EXHIBIT 3.1
RESTATED
ARTICLES OF INCORPORATION OF
PRG-SCHULTZ INTERNATIONAL, INC.
1.
NAME
The name of the corporation is PRG-SCHULTZ INTERNATIONAL, INC. (the
"Corporation").
2.
CAPITALIZATION
The total number of shares of capital stock of all classes that the
corporation shall have the authority to issue is Two Hundred One Million
(201,000,000) shares, of which Two Hundred Million (200,000,000) shares, no par
value per share, shall be designated "Common Stock" and One Million (1,000,000)
shares, no par value per share, shall be designated "Preferred Stock".
The preferences, limitations and relative rights of the shares of each
class of stock of the corporation are as follows:
A. PREFERRED STOCK
1. General. The Preferred Stock may be issued from time to time in one or
more classes or series, the shares of each class or series to have such
designations, powers, preferences, rights qualifications, limitations and
restrictions thereon as are stated and expressed herein and in the resolution or
resolutions providing for the issuance of such class or series adopted by the
Board of Directors as hereinafter prescribed. Articles of Amendment shall be
filed with respect to issuance of such Preferred Stock pursuant to the
provisions of Section 14-2-602 of the Georgia Business Corporation Code (as
amended from time to time, the "Code"). Each series of a class must be given a
distinguishing designation and all shares of a series must have preferences,
limitations, and relative rights identical with those of other shares of the
same series and, except to the extent otherwise provided in the description of
the series, with those of other series of the same class; provided, however,
that any of the voting powers, preferences, designations, rights,
qualifications, limitations, or restrictions of or on the class or series of
shares, or the holders thereof, may be made dependent upon facts ascertainable
outside these Articles of Incorporation, as amended from time to time, if the
manner in which the facts shall operate upon the voting powers, designations,
preferences, rights, qualifications, limitations, or restrictions of or on the
shares, or the holders thereof, is clearly and expressly set forth in these
Articles of Incorporation, as amended from time to time.
2. Preferences, Limitations and Relative Rights. Authority is hereby
expressly granted to and vested in the Board of Directors to authorize the
issuance of the Preferred Stock from time to time in one or more classes or
series, to determine and take necessary proceedings to fully effect the issuance
and redemption of any such Preferred Stock, and, with respect to each class or
series of the Preferred Stock, to fix and state the following by resolution or
resolutions from time to time adopted providing for the issuance thereof:
a) whether or not the class or series is to have voting rights, full or
limited, or is to be without voting rights;
b) the number of shares which shall constitute the class or series and the
designations thereof;
c) the preferences and relative participating, optional or other special
rights, if any, and the qualifications, limitations or restrictions thereof, if
any, with respect to any class or series;
d) whether or not the shares of any class or series shall be redeemable
and, if redeemable, the redemption price or prices, and the time or times at
which, and the terms and conditions upon which, such shares shall be redeemable
and the manner of redemption;
e) whether or not the shares of a class or series shall be subject to the
operation of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement, and if such retirement or sinking fund
or funds be established, the annual amount thereof and the terms and provisions
relative to the operation thereof;
f) whether or not dividends are payable on any class or classes or series
of stock, and if dividends are so payable, the dividend rate, whether dividends
are payable in cash, stock of the corporation, or other property, the conditions
upon which and the times when such dividends are payable, the preference to, or
the relation to the payment of, the dividends payable on any other class or
classes or series of stock, whether or not such dividend shall be cumulative or
noncumulative, and if cumulative, the date or dates from which such dividends
shall accumulate;
g) the preferences, if any, and the amounts thereof that the holders of any
class or series thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the assets of, the
corporation;
h) whether or not the shares of any class or series shall be convertible
into, or exchangeable for, the shares of any other class or classes or of any
other series of the same or any other class or classes of the corporation and
the conversion price or prices or ratio or ratios or the rate or rates at which
2
such conversion or exchange may be made, with such adjustments, if any, as shall
be stated and expressed or provided for in such resolution or resolutions; and
i) such other rights and provisions with respect to any class or series as
the Board of Directors may deem advisable.
The shares of each class or series of the Preferred Stock may vary from the
shares of any other class or series thereof in any or all of the foregoing
respects. The Board of Directors may increase the number of shares of Preferred
Stock designated for any existing class or series by a resolution adding to such
class or series authorized and unissued shares of the Preferred Stock not
designated for any other class or series. The Board of Directors may decrease,
but not below the number of shares then issued, the number of shares of the
Preferred Stock designated for any existing class or series by a resolution,
subtracting from such class or series unissued shares of the Preferred Stock
designated for such class or series, and the shares so subtracted shall become
authorized, unissued and undesignated shares of the Preferred Stock.
3. Participating Preferred Stock.
i. The distinctive serial designation of this series shall be
"Participating Preferred Stock" (hereinafter called "this Series"). Each share
of this Series shall be identical in all respects with the other shares of this
Series except as to the dates from and after which dividends thereon shall be
cumulative.
ii. The number of shares in this Series shall initially be 500,000 which
number may from time to time be increased or decreased (but not below the number
then outstanding) by the Board of Directors. Shares of this Series purchased by
the Corporation shall be canceled and shall revert to authorized but unissued
shares of Preferred Stock undesignated as to series. Shares of this Series may
be issued in fractional shares, which fractional shares shall entitle the
holder, in proportion to such holder's fractional share, to all rights of a
holder of a whole share of this Series.
iii. The holders of full or fractional shares of this Series shall be
entitled to receive, when and as declared by the Board of Directors, but only
out of funds legally available therefor, dividends, on each date that dividends
or other distributions (other than dividends or distributions payable in Common
Stock of the Corporation) are payable on or in respect of Common Stock
comprising part of the Reference Package (as defined below), in an amount per
whole share of this Series equal to the aggregate amount of dividends or other
distributions (other than dividends or distributions payable in Common Stock of
the Corporation) that would be payable on such date to a holder of the Reference
Package. Each such dividend shall be paid to the holders of record of shares of
this Series on the date, not exceeding seventy days preceding such dividend or
distribution payment date, fixed for the purpose by the Board of Directors in
advance of payment of each particular dividend or distribution. Dividends on
each full and each fractional share of this Series shall be cumulative from the
date such full or fractional share is originally issued provided that any such
3
full or fractional share originally issued after a dividend record date and on
or prior to the dividend payment date to which such record date relates shall
not be entitled to receive the dividend payable on such dividend payment date or
any amount in respect of the period from such original issuance to such dividend
payment date.
The term "Reference Package" shall initially mean 100 shares of common
stock, $.001 par value per share ("Common Stock"), of the Corporation. In the
event the Corporation shall at any time after the close of business on August
14, 2000 (A) declare or pay a dividend on any Common Stock payable in Common
Stock, (B) subdivide any Common Stock, or (C) combine any Common Stock into a
smaller number of shares, then and in each such case the Reference Package after
such event shall be the Common Stock that a holder of the Reference Package
immediately prior to such event would hold thereafter as a result thereof.
Holders of shares of this Series shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of full cumulative
dividends, as herein provided on this Series.
So long as any shares of this Series are outstanding, no dividend (other
than a dividend in Common Stock or in any other stock ranking junior to this
Series as to dividends and upon liquidation) shall be declared or paid or set
aside for payment or other distribution declared or made upon the Common Stock
or upon any other stock ranking junior to this Series as to dividends or upon
liquidation, nor shall any Common Stock nor any other stock of the Corporation
ranking junior to or on a parity with this Series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any consideration
(or any monies to be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Corporation (except by
conversion into or exchange for stock of the Corporation ranking junior to this
Series as to dividends and upon liquidation), unless, in each case, the full
cumulative dividends (including the dividend to be due upon payment of such
dividend, distribution, redemption, purchase or other acquisition), if any, on
all outstanding shares of this Series shall have been, or shall
contemporaneously be, paid.
iv. In the event of any merger, consolidation, reclassification 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 this Series shall at the same time be similarly exchanged or
changed in an amount per whole share equal to the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, that a holder of the Reference Package would be entitled to receive as a
result of such transaction.
v. In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the holders of
full and fractional shares of this Series shall be entitled, before any
distribution or payment is made on any date to the holders of the Common Stock
or any other stock of the Corporation ranking junior to this Series upon
liquidation, to be paid in full an amount per whole share of this Series equal
to the aggregate amount distributed prior to such date or to be distributed in
4
connection with such liquidation, dissolution or winding up to a holder of the
Reference Package (such amount being hereinafter referred to as the "Liquidation
Preference"), together with accrued dividends to such distribution or payment
date, whether or not earned or declared. If such payment shall have been made in
full to all holders of shares of this Series, the holders of shares of this
Series as such shall have no right or claim to any of the remaining assets of
the Corporation.
In the event the assets of the Corporation available for distribution to
the holders of shares of this Series upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such holders are entitled
pursuant to the first paragraph of this Section (v), no such distribution shall
be made on account of any shares of any other class or series of Preferred Stock
ranking on a parity with the shares of this Series upon such liquidation,
dissolution or winding up unless proportionate distributive amounts shall be
paid on account of the shares of this Series, ratably in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such liquidation, dissolution or winding up.
Upon the liquidation, dissolution or winding up of the Corporation, the
holders of shares of this Series then outstanding shall be entitled to be paid
out of assets of the Corporation available for distribution to its shareholders
all amounts to which such holders are entitled pursuant to the first paragraph
of this Section (v) before any payment shall be made to the holders of Common
Stock or any other stock of the Corporation ranking junior upon liquidation to
this Series.
For purposes of this Section (v), the consolidation or merger of, or
binding share exchange by, the Corporation with any other corporation shall not
be deemed to constitute a liquidation, dissolution or winding up of the
Corporation.
vi. The shares of this Series shall not be redeemable without the consent
of the holder of such shares.
vii. In addition to any other vote or consent of shareholders required by
law or by the Articles of Incorporation, as amended, of the Corporation, each
whole share of this Series shall, on any matter, vote as a class with any other
capital stock comprising part of the Reference Package and voting on such matter
and shall have the number of votes thereon that a holder of the Reference
Package would have.
viii. The shares of this Series 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.
4. Series A Preferred Stock. There shall be a series of Preferred Stock, no
par value, of the Corporation with the following designated number of shares,
relative rights, preferences, and limitations thereof:
5
Section 4.1. Designation, Rank and Number.
(a) The shares of the series shall be designated as 9.0% Senior Series A
Convertible Participating Preferred Stock (the "Series A Preferred Stock"), no
par value, with a liquidation preference of $120.00 per share as of the date of
issue. The authorized number of shares constituting such series shall be
125,000.
(b) The Series A Preferred Stock, with respect to dividend rights and the
distribution of assets upon the Corporation's liquidation, dissolution or
winding up, will rank (i) junior to all indebtedness of the Corporation; (ii)
senior to all classes or series of the Corporation's common stock and to all
other equity securities the terms of which specifically provide that such equity
securities rank junior to the Series A Preferred Stock ("Junior Stock"); (iii)
pari passu with the 10.0% Series B Convertible Participating Preferred Stock
(the "Series B Preferred Stock") and all other preferred equity securities
issued by the Corporation, other than those securities described in clauses (ii)
and (iv) of this Section 4.1(b), the issuance of which shall be subject to the
consent of the required holders of the Series A Preferred Stock; and (iv) junior
to all equity securities issued by the Corporation, the terms of which
specifically provide that such equity securities rank senior to the Series A
Preferred Stock, subject to the consent of the required holders of the Series A
Preferred Stock.
Section 4.2. Dividends.
(a) General. The holders of shares of Series A Preferred Stock, in
preference to the holders of shares of any Junior Stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available therefor, cumulative dividends, at a rate of 9.0% per annum of the
then-effective liquidation preference payable in cash semi-annually on March 15
and September 15 of each year, commencing September 15, 2006, to holders of
record at the close of business on the preceding March 1 and September 1,
respectively. Declared dividends will be payable in cash. Any undeclared
dividends will increase the liquidation preference as of the applicable dividend
payment date.
(b) Dividend Participation. If any dividends or distributions are paid on
the Corporation's common stock (other than a dividend or distribution paid
solely in additional shares of the Corporation's common stock), the holders of
Series A Preferred Stock will be paid dividends or distributions per share of
Series A Preferred Stock in an amount equal to what such holder would have
received had it converted its shares of Series A Preferred Stock into shares of
common stock of the Corporation immediately prior to the record date for the
payment of such dividend or distribution.
(c) Partial Dividend Periods. The Corporation will prorate and compute any
dividend payable for a partial dividend period on the basis of a 360-day year
consisting of twelve 30-day months. The Corporation will pay dividends to
holders of record as they appear in its share records at the close of business
on the applicable dividend record date.
6
(d) Unpayable Dividends. No dividend on the Series A Preferred Stock will
be authorized or declared or paid or set apart for payment by the Corporation if
such authorization, declaration, payment or setting apart for payment would
violate any of its agreements or is restricted or prohibited by law.
Notwithstanding the foregoing, dividends on the Series A Preferred Stock will
accrue whether or not the Corporation has earnings, whether or not there are
funds legally available for the payment of dividends and whether or not such
dividends are authorized or declared by the Board of Directors.
(e) Dividends not Declared and Paid in Full. When dividends are not
declared and paid in full (or a sum sufficient for such full payment is not so
set apart) on the Series A Preferred Stock and all other equity securities
ranking pari passu as to dividends with the Series A Preferred Stock (including
the Series B Preferred Stock, if any), all dividends declared upon the Series A
Preferred Stock and any other equity securities ranking pari passu as to
dividends with the Series A Preferred Stock shall be declared pro rata so that
the amount of dividends declared per share of Series A Preferred Stock and such
other equity security shall in all cases bear to each other the same ratio that
accumulated dividends per share on the Series A Preferred Stock and such other
equity security bear to each other.
(f) Restrictions on Other Payments. Except as provided in Section 4.2(e),
unless full cumulative dividends on the Series A Preferred Stock have been or
contemporaneously are authorized and paid or authorized and a sum sufficient set
apart for payment for all past distribution periods and the then current
dividend period:
(i) no dividends, other than distributions in kind of common stock of the
Corporation or other shares of Junior Stock, may be authorized or paid or set
aside for payment, and no other dividend may be authorized or made upon, shares
of common stock of the Corporation or any other shares of Junior Stock; and
(ii) no shares of common stock of the Corporation or any other shares of
Junior Stock may be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any such shares) by the Corporation or any subsidiary of the
Corporation, except by conversion into or exchange for other Junior Stock.
Section 4.3. Liquidation Preference.
(a) Initial Preference. The Series A Preferred Stock will have an initial
liquidation preference of $120.00 per share, subject to accretion.
(b) Distribution upon Liquidation. Upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, holders of Series A
Preferred Stock will be entitled to receive out of the assets of the Corporation
available for distribution to stockholders (after payment or provision for all
of the Corporation's debts and other liabilities and preference payments to
holders of equity securities ranking senior to the Series A Preferred Stock but
before any payment or provision for any Junior Stock) an amount equal to the
greater of:
7
(i) the amount per share of Series A Preferred Stock equal to the
then-effective liquidation preference, plus any accrued and undeclared dividends
to the date of payment; and
(ii) the amount per share the holder would have received in connection with
such voluntary or involuntary liquidation, dissolution or winding up of the
Corporation had such holder converted such share of Series A Preferred Stock
into shares of common stock immediately prior to such event.
(b) Distribution with Insufficient Assets. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, its
assets are insufficient to make full payment of the liquidating distributions to
holders of the Series A Preferred Stock and any other shares the Corporation's
equity securities ranking pari passu with the Series A Preferred Stock as to
liquidation rights (including the Series B Preferred Stock, if any), then the
holders of the Series A Preferred Stock and pari passu shares will share ratably
in any distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
Section 4.4. Conversion. The holders of the Series A Preferred Stock shall
have conversion rights as follows:
(a) Right to Convert. The Series A Preferred Stock will be convertible at
the holder's option at any time. Each share of Series A Preferred Stock will be
initially convertible into 422.5 shares of common stock of the Corporation,
calculated by dividing the then-effective liquidation preference of each share
of Series A Preferred Stock by the conversion price. The initial conversion
price is $0.28405, subject to anti-dilution adjustments described in this
Section 4.4.
(b) Notice of Conversion. In order to effect a conversion of Series A
Preferred Stock, a holder must deliver a notice of conversion to the
Corporation. Upon receipt by the Corporation of the notice of conversion, the
holder's shares of Series A Preferred Stock will immediately cease to have the
rights and restrictions of preferred stock, and the holder will immediately be
deemed to have all the rights of a holder of shares of common stock. The
Corporation will deliver a copy of the form of notice of conversion to each
holder of Series A Preferred Stock prior to the convening of a stockholders
meeting to increase the Corporation's authorized capital or at any time at the
request of a holder of Series A Preferred Stock.
(c) Adjustments to Conversion Price. The conversion price will be subject
to adjustment in the event the Corporation (i) pays a dividend or distribution
solely in shares of common stock; (ii) subdivides its outstanding shares of
common stock into a greater number of shares of common stock, or (iii) combines
its outstanding shares of common stock into a smaller number of shares of common
stock. Concurrently with the effectiveness of any of the events described in
clauses (i) through (iii), the conversion price in effect immediately prior
thereto shall be adjusted by multiplying the conversion price in effect
immediately prior to such adjustment by a fraction of which the numerator shall
be the number of shares of common stock outstanding immediately prior to such
adjustment and the denominator shall be the number of shares of common stock
outstanding immediately following such adjustment.
8
(d) Adjustments for Reclassification, Consolidation and Reorganization. In
case of any reclassification of the common stock, any consolidation of the
Corporation with, or merger of the Corporation into, any other entity, any
merger of any entity into the Corporation (other than a merger that does not
result in reclassification, conversion, exchange or cancellation of the
outstanding shares of common stock), any sale or transfer of all or
substantially all of the assets of the Corporation or any compulsory share
exchange whereby the common stock is converted into other certain securities,
cash or other property, then the holder of each share of Series A Preferred
Stock then outstanding shall have the right thereafter, during the period that
the Series A Preferred Stock shall be convertible, to convert that share only
into the kind and amount of securities, cash and other property receivable upon
the reclassification, consolidation, merger, sale, transfer or share exchange by
a holder of the number of shares of common stock into which one share of Series
A Preferred Stock would have been convertible immediately prior to the
reclassification, consolidation, merger, sale, transfer or share exchange.
(e) Further Adjustments. In the event that the Corporation's 2006
Management Incentive Plan as may be amended from time to time ("MIP"), provides
for adjustments to the conversion or strike prices of the equity securities
granted thereunder or the number of shares issuable upon any such conversion
that would be in addition to or more favorable than the adjustments contained in
clauses (c) and (d) of this Section 4.4, then the conversion price of the Series
A Preferred Stock or the number of shares issuable upon such conversion shall
also be adjusted to the same extent as the conversion or strike prices of the
equity securities granted under the MIP or the number of shares issuable upon
any such conversion.
(f) Notices of Record Date. In the event that the Corporation shall propose
at any time: (i) to declare any dividend or distribution upon its common stock,
whether in cash, property, stock or other securities, whether or not a regular
cash dividend and whether or not out of earnings or earned surplus; (ii) to
offer for subscription pro rata to the holders of its common stock any
additional shares of stock of any class or series or other rights; (iii) to
effect any reclassification or recapitalization of its common stock outstanding
involving a change in the common stock; or (iv) to merge or consolidate with or
into any other corporation, or sell, lease or convey all or substantially all of
its assets, or to liquidate, dissolve or wind up; then, in connection with each
such event, the Corporation shall send to the holders of Series A Preferred
Stock:
(1) at least twenty (20) days' prior written notice of the date on which a
record shall be taken for such dividend, distribution or subscription rights
(and specifying the date on which the holders of common stock shall be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (i) and (ii) above; and
9
(2) in the case of the matters referred to in (iii) and (iv) above, at
least twenty (20) days' prior written notice of the date when the same shall
take place (and specifying the date on which the holders of common stock shall
be entitled to exchange their common stock for securities or other consideration
properly deliverable upon the occurrence of such event).
(g) Issue Taxes. The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of shares of
common stock on conversion of Series A Preferred Stock pursuant hereto;
provided, however, that the Corporation shall not be obligated to pay any
transfer taxes resulting from any transfer requested by any holder in connection
with any such conversion.
(h) Reservation of Stock Issuable Upon Conversion. The Corporation shall at
all times reserve and keep available out of its authorized but unissued shares
of common stock, solely for the purpose of effecting the conversion of the
shares of the Series A Preferred Stock, such number of its shares of common
stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock; and if at any time the
number of authorized but unissued shares of common stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series A
Preferred Stock, the Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of common stock to such number of shares as shall be sufficient for such
purpose, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval of any necessary amendment to the Articles of
Incorporation.
(i) Fractional Shares. No fractional share shall be required to be issued
by the Corporation upon the conversion of any share or shares of Series A
Preferred Stock. All shares of common stock (including fractions thereof)
issuable upon conversion of more than one share of Series A Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a share of common stock, the Corporation shall have the option, in
lieu of issuing any fractional share, to pay the holder otherwise entitled to
such fraction a sum in cash equal to the fair market value of such fraction on
the date of conversion (as determined in good faith by the Board of Directors).
(j) Notices. Any notice required by the provisions of this Section 4.4 to
be given to the holders of shares of Series A Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid, or if sent by
facsimile or delivered personally by hand or nationally recognized courier and
addressed to each holder of record at such holder's address or facsimile number
appearing in the records of the Corporation.
Section 4.5. Voting Rights. Each share of Series A Preferred Stock will
have the number of votes that the shares of common stock issuable upon
conversion of a share of Series A Preferred Stock would have (referred to herein
as voting on an "as converted" basis). Each share of Series A Preferred Stock
will initially have 422.5 votes. The common stock, Series A Preferred Stock and
Series B Preferred Stock, if any, will vote together as a single class, except
10
in the limited circumstances provided in Section 4.6 below or as required under
applicable law.
Section 4.6. Voting as Separate Class. Any amendment, modification or
repeal of the terms of the Corporation's Articles of Incorporation relating to
the Series A Preferred Stock that would materially adversely affect the powers,
preferences, or rights of the Series A Preferred Stock or the bylaws including
but not limited to modifications resulting from or in connection with any
merger, consolidation or sale of all or substantially all of the assets of the
Corporation, will require the approval of holders of at least a majority of the
issued and outstanding shares of Series A Preferred Stock and Series B Preferred
Stock, if any, voting together as a separate class. In addition, without the
affirmative vote or consent of holders of at least a majority of the outstanding
shares of Series A Preferred Stock and Series B Preferred Stock, if any, voting
together as a separate class, the Corporation shall not authorize, create, or
increase the authorized or issued amount of any class or series of equity
securities ranking senior or pari passu with the Series A Preferred Stock with
respect to the payment of dividends or the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation.
Section 4.7. Optional Redemption.
(a) Optional Redemption. The Corporation shall have the right to redeem the
Series A Preferred Stock at any time, after the New Conversion Rights Date, in
whole or in part at any time concurrently with or after all of the Corporation's
outstanding 11.0% Senior Notes due 2011 (the "Senior Notes") and 10.0% Senior
Convertible Notes due 2011 (the "Senior Convertible Notes" and, together with
the Senior Notes, the "Notes") have been repurchased, redeemed or otherwise
repaid in full. Any such redemption shall be for a cash amount per share equal
to the then-effective liquidation preference, together with any accrued and
undeclared dividends to the date of redemption. The Corporation will provide
notice of the optional redemption date at least 30 days in advance of such date
to all holders of Series A Preferred Stock showing on the registry books of the
Corporation or the Transfer Agent as of such date and make such other public
announcement as it deems reasonable. For purposes hereof, 'New Conversion Rights
Date' means the first date on which each of the following has occurred: (1) a
registration statement registering the resale of the Notes, Series A Preferred
Stock, Series B Preferred Stock, and shares of common stock issued upon the
conversion of the Series A Preferred Stock and Series B Preferred Stock by
affiliates of the Corporation becomes effective; and (2) a majority of the
shareholders of the Corporation holding common stock have approved an increase
in the amount of authorized shares of the common stock sufficient to implement
fully the common stock conversion rights of the Senior Convertible Notes, the
Series A Preferred Stock, the Series B Preferred Stock and the distribution of
common stock under the MIP.
(b) Conversion in Lieu of Redemption. The holders' option to convert shares
of Series A Preferred Stock into shares of common stock of the Corporation will
terminate at the close of business on the business day preceding the optional
redemption date, unless the Corporation defaults in making any redemption
11
payment upon such optional redemption date. Holders of the Series A Preferred
Stock shall have the right to exercise conversion rights in lieu of the receipt
of the redemption payment up to and including the business day preceding the
optional redemption date.
Section 4.8. Mandatory Redemption.
(a) Mandatory Redemption Date. On March 15, 2011 (the "Series A Mandatory
Redemption Date"), the Corporation must redeem all outstanding shares of Series
A Preferred Stock for a cash redemption price per share equal to the
then-effective liquidation preference, together with any accrued and undeclared
dividends to the date of redemption.
(b) Insufficient or Unavailable Capital at the Mandatory Redemption Date.
If at the Series A Mandatory Redemption Date, the Corporation does not have
sufficient capital and surplus legally available to redeem all the outstanding
shares of Series A Preferred Stock, the Corporation will take all reasonable
measures permitted under the Georgia Business Corporation Code to increase the
amount of its capital and surplus legally available, and the Corporation will
redeem as many shares of Series A Preferred Stock as it may legally redeem,
ratably (as nearly as may be practicable without creating fractional shares)
from the holders thereof in proportion to the number of shares held by them, and
shall thereafter from time to time, as soon as it shall have funds available
therefor, redeem as many shares of Series A Preferred Stock as it legally may
until it has redeemed all of the outstanding shares of Series A Preferred Stock.
(c) Conversion in Lieu of Redemption. The holders' option to convert shares
of Series A Preferred Stock into shares of common stock of the Corporation will
terminate at the close of business on the business day preceding the Series A
Mandatory Redemption Date (subject to any extension necessary to permit the
expiration of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), if applicable),
unless the Corporation defaults in making any redemption payment upon such
Series A Mandatory Redemption Date. Holders of the Series A Preferred Stock
shall have the right to exercise conversion rights in lieu of the receipt of the
redemption payment up to and including the business day preceding the Series A
Mandatory Redemption Date.
(d) Notice. The Corporation will provide notice of the Series A Mandatory
Redemption Date at least 30 days in advance of such date to all holders of
Series A Preferred Stock showing on the registry books of the Corporation or the
Transfer Agent as of such date and make such other public announcement as it
deems reasonable.
Section 4.9. Loss, Theft, Destruction of Preferred Stock. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of shares of Series A Preferred Stock and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Corporation, or, in the case of any such mutilation, upon
surrender and cancellation of the Series A Preferred Stock, the Corporation
shall make, issue and deliver, in lieu of such lost, stolen, destroyed or
mutilated shares of Series A Preferred Stock, new shares of Series A Preferred
Stock of like tenor. The Series A Preferred Stock shall be held and owned upon
the express condition that the provisions of this Section 4.9 are exclusive with
12
respect to the replacement of mutilated, destroyed, lost or stolen shares of
Series A Preferred Stock and shall preclude any and all other rights and
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement of negotiable instruments or other
securities without the surrender thereof.
Section 4.10. Register. The Corporation shall appoint a transfer agent
("Transfer Agent") registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") to keep at its principal office a register in which
the Transfer Agent shall provide for the registration of the Series A Preferred
Stock. The initial Transfer Agent shall be American Stock Transfer and Trust
Company. Upon any transfer of the Series A Preferred Stock in accordance with
the provisions hereof, the Transfer Agent shall register such transfer on the
Series A Preferred Stock register. The Corporation or the Transfer Agent may
deem the person in whose name the Series A Preferred Stock shall be registered
upon the registry books of the Corporation or the Transfer Agent to be, and may
treat it as, the absolute owner of the Series A Preferred Stock for the purpose
of receiving payment of dividends on the Series A Preferred Stock, for the
conversion of the Series A Preferred Stock and for all other purposes, and the
Corporation or the Transfer Agent shall not be affected by any notice to the
contrary. All such payments and such conversions shall be valid and effective to
satisfy and discharge the liability upon the Series A Preferred Stock to the
extent of the sum or sums so paid or the conversion or conversions so made.
Section 4.11. Form of Certificates; Transfer. (a) Series A Preferred Stock
shall be issued in the form of one or more permanent global shares of Series A
Preferred Stock (the "Global Preferred Shares") in definitive, fully registered
form with the global legend as set forth in clause (d) of this Section 4.11
below. The Global Preferred Share may have notations, legends or endorsements
required by law, stock exchange rules, agreements to which the Corporation is
subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Corporation). The Global Preferred
Share shall be deposited on behalf of the holders of the Series A Preferred
Stock represented thereby with Wachovia Bank, N.A. or any successor thereto, as
may be designated by the Board of Directors (the "Registrar"), at its New York
office, as custodian for The Depository Trust Company ("DTC") or its successor
depositary (collectively, the "Depositary"), and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by the Corporation and
countersigned and registered by the Registrar as hereinafter provided. The
aggregate number of shares represented by each Global Preferred Share may from
time to time be increased or decreased by adjustments made on the records of the
Registrar and the Depositary or its nominee as hereinafter provided. This
Section 4.11 (a) shall apply only to a Global Preferred Share deposited with or
on behalf of the Depositary. The Corporation shall execute and the Registrar
shall, in accordance with this Section, countersign and deliver initially one or
more Global Preferred Shares that (i) shall be registered in the name of Cede &
Co. or other nominee of the Depositary and (ii) shall be delivered by the
Registrar to Cede & Co. or pursuant to instructions received from Cede & Co. or
held by the Registrar as custodian for the Depositary pursuant to an agreement
between the Depositary and the Registrar. Members of, or participants in, the
Depositary ("Agent Members") shall have no rights under this subdivision with
respect to any Global Preferred Share held on their behalf by the Depositary or
by the Registrar as the custodian of the Depositary or under such Global
Preferred Share, and the Depositary may be treated by the Corporation, the
Registrar and any agent of the Corporation or the Registrar as the absolute
13
owner of such Global Preferred Share for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Corporation, the
Registrar or any agent of the Corporation or the Registrar from giving effect to
any written certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise of the
rights of a holder of a beneficial interest in any Global Preferred Share.
(b) Owners of beneficial interests in Global Preferred Shares shall not be
entitled to receive physical delivery of certificated shares of Series A
Preferred Stock, unless:
(i) DTC is unwilling or unable to continue as Depositary for the Global
Preferred Share and the Corporation does not appoint a qualified replacement for
DTC within 90 days,
(ii) DTC ceases to be a "clearing agency" registered under the Exchange
Act, and the Corporation does not appoint a qualified replacement for DTC within
90 days or
(iii) the Corporation decides to discontinue the use of book-entry transfer
through DTC (or any successor Depositary). In any such case, the Global
Preferred Share shall be exchanged in whole for definitive shares of Series A
Preferred Stock in registered form, with the same terms and of an equal
aggregate liquidation preference.
Definitive shares of Series A Preferred Stock shall be registered in the name or
names of the person or persons specified by DTC in a written instrument to the
Registrar.
(c) A Global Preferred Share shall not be valid until it is signed by an
authorized officer of the Corporation in accordance with its bylaws, by manual
or facsimile signature, and an authorized signatory of the Transfer Agent or its
successor manually countersigns the Global Preferred Share. The signature shall
be conclusive evidence that the Global Preferred Share has been authenticated
under this Article 2. Each Global Preferred Share shall be dated the date of its
authentication.
(d) Each Global Preferred Share shall bear a legend in substantially the
form as follows:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE CORPORATION OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO
14
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE ARTICLES OF AMENDMENT (AS DEFINED
BELOW). TRANSFERS TO AND FROM THIS GLOBAL SECURITY SHALL BE NOTED BY
THE TRANSFER AGENT ON THE SCHEDULE OF EXCHANGES BELOW.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM
THAT TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
Section 4.12. Withholding. To the extent required by applicable law, the
Corporation may withhold amounts for or on account of any taxes imposed or
levied by or on behalf of any taxing authority in the United States having
jurisdiction over the Corporation from any payments made pursuant to the Series
A Preferred Stock.
Section 4.13. Headings. The headings of the sections of this subsection 4
are inserted for convenience only and do not constitute a part of these Articles
of Incorporation.
5. Series B Preferred Stock. There shall be a series of Preferred Stock, no
par value, of the Corporation with the following designated number of shares,
relative rights, preferences and limitations thereof:
Section 5.1 Designation, Rank and Number.
(a) The shares of the series shall be designated as 10.0% Senior Series B
Convertible Participating Preferred Stock (the "Series B Preferred Stock"), no
par value, with a liquidation preference of $480.00 per share as of the date of
issue. The authorized number of shares constituting such series shall be
125,000.
(b) The Series B Preferred Stock, with respect to dividend rights and the
distribution of assets upon the Corporation's liquidation, dissolution or
winding up, will rank (i) junior to all indebtedness of the Corporation; (ii)
senior to all classes or series of the Corporation's common stock and to all
15
other Junior Stock; (iii) pari passu with the Series A Preferred Stock described
in Section 4 above and all other preferred equity securities issued by the
Corporation, other than those securities described in clauses (ii) and (iv) of
this Section 5.1(b), the issuance of which shall be subject to the consent of
the required holders of the Series B Preferred Stock,; and (iv) junior to all
equity securities issued by the Corporation, the terms of which specifically
provide that such equity securities rank senior to the Series B Preferred Stock,
subject to the consent of the required holders of the Series B Preferred Stock.
Section 5.2. Dividends.
(a) General. The holders of shares of Series B Preferred Stock, in
preference to the holders of shares of any Junior Stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available therefor, cumulative dividends, at a rate of 10.0% per annum of the
then-effective liquidation preference payable in cash semi-annually on March 15
and September 15 of each year, commencing September 15, 2006, to holders of
record at the close of business on the preceding March 1 and September 1,
respectively. Declared dividends will be payable in cash. Any undeclared
dividends will increase the liquidation preference as of the applicable dividend
payment date.
(b) Dividend Participation. If any dividends or distributions are paid on
the Corporation's common stock (other than a dividend or distribution paid
solely in additional shares of the Corporation's common stock), the holders of
Series B Preferred Stock will be paid dividends or distributions per share of
Series B Preferred Stock in an amount equal to what such holder would have
received had it converted its shares of Series B Convertible Preferred Stock
into shares of common stock of the Corporation immediately prior to the record
date for the payment of such dividend or distribution.
(c) Partial Dividend Periods. The Corporation will prorate and compute any
dividend payable for a partial dividend period on the basis of a 360-day year
consisting of twelve 30-day months. The Corporation will pay dividends to
holders of record as they appear in its share records at the close of business
on the applicable dividend record date.
(d) Unpayable Dividends. No dividend on the Series B Preferred Stock will
be authorized or declared or paid or set apart for payment by the Corporation if
such authorization, declaration, payment or setting apart for payment would
violate any of its agreements or is restricted or prohibited by law.
Notwithstanding the foregoing, dividends on the Series B Preferred Stock will
accrue whether or not the Corporation has earnings, whether or not there are
funds legally available for the payment of dividends and whether or not such
dividends are authorized or declared by the Board of Directors.
(e) Dividends not Declared and Paid in Full. When dividends are not
declared and paid in full (or a sum sufficient for such full payment is not so
set apart) on the Series B Preferred Stock and all other equity securities
ranking pari passu as to dividends with the Series B Preferred Stock (including
the Series A Preferred Stock), all dividends declared upon the Series B
Preferred Stock and any other equity securities ranking pari passu as to
dividends with the Series B Preferred Stock shall be declared pro rata so that
16
the amount of dividends declared per share of Series B Preferred Stock and such
other equity security shall in all cases bear to each other the same ratio that
accumulated dividends per share on the Series B Preferred Stock and such other
equity security bear to each other.
(f) Restrictions on Other Payments. Except as provided in Section 5.1(e),
unless full cumulative dividends on the Series B Preferred Stock have been or
contemporaneously are authorized and paid or authorized and a sum sufficient set
apart for payment for all past distribution periods and the then current
dividend period:
(i) no dividends, other than distributions in kind of common stock of the
Corporation or other shares of Junior Stock, may be authorized or paid or set
aside for payment, and no other dividend may be authorized or made upon, shares
of common stock of the Corporation or any other shares of Junior Stock; and
(ii) no shares of common stock of the Corporation or any other shares of
Junior Stock may be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any such shares) by the Corporation or any subsidiary of the
Corporation, except by conversion into or exchange for other Junior Stock.
Section 5.3. Liquidation Preference.
(a) Initial Preference. The Series B Preferred Stock will have an initial
liquidation preference of $480.00 per share, subject to accretion.
(b) Distribution upon Liquidation. Upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, holders of Series B
Preferred Stock will be entitled to receive out of the assets of the Corporation
available for distribution to stockholders (after payment or provision for all
of the Corporation's debts and other liabilities and preference payments to
holders of equity securities ranking senior to the Series B Preferred Stock but
before any payment or provision for any Junior Stock) an amount equal to the
greater of:
(i) the amount per share of Series B Preferred Stock equal to the
then-effective liquidation preference, plus any accrued and undeclared dividends
to the date of payment; and
(ii) the amount per share the holder would have received in connection with
such voluntary or involuntary liquidation, dissolution or winding up of the
Corporation had such holder converted such share of Series B Preferred Stock
into shares of common stock immediately prior to such event.
(c) Distribution with Insufficient Assets. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, its
assets are insufficient to make full payment of the liquidating distributions to
holders of the Series B Preferred Stock and any other shares the Corporation's
equity securities ranking pari passu with the Series B Preferred Stock as to
17
liquidation rights (including the Series A Preferred Stock), then the holders of
the Series B Preferred Stock and pari passu shares will share ratably in any
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
Section 5.4. Conversion. The holders of the Series B Preferred Stock shall
have conversion rights as follows:
(a) Right to Convert. The Series B Preferred Stock will be convertible at
the holder's option at any time after the New Conversion Rights Date. Each share
of Series B Preferred Stock will be initially convertible into 738.5 shares of
common stock of the Corporation, which is calculated by dividing the
then-effective liquidation preference of each share of Series B Preferred Stock
by the conversion price. The initial conversion price is $0.65, subject to
anti-dilution adjustments described in this Section 5.4.
(b) Notice of Conversion. In order to effect a conversion of Series B
Preferred Stock, a holder must deliver a notice of conversion to the
Corporation. Upon receipt by the Corporation of the notice of conversion, the
holder's shares of Series B Preferred Stock will immediately cease to have the
rights and restrictions of preferred stock, and the holder will simultaneously
receive shares of common stock in accordance with the terms outlined above. The
Corporation will deliver a copy of the form of notice of conversion to each
holder of Series B Preferred Stock at any time at the request of a holder of
Series B Preferred Stock.
(c) Adjustments to Conversion Price. The conversion price will be subject
to adjustment in the event the Corporation (i) pays a dividend or distribution
solely in shares of common stock; (ii) subdivides its outstanding shares of
common stock into a greater number of shares of common stock, or (iii) combines
its outstanding shares of common stock into a smaller number of shares of common
stock. Concurrently with the effectiveness of any of the events described in
clauses (i) through (iii), the conversion price in effect immediately prior
thereto shall be adjusted by multiplying the conversion price in effect
immediately prior to such adjustment by a fraction of which the numerator shall
be the number of shares of common stock outstanding immediately prior to such
adjustment and the denominator shall be the number of shares of common stock
outstanding immediately following such adjustment.
(d) Adjustments for Reclassification, Consolidation and Reorganization. In
case of any reclassification of the common stock, any consolidation of the
Corporation with, or merger of the Corporation into, any other entity, any
merger of any entity into the Corporation (other than a merger that does not
result in reclassification, conversion, exchange or cancellation of the
outstanding shares of common stock), any sale or transfer of all or
substantially all of the assets of the Corporation or any compulsory share
exchange whereby the common stock is converted into other certain securities,
cash or other property, then the holder of each share of Series B Preferred
Stock then outstanding shall have the right thereafter, during the period that
18
the Series B Preferred Stock shall be convertible, to convert that share only
into the kind and amount of securities, cash and other property receivable upon
the reclassification, consolidation, merger, sale, transfer or share exchange by
a holder of the number of shares of common stock into which one share of Series
B Preferred Stock would have been convertible immediately prior to the
reclassification, consolidation, merger, sale, transfer or share exchange.
(e) Further Adjustments. In the event that the MIP provides for adjustments
to the conversion or strike prices of the equity securities granted thereunder
or the number of shares issuable upon any such conversion that would be in
addition to or more favorable than the adjustments contained in clauses (c) and
(d) of this Section 5.4, then the conversion price of the Series B Preferred
Stock or the number of shares issuable upon such conversion shall also be
adjusted to the same extent as the conversion or strike prices of the equity
securities granted under the MIP or the number of shares issuable upon any such
conversion.
(f) Notices of Record Date. In the event that the Corporation shall propose
at any time: (i) to declare any dividend or distribution upon its common stock,
whether in cash, property, stock or other securities, whether or not a regular
cash dividend and whether or not out of earnings or earned surplus; (ii) to
offer for subscription pro rata to the holders of its common stock any
additional shares of stock of any class or series or other rights; (iii) to
effect any reclassification or recapitalization of its common stock outstanding
involving a change in the common stock; or (iv) to merge or consolidate with or
into any other corporation, or sell, lease or convey all or substantially all of
its assets, or to liquidate, dissolve or wind up; then, in connection with each
such event, the Corporation shall send to the holders of Series B Preferred
Stock:
(i) at least twenty (20) days' prior written notice of the date on which a
record shall be taken for such dividend, distribution or subscription rights
(and specifying the date on which the holders of common stock shall be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (i) and (ii) above; and
(ii) in the case of the matters referred to in (iii) and (iv) above, at
least twenty (20) days' prior written notice of the date when the same shall
take place (and specifying the date on which the holders of common stock shall
be entitled to exchange their common stock for securities or other consideration
properly deliverable upon the occurrence of such event).
(g) Issue Taxes. The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of shares of
common stock on conversion of Series B Preferred Stock pursuant hereto;
provided, however, that the Corporation shall not be obligated to pay any
transfer taxes resulting from any transfer requested by any holder in connection
with any such conversion.
(h) Reservation of Stock Issuable Upon Conversion. The Corporation shall at
all times reserve and keep available out of its authorized but unissued shares
of common stock, solely for the purpose of effecting the conversion of the
shares of the Series B Preferred Stock, such number of its shares of common
stock as shall from time to time be sufficient to effect the conversion of all
19
outstanding shares of the Series B Preferred Stock; and if at any time the
number of authorized but unissued shares of common stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series B
Preferred Stock, the Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of common stock to such number of shares as shall be sufficient for such
purpose, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval of any necessary amendment to the Articles of
Incorporation.
(i) Fractional Shares. No fractional share shall be required to be issued
by the Corporation upon the conversion of any share or shares of Series B
Preferred Stock. All shares of common stock (including fractions thereof)
issuable upon conversion of more than one share of Series B Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a share of common stock, the Corporation shall have the option, in
lieu of issuing any fractional share, to pay the holder otherwise entitled to
such fraction a sum in cash equal to the fair market value of such fraction on
the date of conversion (as determined in good faith by the Board).
(j) Notices. Any notice required by the provisions of this Section 5.4 to
be given to the holders of shares of Series B Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid, or if sent by
facsimile or delivered personally by hand or nationally recognized courier and
addressed to each holder of record at such holder's address or facsimile number
appearing in the records of the Corporation.
Section 5.5. Voting Rights. Each share of Series B Preferred Stock will
have the number of votes that the shares of common stock issuable upon
conversion of a share of Series B Preferred Stock would have (referred to herein
as voting on an "as converted" basis). Each share of Series B Preferred Stock
will initially have 738.5 votes. The common stock, Series A Preferred Stock and
Series B Preferred Stock will vote together as a single class, except in the
limited circumstances provided in Section 5.6 below or as required under
applicable law.
Section 5.6. Voting as Separate Class. Any amendment, modification or
repeal of the terms of the Corporation's Articles of Incorporation relating to
the Series B Preferred Stock that would materially adversely affect the powers,
preferences, or rights of the Series B Preferred Stock or the bylaws including
but not limited to modifications resulting from or in connection with any
merger, consolidation or sale of all or substantially all of the assets of the
Corporation, will require the approval of holders of at least a majority of the
issued and outstanding shares of Series A Preferred Stock and Series B Preferred
Stock, if any, voting together as a separate class. In addition, without the
affirmative vote or consent of holders of at least a majority of the outstanding
shares of Series A Preferred Stock and Series B Preferred Stock, voting together
as a separate class, the Corporation shall not authorize, create, or increase
the authorized or issued amount of, any class or series of equity securities
20
ranking senior to or pari passu with the Series B Preferred Stock with respect
to the payment of dividends or the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation.
Section 5.7. Optional Redemption.
(a) Optional Redemption. The Corporation shall have the right to redeem the
Series B Preferred Stock at any time after the New Conversion Rights Date, in
whole or in part at any time concurrently with or after all of the Corporation's
outstanding Senior Notes and Senior Convertible Notes (to the extent any such
notes remain outstanding and have not been converted into Series B Preferred
Stock) have been repurchased, redeemed or otherwise repaid in full. Any such
redemption shall be for a cash amount per share equal to the then-effective
liquidation preference, together with any accrued and undeclared dividends to
the date of redemption. The Corporation will provide notice of the optional
redemption date at least 30 days in advance of such date to all holders of
Series B Preferred Stock showing on the registry books of the Corporation or the
Transfer Agent as of such date and make such other public announcement as it
deems reasonable.
(b) Conversion in Lieu of Redemption. The holders' option to convert shares
of Series B Preferred Stock into shares of common stock of the Corporation will
terminate at the close of business on the business day preceding the optional
redemption date, unless the Corporation defaults in making any redemption
payment upon such optional redemption date. Holders of the Series B Preferred
Stock shall have the right to exercise conversion rights in lieu of the receipt
of the redemption payment up to and including the business day preceding the
optional redemption date.
Section 5.8. Mandatory Redemption.
(a) Mandatory Redemption Date. On the later of (i) March 15, 2011 and (ii)
120 days following the New Conversion Rights Date (the "Series B Mandatory
Redemption Date"), the Corporation must redeem all outstanding shares of Series
B Preferred Stock for a cash redemption price per share equal to the
then-effective liquidation preference, together with any accrued and undeclared
dividends to the date of redemption. In the event that the New Conversion Rights
Date has not occurred on or before March 15, 2011, then on each semi-annual
dividend payment date on or after March 15, 2011, in the event that any holder
has given the Corporation at least 60 days notice prior to such dividend payment
date, the Corporation will redeem such holders' Series B Preferred Stock at a
price per share equal to the then-effective liquidation preference, together
with any accrued and undeclared dividends to the date of redemption.
(b) Insufficient or Unavailable Capital at the Mandatory Redemption Date.
If at the Series B Mandatory Redemption Date, the Corporation does not have
sufficient capital and surplus legally available to redeem all the outstanding
shares of Series B Preferred Stock, the Corporation will take all reasonable
measures permitted under the Georgia Business Corporation Code to increase the
amount of its capital and surplus legally available, and the Corporation will
redeem as many shares of Series B Preferred Stock as it may legally redeem,
ratably (as nearly as may be practicable without creating fractional shares)
21
from the holders thereof in proportion to the number of shares held by them, and
shall thereafter from time to time, as soon as it shall have funds available
therefor, redeem as many shares of Series B Preferred Stock as it legally may
until it has redeemed all of the outstanding shares of Series B Preferred Stock.
(c) Conversion in Lieu of Redemption. The holders' option to convert shares
of Series B Preferred Stock into shares of common stock of the Corporation will
terminate at the close of business on the business day preceding the Series B
Mandatory Redemption Date (subject to any extension necessary to permit the
expiration of any applicable waiting period under the HSR Act, if applicable),
unless the Corporation defaults in making any redemption payment upon the Series
B Mandatory Redemption Date. Holders of the Series B Preferred Stock shall have
the right to exercise conversion rights in lieu of the receipt of the redemption
payment up to and including the business day preceding the Series B Mandatory
Redemption Date.
(d) Notice. The Corporation will provide notice of the Mandatory Redemption
Date at least 30 days in advance of such date to all holders of Series B
Preferred Stock showing on the registry books of the Corporation or the Transfer
Agent as of such date make such other public announcement as it deems
reasonable.
Section 5.9. Loss, Theft, Destruction of Preferred Stock. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of shares of Series B Preferred Stock and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Corporation, or, in the case of any such mutilation, upon
surrender and cancellation of the Series B Preferred Stock, the Corporation
shall make, issue and deliver, in lieu of such lost, stolen, destroyed or
mutilated shares of Series B Preferred Stock, new shares of Series B Preferred
Stock of like tenor. The Series B Preferred Stock shall be held and owned upon
the express condition that the provisions of this Section 5.9 are exclusive with
respect to the replacement of mutilated, destroyed, lost or stolen shares of
Series B Preferred Stock and shall preclude any and all other rights and
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement of negotiable instruments or other
securities without the surrender thereof.
Section 5.10. Register. The Corporation shall appoint a transfer agent
registered under the Exchange Act to keep at its principal office a register in
which the Transfer Agent shall provide for the registration of the Series B
Preferred Stock. The initial Transfer Agent shall be American Stock Transfer and
Trust Company. Upon any transfer of the Series B Preferred Stock in accordance
with the provisions hereof, the Transfer Agent shall register such transfer on
the Series B Preferred Stock register. The Corporation or the Transfer Agent may
deem the person in whose name the Series B Preferred Stock shall be registered
upon the registry books of the Corporation or the Transfer Agent to be, and may
treat it as, the absolute owner of the Series B Preferred Stock for the purpose
of receiving payment of dividends on the Series B Preferred Stock, for the
conversion of the Series B Preferred Stock and for all other purposes, and the
22
Corporation or the Transfer Agent shall not be affected by any notice to the
contrary. All such payments and such conversions shall be valid and effective to
satisfy and discharge the liability upon the Series B Preferred Stock to the
extent of the sum or sums so paid or the conversion or conversions so made.
Section 5.11. Form of Certificates. The shares of Series B Preferred Stock
shall be certificated.
Section 5.12. Withholding. To the extent required by applicable law, the
Corporation may withhold amounts for or on account of any taxes imposed or
levied by or on behalf of any taxing authority in the United States having
jurisdiction over the Corporation from any payments made pursuant to the Series
B Preferred Stock.
Section 5.13. Headings. The headings of the sections of this subsection 5
are inserted for convenience only and do not constitute a part of these Articles
of Incorporation.
B. COMMON STOCK
1. Voting Rights.
(a) Except as otherwise required by law or as may be provided by the
resolutions of the Board of Directors authorizing the issuance of any class or
series of Preferred Stock, as provided in Section A of this Article 2, all
rights to vote and all voting power shall be vested exclusively in the holders
of the Common Stock.
(b) The holders of the Common Stock shall be entitled to one vote per share
on all matters submitted to a vote of shareholders of the Corporation ( the
"Shareholders"), including, without limitation, the election of directors.
2. Dividends. Except as otherwise provided by law or as may be provided by
the resolutions of the Board of Directors authorizing the issuance of any class
or series of Preferred Stock, as provided in Section A of this Article 2, the
holders of the Common Stock shall be entitled to receive, on a pro-rata basis,
when, as and if provided by the Board of Directors, out of funds legally
available therefor, dividends payable in cash, stock or otherwise.
3. Liquidating Distributions. Upon any liquidation, dissolution or
winding-up of the corporation, whether voluntary or involuntary, and after
payment or provision for payment of the debts and other liabilities of the
corporation, and except as may be provided by the resolutions of the Board of
Directors authorizing the issuance of any class or series of Preferred Stock, as
provided in Section A of this Article2, the remaining assets of the corporation
shall be distributed pro-rata to the holders of the Common Stock.
23
3.
REGISTERED AGENT AND OFFICE
The street address and county of the initial registered office of the
corporation are 2300 Windy Ridge Parkway, Cobb County, Atlanta, Georgia. The
initial registered agent of the corporation at such office is Tony G. Mills.
4.
INCORPORATOR
The name and address of the incorporator are:
Tony G. Mills
The Profit Recovery Group International, Inc.
2300 Windy Ridge Parkway
Suite 300 North
Atlanta, GA 30339-8426
5.
INITIAL PRINCIPAL OFFICE
The mailing address of the initial principal office of the corporation is:
The Profit Recovery Group International, Inc.
2300 Windy Ridge Parkway
Suite 300 North
Atlanta, GA 30339-8426
6.
BOARD OF DIRECTORS
(a) The number of directors constituting the initial Board of Directors is
eight (8) and the names and addresses of such directors are as follows:
John M. Cook John M. Toma Stanley B. Cohen
2300 Windy Ridge Parkway 2300 Windy Ridge Parkway 6195 Barfield Road
Suite 300 North Suite 300 North Suite 280
Atlanta, GA 30339-8426 Atlanta, GA 30339-8426 Atlanta, GA 30328-4328
Jonathan Golden T. Charles Fial Garth H. Greimann
2800 One Atlantic Center 290 Kiowa Place Berkshire Partners
1201 W. Peachtree Street Boulder, CO 80303 Suite 3425
Atlanta, GA 30309-3400 One Boston Place
Boston, MA 02108-4401
24
E. James Lowrey Fred W. I. Lachotzki
c/o Sysco Corporation c/o Nijenrode University
1390 Enclave Parkway Straatweg 25
Houston, TX 77077 3621 BG Breukelen
The Netherlands
The Board of Directors shall be divided into three (3) classes with each
such class to be as nearly equal in number as possible. The terms of directors
in Class I shall expire at the first annual shareholders' meeting after the date
of these Articles of Incorporation, the terms of directors in Class II shall
expire at the second annual shareholders' meeting after such date and the terms
of directors in Class III shall expire at the third annual shareholders' meeting
after such date. At each annual shareholders' meeting held thereafter, directors
shall be chosen for a term of three years to succeed those whose terms expire at
that meeting. Each director shall hold office for the term for which he or she
is elected or appointed or until his or her successor shall be elected and
qualified, or until his or her death, removal from office or resignation.
(b) The members of the initial classified Board of Directors are as
follows:
Class I Class II Class III
John M. Cook Jonathan Golden Stanley B. Cohen
John M. Toma Garth H. Greimann T. Charles Fial
E. James Lowrey Fred W. I. Lachotzki
(c) Each director shall hold office for the term for which he or she is
elected or appointed or until his or her successor shall be elected and
qualified, or until his or her death, removal from office or resignation.
(d) Should the number of directors be changed, any newly created
directorships or any decrease in directorships shall be so apportioned among the
classes as to make Classes I, II, and III as nearly equal in number as possible.
(e) No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
(f) In discharging the duties of their respective positions and in
determining what is believed to be in the best interests of the corporation, the
Board of Directors, committees of the Board of Directors, and individual
directors, in addition to considering the effects of any action on the
corporation or its shareholders, may consider the interests of the employees,
25
customers, suppliers and creditors of the corporation and its subsidiaries, the
communities in which offices or other establishments of the corporation and its
subsidiaries are located, and all other factors such directors consider
pertinent; provided, however, that this provision shall be deemed solely to
grant discretionary authority to the directors and shall not be deemed to
provide to any constituency any right to be so considered.
7.
SPECIAL MEETINGS OF SHAREHOLDERS
Special meetings of the Shareholders may be called only by:
(a) the Chairman of the Board;
(b) the President;
(c) a majority of the members of the Board of Directors then in office; or
(d) the holders of at least thirty five percent (35%) of all the votes
entitled to be cast on any issue proposed to be considered at the proposed
special meeting if said holders deliver to the Secretary of the corporation one
(1) or more signed and dated written demands for the meeting, describing therein
the purpose or purposes for which the special meeting is to be held; provided,
however, that at such time and so long as there are one hundred (100) or fewer
Shareholders of record, the corporation shall hold such special meeting upon the
demand of at least twenty five percent (25%) of said holders. The record date
for determining Shareholders entitled to demand a special meeting shall be
determined in the manner provided in the Bylaws.
Only the business within the purpose or purposes described in the meeting
notice required by subsection (c) of Code Section 14-2-705 may be conducted at a
special meeting of the Shareholders.
8.
INDEMNIFICATION
The corporation may indemnify or obligate itself to indemnify, pursuant to
an indemnification agreement or otherwise, a director made a party to a
proceeding, including a proceeding brought by or in the right of the
corporation, to the maximum extent permitted by Section 14-2-856 of the Code,
without regard to the limitations contained in other sections of Part 5 of
Article 8 of the Code.
26
9.
ELIMINATION OF MONETARY LIABILITY
(a) No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of his or her
duty of care or other duty as a director; provided, that this provision shall
eliminate or limit the liability of a director only to the extent permitted by
the Code or by any successor law or laws.
(b) Any repeal or modification of the provisions of this Article 9 by the
shareholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation with respect to any act or omission occurring prior to the effective
date of such repeal or modification.
10.
REMOVAL OF DIRECTORS
Shareholders may only remove directors for cause, by a majority of the
votes entitled to be cast.
27