EXHIBIT 3.2
ARTICLES SUPPLEMENTARY
Series A Junior Participating Preferred Stock
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OF
SYLVAN LEARNING SYSTEMS, INC.
(filed with the Maryland State Department of Assessments and
Taxation on October 29, 1996)
SYLVAN LEARNING SYSTEMS, INC., a Maryland corporation, having its
principal office in Howard County, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article SIXTH of the Charter of the Corporation, the Board
of Directors has duly divided and classified 250,000 shares of the Preferred
Stock of the Corporation into a series designated "Series A Junior Participating
Preferred Stock" and has provided for the issuance of such series.
SECOND: The terms of the Series A Junior Participating Preferred Stock
as set by the Board of Directors are as follows:
1. Designation and Amount. The shares of such series shall be
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designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting such series shall
initially be 250,000, subject to increase or decrease by action of the Board of
Directors effectuated by further Articles Supplementary.
2. Dividends and Distributions.
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(i) The holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock and of any other junior stock,
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of March, June, September and
December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of
a share of Series A Preferred Stock, in an amount per share (rounded to
the nearest cent) equal to the greater of (a) Five Dollars ($5.00) or
(b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares
of Common Stock of the Corporation or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise, declared on
the Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any
time after the date hereof declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number
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of shares of Common Stock that were outstanding immediately prior to
such event.
(ii) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in subparagraph (i) of this
paragraph 2 immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of Five Dollars ($5.00) per share on
the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Series A Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A Preferred Stock
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shall have the following voting rights:
(i) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at
any time after the date hereof declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(ii) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(iii) Except as set forth herein, holders of Series A
Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote
with holders of Common Stock and any other capital stock of the
Corporation having general voting rights as set forth herein) for taking
any corporate action.
(iv) At such time as quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
paragraph 2 of this Section are in arrears for six consecutive quarters,
the holders of the Series A Preferred Stock may, by affirmative vote of
a majority thereof, remove
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two members of the Class of the Board of Directors whose term expires at
the next annual meeting of shareholders of the Corporation and elect
their replacements, which replacements shall serve as members of the
Board of Directors until (x) all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full and (y) their successors
shall have been elected by the affirmative vote of the holders of the
Common Stock and Series A Preferred Stock, voting together as a single
class, and shall have qualified.
4. Certain Restrictions.
(i) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
paragraph 2 of this Section are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not declared,
on shares of Series A Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:
(a) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock;
(b) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(c) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(d) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except
in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith
will result in fair and equitable treatment among the
respective series or classes.
(ii) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
subparagraph (i) of this paragraph 4, purchase or otherwise acquire such
shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series A Preferred Stock purchased
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or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be classified again and reissued as part of a new
series or class of Preferred Stock to be created by the Board of Directors
pursuant to its power contained in the Charter, subject to the conditions and
restrictions on issuance set forth herein.
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6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
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dissolution or winding up of the Corporation, no distribution shall be made
(a) to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A Preferred
Stock shall have received One hundred dollars ($100.00) per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, provided that the
holders of shares of Series A Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (b) to the holders of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all other such
parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up.
In the event the Corporation shall at any time after the date hereof declare
or pay any dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (a) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
7. Consolidation, Merger, etc. In case the Corporation shall enter
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into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the date
hereof declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case
the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
8. No Redemption. The shares of Series A Preferred Stock shall not be
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redeemable.
9. Rank. The Series A Preferred Stock shall rank junior with respect
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to payment of dividends and on liquidation to all other Preferred Stock of
the Corporation unless the terms of any other Preferred Stock specifically
provide that it shall rank junior to, or on a parity with, the Series A
Preferred Stock.
10. Amendment. The Charter of the Corporation shall not be amended in
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any manner that would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds of the
outstandingshares of Series A Preferred Stock, voting together as a single
class.
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IN WITNESS WHEREOF, SYLVAN LEARNING SYSTEMS, INC. has caused these
presents to be signed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on October 28, 1996.
WITNESS: SYLVAN LEARNING SYSTEMS, INC.
/s/ O. Steven Jones By: /s/ Douglas L. Becker
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O. Steven Jones, Assistant Secretary Douglas L. Becker, President
THE UNDERSIGNED, President of Sylvan Learning Systems, Inc., who
executed on behalf of the Corporation Articles Supplementary of which this
Certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Douglas L. Becker
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Douglas L. Becker, President
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