them (a) to receive a dividend or other
distribution payable in Common Stock or in
Convertible Securities, or in any rights or options
to purchase any Common Stock or Convertible
Securities, or (b) to subscribe for or purchase
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 upon the declaration of such
dividend or the making of such other distribution or
the date of the granting of such rights of
subscription or purchase, as the case may be.
(v) 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 purpose of this
subparagraph (3).
(4) In case the corporation shall (i) declare a dividend upon the
Common Stock payable in Common Stock (other than a dividend
declared to effect a subdivision of the outstanding shares of
Common Stock, as described in subparagraph (5) below) or
Convertible Securities, or in any rights or options to
purchase Common Stock or Convertible Securities, or (ii)
declare any other dividend or make any other distribution upon
the Common Stock payable otherwise than out of earnings or
earned surplus, then thereafter each holder of shares of Class
B Common Stock upon the conversion thereof will be entitled to
receive the number of shares of Common Stock into which such
shares of Class B Common Stock have been converted, and, in
addition and without payment therefor, each dividend described
in clause (i) above and each dividend or distribution
described in clause (ii) above which such holder would have
received by way of dividends or distributions if continuously
since such holder became the record holder of such shares of
Class B Common Stock such holder (i) had been the record
holder of the number of shares of Common Stock then received,
and (ii) had retained all dividends or distributions in stock
or securities (including Common Stock or Convertible
Securities, and any rights or options to purchase any Common
Stock or Convertible Securities) payable in respect of such
Common Stock or in respect of any stock or securities paid as
dividends or distributions and originating directly or
indirectly from such Common Stock. For the purposes of the
foregoing a dividend or distribution other than in cash shall
be considered payable out of earnings or earned surplus only
to the extent that such earnings or earned surplus are charged
an amount equal to the fair value of such dividend or
distribution as determined by the Board of Directors of the
corporation.
(5) 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.
(6) If (i) the purchase price provided for in any right or option
referred to in clause (i) of subparagraph (3), or (ii) the
additional consideration, if any, payable upon the conversion
or exchange of Convertible Securities referred to in clause
(i) or clause (ii) of subparagraph (3), or (iii) the rate at
which any Convertible Securities referred to in clause (i) or
clause (ii) of subparagraph (3) are convertible into or
exchangeable for Common Stock, shall change at any time (other
than under or by reason of provisions designed to protect
against dilution), the conversion price then in effect
hereunder shall forthwith be increased or decreased to such
conversion price as would have obtained had the adjustments
made upon the issuance of such rights, options or Convertible
Securities been made upon the basis of (a) the issuance of the
number of shares of Common Stock theretofore actually
delivered upon the exercise of such options or rights or upon
the conversion or exchange of such Convertible Securities, and
the total consideration received therefor, and (b) the
issuance at the time of such change of any such options,
rights, or Convertible Securities then still outstanding for
the consideration, if any, received by the corporation
therefor and to be received on the basis of such changed
price, and on the expiration of any such option or right or
the termination of any such right to convert or exchange such
Convertible Securities, the conversion price then in effect
thereunder shall forthwith be increased to such conversion
price as would have obtained had the adjustments made upon the
issuance of such rights or options or Convertible Securities
been made upon the basis of the issuance of the shares of
Common Stock theretofore actually delivered (and the total
consideration received therefor) upon the exercise of such
rights or options or upon the conversion or exchange of such
Convertible Securities. If the purchase price provided for in
any right or option referred to in clause (i) of subparagraph
(3), or the rate at which any Convertible Securities referred
to in clause (i) or clause (ii) of subparagraph (3) are
convertible into or exchangeable for Common Stock, shall
decrease at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then in
case of the delivery of Common Stock upon the exercise of any
such right or option or upon conversion or exchange of any
such Convertible Security, the conversion price then in effect
hereunder shall forthwith be decreased to such conversion
price as would have obtained had the adjustments made upon the
issuance of such right, option or Convertible Security been
made upon the basis of the issuance of (and the total
consideration received for) the shares of Common Stock
delivered as aforesaid.
(7) 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 of
all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock
shall be entitled to receive stock, securities or assets with
respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification,
consolidation, merger or sale, and subject to subparagraph (a)
above, lawful and adequate provision shall be made whereby the
holders of Class B Common Stock shall thereafter have the
right to receive upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of the
Common Stock of the corporation immediately theretofore
receivable upon the conversion of Class B Common Stock, such
shares of stock, securities 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 such stock immediately theretofore receivable upon
the conversion of Class B Common Stock had such
reorganization, reclassification, consolidation, merge or sale
not taken place, plus all dividends unpaid and accumulated or
accrued thereon to the date of such reorganization,
reclassification, consolidation, merger or sale, and in any
such case appropriate provision shall be made with respect to
the rights and interests of the holders of Class B Common
Stock to the end that the provisions hereof (including without
limitation provisions for adjustments of the conversion price
and of the number of shares receivable upon the conversion of
Class B Common Stock) shall thereafter be applicable, as
nearly as may be in relation to any shares of stock,
securities or assets thereafter receivable upon the conversion
of Class B Common Stock. The corporation shall not effect any
such consolidation, merger or sale, unless prior to the
consummation thereof the successor corporation (if other than
the corporation) resulting from such consolidation or merger
or the corporation purchasing such assets shall assume by
written instrument executed and mailed to the registered
holders of Class B Common Stock, at the last addresses of such
holders appearing on the books of the corporation, the
obligation to deliver to such holders such shares of stock,
securities or assets as, in accordance with the foregoing
provisions, such holders may be entitled to receive.
(8) Upon any adjustment of the conversion price, then and in each
case the corporation shall give written notice thereof, by
first-class mail, postage prepaid, addressed to the registered
holders of Class B Common Stock, at the addresses of such
holders as shown on the books of the corporation, which notice
shall state the conversion price resulting from such
adjustment and the increase or decrease, if any, in the number
of shares receivable at such price upon the conversion of
Class B Common Stock, setting forth in reasonable detail the
method of calculation and the facts upon which such
calculation is based.
(9) In case at any time:
(i) the corporation shall declare any cash dividend on
its Common Stock at a rate in excess of the rate of
the last cash dividend theretofore paid;
(ii) the corporation shall pay any dividend payable in
stock upon its Common Stock or make any distribution
(other than regular cash dividends) to the holders of
its Common Stock;
(iii) the corporation shall offer for subscription pro rata
to the holders of its Common Stock any additional
shares of stock of any class or other rights;
(iv) there shall be any capital reorganization, or
reclassification of the capital stock of the
corporation, or consolidation or merger of the
corporation with, or sale of all or substantially all
of its assets to, another corporation; or
(v) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the
corporation; then, in any one or more of said cases,
the corporation shall give written notice, by
first-class mail, Postage prepaid, addressed to the
registered holders of Class B Common Stock at the
addresses of such holders as shown on the books of
the corporation, of the date on which (a) the books
of the corporation shall close or a record shall be
taken for such dividend, distribution or subscription
rights, or (b) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation
or winding up shall take place, as the case may be.
Such notice shall also specify the date as of which
the holders of Common Stock of record shall
participate in such dividend, distribution or
subscription rights, or shall be entitled to exchange
their Common Stock for securities or other property
deliverable upon such reorganization,
reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding up, as the case
may be. Such written notice shall be given at least
20 days prior to the action in question and not less
than 20 days prior to the record date or the date on
which the corporation's transfer books are closed in
respect thereto.
(10) If any event occurs as to which in the opinion of the Board of
Directors of the corporation the other provisions of this
paragraph (D) are not strictly applicable or if strictly
applicable would not fairly protect the rights of the holders
of Class B Common Stock in accordance with the essential
intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and
principles, so as to protect such rights as aforesaid.
(11) As used in this paragraph (D) the term "Common Stock" shall
mean and include the corporation's presently authorized Common
Stock and shall also include any capital stock of any class of
the corporation hereafter authorized which shall not be
limited to a fixed sum or percentage in respect of the rights
of the holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the corporation;
provided that the shares receivable pursuant to conversion of
shares of Class B Common Stock shall include shares designated
as Common Stock of the corporation as of the date of issuance
of such shares of Class B Common Stock, or, in case of any
reclassification of the outstanding shares thereof, the stock,
securities or assets provided for in subparagraph (7) above.
(12) No fractional shares of Common Stock shall be issued upon
conversion, but, instead of any fraction of a share which
would otherwise be issuable, the corporation shall pay a cash
adjustment in respect of such fraction in an amount equal to
the same fraction of the market price per share of Common
Stock as of the close of business on the day of conversion.
"Market price" shall mean if the Common Stock is traded on a
securities exchange or on the NASDAQ National Market System,
the closing sale price of the Common Stock on such exchange or
the NASDAQ National Market System, or, if the Common Stock is
otherwise traded in the over-the-counter market, the average
bid price at the end of the day in the over-the-counter
market, in each case averaged over a period of 20 consecutive
business days prior to the date as of which "market price" is
being determined, provided, however, that in the event of a
private placement of the Common Stock the term "market price"
shall mean the fair value of the Common Stock as determined by
an independent appraiser mutually acceptable to the
corporation and the holders of the Class B Common Stock. If at
any time the Common Stock is not traded on an exchange or the
NASDAQ National Market System, or otherwise traded in the
over-the-counter market, the "market price" shall be deemed to
be the higher of (i) the book value thereof as determined by
any firm of independent public accountants of recognized
standing selected by the Board of Directors of the corporation
as of the last day of any month ending within 60 days
preceding the date as of which the determination is to be
made, or (ii) the fair value thereof determined in good faith
by the Board of Directors of the corporation as of a date
which is within 15 days of the date as of which the
determination is to be made.