EXHIBIT 3.1
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
of
WEIGHT WATCHERS INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
of
WEIGHT WATCHERS INTERNATIONAL, INC.
ARTICLE I
The name of the Corporation shall be Weight Watchers International,
Inc.
ARTICLE II
The purpose for which the Corporation is formed is to transact any
or all lawful business, not required to be specifically stated in these Articles
of Incorporation, for which corporations may be incorporated under the Virginia
Stock Corporation Act, as amended from time to time, and any legislation
succeeding thereto (the "VSCA").
All references herein to "Articles of Incorporation" shall mean
these Amended and Restated Articles of Incorporation, as subsequently amended or
restated in accordance herewith and with the VSCA.
ARTICLE III
The aggregate number of shares that the Corporation shall have
authority to issue shall be 10,000,000 shares of Preferred Stock, no par value
per share (hereinafter called "Preferred Stock"), and 100,000,000 shares of
Common Stock, no par value per share (hereinafter called "Common Stock").
The following is a description of each of such classes of stock, and
a statement of the preferences, limitations, voting rights and relative rights
in respect of the shares of each such class:
A. Preferred Stock
1. Authority to Fix Rights of Preferred Stock. The Board of
Directors shall have authority, by resolution or resolutions, at any time
and from time to time to divide and establish any or all of the unissued
shares of Preferred Stock not then allocated to any series of Preferred
Stock into one or more series, and, without limiting the generality of the
foregoing, to fix and determine the designation of each such series, the
number of shares that shall constitute such series and the following
relative rights and preferences of the shares of each series so
established:
(a) The annual or other periodic dividend, if any, payable on
shares of such series, the time of payment thereof, whether any such
dividends shall be cumulative or non-cumulative, and the date or
dates from which any cumulative dividends shall commence to accrue;
(b) the price or prices at which and the terms and conditions,
if any, on which shares of such series may be redeemed;
(c) the amounts payable upon shares of such series in the
event of the voluntary or involuntary dissolution, liquidation or
winding-up of the affairs of the Corporation;
(d) the sinking fund provisions, if any, for the redemption or
purchase of shares of such series;
(e) the extent of the voting powers, if any, of the shares of
such series;
(f) the terms and conditions, if any, on which shares of such
series may be converted into shares of stock of the Corporation of
any other class or classes or into shares of any other series of the
same or any other class or classes;
(g) whether, and if so the extent to which, shares of such
series may participate with the Common Stock in any dividends in
excess of the preferential dividend fixed for shares of such series
or in any distribution of the assets of the Corporation, upon a
liquidation, dissolution or winding-up thereof, in excess of the
preferential amount fixed for shares of such series; and
(h) any other preferences and relative, optional or other
special rights, and qualifications, limitations or restrictions of
such preferences or rights, of shares of such series not fixed and
determined by law or in this Article III.
2. Distinctive Designations of Series. Each series of Preferred
Stock shall be so designated as to distinguish the shares thereof from the
shares of all other series. Different series of Preferred Stock shall not
be considered to constitute different voting groups of shares for the
purpose of voting by voting groups except as required by the VSCA or as
otherwise specified by the Board of Directors, as reflected in articles of
amendment to the Articles of Incorporation, with respect to any series at
the time of the creation thereof.
3. Restrictions on Certain Distributions. So long as any shares of
Preferred Stock are outstanding, the Corporation shall not declare and pay
or set apart for payment any dividends (other than dividends payable in
Common Stock or other stock of the Corporation ranking junior to the
Preferred Stock as to dividends) or make any other distribution on such
junior stock if, at the time of making such declaration, payment or
2
distribution, the Corporation shall be in default with respect to any
dividend payable on, or any obligation to redeem, any shares of Preferred
Stock.
B. Common Stock
1. Voting Rights. Subject to the provisions of the VSCA or of the
Bylaws of the Corporation as from time to time in effect with respect to
the closing of the transfer books or the fixing of a record date for the
determination of shareholders entitled to vote, and except as otherwise
provided by the VSCA or in articles of amendment to the Articles of
Incorporation establishing any series of Preferred Stock pursuant to the
provisions of Paragraph 1 of Part A of this Article III, the holders of
outstanding shares of Common Stock of the Corporation shall possess
exclusive voting power for the election of directors and for all other
purposes, with each holder of record of shares of Common Stock of the
Corporation being entitled to one vote for each share of such stock
standing in his name on the books of the Corporation.
2. Rights Upon Dissolution. Except as required by the VSCA or the
Articles of Incorporation with respect to any rights upon dissolution of
the Preferred Stock or any one or more series thereof, the holders of the
Common Stock shall have the exclusive right to receive, pro rata according
to the number of shares of Common Stock owned of record by each of them,
the net assets of the Corporation upon dissolution and the full amount of
any dividends or other distributions paid by the Corporation.
C. General Provisions
1. Redeemed or Reacquired Shares. Shares of any series of Preferred
Stock that have been redeemed or otherwise reacquired by the Corporation
(whether through the operation of a sinking fund, upon conversion or
otherwise) shall have the status of authorized and unissued shares of
Preferred Stock and may be redesignated and reissued as a part of such
series (except as otherwise provided in Part D of this Article III with
respect to the Series A Preferred Stock or unless prohibited by the
articles of amendment creating any other series) or of any other series of
Preferred Stock. Shares of Common Stock that have been reacquired by the
Corporation shall have the status of authorized and unissued shares of
Common Stock and may be reissued.
2. No Preemptive Rights. No holder of shares of stock of any class
of the Corporation shall, as such holder, have any right to subscribe for
or purchase (a) any shares of stock of any class of the Corporation, or
any warrants, options or other instruments that shall confer upon the
holder thereof the right to subscribe for or purchase or receive from the
Corporation any shares of stock of any class, whether or not such shares
of stock, warrants, options or other instruments are issued for cash or
services or property or by way of dividend or otherwise, or (b) any other
security of the Corporation that shall be convertible into, or
exchangeable for, any shares of stock of the Corporation of any class or
classes, or to which shall be attached or appurtenant any warrant, option
or other instrument that shall confer upon the holder of such security the
right to subscribe
3
for or purchase or receive from the Corporation any shares of its stock of
any class or classes, whether or not such securities are issued for cash
or services or property or by way of dividend or otherwise, other than
such right, if any, as the Board of Directors, in its sole discretion, may
from time to time determine. If the Board of Directors shall offer to the
holders of shares of stock of any class of the Corporation, or any of
them, any such shares of stock, options, warrants, instruments or other
securities of the Corporation, such offer shall not, in any way,
constitute a waiver or release of the right of the Board of Directors
subsequently to dispose of other securities of the Corporation without
offering the same to such holders.
3. Control Share Acquisition Statute. The provisions of Article 14.1
of the VSCA shall not apply to acquisitions of shares of any class of
capital stock of the Corporation.
D. Series A Preferred Stock.
There is hereby established a series of the Corporation's authorized
Preferred Stock, to be designated as the "Series A Preferred Stock, no par value
per share." The designation and number, and relative rights, preferences and
limitations of the Series A Preferred Stock, insofar as not already fixed by any
other provision of these Articles of Incorporation, shall be as follows:
1. Designation and Amount. The number of shares constituting the Series A
Preferred Stock shall be 1,000,000, and the liquidation preference of the Series
A Preferred Stock shall be $25.00 per share (the "Liquidation Value").
2. Rank. The Series A Preferred Stock shall, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank (i) senior to
the Corporation's Common Stock and to all other classes and series of stock of
the Corporation now or hereafter authorized, issued or outstanding which by
their terms expressly provide that they are junior to the Series A Preferred
Stock with respect to such matters (collectively with the Common Stock, the
"Junior Securities"); (ii) on a parity with each other class of capital stock or
series of preferred stock issued by the Corporation after the date hereof the
terms of which specifically provide that such class or series will rank on a
parity with the Series A Preferred Stock with respect to such matters or which
do not specify their rank (collectively referred to as "Parity Securities"); and
(iii) junior to each other class of capital stock or other series of Preferred
Stock issued by the Corporation after the date hereof which specifically
provides that such class or series will rank senior to the Series A Preferred
Stock with respect to such matters (collectively referred to as "Senior
Securities").
3. Dividends.
(a) The holders of shares of the Series A Preferred Stock shall be
entitled to receive, as and when declared and out of funds legally
available therefor, dividends in cash on each share of Series A Preferred
Stock at an annual rate equal to 6% of the
4
Liquidation Value. Such dividends shall be cumulative and shall accrue and
be payable annually on July 31 of each year (each such date being a
"Dividend Payment Date"), to holders of record at the close of business on
the date specified by the Board of Directors of the Corporation at the
time such dividend is declared (the "Record Date"), in preference to
dividends on the Junior Securities, commencing on the Dividend Payment
Date next succeeding the Issue Date. Any such Record Date shall be 15 days
prior to the relevant Dividend Payment Date. With respect to any dividend
that has been declared, if on the applicable Dividend Payment Date the
Corporation is in default under its Senior Credit Agreement or any of its
other Debt Agreements or if the payment of such dividend in cash would
result in such a default, the payment of such declared dividend with
respect to shares of Series A Preferred Stock on such date shall be
deferred to the next Dividend Payment Date or other payment date provided
pursuant to Section 3(d) below on which no default exists or would occur.
Such unpaid dividends shall accrue interest at a rate of 6% per annum
until paid in full. All dividends paid with respect to shares of Series A
Preferred Stock pursuant to this Section 3 shall be paid pro rata to the
holders entitled thereto.
(b) In the case of dividend payments made on the first Dividend
Payment Date with respect to shares of Series A Preferred Stock issued on
the Issue Date, dividends shall accrue and be cumulative from the Issue
Date.
(c) Each fractional share of Series A Preferred Stock outstanding
shall be entitled to a ratably proportionate amount of all dividends
accruing with respect to each outstanding share of Series A Preferred
Stock pursuant to subparagraph (a) of this Section 3, and all such
dividends with respect to such outstanding fractional shares shall be
cumulative and shall accrue (whether or not declared), and shall be
payable in the same manner and at such times as provided for in
subparagraph (a) of this Section 3 with respect to dividends on each
outstanding share of Series A Preferred Stock. Each fractional share of
Series A Preferred Stock outstanding shall also be entitled to a ratably
proportionate amount of any other distributions made with respect to each
outstanding share of Series A Preferred Stock, and all such distributions
shall be payable in the same manner and at the same time as distributions
on each outstanding share of Series A Preferred Stock.
(d) Accrued but unpaid dividends for any past dividend periods may
be declared by the Board of Directors and paid on any date fixed by the
Board of Directors, whether or not a regular Dividend Payment Date, to
holders of record on the books of the Corporation on such record date as
may be fixed by the Board of Directors, which record date shall be not
less than 10 days and not more than 30 days prior to the payment date
thereof. Holders of Series A Preferred Stock will not be entitled to any
dividends, whether payable in cash, property or stock, in excess of the
full cumulative dividends provided for herein.
(e) (i) So long as any shares of the Series A Preferred Stock are
outstanding, the Corporation shall not make any payment on account of, or
set apart for payment money
5
for a sinking or other similar fund for, the purchase, redemption or
retirement of, any Junior Securities or any warrants, rights, calls or
options exercisable for or convertible into any Junior Securities, whether
directly or indirectly, and whether in cash, obligations or shares of the
Corporation or other property (other than dividends or distributions
payable in additional shares of Junior Securities to holders of Junior
Securities), and shall not permit any Person directly or indirectly
controlled by the Corporation to purchase or redeem any Junior Securities
or any warrants, rights, calls or options exercisable for or convertible
into any Junior Securities. Notwithstanding the foregoing, the Corporation
may purchase, redeem or otherwise acquire, cancel or retire for value
Junior Securities or options, warrants, equity appreciation rights or
other rights to purchase or acquire Junior Securities (A) held by any
existing or former employees or management of the Corporation or any
Subsidiary of the Corporation or their assigns, estates or heirs, in each
case in connection with the repurchase provisions under employee stock
option or stock purchase agreements or other agreements to compensate
management employees or (B) issued in connection with the incurrence of
debt under a Debt Agreement or the issuance of Senior Securities (other
than securities issued to any Permitted Holder).
(ii) No full dividends shall be declared by the Board of Directors
of the Corporation or paid or set apart for payment by the Corporation on
any Parity Securities for any period unless full cumulative dividends have
been or contemporaneously are declared and paid (in cash) or declared and
a sum set apart sufficient for such payment (in cash) on the Series A
Preferred Stock for all dividend payment periods terminating on or prior
to the date of payment of such full dividends on such Parity Securities.
If any dividends are not paid in full, as aforesaid, upon the shares of
Series A Preferred Stock and any other Parity Securities, all dividends
declared upon shares of Series A Preferred Stock and any other Parity
Securities shall be declared pro rata so that the amount of dividends
declared per share of the Series A Preferred Stock and such Parity
Securities shall in all cases bear to each other the same ratio that
accrued dividends per share on the Series A Preferred Stock and such
Parity Securities bear to each other.
4. Liquidation Preference.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders
of shares of Series A Preferred Stock then outstanding shall be entitled
to be paid out of the assets of the Corporation available for distribution
to its shareholders an amount in cash equal to 100% of the Liquidation
Value for each share outstanding, plus an amount in cash equal to all
accrued but unpaid dividends thereon to the date of liquidation,
dissolution or winding up, before any payment shall be made or any assets
distributed to the holders of any of the Junior Securities. If the assets
of the Corporation are not sufficient to pay in full the liquidation
payments payable to the holders of outstanding shares of the Series A
Preferred Stock and any Parity Securities, then the holders of all such
shares shall share ratably in such distribution of assets in accordance
with the amount which would be payable on such distribution if the amounts
to which the holders of outstanding shares of Series A
6
Preferred Stock and the holders of outstanding shares of such Parity
Securities are entitled were paid in full.
(b) For the purposes of this Section 4, neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets
of the Corporation nor the consolidation or merger of the Corporation with
any one or more other Person shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation,
unless such voluntary sale, conveyance, exchange or transfer shall be in
connection with a plan of liquidation, dissolution or winding up of the
Corporation.
5. Redemption.
(a) Optional Redemption. The Corporation may redeem, in whole or in
part, the Series A Preferred Stock, at any time or from time to time, in
the manner provided in Section 6(a) of this Part D (an "Optional
Redemption"). Any Optional Redemption shall be at a price per share equal
to 100% of the Liquidation Value thereof plus 100% of the sum of accrued
and unpaid dividends thereon (including an amount equal to a prorated
dividend from the last Dividend Payment Date immediately prior to the
redemption date).
(b) Redemption Upon Change in Control or a Permitted Holder Public
Sale. Upon the occurrence of a Change in Control or a Permitted Holder
Public Sale (each a "Trigger Event"), the Series A Preferred Stock shall
be redeemable at the option of the holders thereof, in whole or in part
and in the manner provided in Section 6(b) of this Part D, at a redemption
price per share payable in cash equal to 100% of the Liquidation Value
plus accrued and unpaid dividends to the date of redemption (including an
amount equal to a prorated dividend from the last Dividend Payment Date
immediately prior to the redemption date). After the occurrence of the
Trigger Event, the Corporation shall redeem the number of shares specified
in the holders' notices of election to redeem pursuant to Section 6(b) of
this Part D on the date fixed for redemption. The Corporation's
obligations pursuant to Section 5(b) of this Part D shall be suspended
during any period when such redemption would be prohibited by the
Corporation's Senior Credit Agreement or any of its other Debt Agreements.
6. Procedure for Redemption.
(a) If the Corporation elects to redeem Series A Preferred Stock
pursuant to Section 5(a) of this Part D, the Corporation shall give
written notice (an "Optional Redemption Notice") thereof by overnight
courier or by facsimile transmission to each holder of Series A Preferred
Stock at its address or facsimile number, as the case may be, as it
appears in the records of the Corporation. Such notice shall set forth:
(i) the redemption price; (ii) the redemption date (which date shall be no
earlier than five days and no later than 60 days from the date the
Optional Redemption Notice is sent); (iii) the procedures to be followed
by such holder, including the place or places where certificates for such
shares are to be surrendered for payment of the redemption price and (iv)
that
7
dividends on the shares to be redeemed will cease to accrue on the
redemption date. If less than all shares of Series A Preferred Stock are
to be redeemed at any time, selection of such shares for redemption shall
be made on a pro rata basis.
(b) At any time prior to and in any event no later than five days
after the occurrence of a Change in Control and no later than 25 days
prior to the occurrence of a Permitted Holder Public Sale, the Corporation
shall give written notice of such Trigger Event by overnight courier or by
facsimile transmission to each holder of Series A Preferred Stock at its
address or facsimile number, as the case may be, as it appears in the
records of the Corporation, which notice shall describe such Trigger
Event. Such notice shall also set forth: (i) each holder's right to
require the Corporation to redeem shares of Series A Preferred Stock held
by such holder as a result of such Trigger Event; (ii) the redemption
price; (iii) the redemption date (which date shall be no later than 45
days from the date of the occurrence of such Trigger Event); (iv) the
procedures to be followed by such holder in exercising its right of
redemption, including the place or places where certificates for such
shares are to be surrendered for payment of the redemption price and (v)
that dividends on the shares to be redeemed will cease to accrue on the
redemption date. In the event a holder of shares of Series A Preferred
Stock shall elect to require the Corporation to redeem any or all of such
shares of Series A Preferred Stock, such holder shall deliver, within 15
days of the sending to it of the Corporation's notice described in this
Section 6(b), a written notice (the "Holder's Election Notice') stating
such holder's election and specifying the number of shares to be redeemed
pursuant to Section 5(b) of this Part D.
(c) If an Optional Redemption Notice has been sent by the
Corporation as provided in Section 6(a) of this Part D, or notice of
election has been delivered by the holders as provided in Section 6(b) of
this Part D, and provided that on or before the applicable redemption date
funds necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the pro
rata benefit of the holders of the shares entitled to redemption, so as to
be and to continue to be available therefor, then, from and after the
redemption date (unless the Corporation defaults in the payment of the
redemption price, in which case such rights shall continue until the
redemption price is paid), dividends on the shares of Series A Preferred
Stock so called for or entitled to redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding and shall not have
the status of shares of Series A Preferred Stock, and all rights of the
holders thereof as shareholders of the Corporation (except the right to
receive the applicable redemption price and any accrued and unpaid
dividends from the Corporation to the date of redemption) shall cease.
Upon surrender of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and a notice by the Corporation shall so
state), such shares shall be redeemed by the Corporation at the applicable
redemption price as aforesaid. In case fewer than all the shares
represented by any such certificate are redeemed, a new certificate or
certificates shall be issued representing the unredeemed shares without
cost to the holder thereof.
8
7. Reacquired Shares. Shares of Series A Preferred Stock that have
been issued and reacquired in any manner shall (upon compliance with any
applicable provisions of the laws of the Commonwealth of Virginia) have the
status of authorized and unissued shares of the class of Preferred Stock
undesignated as to series and may be redesignated and reissued as part of any
series of Preferred Stock other than the Series A Preferred Stock.
8. Voting Rights. Except as required by law or set forth below, the
holders of the Series A Preferred Stock will have no voting rights with respect
to their shares of Series A Preferred Stock. The approval of holders of a
majority of the outstanding shares of Series A Preferred Stock, voting as a
class, shall be required to amend, repeal or change any of the provisions of the
Articles of Incorporation of the Corporation in any manner that would alter or
change the powers, preferences or special rights of the shares of Series A
Preferred Stock so as to affect them adversely; provided that without the
consent of each holder of Series A Preferred Stock, no amendment may reduce the
dividend payable on or the Liquidation Value of the Series A Preferred Stock.
9. Certain Covenants. Any holder of Series A Preferred Stock may
proceed to protect and enforce its rights and the rights of such holders by any
available remedy by proceeding at law or in equity to protect and enforce any
such rights, whether for the specific enforcement of any provision in this Part
D or in aid of the exercise of any power granted herein, or to enforce any other
proper remedy.
10. Definitions. For the purposes of this Part D, the following
terms shall have the meanings indicated:
"affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act or any
successor provision. The terms "affiliated" and "non-affiliated" shall have
meanings correlative to the foregoing.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Change in Control" shall mean (a) any "person" or "group" of
related persons (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of more than 35% of the total voting power of the Voting
Stock of the Corporation (unless the Permitted Holders shall hold a higher
percentage thereof or have the ability to elect or designate for election a
majority of the Board of Directors of the Corporation); or
(b) the adoption by the shareholders of the Corporation of a plan or
proposal for the liquidation or dissolution of the Corporation; or
9
(c) the merger or consolidation of the Corporation with another
Person that is not an affiliate of the Corporation prior thereto or the sale or
other disposition of all or substantially all the assets or property of the
Corporation in one transaction or series of related transactions to a Person who
is not an affiliate of the Corporation prior thereto.
"Debt Agreement" shall mean any instrument or agreement governing
indebtedness (whether now outstanding or hereinafter incurred) of the
Corporation.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean the first date on which shares of Series A
Preferred Stock are issued.
"Junior Securities" shall have the meaning set forth in Section 2 of
this Part D.
"Parity Securities" shall have the meaning set forth in Section 2 of
this Part D.
"Permitted Holder" shall mean Artal Luxembourg S.A. and any of its
affiliates, but in the case of any affiliate, only for so long as it continues
to be an affiliate of Artal Luxembourg S.A.
"Permitted Holder Public Sale" shall mean a sale for cash by a
Permitted Holder of all or part of the Common Stock in a registered, secondary
public offering.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, limited liability company or
other entity.
"Senior Credit Agreement" shall mean the Senior Credit Agreement,
dated as of September 29, 1999, among the Corporation, WW Funding Corp., various
financial institutions, The Bank of Nova Scotia, as Administrative Agent, BHF
(USA) Capital Corporation, as Documentation Agent, and Credit Suisse First
Boston, as Syndication Agent, and the term Senior Credit Agreement shall also
include any amendments, extensions, renewals, restatements or refundings thereof
and any credit facilities that replace, refund or refinance any part of the
loans or commitments thereunder, including any such replacement, refunding or
refinancing facility that increases the amount borrowable thereunder.
"Senior Securities" shall have the meaning set forth in Section 2 of
this Part D.
"Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
"Trigger Event" shall have the meaning set forth in Section 5(b) of
this Part D.
10
"Voting Stock" of a corporation means all classes of capital stock
of such corporation then outstanding and normally entitled to vote in the
election of directors.
ARTICLE IV
1. The number of directors shall be as specified in the Bylaws of
the Corporation but such number may be increased or decreased from time to
time in such manner as may be prescribed in the Bylaws.
2. Subject to the rights of the holders of any Preferred Stock then
outstanding, directors may be removed with or without cause by the
affirmative vote of a majority of the votes entitled to be cast by each
voting group that is entitled to vote generally in the election of
directors.
3. Subject to the rights of the holders of any Preferred Stock then
outstanding and to any limitations set forth in the VSCA, newly-created
directorships resulting from any increase in the number of directors and
any vacancies in the Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled solely (i) by the
Board of Directors or (ii) at a meeting of shareholders by the
shareholders entitled to vote on the election of directors. If the
directors remaining in office constitute fewer than a quorum of the Board,
they may fill the vacancy by the affirmative vote of a majority of the
directors remaining in office.
4. No provision of any agreement, plan or related document
contemplated by Section 13.1-646 of the VSCA and approved by the Board of
Directors shall be considered to be a limitation on the authority or power
of the Board of Directors but, if so considered, is hereby authorized by
these Articles of Incorporation.
ARTICLE V
Except as expressly otherwise required in the Articles of
Incorporation, to be approved, action on a matter involving (i) an amendment or
restatement of the Articles of Incorporation for which the VSCA requires
shareholder approval, (ii) a plan of merger or share exchange for which the VSCA
requires shareholder approval, (iii) a sale of assets other than in regular
course of business or (iv) the dissolution of the Corporation shall be approved
by a majority of the votes entitled to be cast by each voting group that is
entitled to vote on the matter, unless in submitting any such matter to the
shareholders the Board of Directors shall require a greater vote.
ARTICLE VI
1. Every person who is or was a director, officer or employee of the
Corporation, or who, at the request of the Corporation, serves or has
served in any such capacity with another corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise shall be
indemnified by the Corporation against any and all liability
11
and reasonable expense that may be incurred by him in connection with or
resulting from any claim, action or proceeding (whether brought in the
right of the Corporation or any such other corporation, entity, plan or
otherwise), in which he may become involved, as a party or otherwise, by
reason of his being or having been a director, officer or employee of the
Corporation, or such other corporation, entity or plan while serving at
the request of the Corporation, whether or not he continues to be such at
the time such liability or expense is incurred, unless such person engaged
in willful misconduct or a knowing violation of the criminal law.
As used in this Article VI: (a) the terms "liability" and "expense"
shall include, but shall not be limited to, counsel fees and disbursements
and amounts of judgments, fines or penalties against, and amounts paid in
settlement by, a director, officer or employee; (b) the terms "director,"
"officer" and employee," unless the context otherwise requires, include
the estate or personal representative of any such person; (c) a person is
considered to be serving an employee benefit plan as a director, officer
or employee of the plan at the Corporation's request if his duties to the
Corporation also impose duties on, or otherwise involve services by, him
to the plan or, in connection with the plan, to participants in or
beneficiaries of the plan; (d) the term "occurrence" means any act or
failure to act, actual or alleged, giving rise to a claim, action or
proceeding; and (e) service as a trustee or as a member of a management or
similar committee of a partnership, joint venture or limited liability
company shall be considered service as a director, officer or employee of
the trust, partnership, joint venture or limited liability company.
The termination of any claim, action or proceeding, civil or
criminal, by judgment, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that a
director, officer or employee did not meet the standards of conduct set
forth in this Paragraph 1. The burden of proof shall be on the Corporation
to establish, by a preponderance of the evidence, that the relevant
standards of conduct set forth in this Paragraph 1 have not been met.
2. Any indemnification under Paragraph 1 of this Article VI shall be
made unless (a) the Board, acting by a majority vote of those directors
who were directors at the time of the occurrence giving rise to the claim,
action or proceeding involved and who are not at the time parties to such
claim, action or proceeding (provided there are at least two such
directors), finds that the director, officer or employee has not met the
relevant standards of conduct set forth in such Paragraph 1, or (b) if
there are not at least two such directors, the Corporation's principal
Virginia legal counsel, as last designated by the Board as such prior to
the time of the occurrence giving rise to the claim, action or proceeding
involved, or in the event for any reason such Virginia counsel is
unwilling to so serve, then Virginia legal counsel mutually acceptable to
the Corporation and the person seeking indemnification, deliver to the
Corporation their written advice that, in their opinion, such standards
have not been met.
12
3. Expenses incurred with respect to any claim, action or proceeding
of the character described in Paragraph 1 of this Article VI shall, except
as otherwise set forth in this Paragraph 3, be advanced by the Corporation
prior to the final disposition thereof upon receipt of an undertaking by
or on behalf of the recipient to repay such amount if it is ultimately
determined that he is not entitled to indemnification under this Article
VI. No security shall be required for such undertaking and such
undertaking shall be accepted without reference to the recipient's final
ability to make repayment. Notwithstanding the foregoing, the Corporation
may refrain from, or suspend, payment of expenses in advance if at any
time before delivery of the final finding described in Paragraph 2 of this
Article VI, the Board or Virginia legal counsel, as the case may be,
acting in accordance with the procedures set forth in Paragraph 2 of this
Article VI, finds by a preponderance of the evidence then available that
the officer, director or employee has not met the relevant standards of
conduct set forth in Paragraph 1 of this Article VI.
4. No amendment or repeal of this Article VI shall adversely affect
or deny to any director, officer or employee the rights of indemnification
provided in this Article VI with respect to any liability or expense
arising out of a claim, action or proceeding based in whole or substantial
part on an occurrence the inception of which takes place before or while
this Article VI, as set forth in these Articles of Incorporation, is in
effect. The provisions of this Paragraph 4 shall apply to any such claim,
action or proceeding whenever commenced, including any such claim, action
or proceeding commenced after any amendment or repeal of this Article VI.
5. The rights of indemnification provided in this Article VI shall
be in addition to any rights to which any such director, officer or
employee may otherwise be entitled by contract or as a matter of law.
6. In any proceeding brought by or in the right of the Corporation
or brought by or on behalf of shareholders of the Corporation, no director
or officer of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages with respect to any transaction,
occurrence or course of conduct, whether prior or subsequent to the
effective date of this Article VI, except for liability resulting from
such person's having engaged in willful misconduct or a knowing violation
of the criminal law or any federal or state securities law.
ARTICLE VII
1. A special meeting of the shareholders of the Corporation for any
purpose or purposes may be held at any time upon the call of (a) the
Chairman of the Board or the President of the Corporation or (b) the
holders of a majority of the votes entitled to be cast on any issue
proposed to be considered at such special meeting, provided, that all of
such shareholders must sign, date and deliver to the Corporation's
secretary one or more demands for such meeting describing the purpose or
purposes for which it is to be held.
13
2. For such periods as the Corporation shall have fewer than 300
shareholders, any action required or permitted by the VSCA to be taken at
a shareholders' meeting may be taken without a meeting and without prior
notice, if the action is taken by the written consent of shareholders who
would be entitled to vote at a meeting of holders of outstanding shares
and who have voting power to cast not less than the minimum number (or the
applicable minimum numbers, in the case of voting by groups) of votes that
would be necessary to authorize or take the action at a meeting at which
all shareholders entitled to vote thereon were present and voted.
14