EXHIBIT 3
ARTICLES OF AMENDMENT TO THE
RESTATED CHARTER
OF
CHATTEM, INC.
Pursuant to the provisions of Section 48-16-102 of the Tennessee Business
Corporation Act (the "Act"), the undersigned corporation adopts the following
Articles of Amendment to its Restated Charter:
1. The name of the corporation is Chattem, Inc.
1. The text of the amendment adopted is:
A new Section 7 as set forth below shall be added to the
Restated Charter and current Sections 7 through 14 shall be
renumbered as Sections 8 through 15:
7. A series of preferred shares of the corporation is hereby
given the distinctive designation of "Series A Junior
Participating Preferred Stock," said series to consist of two
hundred thousand (200,000) shares without par value, of which
the preference and relative, participating, optional and other
special rights of such series and the qualifications,
limitations or restrictions thereof shall be as follows:
(a) DIVIDENDS AND DISTRIBUTIONS.
(i) Subject to the prior and superior rights
of the holders of any shares of any series of Preferred Stock
ranking prior and superior to the shares of Series A Junior
Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first
day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction
of a share of Series A Junior Participating Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to
the greater of (A) $1.00 or (B) subject to the provision for
adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on
the Common Stock, without par value, of the corporation (the
"Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred
Stock. In the event the corporation shall at any time after
February 11, 2000 (the "Rights Dividend Declaration Date") (i)
declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders of
shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event under clause (B) of the
preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(ii) The corporation shall declare a
dividend or distribution on the Series A Junior Participating
Preferred Stock as provided in Paragraph (i) of this Section
(a) immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares
of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date
and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1.00 per share on the Series A Junior
Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the
date of issue of such shares is prior to the record date for
the first
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Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A
Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of
holders of shares of Series A Junior Participating Preferred
Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no
more than 30 days prior to the date fixed for the payment
thereof.
(b) VOTING RIGHTS. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following
voting rights:
(i) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Junior
Participating Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the
shareholders of the corporation. In the event the corporation
shall at any time after the Rights Dividend Declaration Date
(A) declare or pay any dividend on Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common
Stock, or (C) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
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(ii) Except as otherwise provided herein or
by law, the holders of shares of Series A Junior Participating
Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a
vote of shareholders of the corporation.
(iii) (A) If at any time dividends on any
Series A Junior Participating Preferred Stock shall be in
arrears in an amount equal to six (6) quarterly dividends
thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") which
shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for
the current quarterly dividend period on all shares of Series
A Junior Participating Preferred Stock then outstanding shall
have been declared and paid or set apart for payment. During
each default period, all holders of Preferred Stock (including
holders of the Series A Junior Participating Preferred Stock)
with dividends in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class, irrespective
of series, shall have the right to elect two (2) directors.
(B) During any default period, such
voting right of the holders of Series A Junior
Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (C) of this
Section (b)(iii) or at any annual meeting of shareholders, and
thereafter at annual meetings of shareholders, provided that
neither such voting right nor the right of the holders of any
other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of directors shall be
exercised unless the holders of ten percent (10%) in number of
shares of Preferred Stock outstanding shall be present in
person or by proxy. The absence of a quorum of the holders of
Common Stock shall not affect the exercise by the holders of
Preferred Stock of such voting right. At any meeting at which
the holders of Preferred Stock shall exercise such voting
right initially during an existing default period, they shall
have the right, voting as a class, to elect directors to fill
such vacancies, if any, in the Board of Directors as may then
exist up to two (2) directors or, if such right is exercised
at an annual meeting, to elect two (2) directors. If the
number which may be so elected at any special meeting does not
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amount to the required number, the holders of the Preferred
Stock shall have the right to make such increase in the number
of directors as shall be necessary to permit the election by
them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect
directors in any default period and during the continuance of
such period, the number of directors shall not be increased or
decreased except by vote of the holders of Preferred Stock as
herein provided or pursuant to the rights of any equity
securities ranking senior to or PARI PASSU with the Series A
Junior Participating Preferred Stock.
(C) Unless the holders of Preferred
Stock shall, during an existing default period, have
previously exercised their right to elect directors, the Board
of Directors may order, or any shareholder or shareholders
owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of a special
meeting of the holders of Preferred Stock, which meeting shall
thereupon be called by the President, a Vice-President or the
Secretary of the corporation. Notice of such meeting and of
any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this Paragraph (iii)(C) shall be
given to each holder of record of Preferred Stock by mailing a
copy of such notice to him at his last address as the same
appears on the books of the corporation. Such meeting shall be
called for a time not earlier than 20 days and not later than
60 days after such order or request or in default of the
calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any
shareholder or shareholders owning in the aggregate not less
than ten percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions of
this Paragraph (iii)(C), no such special meeting shall be
called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of the
shareholders.
(D) In any default period, the
holders of Common Stock, and other classes of stock of the
corporation if applicable, shall continue to be entitled to
elect the whole number of directors until the holders of
Preferred Stock shall have exercised their right to elect two
(2) directors voting as a
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class, after the exercise of which
right (i) the directors so elected by the holders of Preferred
Stock shall continue in office until their successors shall
have been elected by such holders or until the expiration of
the default period, and (ii) any vacancy in the Board of
Directors may (except as provided in Paragraph (iii)(B) of
this Section (b)) be filled by vote of a majority of the
remaining directors theretofore elected by the holders of the
class of stock which elected the director whose office shall
have become vacant. References in this Paragraph (iii) to
directors elected by the holders of a particular class of
stock shall include directors elected by such directors to
fill vacancies as provided in clause (ii) of the foregoing
sentence.
(E) Immediately upon the expiration
of a default period, (i) the right of the holders of
Preferred Stock as a class to elect directors shall cease,
(ii) the term of any directors elected by the holders of
Preferred Stock as a class shall terminate, and (iii) the
number of directors shall be such number as may be provided
for in the charter or by-laws irrespective of any increase
made pursuant to the provisions of Paragraph (iii)(B) of this
Section (b) (such number being subject, however, to change
thereafter in any manner provided by law or in the Restated
Charter or by-laws). Any vacancies in the Board of Directors
effected by the provisions of clauses (ii) and (iii) in the
preceding sentence may be filled by a majority of the
remaining directors.
(iv) Except as set forth herein, or as
otherwise provided by law, holders of Series A Junior
Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock
as set forth herein) for taking any corporate action.
(c) CERTAIN RESTRICTIONS.
(i) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Junior
Participating Preferred Stock as provided in Section (a) are
in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on
shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the corporation
shall not
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(A) declare or pay dividends on
or, make any other distributions on, any shares of
stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(B) declare or pay dividends on or
make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, except dividends paid
ratably on the Series A Junior Participating Preferred Stock
and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(C) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking
on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior
Participating Preferred Stock, provided that the corporation
may at any time redeem, purchase or otherwise acquire shares
of any such parity stock in exchange for shares of any stock
of the corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series A
Junior Participating Preferred Stock; or
(D) redeem or purchase or otherwise
acquire for consideration any shares of Series A
Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior Participating
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(ii) The corporation shall not permit any
subsidiary of the corporation to purchase or otherwise acquire
for consideration any shares of stock of the corporation
unless the corporation could, under Paragraph (i) of this
Section (c), purchase or
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otherwise acquire such shares at such time and in such manner.
(d) REACQUIRED SHARES. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired
by the corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock without designation as to
series and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of
the Board of Directors as permitted by the Restated Charter or
as otherwise permitted under Tennessee law.
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(e) LIQUIDATION, DISSOLUTION OR WINDING UP.
(i) Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the corporation, no
distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the
holders of shares of Series A Junior Participating Preferred
Stock shall have received an amount equal to $100 per share of
Series A Participating Preferred Stock, plus an amount equal
to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of
shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (x)
the Series A Liquidation Preference by (y) 100 (as
appropriately adjusted as set forth in Paragraph (iii) below
to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such
number in clause (y), the "Adjustment Number"). Following the
payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A
Junior Participating Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio
of the Adjustment Number to 1 with respect to such Preferred
Stock and Common Stock, on a per share basis, respectively.
(ii) In the event, however, that there are
not sufficient assets available to permit payment in full of
the Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available
to permit payment in full of the Common
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Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(iii) In the event the corporation shall at
any time after the Rights Dividend Declaration Date (A)
declare or pay any dividend on Common Stock payable in shares
of Common Stock, (B) subdivide the outstanding Common Stock,
or (C) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the Adjustment Number
in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator
of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
(f) CONSOLIDATION, MERGER, ETC. In case the
corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case the shares of Series A Junior Participating Preferred
Stock shall at the same time be similarly exchanged or changed
in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged.
In the event the corporation shall at any time after the
Rights Dividend Declaration Date declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A
Junior Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which
is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
(g) NO REDEMPTION. The shares of Series A Junior
Participating Preferred Stock shall not be redeemable.
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(h) RANKING. The Series A Junior Participating
Preferred Stock shall rank junior to all other series of the
corporation's Preferred Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such
series shall provide otherwise.
(i) AMENDMENT. The Restated Charter shall not be
amended in any manner which would materially alter or change
the powers, preferences or special rights of the Series A
Junior Participating Preferred Stock so as to affect the
holders thereof adversely without the affirmative vote of the
holders of at least a majority of the outstanding shares of
Series A Junior Participating Preferred Stock, voting
separately as a class.
(j) FRACTIONAL SHARES. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which
shall entitle the holder, in proportion to such holder's
fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Junior
Participating Preferred Stock.
1. The amendment was duly adopted on January 27, 2000 by the
Board of Directors of the Company without shareholder action
which, in accordance with Section 48-16-102 of the Act, was
not required.
Dated this _________ day of _______________ , 2000.
CHATTEM, INC.
By: ___________________________
A. Alexander Taylor II,
President
and Chief Operating Officer
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